A Web Of Opportunity

WRITTEN BY Mohamed Ali Chatti in association with Bayan Al Mazroui, Yoseph Alsawady, Ghassen Khelifi and Al-Amin Muttallab

In many Islamic Development Bank (IsDB) member countries, a skills gap or mismatch exists between youth and available employment opportunities – a gap that might not necessarily be bridged by formal education alone. To transform youth into economically productive professionals, who have decent and sustainable jobs in the formal market, a market-based approach to skilling is needed. By applying the awqaf model, the IsDB-Bangladesh Islamic Solidarity Education Wakf (IsDB-BISEW) funds education opportunities throughout Bangladesh using income from IsDB Bhaban, a state-of-the-art commercial and retail complex in Dhaka. To date, this program has awarded 12,778 scholarships, a total of 9,961 computer literacy programs and 6,753 professional courses have been completed, and 5,922 job placements have been made.

In many IsDB member countries, a skills gap or mismatch exists between youth and available employment opportunities – a gap that might not necessarily be bridged by formal education alone. Indeed, to transform youth into economically productive professionals, who have decent and sustainable jobs in the formal market, a market-based approach to skilling is needed.

As a major IsDB member country with a youthful but largely underprivileged demographic, Bangladesh needs to address the issue of youth unemployment. Such a serious problem requires radically different development solutions – such as the model of awqaf. IsDB has taken the lead with this model via the IsDB-Bangladesh Islamic Solidarity Education Wakf (IsDB-BISEW). IsDB-BISEW has piloted the use of awqaf – as a form of Islamic social finance – in a development context.

Historically, awqaf have played a major role in providing sustainable finance for many social services, including education and health. Today, many modern Western institutions, most notably major universities, depend heavily on their endowments. Nevertheless, endowment financing had never before been part of development policy.

IsDB has successfully revitalized the concept of awqaf, introducing awqaf financing as an effective tool to solve difficult socio-political issues. It has achieved this by financing the development, renovation and purchase of revenue-generating real estate assets. This revenue provides financial sustainability for development initiatives.

After testing the model, IsDB institutionalized this approach. It established an innovative impact investment fund based on a unique development model with long-term financial sustainability at its core – the Awqaf Properties Investment Fund (APIF).

Although approximately 30% of APIF projects serve educational purposes, IsDB-BISEW is unique. As one of the earliest awqaf projects in which IsDB continues to actively participate, IsDB-BISEW represents a model reference case of a waqf project. It represents the best features of the awqaf decentralized model as a development tool, which can be tailored towards social interventions that take account of the most intricate details of the local contex

"IsDB has successfully revitalized the concept of awqaf, introducing awqaf financing as an effective tool to solve difficult socio-political issues."

IsDB-BISEW embodies the concept of sustainability. At the top of its governance structure is a mutawalli committee, which meets on a quarterly basis and includes three members nominated by IsDB. The initiative undertakes the funding, formulation and implementation of projects in the areas of education, human resource development and institutional strengthening. Over the last 17 years, it has supported educational programs, targeting the most promising but disadvantaged youth to fill critical skills gaps. 

Furthermore, IsDB-BISEW has accumulated significant financial reserves to use for its expansion. In fact, 30% of its annual income has been consistently directed to a sinking fund (except for two years). With these resources in hand, IsDB-BISEW is currently in a position to implement a new waqf project, partially financed by its own resources and partially by APIF, with land allocated by the Bangladeshi government. 

IsDB-BISEW was established to transform Bangladeshi youth into a productive workforce by strengthening their technical capabilities using existing and emerging technologies for sustainable economic growth and equality. As such, the major barometer of success guiding operations is job placement. 

According to its deed of waqf, IsDB-BISEW aimed to provide financial assistance to serve an educational mandate, supporting the education of Bangladeshi Muslim students, Islamic educational institutions and orphanages in Bangladesh. Unlike most IsDB awqaf projects, in the case of IsDB-BISEW there was no pre-existing organization. Furthermore, the grant component of the project was very large. 

These two factors meant that IsDB played the role of founder rather than simply financier. In this case, the endowment and educational organizations were created simultaneously as a single integrated initiative, which could then develop its own educational programs. Furthermore, the grant component ensured a minimal repayment burden, meaning that funds were immediately available to support educational activities. 

The main output of the project was the construction of a waqf complex in Dhaka, Bangladesh, named IsDB Bhaban. Although the early stages of IsDB-BISEW are traced to an agreement between IsDB and the Government of Bangladesh in 1987, the IsDB Bhaban waqf facility only began operating in 1997. Subsequently, it began to serve its educational mandate in 2003 and continues to do so today. 

"The excellent quality of IsDB Bhaban’s tenants has helped it achieve a high-level and stable financial income."

The IsDB Bhaban complex is a 20-storey mixed-use commercial building and a four-storey computer shopping complex – BCS Computer City. Construction was financed through a USD 10 million grant and USD 3.2 million of financing, both from IsDB. Among the tallest buildings in Dhaka, IsDB Bhaban at Agargaon is one of the most prestigious buildings in the capital, housing United Nations bodies as well as other multinational organizations and companies.

The excellent quality of IsDB Bhaban’s tenants has helped it achieve a high-level and stable financial income. The budget estimates for the financial year July 2018 to June 2019 indicate a total gross income of approximately USD 4.56 million.

In addition to covering expenses, this income has contributed USD 19.6 million in project disbursements since its inception (a yearly average of USD 1.23 million of support to educational programs). Over the same period, 30% of gross income has been channeled into a sinking fund. 

From inputs of a two-acre plot of land from the Government of Bangladesh, in addition to a USD 10 million grant and USD 3.2 million of financing from IsDB, the direct outputs have been impressive. IsDB-BISEW has made USD 19.6 million in project disbursements and sits on a sinking fund of USD 10.68 million, as well as a piece of property estimated to be worth USD 50 million. IsDB-BISEW currently holds approximately USD 160 million worth of assets.

The revenue from IsDB Bhaban is used to deliver various forms of socio-economic benefits for end beneficiaries; the project sponsor and beneficiary organization; awqaf and the philanthropic sector; and the local economy. IsDB-BISEW supports five programs: the IT Scholarship Program; the Vocational Training Program; the Madrasah Program; the Scholarship for 4-Year Diplomas in Engineering Program; and the Orphanage Program.

The IT Scholarship Program aims to transform the large population of unemployed university graduates from non-IT fields into productive members of the workforce by strengthening their technical capabilities in the field of information communication technology. It provides training in employability-focused IT skills that are in demand. The course is intensive, lasting just over one year.

The program trains 1,200 students per year. International IT certifications’ exam fees are covered by the scholarship. But support does not end there: course graduates are helped to find employment. To date, this program has awarded 12,778 scholarships. A total of 9,961 computer literacy programs and 6,753 professional courses have been completed; and 5,922 job placements made. Indeed, IsDB-BISEW’s IT Scholarship Program is held in high regard by employers, who often explicitly mention a preference for IsDB-BISEW graduates in job advertisements.

"IsDB Bhaban’s high-quality facilities have positively impacted the local ecosystem for international organizations and corporations."

The Vocational Training Program aims to transform the lives of high-school leavers – who failed to pursue further education due to financial constraints – by strengthening their vocational skills. It covers fees for training in trades such as electrical works and electronics; machinist work; refrigeration and air-conditioning; and welding and fabrication. Furthermore, it supports the trainees by providing free accommodation and food facilities, as well as a monthly maintenance allowance. At the end of the program, it assists with job placement. To date, this program has awarded 1,288 scholarships. A total of 950 trainees have completed courses and, of those, 872 have found a job. 

The Madrasah Program develops physical facilities in madrasahs and has introduced a Dakhil (Vocational) Program by providing complete facilities under the Bangladesh Technical Education Board (BTEB). Through the program, academic buildings and vocational workshops are constructed; teaching staff recruited; raw materials, tools and equipment supplied; and registration and exam fees covered. There are as many as 27,210 beneficiaries, including 1,068 vocational graduates. Many of these achieved positions in the top 20 of the BTEB final exam from 2011 to 2015. 

The Scholarship for 4-Year Diploma in Engineering Program creates opportunities for Dakhil (vocational) graduates of the Madrasah Program to complete a four-year diploma in engineering in government polytechnic institutes. The program provides TK 2,500 in tuition fees (per semester), TK 2,000 in pocket expenses (monthly), and TK 500 for books and other materials (monthly). A total of 171 scholarships have been awarded, with recipients attending one of the 34 government polytechnic institutes covered. 

The Orphanage Program consists of a single project to date – the Khaiyarbhanga Orphanage in Madaripur. Residential accommodation has been constructed for 100 orphans. Half of the orphanage’s monthly food expenses are covered. Classes are run for the orphans, who have achieved a 100% pass rate in public exams, securing government merit scholarships. 

A total of 1,350 orphans have benefited with 20 to 30 new orphans being enrolled each year. 

At the level of individual end beneficiaries, the benefits attained by trainees are expected to be sustained over multiple generations. As attested by many IsDB-BISEW alumni, especially of the IT Scholarship Program, enrolling in a program represented a once-in-a-lifetime opportunity for them. It completely changed their prospects and ultimately their standard of living, and that of their families. 

The waqf project saw the creation of a new institution, complete with its own governance and management structures. This institution has evolved over time, improving its ability to efficiently and effectively utilize the return from the waqf for educational programs, and thereby delivering on the waqf’s purpose and mandate. 

For the Bangladesh Ministry of Religious Affairs’ Waqf Administration, represented on the mutawalli committee of IsDB-BISEW, this project is a major success. It represents a significant shift in awqaf management in Bangladesh. IsDB-BISEW has received many prizes and honors, raising the profile of awqaf and providing a high-quality role model for emulation within the sector. 

IsDB Bhaban’s high-quality facilities have positively impacted the local ecosystem for international organizations and corporations. As one of the best maintained and secure buildings in Dhaka, IsDB Bhaban provides high-standard facilities, facilitating the work of international organizations (like the UN). The facilities also house the largest specialized computer market in Bangladesh. As such, IsDB Bhaban has helped vitalize the district in which it is situated.

IsDB-BISEW was one of the earliest providers of IT training, helping to fill a critical skills gap in the early 2000s. This arguably helped facilitate the early stages of the Bangladeshi IT/software sector that is now booming. As a result, IsDB-BISEW’s IT Scholarship Program is a model for employment-focused educational/training programs in Bangladesh, influencing the practices of the government and other organizations. 

Overall, IsDB-BISEW represents a model case of an IsDB waqf intervention. It has set an example that could impact future waqf projects executed by IsDB or other players. A few of the lessons and best practices gained from the IsDB-BISEW experience are described below. The oversight and administration of IsDB-BISEW has been vested in a “committee of mutawallis” (effectively a board of directors) constituting six members. Three members represent the Government of Bangladesh, while the other three members are nominated by IsDB. 

Although this structure is a direct result of the partnership between the government and IsDB, and as such is unique, it provides a model of successful governance. The competence and professionalism of the management team is a direct result of the well-designed governance structure and close oversight of the waqf. Management utilizes dashboards and IT systems to maintain quality, oversight and transparency.

One critical lesson learned from the IsDB-BISEW experience is the usefulness of both IsDB and government membership on the board of a waqf project (mutawalli or nazir committee). IsDB membership ensures quality and avoids deviation from the initial deed of the waqf. Furthermore, continued IsDB involvement can boost the standing of the organization, given its continued affiliation with an international organization. 

Government membership of the board facilitates the speedy achievement of objectives by guiding decision making and providing the necessary advice and network to facilitate the waqf objectives. Furthermore, government membership helps transfer expertise in both directions, promoting the idea of waqf in government by providing detailed knowledge of the success of waqf programs. 

More generally, the establishment of a mutawalli/nazir committee as a model for waqf institutional management is superior to the traditional practice of nominating individuals as nazirs, which can lead to corruption or, at the very least, weaken decision making. 

The management office of IsDB-BISEW is housed within the waqf building itself. The management team, headed by the CEO, oversees management of the waqf facility and employs a team of educational consultants to manage the various programs of IsDB-BISEW. This team of consultants ensures that the educational programs perform to the highest standards, with continuous monitoring and improvement. This has produced programs closely tailored to the local context with detailed checks and balances. 

The intricate design of IsDB-BISEW’s educational programs is the result of an organic process of continuous improvement that has taken place since the programs began in 2003. Thus, these practices can be taken as the starting point for future waqf projects with similar educational mandates. They include dependence on third-party service providers for training with strong in-house verification and testing of students’ progress; biometric verification of physical attendance; and payments to providers that are structured around and closely tied to performance and attendance. Employers are continuously surveyed, and curricula updated accordingly. 

Additionally, IsDB-BISEW’s selection of tenants and building use has been highly successful: tenants have been limited to international organizations and multinational corporations to ensure smooth cash flow (the UN, for example, makes its rent payment 100% in advance). As for the podium market, IsDB-BISEW management remained adamant that it should be branded as a highly specialized (computer) market, making it a uniquely attractive venue for computer-related businesses.