Developing a waqf-fintech integrated model for funding paddy farming sector in Malaysia

Abstract

Despite the widespread adoption of financial technology (fintech) solutions in various industries, its application is still relatively low in the field of agriculture, especially in the paddy farming sector. This study aims to develop a Waqf-Fintech Integrated Model (WFIM) to achieve two objectives: First, to meet the financing needs of small farmers in developing their paddy land. Second, to assist Waqf institutions in raising funds via cash waqf and fintech for financing the Waqf paddy lands in Malaysia. Although there are several challenges, the liquidity problem seems to be the primary concern that requires rigorous focus in this study. Various studies have revealed that there are a number of Waqf lands in Malaysia that are undeveloped. Hence, this study looks at the possibility of combining Waqf lands, cash Waqf, fintech solutions, such as equity-based crowdfunding and smart contracts on the blockchain to meet the financing needs of small farmers who can develop Waqf paddy lands. Such an arrangement could enhance the local rice production to ensure the problem of food security is tackled in Malaysia. In this study, an Integrated Waqf Fintech Model (WFIM) has been proposed and developed to ensure that financing liquidity supply is available and to automate the process of fund allocation via crowdfunding and Blockchain technologies. This model consists of three stakeholders, namely: Malaysian employees living in the Klang Valley area, Waqf institutions, and small paddy farmers. The study uses interview and survey (mixed method) approaches for data collection. The former was conducted to validate the WFIM model regarding its viability, applicability, challenges, and suggestions for improvement, by conducting interviews with paddy farmers, Waqf institutions, Fintech Experts and academicians. The findings of the interviews revealed that stakeholders from different backgrounds have positive perceptions towards the proposed WFIM. In addition, experts affirmed that a WFIM platform is a viable and relevant model that would have tremendous benefits for paddy farmers. Similarly, the survey examines and investigates the main factors that influence the adoption of the WFIM by Malaysian employees, using the Technology Acceptance Model (TAM). The sample consists of 458 respondents, analysed using Structural Equation Modelling (SEM) to examine causal relationships among the latent variables. The SEM results indicate that perceived usefulness, perceived ease of use, trust, and social finance have a significant and positive influence on intention towards the adoption of WFIM among Malaysian employees. Nevertheless, risk has no significance but a negative effect on intention towards WFIM. Awareness also has no significance but a positive effect on WFIM adoption. Furthermore, the findings of the study reveal that the social influence relationship with perceived usefulness was not significant but had a negative impact on the respondents' intention. It can be concluded that the extended TAM framework explains Malaysian employees' intention to adopt the WFIM. This suggests that when employees have a positive view about the outcome of the WFIM, the stronger their intention is to finance Waqf paddy projects. The findings of this study will provide useful insights for Waqf institutions and policymakers who want to consider investing in the fintech solutions for Waqf and paddy development, hoping to restore the leading role of Waqf in the Malaysian society.