Enhancing socio-economic justice and financial inclusion in Nigeria

Abstract

Purpose The purpose of this paper is to discuss the roles of Zakat, Sadaqah and Qardhul Hassan within the context of the existing literature as major Islamic financial instruments for enhancing socio-economic justice amongst Muslims haves and have-nots as these enhance financial inclusion in Nigeria. Design/methodology/approach The discussion in this paper is based on secondary sources such as the divine knowledge contained in the Qur’an, Hadiths and the existing literature, such as previously conducted empirical studies and Islamic world view (Tawhidi epistemology). Findings This paper implores Islamic societies to use Zakat, Sadaqah and Qardhul Hassan as instruments that encourages wealth redistribution that promotes efficient and effective wealth redistribution between haves and have-nots as part of the vicegerent (khaliphah) role between mortal being (human) and his immortal creator (Allah). This paper concludes by suggesting the use of these Islamic financial instruments as means to enhance socio-economic justice and financial inclusion in the Nigeria’s Muslims’ communities that are negatively affected by the high rate of financial exclusion and poverty as had been previously practiced in the Muslim world throughout the Islamic history. Research limitations/implications This paper provides critical suggestions on the ways Zakat, Sadaqah and Qardhul Hassan will contribute significantly towards assisting Nigeria in achieving its vision of reducing the financial exclusion rate that is currently put at 41.6% to 20% by the year 2020 and may foster inclusive growth and sustainable development. However, the limitation is that it is a mare conceptual study, and the future researchers may subject it to the scientific test to offer empirical evidence regarding the roles of Zakat, Sadaqah and Qardhul Hassan towards closing the gap of financial exclusion in Nigeria. Originality/value This paper contributes to the existing literature on the doctrine of the Islamic moral economy by recommending the adoption of Islamic financial instruments as tools for enhancing income redistribution and financial inclusion.

What do we know about zakat literature? A bibliometric review

“…We also revealed the most relevant authors in this field as shown in Figure 4. Based on our results, Saad Raj (Saad et al, 2020;Saad and Farouk, 2019) is the most relevant author as he has published 15 relevant articles, followed by Johari F. with 7 articles (Ahmed et al, 2017;Ali et al, 2015) and Sawandi N. with 6 articles (Zauro et al, 2020).…”

“…The definition of zakat indicates also on how an individual can be cleaned and purified from his wealth dirt by the payment of zakat. Additionally, based on the definitions given, virtually all eligible Muslims are required to pay Zakat to the eight Asnaf (who are eligible to receive zakat) to uplift the standard of living of the poor among Muslims (Zauro et al, 2020;Alaro and Alalubosa, 2019;Ahmed and Salleh, 2016).…”

Integration of Waqf towards enhancing financial inclusion and socio-economic justice in Nigeria

“…That financial inclusion can be addressed either by promoting risk-sharing contracts or through the use of specific instruments of redistribution of wealth among the members of the society (Askari et al, 2010;Iqbal and Mirakhor, 2013). Both risk-sharing financing instruments and redistributive instruments such as Zakat, Sadaqah and Qardhul Hassan complement each other to offer a comprehensive approach to poverty eradication and enhance access to finance among the vulnerable poor especially Muslims communities in Nigeria and ultimately build a healthy and vibrant economy (Gelbard et al, 2014;Zauro et al, 2020). The people affected by the problems of financial exclusion are usually individuals and social groups at the bottom of the social ladder, due to their poor economic conditions such as low income and perhaps lack of financial literacy ( Conkov a et al, 2013).…”

Model Akad Qardhul Hasan Pada Usaha Mikro Kecil Menengah

“…Penelitiannya juga menemukan bahwa peran Baitul Maal mengurangi angka kemiskinan. Penelitian (Zauro, Zauro, Saad, & Sawandi, 2020) (Ismail, 2013). Berdasar dari pengertian ini dapat diartikan bahwa dengan pembiayaan qardhul hasan maka usaha kecil akan berkembang dan sekaligus mewujudkan pembangunan ekonomi.…”