Cash Waqfs in Egypt

Various sources have revealed that large cash sums were being dedicated in eighteenth century Egypt to various religious institutions such as the famous al-Azhar as well as to lesser zawiyas and shrines. Cash sums were also allocated for the periodic celebrations of the mawlids of the Prophet and other saints (Behrens-Abouseif, 1994: 158). We are also well informed about a certain Abidin Bey, who was the amir al-hajj in the 1620s and who developed a whole quarter of Cairo known today by his name. The development was achieved through the waqf system, which included extensive real estate as well as cash. The cash was endowed as waqf for the poor of the holy cities.

Concerning modern times, unlike Turkey, the Egyptian cash waqfs were apparently allowed to maintain their judicial personality. For we are informed by Anderson that Article 8 of the so-called Law of Rules Relevant to Waqf, dated 1946 allows the establishment of cash waqfs with stocks and shares (1952: 263). Anderson also says that there has been a shift in Egypt from the more difficult Hanafi law to the Maliki law in waqf affairs.

“ … the Hanafi law previously applicable, only allows a waqf of movables as appendages to immovables or as sanctioned by ancient custom, but the Maliki doctrine which makes no such restriction was plainly more suited to modern life. The view of Abu Yusuf previously dominant, allows the waqf of an undivided share in indivisible property almost without restriction, but the Maliki view, far stricter in this particular, seemed preferable, in view of the disputes and complications to which the contrary policy inevitably gives rise. The enunciation of this principle demanded an express reference to the validity of a waqf of stocks and shares, provided the companies concerned do not transgress the Islamic prohibition of usury. To these provisions, again, parallels may be found in Articles 15 and 16 of the Lebanese Law.” (Anderson, 1952: 263)

We need to elaborate on the difficulty pertaining to the Hanafi law, which allows the waqf of movables subject to ancient custom. Thus, notwithstanding Imam al-Sarakhsi’s report that Imam Muhammad had confirmed the waqf of movables as valid subject to custom existing at his time as well as subject to custom that may arise in the future, Egyptian authorities considered the Hanafi law as too rigid and preferred the Maliki law. There may have been a number of reasons for this. On the one hand, Maliki law may have been preferred to the Hanafi as part of a process to discard the vestiges of the Ottoman era. On the other, the technical difficulty embodied in the concept of custom may also have prompted this process. Since the establishment of a waqf with joint-stock company shares must have been a new practice, the authorities may have preferred the Maliki law, which does not have any restrictions regarding customs.

Ironically, the Maliki law which was preferred in view of its flexibility concerning custom, was also preferred for its relative stringency concerning “the waqf of undivided share”, Mush’a. It is furthermore noteworthy that the Maliki stringency concerning the waqf of Mush’a also led to an indirect confirmation of the modern cash waqfs. That the same provisions can also be found in the Lebanese law is also interesting.

The permission granted by Article 8 to establish cash waqfs with the stocks and shares of joint-stock companies has had important repercussions for ibdal/ istibdal in Egypt. When a waqf property was sold off, the amount of money for which it was traded is called amwal al-badal. Previously, these amwal al-badal were not immediately put to use, they were kept idle for years and depleted by inflation. In the year 1942, for instance, the total amount of idle cash had reached PE 670,938 (Anderson, 1952: 265). Articles 14 and 15 altered this. They authorised the courts to purchase with the amwal al-badal in their treasury any moveable or immovable property, which would provide a new source of income for the waqf in question. Courts may also give permission to invest these amwal al-badal temporarily to generate income in the short run. It is envisaged that a court would do this in response to the request of the interested persons, but in cases where such a request did not materialise within a year from the date when this law came into force, a special court, the

Mahkamat al-Tasarrufat in Cairo, on the demand of the Minister of Justice, was allowed to expend them in purchasing sources of income in the form of moveable or immovable property. If the capital of numerous waqfs had been sold off and the amwal al-badal belonged to these waqfs jointly, then all property so constructed or bought was held jointly by them in proportion to the share of each therein.

Thus, the 1946 Law in Egypt introduced several reforms simultaneously. It first permitted the establishment of cash waqfs with stocks and shares of joint-stock companies (Article 8), and then using this, attacked the problem of idle funds generated by the sale of derelict waqf properties. It is thus permissible in Egypt to sell such waqf properties on the condition that the cash obtained is used to establish a new cash waqf.20

The practice of converting real estate properties of the waqfs into cash was boosted with the Nasserite revolution when the state assumed jurisdiction over all the waqfs through the Ministry of Waqfs. In 1957, Law 152 conferred upon the state the right to substitute money for land, i.e., to practice ibdal/istibdal on a massive scale. This law, in fact, paved the way for a massive land reform and the nationalisation of the waqf lands by transferring the ownership of these lands to the Land Reform Committee. The trustees of the waqfs were issued with Land Reform Bonds for the confiscated lands. When the bonds matured, the capital was to be transferred to the government and invested in development projects. The trustees were then supposed to receive, on behalf of their waqfs, interest due on the bonds and later profits from the invested capital. In this way, the real estate waqfs of Egypt were converted into cash waqfs with shares in government development projects (Baer, 1969: 91-92).

Source: Murat Cizakca, A History of Philanthropic Foundations: The Islamic World From the Seventh Century to the Present. Republished with permission.