Waqf-Based Microfinance: An Alternative Solution to Poverty Reduction
This paper intends to determine the scope and opportunity of waqf-based (Islamic endowment) microfinance by applying financial schemes and models to alleviate poverty in the society. The paper is a review-based conceptual piece of work in nature. Waqf-based microfinance model is designed and proposed as a solution to ensure an improved livelihood for the people of the Islamic countries through a comprehensive literature review and provide descriptive data to present its main notion. The development of micro-entrepreneurs integrating waqf-based microfinance will reduce poverty in Islamic countries. This paper proposes a distinct poverty alleviation model which will help generate income and employment for socio-economic development. The study does not address the regulatory and operational issues of the waqf in detail. Moreover, the study endeavours to integrate the waqf as a source of funding for the microfinance operation which is found to be constraining hence, an empirical model to be analysed in the future is proposed in this paper. The purpose of waqf is to ensure potential economic contribution and equality among the poor segment in the society through a noble charitable effort. This paper will also contribute to the existing literature in the field of poverty reduction. The integration of waqf in Islamic microfinance will make Microfinance Institutions (MFIs)’ sustainable with an available source of funding. The MFIs’ will fund the available capital to the micro-entrepreneurs and at the same time, innovative micro-financing models incorporating waqf will bring peace in the society by eradicating poverty significantly.