Zakat Collectible in OIC Countries for Poverty Alleviation: A Primer on Empirical Estimation International Journal of Zakat | ISSN: 2541 1411 | Vol. 1 (1) 2016
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Nov 16, 2016
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Abstract
This study estimates potential Zakat collectible in 17 member countries of the Organization of Islamic Cooperation (OIC). In our estimation, we found that the zakat to GDP ratio exceeds the poverty gap index to GDP (PGI-GDP) ratio in all but 3 countries, with poverty line defined at $1.25 a day. We also found that the zakat to GDP ratio exceeds the PGI-GDP ratio, except in 4 countries with poverty line defined at $2.00 a day. We also compared zakat to GDP ratio against poverty headcount ratio. According to our estimates, the Zakat to GDP ratio exceeds the poverty head count ratio to GDP (PHCR-GDP), except in 5 countries with poverty line defined at $1.25 a day. We also found that zakat to GDP ratio exceeds PHCR-GDP ratio except in 7 countries, with poverty line defined at $2.00 a day. Thus, the institution of Zakat has ample potential to contribute towards the alleviation of poverty. Lastly, we show that the aggregate resources pooled together from the potential Zakat collection in 17 OIC countries will be enough to fund resources for poverty alleviation in all 17 OIC countries combined.
Keywords: Zakat, Fiscal Policy, Poverty, Redistribution
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Ahmed Shaikh, S. (2016, November 16). Zakat Collectible in OIC Countries for Poverty Alleviation: A Primer on Empirical Estimation. International Journal of Zakat, 1(1), 17-35. https://doi.org/https://doi.org/10.37706/ijaz.v1i1.4
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References
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Ahmad, S.; Wahid, H. & Mohamad, A. (2006). “Privatisation of Zakat institutions in Malaysia and Its Effect on Formal Payment”, International Journal of Management Studies, 13(2), pp. 175 – 196.
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Rahman, A. R. A. (2003). “Zakat on business wealth in Malaysia: Corporate Tax Rebate, Accountability, and Governance”, Journal IKIM, 11(1), pp. 37 – 50.
Sadeq, A. H. M. (1996). “Ethico-Economic Institution of Zakat: An Instrument of Self Reliance and Sustainable Grassroots Development”, IIUM Journal of Economics and Management, 12(2).
Sen, A. (1983). “Poverty and Famines: An Essay on Entitlement and Deprivation”. Oxford University Press.
Shaik, A. Aziz (1979). “Some Aspects of Economics of Zakat”, USA: American Trust Publication
Shirazi, Nasim S. (2014). “Integrating Zakat and Waqf into the Poverty Reduction Strategy of the IDB Member Countries”, Islamic Economic Studies, 22(1), pp. 79 – 108.
Shirazi, Nasim S. & Amin, M. Fouad (2009). “Poverty Elimination through Potential Zakat Collection in the OIC-member Countries: Revisited”, The Pakistan Development Review, 48(4), pp. 739 – 754.
Siddiqui, M. Nejatullah (1978). “Place of Additional Levies in the Islamic Shari’ah”, New Delhi: Maktaba-i-Islami.
Suprayitno, E.; Kader, R. A. & Harun, A. (2013). “The Impact of Zakat on Aggregate Consumption in Malaysia”, Journal of Islamic Economics, Banking and Finance, 9(1), pp. 39 – 62.
Wahid, Abu N. M. (1986). “The Economic Implications of Zakat”, Contemporary Review, 248 (1440), p. 10.
Wahid, H; Ahmad, S. & Kader, A.R. (2008). “Distribution of Zakat in Malaysia: Why are the Muslims Still Dissatisfied”, Proceedings of Seminar Kebangsaan Ekonomi Malaysia, Universiti Kebangsaan Malaysia, Bangi.
World Bank Group (Ed.). (2012). “World Development Indicators 2012”. World Bank Publications.
Yusoff, Mohammed B. (2011). “Zakat Expenditure, School Enrollment, and Economic Growth in Malaysia”, International Journal of Business and Social Science, 2(6), pp. 175 – 181.
Abdullah, M. & Suhaib, A. Q. (2011). “The Impact of Zakat on Social life of Muslim Society”, Pakistan Journal of Islamic Research, 8, pp. 85 – 91.
Abu Bakar; Nur B. & A. Rahman, A. Rahim (2007). “A Comparative Study of Zakat and Modern Taxation”, Journal of King Abdul Aziz University: Islamic Economics, 20(1), pp: 25 – 40.
Ahmed, Habib (2004). “Role of Zakat and Awqaf in Poverty Alleviation”, Islamic Research and Training Institute, Islamic Development Bank Group, Jeddah. (Occasional Paper No. 8).
Ahmad, S.; Wahid, H. & Mohamad, A. (2006). “Privatisation of Zakat institutions in Malaysia and Its Effect on Formal Payment”, International Journal of Management Studies, 13(2), pp. 175 – 196.
Azam, M.; Iqbal, N. & Tayyab, M. (2014). “Zakat and Economic Development: Micro and Macro Level Evidence from Pakistan”, Bulletin of Business and Economics, 3(2), pp. 85 – 95.
Debnath, Sajit C.; Islam, Mohammad T. & Mahmud, Kazi. T (2013). “The Potential of Zakat Scheme as an Alternative of Microcredit to Alleviate Poverty in Bangladesh”, 9th International Conference on Islamic Economics and Finance, QFIS, Doha, Qatar.
Firdaus, Muhammad; Beik, Irfan S.; Irawan, Tonny & Juanda, Bambang (2012). “Economic Estimation and Determinations of Zakat Potential in Indonesia”, IRTI Working Paper Series, WP# 1433‐07.
Haneef, S. S. S. & Mahmud, M. W. (2012). “Issues in Contemporary Zakat: A Juristic Analytical Evaluation”, Kuala Lumpur: IIUM Press.
Hassan, M. Kabir & Jauanyed Masrur Khan (2007). “Zakat, External Debt and Poverty Reduction Strategy in Bangladesh”, Journal of Economic Cooperation, 28(4), pp. 1 – 38.
Hassan, M. Kabir (2010). “An Integrated Poverty Alleviation Model Combining Zakat, Awqaf and Microfinance”, in Seventh International Conference-The Tawhidi Epistemology: Zakat and Waqf Economy, Bangi, Malaysia.
Ibrahim, Patmawati (2006). “Economic Role of Zakat in Reducing Income Inequality and Poverty in Selangor”, PhD thesis, Universiti Putra Malaysia.
Kahf, M. 1989. “Zakat: Unresolved Issues in Contemporary Fiqh”, Journal of Islamic Economics, 2(1): 1 – 22.
Khan, M. Akram (2005). “Comments on A. Azim Islahi & M. Obaidullah: Zakat on Stocks: Some Unsettled Issues”, Journal of King Abdul Aziz University: Islamic Economics, 18(1), pp. 41 – 42.
Kuran, Timur (2003). “Islamic Redistribution through Zakat: Historical Record and Modern Realities, “in Bonner, M, Ener, M, and Singer A. (eds.). Poverty and
34 International Journal of Zakat 1(1) 2016
Charity in Middle Eastern Contexts, SUNY Press, pp. 275 – 293.
M. Akram, Mian & Afzal, M. (2014). “Dynamic Role of Zakat in Alleviating Poverty: A Case Study of Pakistan”, University Library of Munich, Germany.
Mahmud, Irfan. (2001). “Economic System under Umar the Great”. Lahore: Shaikh Muhammad Ashraf Publishers.
Malik, Sohail J; Hussain, Muhammad & Shirazi, Nasim S. (1994). “Role of Infaq in Poverty Alleviation in Pakistan”, The Pakistan Development Review, 33(4), pp. 935 – 952.
Maududi, Sayyid Abul A’la (1970). “Ma’ashiyat-e Islam [Economic System of Islam]”, Lahore: Islamic Publications.
Nadvi, S. Moeen-ud-din (1996). “Taareekh-e-Islam [History of Islam]”. Lahore: Maktaba-e-Rehmania.
Nadzri, Farah A.; A. Rahman, Rashidah & Omar, Nomrah (2012). “Zakat and Poverty Alleviation: Roles of Zakat Institutions in Malaysia”, International Journal of Arts and Commerce, 1(7), pp. 61 – 72.
Naveed, Arif & Ali, Nizam (2012), “Clustered Deprivation - District Profile of Poverty in Pakistan”, SDPI.
Norazlina A. Wahab & A. Rahim, A. Rahman (2011). “A Framework to Analyse the Efficiency and Governance of Zakat Institutions”, Journal of Islamic Accounting and Business Research, 2(1), pp. 43 – 62.
Piketty, Thomas (2014). “Capital in the 21st Century”. New York: Belknap Press.
Pingali, P. (2002). “Reducing Poverty and Hunger: The Critical Role of Financing for Rural Development, Food & Agriculture. In International Conference on Financing for Development, March, 2002.
Powell, Russell (2009). “Zakat: Drawing Insights for Legal Theory and Economic Policy from Islamic Jurisprudence”, Pittsburgh Tax Review, 7(43), pp. 10 – 17.
Qaradawi, Yusufal (1999). “Fiqh az-Zakat: A Comparative Study-The Rules, Regulations and Philosophy of Zakat in the Light of the Qur’an and Sunnah”, Dar Al Taqwa Ltd: London.
Rahman, A. R. A. (2003). “Zakat on business wealth in Malaysia: Corporate Tax Rebate, Accountability, and Governance”, Journal IKIM, 11(1), pp. 37 – 50.
Sadeq, A. H. M. (1996). “Ethico-Economic Institution of Zakat: An Instrument of Self Reliance and Sustainable Grassroots Development”, IIUM Journal of Economics and Management, 12(2).
Sen, A. (1983). “Poverty and Famines: An Essay on Entitlement and Deprivation”. Oxford University Press.
Shaik, A. Aziz (1979). “Some Aspects of Economics of Zakat”, USA: American Trust Publication
Shirazi, Nasim S. (2014). “Integrating Zakat and Waqf into the Poverty Reduction Strategy of the IDB Member Countries”, Islamic Economic Studies, 22(1), pp. 79 – 108.
Shirazi, Nasim S. & Amin, M. Fouad (2009). “Poverty Elimination through Potential Zakat Collection in the OIC-member Countries: Revisited”, The Pakistan Development Review, 48(4), pp. 739 – 754.
Siddiqui, M. Nejatullah (1978). “Place of Additional Levies in the Islamic Shari’ah”, New Delhi: Maktaba-i-Islami.
Suprayitno, E.; Kader, R. A. & Harun, A. (2013). “The Impact of Zakat on Aggregate Consumption in Malaysia”, Journal of Islamic Economics, Banking and Finance, 9(1), pp. 39 – 62.
Wahid, Abu N. M. (1986). “The Economic Implications of Zakat”, Contemporary Review, 248 (1440), p. 10.
Wahid, H; Ahmad, S. & Kader, A.R. (2008). “Distribution of Zakat in Malaysia: Why are the Muslims Still Dissatisfied”, Proceedings of Seminar Kebangsaan Ekonomi Malaysia, Universiti Kebangsaan Malaysia, Bangi.
World Bank Group (Ed.). (2012). “World Development Indicators 2012”. World Bank Publications.
Yusoff, Mohammed B. (2011). “Zakat Expenditure, School Enrollment, and Economic Growth in Malaysia”, International Journal of Business and Social Science, 2(6), pp. 175 – 181.