The Socio-economic Importance of Zakat -Md. Sajidul Islam
Zakat is one of the five pillars of Islam. Allah says in the Holy Quran,
“And in their wealth there was a rightful share for the begger and for the destitute” (51:19)
Zakat is obligatory on a person if he has assets equal to Nisab. Nisab wealth means having wealth equal to seven and a half gold or fifty two and a half tolas of silver. And if someone has Nisab amount of wealth then he has to donate 2.5% of that wealth at the end of the year. There are also 8 specific categories allocated for donating this wealth, which are prescribed by Allah Ta’ala in the Holy Quran-
1. Fakir (who has nothing)
2. The poor (who do not have the required amount of wealth)
3. Employees engaged in collection of Zakat (who have no other means of livelihood)
4. Neo-Muslims (if in financial crisis)
5. Slaves (for emancipation)
6. People who have more debt than their assets (Affluent at home but abroad)
7. A person who strives in the way of Allah
8. Musafir (one who falls into want while travelling)
Looking at the sectors, it is clear that all the people in the society who need help financially are asked to pay Zakat. Not only from the Islamic point of view, but also from the social point of view, the importance of Zakat is immense. Below is a detailed explanation about it-
On alleviating Inequality
Zakat is able to establish equality in society. The biggest problem of capitalist society is ‘economic inequality’ which can be eliminated through Zakat. Because through Zakat, the economic disparity between the rich and the poor is reduced. Thus, Zakat prevents the tendency of people to concentrate wealth.
On elimination of interest free Society:
Zakat helps to build an interest free society. If we look at the context of Bangladesh, we notice that when a poor person suddenly needs money, he has to go to the village moneylender or small loan, where again he has to bear the burden of interest. Right there, if that poor person receives the amount of Zakat, then firstly his poverty is alleviated and secondly he is saved from interest.
Discourages hoarding of wealth:
A fundamental principle of Islamic economics is that it does not allow wealth to be concentrated in the hands of a few. Al-Qur’an states, “Beware, do not direct wealth to the wealthy section of the community only” (Al-Qur’an 59:70). Hoarding of assets is one of the reasons for rising commodity prices. In fact, zakat also prevents the hoarding of goods, because if the goods are kept in stock, zakat must be paid on them again. As zakat has to be paid on deposited gold and silver, investment in these unproductive sectors decreases and vice versa investment in productive sectors increases. That increases the total output of the society, creating new businesses. As a result, new jobs are created and unemployment is reduced.
On alleviating poverty:
Zakat mainly plays a role in alleviating poverty from the society. Zakat is also given in such a way that the zakat recipient can become self-sufficient after receiving zakat for a few years, and thereafter he will not need to take zakat again. It even happens that the zakat receiver acquires the ability to pay zakat himself after becoming self-reliant by receiving zakat. In this way, the number of zakat recipients in the society will decrease. At the end of the day, it is possible to raise some people from below the poverty line and make them self-reliant through the system of zakat.
A huge amount of money is collected in Zakat every year all over the world. From this collected money, orphanages, hospitals, old age homes are run in different countries of the world. In 2021, the equivalent of $1.8 billion was raised from Muslims in the United States alone, all of which was spent in the service of humanity.
On Achieving SDGs:
One of the 17 Sustainable Development Goals of the United Nations is to build a world free of hunger and poverty, which is essentially similar to the purpose of Zakat. The Qur’an identifies eight sectors worthy of zakat, including helping the poor and needy, refugees and displaced people, and liberating those in slavery. As a result, Zakat is strongly aligned with SDG 1: No Hunger, SDG 2: Zero Poverty, SDG 10: Reduce Inequality. Zakat also resembles with other SDG targets. For example, the motto of SDG 17 is – Partnership. Since zakat givers and administrators cooperate with each other in implementing zakat, SDG 17 namely partnership is also reflected here.
On wealth redistribution:
Zakat transfers purchasing power from the rich to the poor, resulting in a redistribution of wealth within society. Wealth is not monopolized by any group of society. Because by paying zakat, it comes back to people. As a result wealth is not concentrated in the society. The transfer of wealth from the rich to the poor increases the purchasing power of the poor, thereby increasing social consumption and creating new demand. Which mainly plays a role in increasing the production of the society.
On Reducing Crimes in Society:
According to sociologists, when poverty increases in the society, various crimes such as theft and robbery increase in the society. The Prophet said, “Poverty can lead to disbelief” (Bukhari and Muslim). And since poverty is eradicated through Zakat system, it also reduces the crime tendency from the society.
Sometimes, due to the lack of connection between Zakat giver and Zakat receiver, the real purpose of Zakat is not fulfilled, it faces a lot of mismanagement too. In order to get out of this problem, several public and private organizations work on zakat collection. For example: Center for Zakat Management, Anjuman Mufidul Islam, Assunnah Foundation, Dhaka Ahsania Mission and many other organizations hand over Zakat to the competent person to collect and receive Zakat. If Zakat system is managed in such a planned manner, several positive changes can be observed in social and economic affairs.
Finally, it should be noted that Zakat reduces economic inequality in society, creates an interest-free economic system, prevents concentration of wealth, transfers purchasing power from the rich to the poor, increases investment and production in society, alleviates poverty and reduces unemployment. Above all, Zakat plays an instrumental role in bringing about social and economic stability. n
Author: Student, Economics, University of Dhaka.