Designing waqf-based financing model for livestock project: empirical evidence from Indonesia

Abstract

Purpose

This study aims to propose a productive waqf-based financing model for the livestock sector by optimizing idle waqf land owned by Islamic boarding schools (pesantren) for livestock breeding and fattening projects. Most pesantrens are established on waqf land and are located in rural areas with great potential for implementing waqf-based livestock projects.

Design/methodology/approach

The authors conducted a critical review on the models of waqf-based empowerment and financing for the livestock, agriculture or agribusiness sectors. Then, a proposed model was designed focused on livestock sector by using waqf land owned by pesantren. To strengthen the proposed model, the authors held a focus group discussion (FGD) by inviting regulators, academics, practitioners/consultants in animal husbandry, waqf, pesantren and economic empowerment.

Findings

Pesantren as nazhir of waqf land can cooperate with baitul maal wat tamwil (BMT) acting as nazhir of cash waqf to form a breeders’ cooperative as the vehicle to carry out the process of producing and fattening cattle. The project is performed under a mudharaba, musharakah or ijara contract, which is supervised by pesantren and BMT.

Research limitations/implications

This research is based on the Indonesian context due to it is influenced by country-specific conditions. Even so, some of the findings in this study can still be adopted by waqf asset managers in other Muslim countries, which also have potential in terms of the number of pesantren and waqf assets.

Social implications

The proposed model can improve the quality of life of the poor in remote areas by fulfilling the demand for beef consumption accompanied by sustainable economic empowerment.

Originality/value

This research focuses on solving the problem of meeting basic needs for beef by optimizing productive waqf in the livestock sector by involving the role of pesantren, which still needs to be discovered in the literature on the use of waqf land.

Citation

Sukmana, R., Ratnasari, R.T., Majid, R. and Mohd Shafiai, M.H. (2024), "Designing waqf-based financing model for livestock project: empirical evidence from Indonesia", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 17 No. 3, pp. 599-617. https://doi.org/10.1108/IMEFM-06-2023-0211