Introduction:

            Zakat is an important pillar of Islam that denotes disbursing an excess of wealth to the needy. As the largest organized religion in the world, this concept has the ability to greatly affect the levels of poverty in Islamic nations. However, the systems instituted to collect and distribute zakat are often flawed or inefficient. To understand the relevance of zakat, the concept in accordance with Islam must be defined. A case study will be conducted in three Muslim majority nations, Saudi Arabia, Malaysia, and Pakistan, to decipher the flaws and successes of zakat implementation. Zakat can be used to lessen the burden of poverty felt in these and other Muslim majority nations or even wholly eradicate the most dire effects of poverty felt by citizens. This essay attempts to assess the problems and potential solutions of zakat collection and distribution in hopes of getting closer to the eradication of extreme poverty.

Zakat in Islam:

            Zakat is mentioned in 19 suras and 32 verses in the Quran.[1] It is the third pillar of Islam, out of five that determine the piety of a believer. In Arabic, zakat can mean growth, cleanliness, and purity.[2] In Fussilat, verse 7, it is stated: “Who give not to the poor-due are disbelievers in the Hereafter.”[3] The Qur’an uses the root word zakah alongside prayer implementing the principle on all believers regardless of income, it has meant purifying one’s wealth by giving charity, and even the wives of the Prophet were told to practice zakah. Usage of the word in such manner suggests zakah can be shown via mercy, extending psychological and humanitarian support, caring for the sick, and giving money especially if wealthy.[4] Zakat also provides social welfare needs such as, “social security entitlements, social assistance grants for childcare, food subsidy, education, health care, housing, and public transportation in a welfare state.”[5]

Those who receive zakat are known as asnafs and they are categorized into eight groups; the needy, poor, zakat collectors, new converts to Islam, slaves, debtors, Muslims who strive for the way of Allah s.w.t., and wayfarers.[6] How these categories are defined in general is presented in Figure A,[7] however, most nations do reinterpret these terms to be more or less inclusive in accordance with their mandates on zakat. Contemporarily, zakat is interpreted to aid the poor and needy the most as exemplified by the uses of zakat in the Qur’an and the six out of eight groups[8] that are associated with more practical socio-economic problems people may face.[9] The Qur’an even allows non-Islamic persons in these categories the ability to be zakat recipients. The significance of the poor and needy in receiving zakat is the basis of the argument put forth that if the zakat collection and distribution system was more efficient, it could greatly alleviate poverty.

During the time of the Prophet, zakat was collected year round, especially during Ramadan for special blessings during the month. During Eid, the Prophet asked Muslim women to donate their ornaments, rings, and necklaces, to charity. Near the end of the Quranic revelation, charity (sadaqah) was made mandatory and Caliph Umar institutionalized it as Zakat.

“The rate or amount of Zakat was calculated at two and a half percent for cash, gold, and liquid assets if possessed in excess of 12 English Guinea gold, or equivalent, but higher levels were fixed for other contemporaneous assets such as the yield of land, perfume, etc.”[10]The threshold of assets is highly contested by modern religious leaders and Islamic scholars. There are issues of precious metals such as diamonds not being considered in the 2.5% Zakat and issues of people potentially acquiring money through exploitation of the poor or unlawful means and “purifying” it by donating a certain amount.[11]

There are two forms of zakat; on the individual (Zakat-ul-Fitr) and on the wealth (Zakat-ul-Maal). In terms of the individual, zakat is meant to clean one of greed from wealth accumulation in terms of wealth, zakat can purify wealth by giving to the needy. Zakat is not even considered charity in Islam per say because when one has an excess of wealth a part of is a right of the poor and needy, therefore it is not really considered charity. Additionally, zakat means growth, in socio-economic terms, some scholars equate this to mean if the poor and needy have the ability to spend money it will grow the economy as the marginal propensity to consume increases.[12]

According to Yunus and Syed, Zakat is similar to the modern property tax which can go to social welfare and charity programs. However, in the modern world, rich believers often find ways to dodge property tax and instead focus on giving 2.5% of Zakat on cash, gold, or liquid assets, which is much lower than what the modern wealthy possess.[13] Herein lies the issue with proper zakat implementation and monitoring to assure efficiency in its purpose as stated in the Qur’an.

Zakat in Malaysia:

            Zakat collection is institutionalized in Malaysia, therefore, the State is responsible for the collection, promotion, and distribution of zakat.[14] Malaysia is an upper middle-income economy which draws the ‘poverty line income (PLI) on US42 or RM6.40 per individual per day. The PLI is based on the lowest 20% of households for non-food item necessities, such as clothing, residence costs, utilities, transport, and the like. However, the PLI in Malaysia may not be an accurate representation about the cost of living because RM6.40 per day is insufficient for food let alone the rest of the non-food related necessities such as healthcare or housing.[15] In Malaysia a distinction can be made in regards to absolute poverty, “or lack of income necessary to satisfy essential non-food needs, and relative poverty, “individuals living on less than $1USD a day, according to the United Nations Development Program (UNDP).[16] The definitions of poverty are often contested in the international community. In Malaysia especially, the cost of living is too high to even live off of $2USD a day.

Zakat in Malaysia can be interpreted as a social safety net. Malaysia has a very open economy thus the 1997/1998 East Asian Financial crises and the 2007 global financial crisis caused a rise in poverty, especially in the rural areas. From 2007 to 2008 poverty in rural Malaysia increased from 7.1% to 7.8%. The rural poor were affected in 1997/1998 due to a decline in commodity prices, such as rubber or palm oil, and in 2007 because rice prices increased and Malaysia is not self-sufficient in rice production.[17] In both cases, the rural poor were affected more than the urban poor. Additionally, the Gini Coefficient in Malaysia was 46.3% in 2008 according to World Bank statistics.[18] Gini coefficients point to income inequalities between the wealthiest and poorest segments of society in a nation. The goal of zakat is to ensure wealth is not accumulated to superfluous extents thus taking away from the basic necessities of the poorest in a country. Since Malaysia has an open economy, high levels of poverty in rural areas, and high-income inequalities to this day, it is imperative to assess the zakat system to decode if potential changes could be made to resolve the strife experienced by the most economically vulnerable citizens in the nation.

Zakat was introduced to Malaysia in the 13th century. During that time religious teachers would determine zakat distribution as they were considered the most knowledgeable and thus most qualified for such a task and this was a tradition at the time since no formal institutionalized distribution of zakat was present. The Malaysian Federal Constitution recognizes religion as a state rather than federal matter, therefore, the distribution of zakat falls under the administration of each state in Malaysia.[19] During colonialism, Islamic and Malay customs were a responsibility of the Majlis Agama Islam Negeri (MAIN) a special body established for these matters. Satu Tinjauan, Kelantan was the first state to establish a model that other states adopted where the Imam governed zakat and a portion of the collected revenues would be delivered to the state government for Islamic affairs. This model exists to this day, now governed by State Islamic Councils.[20] The first collection system was established in the State of Kelantan in 1916.[21]

Before the 1990s, the amount of money collected for zakat was extremely low because payment of fitrah (tithes) was given priority while zakat from private property, businesses and income were overlooked, and zakat was generally collected seasonally, usually during Ramadan.[22] Since then, notable steps have been made in the Malaysian zakat system.

In contemporary Malaysian law zakat is not a legal obligation for Muslims it is an act of piety, however, taxes are legally binding but not connected with zakat as in other Muslim majority nations.[23] The states have introduced incentives to pay zakat, for example, a 1-to-1 tax deduction is granted to zakat payers and zakat deductions from monthly salaries, or the“thohir scheme,” has been implemented.[24] The thohir scheme has been especially successful leading to a rise in the amount of zakat collected and it is the largest payment method for zakat in Malaysia.[25] There have also been notable shifts in the collection methods of zakat via advances in technology. “Among them are salary deductions, postal orders, Internet banking, phone banking, credit card, debit card, auto-teller machine, short messaging system, post office counters and selected bank counters.”[26]

There are four different types of corporations in Malaysia dealing with zakat distribution. One is under zakat enactment, for example, Jabatan Zakat Negeri Kedah separate from the Keddah Administration of Islamic Law. Second, a corporation under the state administration. Third, a corporation under an Act or State administration of Islamic law that only collects zakat. Fourth, collection and distribution of zakat executed by MAIN through its own zakat centers.[27] According to the Faculty of Management and Economics in Universti Malaysia, “seven sources of zakat must be paid from seven sources of wealth and income; zakat on business, agricultural harvest, savings, live stocks, mining, earnings and during Eid-al-Fitr.”[28]

Following the 1990s, many improvements were made in the Malaysian zakat system. For example, the collection of zakat is still in line with the traditional sources of money, gold, silver, cattle, mineral mining, and business activities.[29] However, zakat is also collected from the more wealthy segments such as personal professional incomes, shares, bonds, and Employees Provident Funds. Majlis Agama Islam Wilayah Persekutuan – MAIWP mandated by the Islamic Religious Council of the Federal Territory, shows that zakah on income scored the highest collection (approximately 69%, followed by zakat on business activities indicating the potential of zakat on income itself.[30] The eight categories of asnaf previously identified have been expanded upon in Malaysia. Muslims who do not have jobs to fulfill family needs are included under asnaf faqir, drug addicts and prostitutes are included under asnaf riqab, and basic necessities now include medicine and transport under had kifayah. These changes point to the adaptability of zakat to mend according to more modern needs and can be expanded upon even more or in a similar manner in Malaysia and other nations.[31]

Zakat distribution is classified by two categories; monetary form, which includes financial compensation, monthly food aid, medical assistance, rent aid, school aid, and scholarships, and capital form, which includes loans for businesses, and cattle or agricultural farms.  Selangor has even made a branch to aid specifically with business loans via information resources, the Zakat Asnaf Group of Entrepreneurs. MAIWP has distributed zakat to institutions such as hospitals, Nursing Colleges, and Professional Institutes to improve the human capital of Malaysia. LZS (Selangor Zakat Board) has provided educational assistance and scholarships for children and conducted training to improve skills concerning business.

The Bank of Islam in Malaysia promotes Corporate Social Responsibility (CSR) via zakat donations and various other strategies. The bank has made zakat and social responsibility a part of its mission; “the objectives of CSR engagement of Bank Islam are dominated by three main purposes: (i) to fulfill the religious obligation as an Islamic business entity through the zakat and so on; (ii) to promote the image of the bank as a responsible bank for sustainability of the business; and (iii) to enhance the well-being of all stakeholders.”[32] There are various funds to carry out the CSR mission of the bank; zakat fund, donation fund, non-compliance Shariah income, and purification fund. The zakat fund is managed by the Zakat Committee and heeds input from multiple business units and divisions, and the Head of the Shariah Division is its secretary. The most notable achievement of the Zakat unit is that regardless of profit or loss the bank does not fail to pay its zakat dues.[33]

Malaysia seems to be moving in the right direction in terms of poverty eradication or alleviation. The important question to ask is has zakat truly improved the lives of the asnaf? In the context of Malaysia, zakat is a State implemented a system that does more to establish social justice by distributing wealth to the poor and a study conducted by Ibrahim, 2006, revealed zakat in Selangor has reduced the incidence, extent, and severity of poverty in the state.[34] However, there have been discrepancies in the amount of zakat collected and the rate of poverty decreasing in Malaysia which is what is expected.[35] There are also distinctions between states. In Selangor, zakat aides by almost 61% in overcoming poverty while poorer states such as Sarawak, only 5% of PLI are receiving zakat.[36]

There are issues with inefficiencies due to the bureaucracy that sometimes deters the public from zakat. Zakat is distributed based on an application from the people asking for it or based on a public report conducted by the zakat institution with set criteria determining the right beneficiaries to give aid to. Some people rightfully receive zakat but there are those who are more in need that is unrecognized or classified asnafs/recipients. Malaysian students discuss how they have to submit applications for receiving zakat every year, each submission is presented as a wholly new application even though they met the criteria for receiving zakat the previous year, greatly slowing down the process of receiving aid. Additionally, in some states students have to obtain a study loan before they are eligible to receive zakat.[37]

The prospective zakat payers are not accurately recognized in Malaysia. A report made by PPZ/MAIWP in 2010 revealed that out of the 2 million Muslims living in Selangor only 160,000 people pay zakat. MAIN in Malaysia or any zakat collecting institution can raise awareness of the need for zakat to benefit public and private sector workers, police and soldiers in training, students, and the rural poor in the nation.[38]

Issues arise when the groups most in need are not aware of the access to zakat due to a lack of promotion and opinions make things complicated as different schools of thought have differing views on the collection of zakat.

“For example, Sya e school of thought stated that zakat may not be paid in price while Hana School allowed it. Those who are in favor of the first view would pay zakat in its real form like zakat for paddy is paid in paddy. Therefore, they pay zakat not to zakat institution as this institution seldom receives zakat in real form.”[39]

Additionally, there are issues with extremes in Malaysia where either all the money collected is not distributed or in some cases, there is more money distributed than collected.[40] From 1999 to 2009, there has been a trend of more zakat collected than distributed in Malaysia pointing to a lack of efficiency in distribution and leading to a distrust by the people in the zakat system as no one knows where the rest of the money is being utilized.[41] To remedy this the Melaka Council of Fatwa stated the undistributed amount should be carried out into the next year. Authors Embong, Taha, and Nor also point of inadequacies in other areas of zakat management;

“… zakat has failed to reduce poverty due to various problems including the inaccurate database on asnaf, bureaucracy, under-identification of potential asnaf, ignorance of asnaf, an attitude of amil and geographical distance to asnaf.”[42]

The objective of zakat recipients should be one day to be the zakat donors. Religiously receiving monetary aid could create a dependency on the aid and not really drive one out of poverty. The objective of the zakat institution should be to invest in the education of children in need, set up educational training camps for workers, investing in small businesses, and other similar capacity building projects to truly aid one out of poverty in the modern world. While Malaysia has introduced these programs since 1990, they are not promoted and utilized to their full potential.[43]

While Malaysia has moved in a positive direction since 1990, problems remain with zakat in the nation. The problems Malaysia needs to address include inefficiencies in administration and bureaucracy, lack of promotion, inefficiencies in identifying the neediest and poor, potential to adhere to multiple schools of law muddying the waters, inability to identify the accurate prospective payers of zakat, and issues with the capacity building. However, Malaysia has introduced positive zakat reforms through incentives such as the thohir scheme, 1-to-1 tax deductions, broadening of definitions for recipients of zakat, modernizing certain zakat methods, introducing a bank with CSR responsibility, and setting up certain branches of zakat management under certain states where poverty has decreased.

Zakat in Saudi Arabia:

            Saudi Arabia is an Islamic nation with a lot of wealth in the MENA region. Yet, the Gini Coefficient for Saudi Arabia was 45.9% in 2013 according to the CIA World Factbook.[44] There are major discrepancies in the Saudi zakat system which could help alleviate poverty and lower the Gini Coefficient if resolved. In Saudi Arabia, zakat is implemented via a form of taxation. Article 21 of the Saudi Basic Law states “Alms tax is to be levied and paid to legitimate recipients,” so the government determines the recipients of zakat.[45] General Authority of Zakat and Tax (GAZT) also known as The Department of Zakat and Income Tax (DZIT) based in the capital of Saudi Arabia, Riyadh, has 19 branches and is in charge of collecting zakat. DZIT collects from Saudi citizens and businesses, citizens of other Gulf countries,[46] and income tax from foreigners.[47]

The recipients of zakat are determined by the Saudi Arabian Monetary Agency (SAMA) which is a fund. The Social Insurance Agency of the Ministry of Social Affairs registers the poor to transfer the SAMA fund to.[48] “Tax revenues are deposited at the Saudi Arabian Monetary Agency (SAMA) where they are used to cover public expenditures for many services provided by the Custodian of the Two Holy Mosques to citizens and residents.”[49] The DZIT mentions non-zakatable items as consumables and charitable funds. Consumables include items like food, personal cars, fertilizers for farming, and the like. Charitable funds are excluded since their purpose is to help the public.[50]

Objections to zakat requirements must be submitted within 15 days of the receipt date in the mail in a notice.[51] The 1st Instance Committee reviews the individual’s appeal request and sends a resolution to which the individual has one month to comply and reply.[52] In cases of non-compliance to pay zakat, the DZIT files a claim to the 1st Instance Court and request public bodies suspend the non-compliant individual’s applications and documents by refusing to give the Zakat Certificate which allows access to certain public processes. Additionally, “the DZIT could suspend the non-compliant payer’s bank accounts or deduct the zakat due from any governmental credit to which they are entitled.”[53] It is up to the DZIT to determine if an individual requires these greater sanctions.

Article 1 of the Saudi Zakat Regulation requires all companies and individuals pay zakat regardless of age, gender, and capacity. However, DZIT generally collects from companies not individuals. There are contradictions within the Saudi Zakat Regulations and fatwas declared, since the DZIT requires fatwas to determine correct accordance with Islamic Law since Saudi Arabia has no distinct Islamic constitution. While Article 6 mentions individuals and commercial entities must record their wealth and spending in books to be certified by commercial courts or notaries, this is rarely implemented on the individual level. The Quran discusses zakat in relation to the wealth of the individual but the practice of zakat collection in Saudi Arabia often excludes the largest portions of individual wealth.[54]

“As the DZIT is only authorized to assess zakat from companies and traders, this means, by default, that personal accounts, private residences, jewelry, lands owned for purposes other than investment, and liquidity held by non-traders are not subject to zakat.”[55]

One reason for discrepancies in Zakat collection and original regulations, could be the definition of wealth. Articles 3 and 4 of the Saudi Zakat Regulation are vague in definitions, rely on fatwas and Islamic jurisprudence a lot, and where wealth is elaborated upon, it is in relation to wealth for commercial purposes.[56] When fatwas are issued in relation to defining wealth, they only end up making the definitions in the Saudi Zakat Regulation more ambiguous. For example, there is an exchangeability feature introduced by fatwas in relations to Article 3 which pretty much states items of value, which would traditionally be considered as wealth, can be non-zakatable items if they are up for trade or subject to exchange. For example, land can be deemed non-zakatable if the owner decides to sell it later on or diamonds that are up for sale are non-zakatable due to price drop. The issue with this feature is that items of considerable wealth can be denoted due to the exchangeability feature. The Quran mentions a zakat on wealth not items up for sale or trade. There is a difference between wealth/ownership and utility/sales. The fatwas are making the concept of zakatable items more unclear. Additionally, people can take advantage of this ambiguity and state they own items that have lost value or are not up for exchange, trade, or sale, allowing them to be zakat exempt.[57] It is notable that fatwas are not legally binding legislation they are more of a second law in Saudi Arabia. Therefore, there have been multiple fatwas issued that contradict each other. This is only problematic when the official jurisprudence on these matters is vague and DZIT relies on fatwas to clarify things.[58]

Problems with disbursement in Saudi Arabia arise from the unnecessary bureaucracy of collecting zakat by DZIT, sending the money to SAMA, and then to the Social Insurance Agency of the Ministry of Social Affairs. It would be more efficient for DZIT to handle disbursement as well as collection. Additionally, the only people eligible to receive zakat are the poor, there is no clarification on the other eight categories mentioned in the Quran, or between the poor and needy, in terms of the requirements set by the Social Insurance Agency of the Ministry of Social Affairs.[59]

DZIT employees receive their salaries from the Ministry of Civil Service and often do not receive zakat proceeds as stated in the Quran. This is detrimental because if employees were paid on the basis of zakat collected they have more of an incentive to collect zakat efficiently.[60] Almu’allafatu qulubihim, debtors, students, and travelers gain certain benefits and are not legally subjected receive a specific amount of zakat proceeds, they depend on donors’ goodwill and various Islamic charities. This allows people subsidies, their right to zakat is more of a benefit than a right, and the implementation of zakat practices differs from what is stated in Article 20 of the Saudi Basic Law of Governance.[61]

It is not wrong to give zakat to friends or relatives but this practice is not in line with what is in the Qur’an. This is due to the reason that zakat beneficiaries have to be considered poor and meet a set of requirements outlined by the government, excluding the other seven categories of zakat recipients in the Quran and those eligible for charity; making zakat a legal right rather than a need.[62] Additionally, fatwas in the past have allowed people to give zakat to family and friends instead of a set tax with legal obligations and consequences, confusing the entire zakat system further.[63]

Saudi Arabia is a very wealthy Islamic nation. The existence of poverty in the nation should have been greatly alleviated with a more efficient zakat system. However multiple problems exist which deter this;

“First, zakat is not collected from individuals but only from companies and commercial entities. Second, the zakat charitable practice still exists. Third, the Saudi Zakat Regulation lacks zakat collection principles. Fourth, the role of fatwas has been increasing to an excessive degree. Fifth, the zakat disbursement mechanism is fundamentally incorrect.”[64]

Resolving these issues is possible it just requires a better system of checks and balances, more efficient and motivated administration, better enforcement of zakat collection from the wealthiest, a set definition of terms and guidelines so as to not rely on fatwas as much, and a drive from the bureaucracy to produce a better system.

Zakat in Pakistan:

According to UNDP reports, Pakistan has an HDI of 0.55, is ranked 147 out of 187 in the global index, and has a multidimensional poverty rate of 0.237 which means 26.5% of the population is living in severe multidimensional poverty.[65] Multidimensional poverty reflects more than wealth, it takes into account education, healthcare, and standard of living. Poverty in Pakistan varies significantly by region, provinces, and rural versus urban areas. “Poverty in urban areas is 9.3 percent as compared to 54.6 percent in rural areas.”[66] A report conducted by 2016 Ministry of Planning Development and Reform disclosed;

“…over two-thirds of people in FATA (73 percent) and Balochistan (71 percent) live in multidimensional poverty. Poverty in Khyber Pakhtunkhwa stands at 49 percent, Gilgit-Baltistan, and Sindh at 43 percent, Punjab at 31 percent and Azad Jammu and Kashmir at 25 percent.”[67]

In some parts of Balochistan and Sindh, the rate of poverty has been increasing over the past decade while most of the other territories witness slight decreases. Education and health have had significant impacts on the increase of multidimensional poverty. “Deprivation in education contributes the largest share of 43 percent to MPI followed by living standards which contribute nearly 32 percent and health contributing 26 percent.” Additionally, the Gini Coefficient in Pakistan was 30.7% in 2013.[68] Zakat and Ushr (tax on agricultural produce) have the potential to significantly affect poverty rates in Pakistan. Studies by Mohammad and Anwar (1991),[69] Nazir (1996),[70] Lorenz (2013),[71] Akram and Afzal (2014),[72] Ibrahim (2015),[73] and many more referenced in these articles, discuss the potential of zakat to improve the well-being of the poor or wholly eradicate poverty from many Muslim nations with emphasizing Pakistan.

The Central Zakat Administration is the federal agency of 16 members which makes the rules for disbursement of zakat and maintains general oversight of zakat affairs in Pakistan. The Chairman of this council is a serving or retired judge of the Supreme Court. Zakat is then divided by 12 regions each under a Regional Administrator;

“The existing system of zakat is composed of one Central Zakat Administration at the federal level, one Provincial Zakat Council in each province, a District Zakat Committee in each district, a Tehsil Zakat committee in each tehsil (or sub-division) and a Local Zakat Committee (LZC) in each locality.”[74]

The Central Zakat Administration collects the money from banks and other agencies. Specified amounts of that money are sent to the Provincial Zakat Council which send funds to the LZC through District Zakat Committees. Most of the disbursement to the needy is done by LZCs while the Provincial Zakat Council is tasked with sending money to institutions. The mustahiqeen or needy are legally defined as widows, orphans, old, and disabled persons. [75]

Zakat is officially and obligatorily collected at 2.5% on 11 assets[76] determined in the 1980 Zakat and Ushr Ordinance under Schedule One. All other assets fall under Schedule Two which are not subject to zakat and fall under donations by the goodwill of an individual. Assets are evaluated on the first day of Ramadan. Ushr is collected at 5% “of the produce from every land-owner, grantee, allottee, lessee, lease-holder or land-holder (except the one excluded from the definition of Sahib-e-Nisab). Individuals are excused if they are classified as poor or needy themselves or if they produce less than 948 kg of wheat or the equivalent of that value.[77] The LZC may make the assessment of a farmer’s land but said individual could do the same for him or herself.

Zakat recipients are not satisfied by the money as a social safety net because it has not helped them in improving their economic conditions.

There are significant deficiencies in the zakat system of Pakistan that need oversight. Zeb and Zaman (2014) outline a few;

  • “There have been delays in the mustahiqeen receiving zakat on time as delays can last up to 6 months, most banks do not prefer to keep the deposits of zakat recipients,
  • Women face trouble accessing their zakat due to distance of the banks from their homes,
  • Most zakat recipients are illiterate thus opening bank accounts or updating ID cards is a difficult process,
  • There is inefficiency in the checks and balances of the Zakat department by government as some people bribe administrator to enlist them on the zakat recipient list, and
  • Recipients have to make multiple trips to the LZC to receive zakat.”[78]

Additionally, authors Akram, Mian, and Afzal (2014) outline multiple other issues requiring attention;

  1. “The practice of giving zakat exemption on various financial instruments (which are zakatable under Shariah) should be stopped;
  2. Stock-in-trade (Amwal-e-Taharah) should also be made part of the Schedule One;
  3. Ushr collection may be extended to all agricultural items considered zakatable under Shariah. Moreover, the present ushr assessment method may be changed to control leakages;
  4. A subsistence allowance may be provided only to the poorest and disabled ones among the MZ. The remaining MZ must be rehabilitated in small proportions every year by providing a small amount for rehabilitation cannot produce the desired results, and finally;
  5. The zakat system must be revitalized at all levels to take a leading role in the process of poverty eradication. Unfortunately, over time it has been reduced to one of those departments which operate only on the fringes of the main government activities. This trend needs to be reversed.”[79]

Multiple scholars note the potential reforms in the system of zakat. Changes need to be made in the administration to resolve issues related to efficiency. Employees in the zakat system need to be monitored via checks and balances. Officials accepting bribes need to be confronted with stronger punishments. The disbursement of zakat requires a more efficient and updated system. The method of disbursement physically must be situated in a manner that is more accessible for women and other mustahiqeen to ensure efficiency and proper allocation of the funds. Pakistan retains a high level of extreme poverty and requires changes in institutions, education, health, and quality of life alongside monetary aid. As a Muslim majority nation, Pakistan has the ability to grant a better life to the most desolate within its borders, utilizing reports on inefficiencies and potential improvements, the nation can carry out that objective.

 

Conclusion:

Zakat is the third pillar of Islam and a crucial part of the governance in Muslim majority nations. Multiple nations have declared goals to decrease or eradicate poverty within their borders. The presence of zakat could potentially lead to desired results, especially in nations with majority Believers and State ordained zakat systems. However, this generally has not been the case due to fundamental flaws in the physical and legal implementation of the zakat system as outlined in the cases of Malaysia, Saudi Arabia, and Pakistan. Each nation has experienced successes and shortcomings in relation to zakat. With more in-depth case studies these nations could determine their failures and potentially fix fundamental flaws. Some common strategies zakat collecting nations can work upon include; changes at the administrative level for zakat collection and disbursement to be more efficient and go to the proper recipients, maintain a more ethical system of checks and balances, and a more outspoken collection strategy from the wealthiest in society. Zakat has the potential to fulfill a greater duty in lessening the burden of poverty on individuals or eradicating it wholly. In light of the contemporary wealth gaps witnessed in the world and the situation of those in extreme poverty, such religious and political concepts should not be taken lightly.

Appendix:

Appendix A: General description of the eight asnafs who are eligible to receive zakat:[80]

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Appendix B: Malaysia disparity in collection and distribution of funds:[81]

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Bibliography: (Click the highlighted link for sources and Bibliography:

Bibliography Zakat