SECP explores revival of Waqf for socio-economic development

April 07, 2025 (MLN): The SECP has issued a concept paper exploring the revival and modernization of Waqf to align with contemporary socio-economic needs.

The paper discusses the historical significance of Waqf, an essential institution in Islamic society, and its contemporary practices.

Historically, Waqf has funded education, healthcare, and social welfare, supporting institutions like Al-Azhar and the Ottoman public works system.

It remains an important player in the socio-economic fabric of the Muslim world.

Countries like Malaysia, Turkey, and Indonesia have successfully adapted Waqf to modern financial systems through regulatory frameworks, innovative governance models, and Shariah-compliant financial instruments.

However, in Pakistan, Waqf remains underutilized due to outdated management practices and the lack of a robust regulatory framework.

The concept paper proposes strategies to harness Waqf for Islamic social finance, including reinvigorating the Waqf institution.

It also suggests enabling the establishment of Waqf in corporate structures as Waqf companies and developing Islamic instruments and financial services products for such companies.

These proposals aim to improve efficiency, complete the Islamic finance ecosystem, and create social impact in Pakistan.

The suggested pathway to transform Waqf into a dynamic, sustainable, and impactful institution for socio-economic development will be deliberated and discussed with key industry stakeholders.

This will take place before initiating the required regulatory interventions, as per the press release issued today.

To address concerns pertaining to jurisdiction and legal considerations, the concept paper includes proposed options such as amending provincial Waqf laws.

It also suggests amending the Companies Act, 2017, or the NPO Regulations to provide for Waqf companies under the Companies Act, 2017.

It is expected that the revival and modernization of Waqf will enable sustainable Islamic social finance institutions, thereby helping achieve the objective of shared prosperity by making resources available for social and welfare projects.

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