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Zakat as a Poverty Reduction Mechanism Among the Muslim Community: Case Study of Bangladesh, Malaysia, and Indonesia


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Poverty reduction remains the most important challenge for policy makers in Islamic communities. The World Bank (2010: Poverty profile in Muslim world, from estimates that approximately 3 billion people are living in poverty and 46 million more people will come under the income level of US$1.25 a day due to the recent global economic meltdown and slow economic growth rates. Thirty-five percent of these people are Muslims from Islamic countries. The global Muslim community has an essential role to play in addressing the injustice of global poverty through zakat. Zakat is an Islamic faith-based institution and is being underutilized for poverty reduction in many of these poor Muslim countries. Since zakat constitutes one of the pillars of Islam, it is logical to assume that policy makers among Muslims should pay serious attention to it. However, that is not the case for many Muslim countries and this paper will show that not all Muslim countries are seriously applying zakat in its strategy of combating poverty. This paper will specifically examine the role and effect of zakat in three Muslim countries (Bangladesh, Malaysia and Indonesia) providing the facts of countries that practise zakat in comparison with those that do not.
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Zakat as a Poverty Reduction Mechanism
Among the Muslim Community: Case Study
of Bangladesh, Malaysia, and Indonesia
Isahaque Ali
and Zulkarnain A. Hatta
Department of Sociology and Social Work, Gono University, Dhaka, Bangladesh;
Department of Social Work, School of Social Sciences, Universiti Sains Malaysia, Penang, Malaysia
Poverty reduction remains the most important challenge for policy makers in Islamic communities.
The World Bank (2010: Poverty profile in Muslim world, from
estimates that approximately 3 billion people are living in poverty and 46 million more people will
come under the income level of US$1.25 a day due to the recent global economic meltdown and
slow economic growth rates. Thirty-five percent of these people are Muslims from Islamic coun-
tries. The global Muslim community has an essential role to play in addressing the injustice of glo-
bal poverty through zakat.Zakat is an Islamic faith-based institution and is being underutilized for
poverty reduction in many of these poor Muslim countries. Since zakat constitutes one of the
pillars of Islam, it is logical to assume that policy makers among Muslims should pay serious atten-
tion to it. However, that is not the case for many Muslim countries and this paper will show that
not all Muslim countries are seriously applying zakat in its strategy of combating poverty. This
paper will specifically examine the role and effect of zakat in three Muslim countries (Bangladesh,
Malaysia and Indonesia) providing the facts of countries that practise zakat in comparison with
those that do not.
Keywords Bangladesh; Indonesia; Malaysia; poverty; spirituality; zakat
Zakat is a mechanism and social work is the practice of assisting people to solve poverty
and make social change at the community, organizational, and international levels. This
paper contends that zakat should be incorporated into the Muslim community, while
social work provides knowledge for poverty reduction and the overall development strat-
egies. Drawing distinct a dichotomy between these two, they can play an important role
in wealth redistribution to enable as well as empower the poor to be more independent
and to generate income.
Correspondence concerning this article should be addressed to Isahaque Ali, Department of Sociology and Social
Work, Gono University, Mirzanogor, Savar, Dhaka 1344, Bangladesh. E-mail:
©2014 The Authors
Asian Social Work and Policy Review ©2014 Wiley Publishing Asia Pty Ltd 59
Asian Social Work and Policy Review 8(2014) 59–70
Poverty in the majority of Muslim countries is severe, with more than 50% of their
populations being extremely poor. Islamic countries with over 1.2 billion people com-
prise six regions: North Africa, Sub-Saharan Africa, the Middle East, Central Asia,
South Asia, and South-East Asia. Except for a handful of countries in South-East Asia
and the Middle East, there are high and rising poverty levels among them. Part of the
explanation for the poverty is unequal income distribution and low productivity. In
Indonesia alone, over half of the population (about 129 million) are poor or vulnerable
to poverty with incomes less than US$2 a day. The following are percentages of poverty
among the poorest Muslim countries: Burkina Faso (46.4%), Chad (64.0%), Guinea
(70.1%), Gambia (61.3%), Mali (63.8%), Mozambique (74.7%), Mauritania (46.3%),
Niger (63.0%), Nigeria (64.4%), Sierra Leone (70.2%), and Uganda (51.5%). The inci-
dence of poverty in Bangladesh (45%), Benin (47.3%), Comoros (46.1%), Guinea-Bissau
(48.8%), and Uzbekistan (46.3%) is also very high (World Bank, 2010). Bangladesh
and Pakistan account for 122 million Muslims who live below the poverty line (Islamic
Development Bank, 2011).
The above statistics underestimate the percentage of poverty in all these countries
compared with their national poverty lines, which indicates the real picture of poverty in
the respective countries.The World Bank (2010) report overestimates the percentage of
poor population (under $1.25 a day) in Benin, Burkina Faso, Guinea-Bissau, and
Uganda compared with their national poverty lines.
Against the global benchmarks, 400 million of the 1 billion people estimated to be in
absolute poverty live in 31 of the 56 members of the Organization of Islamic Countries
(OIC); i.e. 40% of the world’s poor live in Muslim countries. In relative terms, out of 975
million people living in these countries, 400 million or 40% are below the absolute pov-
erty line. In other words, the incidence of poverty in these 56 OIC member countries is
twice the average of the developing world (Khan, 2010).
Poverty scenario in Bangladesh, Malaysia, and Indonesia
Each of the abovementioned countries has a different scenario of poverty. Although
some are relatively better off than others, poverty still remains in all of the three coun-
tries. In Bangladesh, poverty is one of the major social problems. Poverty has multidi-
mensional characteristics in Bangladesh. The level of poverty is relatively high due to the
fact that employment opportunities are limited and average income level is low. Poverty
in Bangladesh is not only a phenomenon of low income, but also a phenomenon of the
poor quality of and limited access to basic services such as food, education, adequate
healthcare and sanitation, proper housing, and pure drinking water. In terms of poverty
and inequality, large differences exist between rural and urban areas (Islam, 2004). Pres-
ently, nearly 45% of the population are living below the poverty line (Bangladesh Bureau
of Statistics, 2011). Poverty reduction remains the most daunting challenge for Bangla-
Although Malaysia is not facing the severity of poverty in Bangladesh, the country
still has pockets of poverty. Severe poverty was reduced from 1.2% in 2004 to 0.7% in
©2014 The Authors
Asian Social Work and Policy Review ©2014 Wiley Publishing Asia Pty Ltd
Isahaque Ali and Zulkarnain A. Hatta Zakat and Poverty Reduction
2010. The incidence of overall poverty fell from 5.7% in 2004 to 3.7% in 2011 (Ministry
of Finance Malaysia, 2011). The global financial crisis of 2008 brought enormous ramifi-
cations for the world economy. Like many economies in South-East Asia, Malaysia cur-
rently faces a number of challenges that could have a significant impact on its economic
growth, development, and poverty reduction.
Unlike Malaysia and Bangladesh, the poverty performance in Indonesia reveals a
different scenario. In the case of Indonesia, poverty and inequality still exist on a large
scale, and are pronounced in rural areas and in the eastern part of Indonesia. In 2004,
with a population of 220 million, the poverty rate in Indonesia was 16.7%. The tsunami
and earthquake in Aceh and North Sumatra has affected at the end of 2004, and created
new poor to the country. To assist authorities combat poverty, Indonesia joined and
signed the Millennium Development Goals (MDGs) global agenda of poverty reduction
and agreed to accomplish MDGs targets by 2015. The agenda of MDGs has been incor-
porated into the National Medium-Term Development Plan.
The historical path of poverty reduction and the social protection agenda in Indone-
sia were influenced by the impacts of the financial crisis of 2008. The country’s develop-
mental programs took a severe beating and the nation suffered both economically and
socially. The financial crisis affected all sectors of Indonesia’s development, and predomi-
nantly extended unemployment in rural and urban areas (Suharto, 2008). In addition,
1.2 million new poor affected by the disaster were added to the number of poor people in
Indonesia. The hike in food and oil prices in 2005 also created new poor people. With all
the mishaps that Indonesia has faced during the last few years, the poverty rate in 2006
increased to 17.8%.
Using the World Bank’s standard of poverty line, which is US$1.25 per day, the total
number of poor people in Indonesia who are still under the poverty line was about 40
million people in 2008 (CBS, 2009). The path to recovery is difficult, and Indonesia is
slowly recovering from the setbacks of the world economic crisis and natural disasters.
In 2010 the poverty rate dropped to 13%, which bodes well for the country.
In summary, the three countries present different scenarios. In Bangladesh, apart
from the phenomenon of low income, there exist also the poor quality of and limited
access to basic services. In Malaysia, while poverty has been reduced dramatically, due to
the global economic downturn, the impact on its economic growth has negative ramifica-
tions on poverty reduction efforts. Indonesia on the other hand encounters double chal-
lenges of trying to combat existing poverty while at the same time adding the new poor
to its already heavily populated pool of poverty-stricken people.
Principles of zakat
The religion of Islam has a mechanism, which is called zakat, to assist in mitigating
against poverty. Zakat is an important institution in the socioeconomic framework of
Islam. Zakat is an Arabic word which means “purity” and “cleanliness”, and it is an act
of giving away part of one’s wealth to the poora contribution paid once a year on
savings of at least 2.5%. In doing so, one purifies one’s wealth and soul.
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Isahaque Ali and Zulkarnain A. Hatta Zakat and Poverty Reduction
Zakat is one of the five pillars
in Islam; hence, it is obligatory on every Muslim who
has the financial means (nisab). Nisab is considered an amount equal to the essential
needs of a person or family for 1 year. Basic needs refer include any or all of the follow-
ing: food, clothing, housing, medical treatment, and transportation for oneself and one’s
dependants. Dependants include spouses, children who are unable to earn a living, and
parents who are in need. In many modern societies, nisab is considered equivalent to a
governmentally determined poverty threshold.
Islam has a code of life which includes, among other things, the economic side of life.
Consequently, the religion has its own scheme of mitigating poverty (see Fig. 1). Zakat is
one of the basic principles of the Islamic economy, based on social welfare and fair distri-
bution of wealth.
It is the right of the poor who do not have enough to take care of their basic needs,
the needy whose basic needs are met but their income does not take care of other impor-
tant needs, for those whose sole job is to collect and distribute the zakat funds, for freeing
a Muslim person from bondage (whether a slave in the old times, or a prisoner of war in
our times), for those who are indebted and cannot pay their debts, and for the wayfarer
(ibn as-sabil) who is stranded in a foreign land and cannot get enough money to go back
to their homeland, even though he might be rich but is cut off from their wealth.
Religion and social work practice
The helping profession has been in existence universally from time immemorial. Prior to
the advent of mainstream religion, communities have been helping each other. With the
coming of various religions, mosques, temples, churches, and synagogues have been the
major institutions in these endeavours. Many associated with various religions are active
in assisting the community at large and their specific constituents in getting aid, subsidies,
Poverty Reduction Scheme in Islam
Positive Measures Preventive Measures Corrective Measures
Income Growth
Functional Distribution
of Income
Equal Opportunity
Control of Ownership
Prevention of
Transfer: Zakat
Transfer: Charity
State Responsibility
Figure 1 Poverty reduction scheme in Islam. Source: Hassan, 2010.
There are five pillars in Islam, namely, shahadah (testimony of faith), solah (five daily prescribed
prayers), siyam (fasting in the month of Ramadan), zakat (giving of charity), and hajj (performing
a pilgrimage to Mecca once in a lifetime if one can afford it).
©2014 The Authors
Asian Social Work and Policy Review ©2014 Wiley Publishing Asia Pty Ltd
Isahaque Ali and Zulkarnain A. Hatta Zakat and Poverty Reduction
community work, and counselling. These organizations have been delivering their ser-
vices based on their respective religious values. Their social support and services include
providing shelter and care to orphans, people with a physical or mental disability, elderly
people, the poor, problem children, women, and disaster victims, to name some.
Social work as it is understood now emerged in the West during late 19th century
as a charity-based practice and today has been transformed into a rights-based practice
(Hatta & Saad, 2010). Practising social workers, however, appear to have little training
in religious issues and values (Sheridan, Bullis, Adcock, Berlin & Miller, 1992), and a
number of scholars advocate a greater presence of religion in the social work curriculum
and the origin of the definition of social work from religious values (Netting, Thibault &
Ellor, 1990; Sheridan, Wilmer & Atcheson, 1994).
The ultimate goals of zakat are to reduce inequality and to establish human rights,
social justice, and empowerment the poor by poverty reduction in Muslim communi-
ties. This sense of collective responsibility is further reinforced by how Muslims view
their place within society. Islam, it should be emphasized, is not concerned with the
welfare of the individual alone; it seeks to achieve a wider societal well-being. While
ensuring the individual’s freedom, it places equal stress on mutual responsibility. This
principle, in turn, is two-dimensional. The individual achieves balance between
thought and action (internal), while caring for the collective welfare of society (exter-
nal) (Azmi, 1991).
On the other hand, the primary mission of the social work profession is to enhance
human well-being and help meet the basic human needs of all people, with particular
attention on the needs and empowerment of people who are vulnerable, oppressed, and
living in poverty. A historic and defining feature of social work is the profession’s focus
on individual well-being in a social context and the well-being of society. Fundamental
to social work is attention to the environmental forces that create, contribute to, and
address problems in living. Social workers promote social justice and social change with
and on behalf of human beings. The term “human beings” is used inclusively to refer to
individuals, families, groups, organizations, and communities. Social workers are sensi-
tive to cultural and ethnic diversity and strive to end discrimination, oppression, poverty,
and other forms of social injustice. These activities may be in the form of direct practice,
community organization, supervision, consultation, administration, advocacy, social and
political action, policy development and implementation, education, and research and
evaluation. Social workers seek to enhance the capacity of people to address their own
needs. Social workers also seek to promote the responsiveness of organizations, commu-
nities, and other social institutions to individuals’ needs and social problems for poverty
reduction (NASW, 2008).
Religious forms of charity or “financial worship” have historically played a key role
in funding charity and philanthropy at the individual and institutional levels in South
Asia, with zakat being the largest source of such funding in Muslim communities (Kir-
mani, 2012). The religious values and beliefs could play an important role in motivating
social workers, individuals and organisations to respond to people’s immediate needs
and partially filling social services that have been left by the state (Kirmani, 2012).
©2014 The Authors
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Isahaque Ali and Zulkarnain A. Hatta Zakat and Poverty Reduction
Zakat and poverty reduction in the Muslim community
In most contemporary Muslim countries, zakat is collected through a decentralized and
voluntary system, where eligible Muslims are expected to pay the zakat. Under the volun-
tary system, zakat committees are established which are tasked with the collection and
distribution of zakat funds. In a handful of Muslim countries, zakat is obligatory, and is
collected in a centralized manner by the state. Ideally the zakat institution should be
under the responsibility of the government or it also can be under the special Muslim
supervisory body that has been appointed by a government (Lubis, Yaacob & Omar,
2011). The governments of Muslim countries should be accountable in collecting and dis-
tributing zakat funds for a few reasons. Zakat distribution by the government will ensure
the dignity of the needy and poor people.
Zakat constitutes the basic institution and addresses the needs of the poor and needy
in the form of a permanently working social and economic security system. Zakat, how-
ever, is not only an institution for the purpose of poverty eradication. Poverty can be
tackled through other means such as sadaqah (Hassan & Khan, 2007). Zakat is different
from sadaqah. The term sadaqah refers to non-obligatory actions, where it is left to a
man’s faith and charitable nature to give without being asked believing that the Creator
will compensate him, and hoping for a greater reward. It is the act of voluntarily spending
one’s resources with one’s closest relatives or next of kin, as well as with other members
of the human community, including those of other faiths, and also includes charitable
deeds aimed at providing continuous flow of reward after one’s death (Haq, 1996).
By having a centralized body to disburse zakat funds makes the process systematic
(Yusuf, 2000). Countries such as Indonesia, Brunei, Sudan, Yemen, and Saudi Arabia
already have compulsory zakat administration, while other countries such as Malaysia,
Egypt, Jordan, and Kuwait have voluntary zakat administration (see Table 1) (Sadeq,
Zakat and poverty reduction in Bangladesh, Malaysia, and Indonesia
In countries such as Bangladesh, foreign aid from donors contributes a significant por-
tion of the development budget. If zakat funds are properly managed, these funds could
reduce foreign aid and significantly reduce the debt burden (Hassan & Khan, 2007). Sev-
eral economists projected that, in 20042005, potential zakat funds could have contrib-
uted up to 43% of the annual development plan of Bangladesh. For example, the GDP
of Bangladesh was US$163.72 billion (using purchasing power parity, PPP) in 2005, and
the Muslim population was 88%; therefore, the adjusted GDP for the purpose of zakat
estimation was US$144.08 billion (Shirazi & Amin, 2009).
In the private sector, there are a number of volunteer organizations mostly associated
with religious associations. However, many of these associations do not have transpar-
ency in zakat funds management. In the absence of transparency and accountability,
people are weary and reluctant to contribute to zakat. These ineffective institutions and
©2014 The Authors
Asian Social Work and Policy Review ©2014 Wiley Publishing Asia Pty Ltd
Isahaque Ali and Zulkarnain A. Hatta Zakat and Poverty Reduction
practices have an adverse effect on the poor as they are denied access to the benefits of
zakat. In addition, the planners of poverty alleviation strategies, both in the public and
private sectors, are not seeing the urgency to adopt zakat in poverty reduction policies.
Part of the reason could be their lack of proper Islamic understanding and faith in zakat,
and their perception that any religious ideas be seen as “non-progressive”.
Although the government of Bangladesh is very keen to alleviate poverty, it has never
seriously looked at the institution of zakat as a national strategy for poverty reduction.
For the fiscal year 20122013, the government of Bangladesh did not include zakat as
one of the poverty reduction programs (Bangladesh Ministry of Finance, 2012).
Malaysia does not have a compulsory zakat law, but the collection system that is in exis-
tence is systematic. Nonetheless, the total zakat collection remains small compared with
the number of the Muslims, who represent 61% of the population. For example, zakat
collection in 2009 was US$0.4 billion compared with US$37.27 billion total tax collection
and US$54 billion in total government revenue (Departments of Statistics Malaysia,
2011). An integrated approach is required to strengthen the presence of the zakat system
in Malaysia’s socioeconomic development. First, similar to tax deduction on salaries,
perhaps there is a need to pass a law to make zakat deductions compulsory on the
incomes of all “zakatable” Muslims.
Zakat management in Malaysia is under the authority of state government. The
roles of zakat institution are not only to collect the zakat dues but also to distribute the
zakat funds to the zakat recipients, so called asnaf.Zakat is being collected from variety
of sources such as individuals as well as corporate companies, while later on is distributed
to the eight groups of recipients (asnaf) mentioned above” (Lubis et al., 2011: 3). Malay-
sia’s authorities have created zakat institutions for zakat contributors and zakat recipi-
ents in collecting and distributing zakat efficiently. Presently, the development of zakat
institutions in Malaysia is constantly improving in terms of zakat collection (Hairunni-
zam & Radiah, 2010). Additionally, Yaumidin (2009) established the resources needed
Table 1 Poverty of compulsory zakat and non-compulsory of zakat collection in Muslim countries
Compulsory zakat
collection by state
People living below
poverty line (%)
zakat collection by state
People living
below poverty line (%)
Saudi Arabia N/A Sierra Leone 70.2
Brunei N/A Chad 64.0
Libya N/A Mali 63.8
Indonesia 13 Niger 63.0
Pakistan 24 Gambia 61.3
Sudan 40 Burkina Faso 46.4
Yemen 40.2 Bangladesh 45.0
Malaysia 3.7
Source: World Bank, 2010.
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Asian Social Work and Policy Review ©2014 Wiley Publishing Asia Pty Ltd 65
Isahaque Ali and Zulkarnain A. Hatta Zakat and Poverty Reduction
for poverty reduction and potential zakat collection for Malaysia and Indonesia. She also
mentioned that Malaysia performs better than Indonesia. The total of zakat collection in
Malaysia has been increased drastically in every year. In Malaysia, the zakat manage-
ment authority is called the Center of Zakat Collection (Pusat Urus ZakatPUZ) and is
under the supervision of each state and territory (Malaysia has 13 states and one federal
The system will be able to generate up to approximately US$1.617 billion zakat on
income alone calculated by multiplying the estimated average zakat of US$365 per per-
son per year (Osman, 2011). According to the Departments of Statistics Malaysia (2011),
there are 17.4 million Muslims between the ages of 1564, of which 64.5% participate in
the labour force, and only the highest income earners (60%) are “zakatable.” US$1.617
billion zakat on income alone is sufficient to bring about major poverty reduction or
finance a large-scale and comprehensive community development project (Shariff, Man-
sor, Hazlina & Jusoff, 2011). Zakat will be effective as a supplement to eradicate poverty
if the zakat collected is equal to at least 3.1% of national GDP. By using these funds, it is
fully expected that the number of poor can be enormously mitigated (Shariff et al.,
2011). Malaysia can be considered as one of the outstanding and excellent countries in
managing and distributing zakat compared with other Islamic countries. The result of
peace and national development helps to reduce poverty successfully (Lubis et al., 2011).
As far as Indonesia is concerned, it has embarked on incorporating zakat into the devel-
opment plan for effective poverty reduction. It has two entities called LAZNAS and
BAZNAS to administer zakat collection and distribution. Unfortunately, the grievance
from the masses is the existence of corruption in those entities which leads to many not
wanting to use their services. However, with improvements in efficiency and rooting out
corruption within the administration, public confidence will return.
Zakat is now one of the most important instruments for increasing the wealth of the
poor in contemporary Indonesia, albeit the problem of mismanagement within the two
institutions entrusted. As the collection of funds grows significantly, the utilization of
zakat funds has now been transformed from a charity purpose into social empowerment
and economic development. Nationally, the amounts of zakat funds that have been
collected by all the zakat institutions have risen significantly for several years. Collected
zakat funds increased from approximately 80 billion rupiah (US$8.4 million) in 2002 to
414 billion rupiah (US$43.9 million) in 2006, or an average annual growth of 51.65%
during the period 20022006. The financial experts of the country as well as the world
have forecast that the financial status of Indonesia is expected to be rosy in coming years.
Indonesian GDP continued to grow strongly at 6.5% during 2011, when GDP per capita
was US$4325. In addition, GNI per capita was US$2500 in 2011.
In Islam, zakat plays an important role in poverty alleviation and socioeconomic devel-
opment. Zakat is an act of piety through which one expresses concern for the well-being
©2014 The Authors
Asian Social Work and Policy Review ©2014 Wiley Publishing Asia Pty Ltd
Isahaque Ali and Zulkarnain A. Hatta Zakat and Poverty Reduction
of fellow Muslims, as well as preserving social harmony between the wealthy and the
poor. It attempts to promote an equitable redistribution of wealth, and fosters a sense of
solidarity among members of the community. It is believed if the zakat system is enforced
in letter and spirit then extreme poverty can be eliminated.
As a consequence of giving zakat, notwithstanding that it is an altruistic and benevo-
lent act, there are spiritual dynamics involved. Those who pay zakat are enhanced spiri-
tually, and, at the worldly level, their wealth is cleansed. By “cleansing” wealth, barakah
(grace) descends on both the giver and receiver. Barakah is the beneficent force or energy
from God that flows through the physical and spiritual spheres as prosperity, protection,
and happiness. As can be seen in the three countries, the Muslims of Malaysia and Indo-
nesia are giving zakat. In Malaysia, their zakat funds are being handled by a responsible
competent body and the poverty rate is relatively much lower than those in Indonesia
and Bangladesh. People in Indonesia are eager to give zakat, but the problem lies within
the less than ideal situation with the administration. Unfortunately, the system of han-
dling zakat in Bangladesh leaves much room for improvement. There are no government
initiatives to collect the zakat funds. Due to the corruption and non-existence of an
administrative body, zakatable people are reluctant to give. Consequently, the barakah
as promised by God is not manifesting to those countries.
The zakat system that has been established and practised in Malaysia, and Indonesia
to a lesser extent, can become a role model to other Muslim countries around the world.
In the age of transparency and accountability, people need to be assured that their contri-
butions benefit the target group. If majority are not giving, by the logic of how barakah
operates, the Creator is not cleansing the wealth nor making it grow (see Fig. 2). This
article has attempted to present circumstantial evidence of the relationship and correla-
tion between giving of zakat as government policy and the poverty of the country.
For societies such as Bangladesh, Malaysia, and Indonesia where the majority are
Muslims, zakat has to play a major role in the process of poverty reduction through poli-
cies and programs. Muslims in these three countries are believers in the power of spiritu-
ality, and it is thus logical to integrate zakat, which has spiritual implications on the
country’s poverty situation. Once a community and government begin to recognize and
acknowledge the role and the importance of zakat institutions as part of Islamic financial
institutions, it is the contention of this article that poverty can be mitigated.
“Faith-based organisations” (FBOs) are gaining increasing attention within development
circlesamong practitioners, funders, and policymakers as well as academics. It is
argued that zakat should be incorporated into poverty reduction programs. The success-
ful implementation of zakat collection and distribution is expected to reduce poverty and
improve living standards of poor citizens in Bangladesh, Malaysia, and Indonesia and
become a model for many other similar countries. Zakat is a spiritual tax paid by every
Muslim under any circumstances. Therefore, the acceptance of zakat funds is relatively
stable. This will ensure the sustainability of poverty reduction programs, which typically
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Isahaque Ali and Zulkarnain A. Hatta Zakat and Poverty Reduction
require a relatively long period of time. Because of these characteristics, the presence of
zakat in the socioeconomic framework of Islam will become a strong basis for sustain-
able poverty reduction. Therefore, social workers could use of zakat as a model for pov-
erty reduction. In a responsible government ruled by Muslims, it is incumbent upon the
government to implement zakat. Muslim social workers have to acquaint themselves with
the principle of zakat from both the material and spiritual aspects of zakat. The needy
are the recipients of zakat (asnaf). Hence, Muslim social workers must be active advo-
cates of zakat. They have to find ways to influence poverty reduction policies to include
zakat. As researchers, policymakers, practitioners, and social workers should be dele-
gates in the society for the antipoverty work. Social workers should be familiar with the
basic beliefs, values, and rituals of Islam as it is practised in the client’s milieu. Social
workers could learn the manner from the religion which could be integrated into a help-
ing relationship for social work profession. In conclusion, the multi-faceted nature of
poverty requires a multi-dimensional approach to poverty reduction based on the devel-
opment of human potential, creativity, and resourcefulness of the poor, building upon
their resources, capabilities, and survival skills.
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Figure 2 The symbiotic relationship between barakah and zakat.
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Isahaque Ali and Zulkarnain A. Hatta Zakat and Poverty Reduction
... Following that, good zakat collection and distribution is supposed to eliminate poverty and enhance poor citizens' living standards (Ali & Hatta, 2014). It has also been established that zakat distribution has a favorable impact on poverty incidence, severity, and extent. ...
... Hence, implementing zakat adds to the welfare of university students and provides numerous benefits to them, since it can assist them in resolving their financial difficulties. This result is supported by Ali and Hatta (2014), Anis and Kassim, (2016), Irijanto et al. (2013), and Malik (2016) which stated that zakat has a positive influence on lowering wealth inequality. Similarly, Suprayitno et al. (2017); and Ahmad Razimi et al. (2016) stated that the successful implementation of zakat collection and distribution is expected to increase the quality of education, reduce poverty and maintain the stability of socioeconomic. ...
... This indicates that the growth of poverty has reach across the globe. In combating poverty, religions have made efforts throughout history, through engagement of religious institutions (Tomalin, 2018;Etim & Thompson, 2021) or encouragement of charity work for individual believers (Abdul-hamid, 2019; Ali & Hatta, 2014), but the literature about the relationship between religion and poverty is quite diverse and not in agreement on whether it has a positive, negative, or neutral impact. Schweiger (2019, p. 2) identifies three areas of inquiry into the connection between religion and poverty, including the impact of religious affiliation on the socio-economic status of the population, the impact of religion of the believers' perceptions of self and society and their fight against poverty, and the role of faith-based organisations in poverty alleviation. ...
... For instance, Waqf (an endowment made by Muslims to a religious cause) has been found a lot less effective in comparison to takaful (members contributing money into a pool system against potential losses) in Malaysia (Haneef et al., 2013, p. 1), while it has been found very effective in poverty reduction in Liberia (Paye, 2017). Similarly, Zakat or Zakah (funds received from the wealthy to be paid to the needy) is considered a poverty reduction initiative (Ali & Hatta, 2014), while it is found to exacerbate poverty in Nigeria (Sakanko & David, 2018). As evident here, the debate between theoretical and empirical research on the impact of religion on poverty is still ongoing. ...
Human society is currently facing multipronged grand challenges whose impacts transcend national and regional boundaries. Of these, environmental degradation is an increasingly complex challenge with grave consequences for the social and economic realms of life. It is being increasingly recognised that the existing approaches to solving the environmental crisis are insufficient and piecemeal, and there is a dire need to explore new philosophical paradigms to charter a sustainable development pathway. In consonance with other major religions of the world, Sikhism is increasing taking a “green turn” through re-interpretation of scriptural sources and drawing on elements of Sikh philosophy. The field-based research documents the role of Sikh organisations in promoting ecological consciousness and creating new forms of environmental governance.
... Dr. Yunus's new 'Social Business' concept after the worldwide acclaimed micro-credit and the Government's ongoing financial inclusion programmes are in the experimental stage of reducing poverty in Bangladesh. But the potentiality of alternative Islamic tools like zakat and Wakf is overlooked in practice here (Ali & Hatta, 2014). ...
... Muslims practice their Islamic obligations more religiously during this month. For example, 'salah' (namaz/prayer) is an obligation on every Muslim five times a day but many Muslims do not offer salah (prayer) on a regular basis (Ali & Hatta, 2014). However, Muslims who do not offer salah (prayer) regularly in other months offer salah (prayer) more religiously in Ramadan. ...
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Religious festivals are special occasions celebrated with religious contemplations and spiritual contemplations. Communities having high Religio Spiritual contemplations for such festivals are often targeted by intensive marketing campaigns based on TV advertisements. These high-stake religious festivals may consume a significant proportion of the annual advertising budget. When Religio Spiritual insights of the consumers are neglected in designing a TV advertisement, it can lead to “Irritation” of the consumers and can affect consumers’ Attitude towards Advertising. This irritation in religious communities may result in protests that can even lead to banning of TV advertisements by the regulators. Consumers’ Attitude towards Advertising is also influenced when TV commercials contain unnecessary Entertainment, inappropriate casting of celebrities with less Credibility, cluttered Information, and phony claims related to Good for Economy. A conceptual framework was developed on the basis of Theory of Reasoned Action to measure the effect of Religio-Spiritual Insights on consumers’ Attitude towards Advertising with its determinants, such as Entertainment, Credibility, Information, Irritation, and Good for Economy. Model fit indices (e.g. CFI, TLI, and RMSEA) were analyzed to validate the model and structural model was used to test the hypotheses. Divergent opinions about the relationship between religiosity and spirituality have made the measurement of Religio-Spiritual contemplations problematic. Opinions range from spirituality being broader than religiosity, or religiosity being broader than spirituality, or the two being distinct or overlapping. Relationship between religiosity and spirituality has been variously described as interchangeable, intertwined, or inconsistent. Existing instruments that measure religiosity or spirituality have been developed without a formal specification of relationship between the two constructs. Therefore, consumers’ Religio-Spiritual Insights cannot be empirically tested with Attitude towards Advertising by using the existing instruments religiosity and spirituality. This study proposes a new methodology of ‘Construct Differential Analysis’ to formally specify the relationship between religiosity and spirituality. Using the formal relationship so obtained, this study uses exploratory sequential mixed methods research design to develop the instrument of Religio-Spiritual Insights. In-depth XIII interviews with consumers were conducted during the religious festival of Ramadan to identify the categories of Religio-Spirituality using Grounded Theory approach. Categories were converted into constructs and codes into items with the help of a panel review. The newly developed instrument of Religio-Spiritual Insights was validated by checking its reliability and validity using SPSS 21 and AMOS 24. Confirmatory Factor Analysis was conducted to validate the newly developed higher order construct of Religio-Spiritual Insights using the Covariance Based Structural Equation Modeling (CB SEM) approach. The results suggest that the instrument measures the construct Religio Spiritual Insights, which significantly acts as a mediating variable between consumers’ Attitude towards Advertising and other constructs, such as Credibility, Information, Entertainment, and Good for Economy. However, result suggests a non-significant mediating effect of Religio-Spiritual Insights between Irritation and consumers’ Attitude towards Advertising. The key finding of this study suggests that researchers can use ‘Construct Differential Analysis’ to formally specify relationship among other constructs whose relationships have been informally or vaguely defined. This study validates the new instrument of Religio-Spiritual Insights and reveals several dimensions, which are Association with Higher Power, Beliefs & Practices, Self Actualization, Knowledge & Meaning, Heart & Mind Involvement Experience, and Interconnectedness. The findings also suggest marketers and policymakers that advertisements having Religio-Spiritual Insights decrease Irritation of consumers and such advertisements can be frequently aired during a religious festival to attract more consumers. Further research can be conducted to test the significance of Religio Spiritual insights during the celebrations of different religious festivals.
... Zakat compliance in Islamic perspective (Abu-Tapanjeh, 2009) Corporate governance from the Islamic perspective: A comparative analysis with OECD principles (Ali & Hatta, 2014) Zakat as a poverty reduction mechanism among the Muslim community: Case study of Bangladesh, Malaysia, and Indonesia (Lessy et al., 2020) Philanthropic zakat for the disadvantaged: Recipient perspectives from Indonesia (Chong & Liu, 2009) Islamic banking: Interest-free or interest-based? (Abdul Rahman, 2007) Pre-requisites for effective integration of zakah into mainstream Islamic financial system in Malaysia (Maali et al., 2006) the Islamic law of human conduct. ...
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This research provides a comprehensive historical and present development of zakat literature through bibliometrics analysis extracted from the Scopus database using Publish or Perish (PoP), RStudio, and VOSviewer. This study confirms that the literature on zakat has significantly increased during the last fifty years (1964-2021). This research identified that zakat literature had been comprehensively discussed by researchers across the nation from six aspects of research, namely the governance of zakat institutions ; zakat as a poverty eradication tool; zakat compliance in an Islamic perspective; zakat as a social security scheme; the intention to pay zakat; and the distribution of zakat. This study confirms that Malaysian scholars and educational institutions have demonstrated a strong research commitment to the theme of zakat.
Abstract Poverty is still a major global multifaceted issue in recent era. The promise to bring wellbeing to all human being remained unfulfilled, despite of changes in development paradigms in the last half of the twenty-first century. Bangladesh, for example, has achieved GDP at 8% in 2019; however, poverty rate according to Bangladesh Bureau of Statistics (BBS) is still high where around 63 million poor and 21 million still living in extreme poverty in 2016. If the lower middle-income number of US$3.20 is applied, nearly half of the population in Bangladesh would be in below poverty line. The gap between the rich and the poor has widened, while the economy has grown. In addition, nearly 16 million people of Bangladesh cannot meet their basic needs based on the present modest criteria. The multidimensional poverty is linked to poor governance; corruption of senior government officials and politicians; unemployment; lack of technical education; ill health; chronic diseases; dowry; incapability of bread winner due to illness, accidents, old age, natural disaster, crop damages, increased prices of essentials, business loss, and limited scope of mass people’s participation in local government and public services in Bangladesh. The objective of this conceptual paper is to analyze the social dimensions of poverty, its major causes and consequences in Bangladesh. Subsequently, the paper highlights some of the possible mechanisms to minimize the different dimensions of poverty, and further suggests the need for formulation of policies and programs based on the actual needs, specifically in the context of demand-driven countries like Bangladesh. It is also recommended that all stakeholders especially government policymakers, NGOs, and development partners should partake in developing suitable plans for better income opportunity, thus enhancing the capacity to manage the existing vulnerabilities due to poverty. Keywords Bangladesh -Poverty -Social dimensions -Multidimensional poverty
This research aims to examine the effects of the Islamic social finance (zakat), the Islamic Human Development Index (IHDI), and the quality of governance on poverty alleviation in 39 Organization of Islamic Cooperation (OIC) member countries from 2007 to 2020. This study uses a fixed effect model to analyze the relationship between variables. The findings show that the Islamic human development index, as a proxy for the quality of human resources, supports the reduction of poverty in OIC countries. Furthermore, the zakat, voice and accountability, and trade openness have a negative and significant relationship with poverty. The quality of governance, population, inflation, and exchange rate, on the other hand, has no significant effect on the poverty rate. These findings can be used as the foundation for state government as the policymaker to solve poverty. The uniqueness of this study is the application of the modified human development index based on the five Islamic objectives and empirically investigates its impact on poverty.
Zakat published articles has been increasing consistently. Such an abundant availability of knowledge warrants for investigation looking into bibliometric characteristics of a specific area. The objective of this study is to present the research trend of zakat. This study adopted a bibliometric analysis based on 318 documents obtained from the Scopus database. To achieve the objectives of the study, various tools have been employed, such as Harzing's Publish or Perish, VOSviewer, and Microsoft Excel. This study presents the results using standard bibliometric indicators. Finally, this study extends findings on zakat literature buy using bibliometric approach and provide meaningful insights on the trend of previous literature. INTRODUCTION The objective of this study is to explore the research related to Zakat as indexed by SCOPUS. Specifically, this study explores common keywords and identified themes based on title and abstract of published articles. The objectives of the present study are: 1. To examine the publication trends related to Zakat; 2. To identify the top cited articles related to Zakat; 3. To identify ten topics based on the abstract of articles related to Zakat. This study applied bibliometric approach to gather data on the productivity and research publications of research related to Zakat. The research published were searched and retrieved from Scopus in December 2021. Search on SCOPUS keyword based on the terms "zakat OR zakah" yielded 318 articles. This study only includes journal articles written in English published up to 2020. The metadata of all 318 articles downloaded in CSV format. The framework consists of three steps: pre-processing, topic modelling, and post-processing. All three steps were conducted based on Python codes within a Jupyter Notebook environment. Latent Dirichlet Allocation (LDA) algorithm was utilized to generate 10 topics.
The Covid-19 pandemic and the recent war have widened the extent and aspects of poverty across the globe necessitating further research and action. Yet, despite the depth of existing research on poverty, the role of religion is still in debate. Accordingly, this chapter explores the contribution of the Bahá’í Faith as a contemporary world religion to this discourse. It finds that the Bahá’í scripture articulates extremes of poverty and wealth as structural issues rooted in ‘morality’ and ‘justice’, and emphasises the role of individuals, firms, societies, governments, law, and educational systems and mechanisms, to collaborate and take ownership of eradication of both extremes. At an organisational level, it stresses moderate withdrawal of profit and the owners’ willingness to share, employees’ fair remuneration and share on the profit towards a distributed comfortable life, and philanthropic activities in various contexts and extents.KeywordsPovertyReligionWealthBahá’í Faith/scripture, justice and moralityOrganisations/firms
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This paper discusses a community empowerment-based zakat program run by the BAZNAS (National Amil Zakat Agency) of Bengkulu Province as well as proves the flexibility of the classical maqāṣid al-sharīʻa in responding to modern development that have not been analyzed by previous researchers. In addition, this paper argues that institutionalizing zakat is not a "bureaucratization of sharia" as stated by Asep Saepuddin Jahar. This paper uses principles of field studies that are corroborated with relevant literature sources. This paper shows that programs initiated by the BAZNAS of Bengkulu Province such as 'Bengkulu takwa', 'healthy Bengkulu', 'smart Bengkulu', and 'prosperous Bengkulu' are an implementation of maqāṣid al-sharīʻa in responding to modern development. These programs demonstrate that preserving religion (al-dīn), soul (al-nafs), intellect (al-ʿaql), lineage (al-nasl), and property (al-māl) in the classical maqāṣid al-sharīʻa discourse is not static, but dynamic. This dynamism can be interpreted as the prosperity of religion, soul, lineage, intellect, and people's property. Thus, this paper argues that institutionalizing zakat is neither a "bureaucratization of sharia" nor merely matching the classical maqāṣid al-sharīʻa with the modern context. Furthermore, it is a waṣīla for the welfare of the people in a structured and measured manner.
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This paper is the extended and updated version of Shirazi (2006), which covers 38 OIC-member countries. The paper estimates the resource required and potential zakat collection for poverty elimination. The paper employed the poverty gap index based on US $ 1.25 a day and US$ 2.0 a day estimated by the World Bank (2009). Zakat potential has been estimated by employing Kahf (1989) method of estimation with some modifications. The paper finds that half of the sample countries not only meet their resource shortfall by potential zakat collection but also generate surplus funds which are sufficient for the resource deficit countries. The paper suggests pooling of zakat funds from the zakat surplus countries and providing for the resource deficit countries to eliminate the poverty. Keywords: Poverty Alleviation, Resource Shortfall, Zakat Collection. OICMember Countries
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This study attempts to investigate the perceptions of zakat recipients (the end user) and the amil (the implementer) on whether localization of zakat distribution would be a possible solution to address the problem of zakat management in Malaysia. The study is motivated by the findings of previous studies that the Muslim society is still not satisfied with management of zakat distribution. Research questions include the perceptions of amils and zakat recipients on; (a) the localization concept of zakat distribution; (b) the main determinants of zakat localization; (c) the relationship between zakat localization and the quality of life; and the influence of religiosity on the quality of life of zakat recipients;(d) the factor determinants that amils agreed to implement localization, as well as (e) the potential role of the mosque in implementing localization. Data collected using purposive random sampling on a sample of amils and zakat recipients in Malaysia. The respondents were selected from the states of Selangor, Penang, Federal Territory Kuala Lumpur, Malacca, Terengganu and Kedah. The collected data was analyzed using Exploratory Factor Analysis (EFA), Confirmatory Factor Analysis (CFA) Structural Equation Modeling (SEM), analysis of variance (ANOVA) and logistic regression (LR). The findings of this study show that majority of respondents strongly support the concept of localization of zakat distribution, especially the amils compared to zakat recipients. It also indicates that all variables, namely trust in Islamic institution (input factor), perceived zakat management (process factor), asnaf’s attitude to change and asnaf’s quality of life (output factor) as well as the proposed localization of zakat distribution (opinion factor) have significant relationship amongst the variables. This finding also indicates that the successful implementation of localization is dependent on the importance of the role of the mosque. Finally, this study recommends the role of the mosque should be strengthened from the outset and then, it would facilitate the implementation of the localization of zakat management
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As one of the fundamental tenets in Islam and central to Islamic economy, zakah, theoretically, has a wide and profound impact on socio-economic development of a nation. This paper attempts to examine the current zakah system in Malaysia particularly its contributions towards poverty alleviation as well as drawbacks that are limiting its overall impact on the country's development. A comparison is made on zakah collection and distribution between two states in Malaysia each at two different extreme of the poverty line. This paper further introduces a model of zakah system as a way forward towards a more holistic and wide-reaching implementation of zakah in Malaysia. INTRODUCTION attempts to examine the current practice of Malaysian
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Poverty alleviation has become a buzzword in Bangladesh over the last three decades. Bangladesh has so far implemented five Five-Year Plans and one Two-Year Plan and a Three-Year PRSP Rolling Plan to accelerate economic growth and poverty reduction. Although the intensity of poverty has lessened to some extent, its depth and severity still persist. Instruments such as Micro credit and Safety Net Program have been contributing to poverty alleviation, but it has proved around the globe that these two instruments are not successful in reducing Income Inequality. This call for a new strategy which can reduce poverty and income inequality. In this context, Waqf can be one of the vital alternatives alongside Zakah because early history indicates free education, scholarship, orphanage, free treatment, and inns for nomads as provided by Waqf based institutions. In fact, Zakah and Waqf played the key role in reducing poverty in Islam. At present Waqf based institutions are not growing at a considerable level. But if we really want to do something for the needy and the poor, we have to revive this much needed institution. Therefore, starting a worldwide Waqf movement is indispensable. This paper tries to assess the role of Waqf in reducing poverty in the context of Bangladesh and finally attempts to present an insight as to how it can be revised.
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This article presents findings from a study that examined the attitudes and behaviors toward religion and spirituality held by 328 randomly selected Virginia licensed clinical social workers, psychologists, and professional counselors. Significant differences were found among the three groups, with social workers generally holding a middle position in comparison with psychologists and professional counselors. As a whole, respondents were found to value the religious or spiritual dimension in their own lives, to respect the function it serves for people in general, and to address, to some extent, religious and spiritual issues in practice. Limited professional training in this area was reported, however, with 79% (n = 259) of the respondents stating that religious or spiritual issues were rarely or never addressed during the course of their graduate education and training. Implications for social work education and practice are discussed.
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This paper estimates the impact of Zakat funds on the annual development plan of Bangladesh. While the Government of Bangladesh has been very keen on alleviating poverty, it has never looked at the institution of Zakat as a national strategy for poverty alleviation. We have shown that Zakat funds can replace government budgetary expenditures in amounts ranging from 21 percent of Annual Development Plan (ADP) in 1983/1984 to 43 percent of ADP in 2004/2005. This amounts to TK.30683 million in 1983/1984 to TK. 220000 million in 2004/2005. The government can utilize this money for other developmental or social expenditures. Zakat funds can increase the taxation potential of the government through the improvement of productivity, employment and output. The Poverty Reduction Strategy Paper (PRSP), on the other hand, is a lucrative issue as the governments of Least Developed Countries (LDCs) or Highly Indebted Poor Countries (HIPCs) are due to get more funds from the Aid Clubs that ultimately increase the dependence of our economy on the externally driven prescriptions. Though Bangladesh currently falls in the category of LDC, the country's increasing external debt burden may move it to an HIPC classification. The Domar Debt Model shows that the dynamic debt burden is 5.4% of GDP. Individuals behind the PRSP have some pious hopes of eradicating poverty. Unfortunately, neither the government nor the International Monetary Fund/World Bank see the need to include Zakat as a poverty alleviating instrument.
'Faith-based organisations' (FBOs) are gaining increasing attention within development circles - amongst practitioners, funders, and policymakers as well as academics. While some discussion has taken place over the meaning of the term 'FBO' in academic circles, little empirical research has been conducted as to the relevance and interpretation of the term in different contexts and what role religion plays within organisations engaged in development-related activities. This paper contributes to this discussion by comparing a range of organisations engaged in charitable and development-related activities in the city of Karachi and elsewhere in the province of Sindh, Pakistan. The findings reveal a broad distinction between local charities, which depend on individual donations for their funding, and for which religious values and beliefs are intertwined to differing degrees in their work, and professional development organisations, which rely on domestic and international institutional funding and have no apparent relationship with religion. However, not all organisations fit neatly into these two categories, demonstrating that religion operates in complex and varied ways within organisations engaged in development-related activities in Pakistan.
This paper examines organized religion as a driving force within the social welfare state and looks at religious organizations as human service providers. Following a brief historical overview, the contemporary significance of organized religion for special population groups is discussed. Information is presented on religious institutions, religiously affiliated organizations, and religious congregations for incorporation into existing courses in social work policy, organization, administration, and community practice.