Poverty alleviation by Zakah in a transitional economy: a small business entrepreneurial framework

Abstract

Around 3 billion people are living in poverty of which 35 % are from Muslim World (World Bank 2010). In this case, global Muslim community has prime role to address the injustice of global poverty through zakah as an Islamic faith-based institution and having potential annual fund of $139.32 billion in Muslim world. This study designed an explanatory sequential mixed method. For qualitative data, 17 managers were interviewed and 85 zakah recipients were purposively surveyed (disproportionate sampling) for quantitative purpose between August 1 and December 30, 2013. The results indicate that zakah has significant bearing on the conditions of zakah recipients and lie the foundation of developing small business entrepreneurship by mobilizing zakah as seed money (investment) and not as spent money (consumption). A five-phased process model underpinned by two well-grounded theories: Becker's human capital theory and Kirkpatrick's training evaluation taxonomy has been proposed for developing entrepreneurship having universal application. The model's implications for alleviating poverty by governments, zakah management institutions, and policy makers also discussed in the paper.JEL Codes: I32; L26; P36

Use of Crowdfunding for Developing Social Enterprises: An Islamic Approach

“…Unfortunately, 44 % of world's 1.7 billion poor (The Nation 2011) or 35 % (World Bank 2010) are living in the different Muslim countries of the world (Hoque et al, 2015). So, Social enterprises are badly needed in the Muslim societies for ensuring social equity and social wellbeing.…”

“…In fact, Islam as a religion of nature (deen alfitar) has a desire to build or portrait a society having absolute economic and social justice for all human being regardless of color, caste, and gender (Choudhury, 2002). But, Islamic teaching of social justice, and brotherhood would be meaningless unless and until economic justice is ensured (Hoque et al, 2015). To materialize this social justice, therefore, all the resources of the world should be utilized efficiently and proper distributive mechanism as envisaged in Islam should be applied (Sadeq 1996, Hoque et al, 2015.…”

“…But, Islamic teaching of social justice, and brotherhood would be meaningless unless and until economic justice is ensured (Hoque et al, 2015). To materialize this social justice, therefore, all the resources of the world should be utilized efficiently and proper distributive mechanism as envisaged in Islam should be applied (Sadeq 1996, Hoque et al, 2015. Hence, Islam emphasizes wealth mobilization through the creation of business enterprises.…”

Zakat as a Mode of Poverty Alleviation

“…Only 37% Muslim countries have state sponsored zakat institutions out of which only 40% have made zakat collection compulsory, remaining 63% doesn't have zakat management at state level, in these dire circumstances we can't expect zakat system to benefit us in the way it is supposed to be. The major reasons for the failure of zakat systems where applicable is lack of proper planning and lack of proper implementation [31], In Indonesia there is rivalry among zakat institutions which is hindering progress, in Malaysia too much decentralization have made things complicated and non-uniform, In Pakistan and Bangladesh there are issues with proper implementation as competent personnel are not in charge of process and political gains are first priority and in Turkey whole responsibility has been left upon public to evaluate and pay zakat to whoever they want and how much they want. With so much different systems working it is very difficult to get optimal results out of zakat.…”

Scriptural Solution to the Implacable Poverty Widespread in the Current Administration in Nigeria: Comparative Analysis

“…This is not only because some Muslims lack Islāmic moral as well as knowledge about the significance of Zakah and Waqfu but also absence of effective Zakah management institutions both in government and private level in Muslim societies [30].…”