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Monday, Sep 01 , 2014 ( Thul-Qedah, 1435)

Updated:10:00 PM GMT

Zakat Revolution Urged in Muslim World

OnIslam & Newspapers
Zakat Revolution Urged in Muslim World
According to Islamic Shari`ah, a capable Muslim pays 2.5 percent mandatory payment and spend it to help the poor and the needy.

DUBAI — While the global economic crisis has cut charity around the world, an annual zakat, alms, amount between US$200 billion and $1 trillion are spent to the poor across the Muslim world, the amount experts say is mismanaged.

“Our [Muslims'] whole donorship was built on religious charity,” Ibrahim Osman, director of the Middle East and North Africa region for the International Federation of Red Cross and Red Crescent Societies (IFRC), told IRIN humanitarian News and Analysis on Friday, June 1.

“That has infiltrated even governments and public institutions... Most Muslim countries do handouts, even with international organizations.”

Zakat, the third pillar of Islam, is obligatory upon every (capable) Muslim.

According to Islamic Shari`ah, a capable Muslim pays 2.5 percent mandatory payment and spend it to help the poor and the needy.

In 2004, economist Habib Ahmed calculated that if all potential 'zakat' were collected in Muslim countries, between a third and half of them could move their poor out of poverty.

"The potential is tremendous," Ahmed, now chair in Islamic Law and Finance at the Institute of Middle Eastern and Islamic Studies at Durham University, told IRIN.

"But in most countries, it is not being used to the potential."

Though estimated by around 15 times more than global humanitarian aid contributions, Islamic finance experts, researchers and development workers say much of the money spent in zakat and charity is mismanaged, wasted or ineffective.

"Wealth is growing in the Muslim world. So is the poverty. Where have we gone wrong?" asks Tariq Cheema, president of the World Congress of Muslim Philanthropists (WCMP), an organization which advises Muslim donors.

"Our rituals are there, but often they lack the spirit," Cheema told IRIN.

"We just give the money and forget."

Analysts refer the growing poverty to zakat mismanagement from people who do not trust governments and prefer to give their money to people they know are in need.

"The 'zakat' authority does not have a long-term investment plan," Syed Wafa is a former professor who headed a research group that advised the Malaysian government on distributing 'zakat' funds, told IRIN.

"They depend on the yearly collection... Their mindset is: We get the funds; we try to disburse them as fast as possible."

Solutions

Admitting the fact that charity is mismanaged, wasted or ineffective, experts urged a change of charity policies around the Muslim world.

"The Arab world has to change from a charity culture to a humanitarian action business," Osman, the director of IFRC, said.

"This is what is missing. It's always charity."

Looking at the roots of the problem, analysts say that very little of the money goes towards sustainable development.

"Billions of dollars worth of giving in 'zakat' and 'sadaqa' are unfortunately ineffective by and large," Cheema told IRIN.

"Our giving shouldn't be driven by our desire to prove that we are good people... Our giving should be smart and effective.

"We are here to bring that shift in the culture: the paradigm shift from conventional and generous giving to strategic giving... There is a lot of money around that needs to be channeled towards development."

Instead of giving money to individual orphans, some NGOs have tried to support them in more strategic ways, introducing human rights, empowerment and "mainstream aid activities", Juul Peterson, a researcher in politics and development at the Danish Institute for International Studies, who wrote her PhD thesis about transnational Muslim NGOs.

"You have these new ideas of how good aid should be," she told IRIN.

In Egypt, a non-profit organization called Misr al-Kheir, led by the Grand Mufti of Egypt, the highest religious authority in the country, and funded by 'zakat' and 'sadaqa', has been a pioneer in the use of 'zakat' for sustainable ends.

Al-Rajhi Bank and Yousef Abdullatif Jameel Co. in Saudi Arabia and Amanah Ikhtiar Malaysia (AIM) are Muslim lending institutions which have attempted to replicate the successes of Grameen bank in Bangladesh.

"We maximize the donation for the best interest of the poor," said Husain Benyounis, secretary-general of Awqaf New Zealand.

"We turn something out of everything they throw away."

Related Links:
Malaysia Plans Zakat Fund for World Poor
Ramadan Iftar Defies Economic Crunch
Egypt Brothers Eye Islamic Finance Economy
Islamic Finance Taps Women Scholars
Irish Muslims Want Islamic Finance

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