Dubai is in talks with Islamic endowments in countries as far afield as South Africa and New Zealand to promote its drive for the industry to become more efficient and profit-oriented, a government official said.
Islamic endowments, or awqaf, receive donations from Muslims around the world to operate social projects such as mosques, schools and welfare schemes. They have amassed huge holdings of real estate, commercial enterprises, cash, equities and other assets, which according to a Dubai government estimate total $1 trillion globally.
But the management of these assets remains primitive in many cases; money is often tied up in property or bank deposits that earn miniscule or even zero returns, imposing economic costs on local economies.
Dubai, which is seeking to expand in many areas of Islamic business, wants to become a centre for modernising awqaf and coordinating their activities in order to make them more financially successful.
"There is a lot of waste," Tayeb Abdel Rahman Al Rayes, secretary-general of Dubai's Awqaf and Minors Affairs Foundation (AMAF), said of the global awqaf sector. Assets are "not utilised properly".
Al Rayes said AMAF was in touch with awqaf in the neighbouring emirate of Sharjah and countries including Bahrain, South Africa and New Zealand to discuss how to modernise the industry.
Dubai plans to establish an international body in the emirate during the first half of next year that would handle such cooperation. It would be managed jointly by members and include non-awqaf charities that operated in similar ways, Al Rayes said.
"It's an authority to look into best practices for all member countries," he said in an interview at his offices. "We want to create an establishment that will bring all awqaf together but won't exclude any other organisation. The members will run this entity - we are only there to set it up."
AMAF hopes to obtain support from the government and private sector to launch the body, in particular to open physical premises, but it would aim to be a self-funded entity, Al Rayes said.
The body would try to coordinate the commercial efforts of awqaf around the globe to give them economies of scale and improve profitability. "One of the roles is to package products under one brand, one logo, so you go out as one," Al Rayes said.
He gestured to six jars of honey on his desk, produced by the commercial arms of six awqaf from around the world; they were of different shapes and sizes and carried different labelling. Dubai hopes to create a single, unified brand for awqaf globally, which could help their commercial arms sell to Muslim consumers and reduce marketing costs.
Zeinoul Abedien Cajee, co-founder of South Africa's National Awqaf Foundation, said Dubai's initiative might have most impact on smaller awqaf and those operating in counries with Muslim minorities.
Awqaf in nations such as Uganda and Malawi as well as South Africa are likely to consider joining the Dubai-based body, he said.
In March, Dubai said it was launching a new asset management firm that would specialise in handling awqaf assets. NoorAwqaf would be owned 60 percent by Noor Investment Group and 40 percent by AMAF; Noor Investment is affiliated to Investment Corp of Dubai, the emirate's flagship investment vehicle.
With AED10m ($2.7 million) of paid-up capital, the new firm would offer services including due diligence, financial analysis and assisting awqaf to develop their strategic objectives, officials said.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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