Editorial

Abstract

In the Name of Allah, Most Gracious, Most Merciful. The love for accumulation and power is part of human instinct. However, Islam teaches that it is not through wealth accumulation and hoarding that human beings will attain falāḥ (success) in this life and the hereafter or draw closer to Allah; rather, wealth circulation and distribution are fundamental principles to promote growth and development and bring about equity and justice in the society. In fact, the “giving” behaviour essentialises the faith of a Muslim. He is called upon to be generous to the poor and the deserving through various means, including zakat (Islamic tax), ṣadaqah (voluntary charity), waqf (Islamic endowment) and qarḍ ḥasan (benevolent loan).

Under the present conditions of the ongoing COVID-19 pandemic that has been affecting societies and the global economy since 2020, the importance of solidarity and the sharing economy has grown even more. The philanthropic sector of Islamic finance, called the Islamic social finance sector, has thus been further propelled to the forefront to help sustain life and human well-being. Islamic social finance has only recently been integrated within the mainstream of Islamic finance to revitalise age-old philanthropic instruments such as waqf to strengthen their effectiveness and applications in contemporary societies. Supported by rapid digital transformation, the Islamic social finance sector along with breakthrough initiatives and Islamic finance innovations have been looked into to contribute to more efficient resource allocation. Ṣadaqah and qarḍ ḥasan, for instance, could be used to provide immediate relief solutions such as food and cash to daily wage earners and migrant workers. The zakat platform, especially if digitalised, could serve as an important vehicle to raise funds for financing aṣnāf (zakat recipients), including microfinance beneficiaries, affected by the pandemic. Potential medium- to long-term solutions could be provided through the various innovative applications of waqf (e.g. waqf-ṣukūk, waqf-venture capital, corporate waqf and others) to mobilise both capital and other resources (e.g. human resources and expertise) for investment in essential activities such as research, technological innovation and transfer, agricultural production capacity building and income-generation projects to support economic recovery and growth.