Islamic social business to alleviate poverty and social inequality

Abstract

Purpose – The purpose of this paper is to identify some well-set instruments in Islam that can efficiently alleviate poverty, solve social problems and reduce social inequality through a new operational framework called “Islamic social business (ISB)”. Design/methodology/approach – This is a conceptual research that is based on Al-Quranic principles as well as contemporary social welfare philosophies, such as, augmented stakeholder theory, social enterprise and social business. Al-Quran, Al-Hadith and existing traditional and Islamic literature are consulted for this study. Findings – The study proposes an efficient system of Islamic wealth sourcing and management to make the process of poverty alleviation sustainable. Other social problems for disadvantaged people, such as, health-, shelter-, literacy- and environmental-related issues are also addressed in the proposed system. The study identifies the inefficiency in the current practices and makes some propositions that are in conformance with Islamic principles and implementable by Islamic institutions all over the world. The authors propose a theoretical framework and operational propositions for ISB. Practical implications – In following this study, social policymakers, Islamic financial institutions, Islamic social enterprises and Islamic charity organizations will find organized guidelines to initiate “new entities” or “reshape existing entities”. Social implications – The study will be effective in solving social problems, alleviating poverty and reducing social inequality. Originality/value – This is the first study that identifies all the potential Islamic sources of funding and the efficient management thereof through ISB. The study also proposes an ISB model and makes several propositions for different types of ISB.

Social Finance Instruments to Support B40 and Micro-Enterprises: Determinants of Islamic Financial Institution Employees’ Acceptance

“…VBI was developed to strengthen the roles and impact of IFIs, with the understanding that the institutions should focus more on a socially responsible banking environment. In another perspective, Aziz and Mohamad (2016) stated that Islamic social business (ISB), which is consistent with the SFI concept, is a new operational framework; well-set as an instrument that can reduce social inequality, solve social problems and also efficiently alleviate poverty based on Islamic concepts. Its principles adhere to the Quran and Sunnah as well as the contemporary social welfare philosophies such as social business, social enterprise and augmented stakeholder theory.…”

“…The Islamic social business model is illustrated in Figure 1. (Aziz & Mohamad, 2016) The model illustrates how waqf, sadaqah and zakat can be used to solve social problems, specifically related to educational, health or medical, and shelter issues, for the B40 and micro-enterprises. The IFIs are seen to be in a better position to uphold the role of social banks in ensuring that social and economic welfare is improved through the equitable distribution of income and wealth, the achievement of environmental balance and social justice, and the promotion of economic development for religious commitments.…”

“…IFIs should work hand-in-hand with the government to take responsibility for overcoming the social problems of the poor and underprivileged people in society. IFIs can expand their financial instruments and mechanisms to encourage entrepreneurship among the poor, and, consequently, alleviate poverty and reduce social inequality (Aziz & Mohamad, 2016).…”

“…Moreover, ethical finance and investment activities have shown an increasing pattern of environmental awareness since 2017, with more than 30 per cent of global assets in socially responsible investments (SRIs) (Ziyaad, 2017). Aziz and Mohamad (2016) argued that the IFIs, social policymakers, Islamic charity organisations (ICOs) and Islamic social enterprises (ISEs) need to take advantage of existing entities by identifying all the potential Islamic sources of funding. Coupled with efficient management, the process of alleviating poverty could be more effective in reducing social inequality and solving social problems.…”

“…Consistent with these arguments, this study aims to investigate and identify factors that significantly influence IFI employees' acceptance of SFIs as a tool to provide affordable financing to the B40 group and micro-enterprises. A total of 197 well-structured questionnaires, developed following the methodology of Abuarqub and Phillips (2009), Hassan (2014), Haneef et al (2013, Aziz and Mohamad (2016), Razinah, Zain, and Adawiah (2017), and Roose and Bishnoi (2012) were distributed to IFIs employees in the Klang Valley area. The factors considered in this study were: (i) awareness, (ii) knowledge, and (iii) demography.…”