The role of endowments in supporting the Omani economy

The waqf endowment system has historically played a role in developing the socio-economic activities of the Muslim world. It still plays an important role in the development of the economy and in socio-economic and community activities in Oman.
The institutions of waqf were developed as a form of charity, where people give public assets such as land, buildings, or financial assets. Initially, the waqf assets are conserved in such a way that income from these assets is used to fund social institutions such as hospitals and schools. This system of waqf institutions and charity is also deep-rooted in Omani culture because Islam encourages charity and the concept of charity is that the benefits continue to accrue to society, ie, charity that is perpetual.
The strongest economic characteristic of endowments in Oman is sustainable financing. Waqf assets are structured to generate income in perpetuity. This is different from usual donations, which in most cases are one-time. For instance, as part of a charitable endowment, donated properties could be rented out and the income used to fund community activities. This creates an avenue for funding that is predictable and supports community project sustenance, fulfils social funding roles in the economy and helps diversify the economic support of the community.
Endowments also play a critical role in maintaining the socio-economic foundation of the economy. In Oman, waqf funds have been used to construct mosques and provide for their operation, to teach and support the religious education of the poor and have more recently been extended to fund schools, healthcare and scholarships. This means that they are sustaining and building the socio-economic foundation and capacity of the community and the economy through education and health.
The promotion of social equality and financial inclusion is an important aspect of endowments. The institution of waqf usually focuses on vulnerable populations by helping them access what is usually the formal financial system. This can take the form of helping to create small business ventures, as well as providing social services. Decreasing inequality in society and improving the economic conditions of individuals subsequently creates more balanced and integrated economies.
In the new economic system in Oman, the inclusion of endowments in national development plans is becoming more significant. The government has been proactive in reforming and modernising the waqf sector to enhance transparency, efficiency and alignment with national development. This has included the digitisation of waqf documentation, the enhancement of waqf asset management and the promotion of waqf investments in the economy. This type of structural reform increases the economic impact of endowments while preserving the tradition of waqf.
Endowments can also play a role in the promotion of entrepreneurship and innovation. The allocation of an endowment to support a business start-up or vocational entrepreneurship training is one of the means by which waqf institutions can contribute to economic diversification. This is particularly important for Oman due to the shift from an oil-based economy. This shift is reflected in the national development vision — Oman Vision 2040. The emphasis is on developing a sustainable economy with a dominant role for the private sector. There is clear potential for endowments to contribute in these areas.
Endowments do face some challenges and obstacles. There are still some waqf assets that are underutilised or poorly managed. Addressing these issues requires strong governance, professional management and public awareness. Ensuring that individuals are encouraged to establish new endowments, as well as the effective utilisation of existing ones, will be crucial.
In summary, waqf endowments are crucial because they have the potential to create an ongoing source of economic support for Oman. In addition to providing a perennial source of funding for social services, waqf institutions help promote equity and support economic diversification and as such, they have material benefits for the economy and society. With persistent reforms and deliberate investment, their relevance and importance are expected to increase and they will become even more significant for Oman’s development.