No poverty
In this piece, I shall endeavor to share my thoughts on how the Bait Al Maal concept could be adopted in the restricted sense to support SDG No 1 by using modern technology to first reduce and finally achieve zero poverty in 57 Islamic countries to start with.
For the sake of clarity, I borrow the following definition of poor and extremely poor from the UN website: “Nearly half of the world’s population currently lives in poverty, defined as income of less than US$2 per day, including one billion children. Of those living in poverty, over 800 million people live in extreme poverty, surviving on less than US$1.25 a day.”
Again, quoting a UN Department of Economic and Social Affairs report “World Population Prospects 2022: the world population is estimated to have reached 8 billion on 15 November 2022. The latest projections suggest that the global population could grow to around 8.5 billion by the end of this decade, 9.7 billion by 2050 and 10.4 billion in 2100.”
Deducing from the report, about 50% or four billion people around the world live in poverty of which about 10% or 800 million of the overall population live in abject poverty. If urgent measures are not taken from now, the number of poor and the extremely poor may rise to over 60% of the global population by 2050.
Comparing the UN definitions of poor and extremely poor with the Quranic explanation of the poor and needy (article 205), you will note that these are one and the same, but with a difference of 14 centuries between them.
Now, moving to the steps which may be initiated to start eradicating poverty first from the Islamic world through Zakah and gradually from the surface of the earth. In my opinion, and as the first step, every Islamic country should develop a database of its population living in poverty and in extreme poverty.
As per the World Privacy Forum (a US-based nonprofit, non-partisan public interest research group), all countries of the world have since adopted the electronic national identity card scheme. Hence, it is safely assumed that all Islamic countries also have the necessary technology-based archive of their respective population.
With a small effort, the technology can be scaled up to capture the information on the poor and extremely poor persons. Connecting the dots, the OIC — where all 57 Islamic countries are members — has the new program OIC-2025 which concentrates on 18 priority goals, one of them being poverty alleviation in the Islamic world. I would recommend that by using technology, a central database should be created by the OIC for the poor and extremely poor people from all Islamic countries.
Each Islamic country should establish a centralized Zakah fund under the auspices of its Ministry of Islamic Affairs. By law all Islamic banks, financial institutions and government-related entities must be obliged to pay Zakah to that fund. Additional contributions may voluntarily come from private sector entities and individuals who would want to rely on the fund to extinguish their Zakah liability. The fund should also be open to receive any contribution other than Zakah to enhance the overall funding for distribution.
The eligibility for the identified poor and extremely poor people to receive Zakah could be embedded in their national identity card, enabling the holders to collect money from the designated banks monthly. Alternatively, a new ATM-enabled Zakah card can be issued to them where the funds can be electronically transferred periodically. Since it will be difficult to attain credibility for a Zakah fund managed by the government, especially in the underdeveloped Islamic countries, the fund should be handed over to be managed by an internationally reputed investment management entity on professional lines — even if it costs a pretty penny. The move shall create higher efficiency, transparency and enhance the integrity of a Zakah fund.
How do you compensate the investment management entity for the effort? Governments usually are found to be struggling to make ends meet and often resort to borrowings to fill the budget deficit. This will make it difficult for governments to pay the fee to the investment management entity.
I have explained earlier that the Holy Quran has defined eight categories of Zakah recipients and one of them is the administrators who manage the receipt and distribution of Zakah. Hence, the investment management entity could be allowed to deduct an agreed annual fee from the collected Zakah amount which, on the one hand, shall not be a burden on the national exchequer and on the other, it will be in line with Islamic teachings. Guidance can be obtained from reputed scholars to ensure such an arrangement shall not contravene any Shariah tenets.
I am aware of the existence of Zakah funds in different parts of the world and that some of them are doing a great service to the poor and needy. However, most are small-scale community efforts compared with the sheer size of the Islamic world.
Also, the United Nations High Commission For Refugees (UNHCR) has established a Zakah fund and has been receiving the Zakah amounts which are mostly spent on refugees. So far in the first two months of 2023, the UNHCR has received US$257,000 from 1,154 donors (average of US$222) which has been utilized to help 106 refugee families and earthquake victims in Turkiye and Syria. This gives an indication of the urgent need to scale up the efforts for Zakah collection and distribution.
In the final article on SDG No 1, I will suggest how to combine the efforts and get the best outcome to help the downtrodden who are waiting to receive their own funds kept in the wealth of rich people by Allah, the most exalted. That is reviving the Bait Al Maal modus operandi for the purpose of uplifting the poor.
The purpose of this educative series and the article is not to hurt any religious or commercial sentiments either consciously or even unwittingly.
Sohail Zubairi is an Islamic finance specialist, AAOIFI-certified Shariah advisor and auditor as well as CIAE-certified Islamic arbitrator and expert. He can be contacted at [email protected].
Next week: SDGs to be continued.