Zakat as a Poverty Reduction Mechanism Among the Muslim Community: Case Study of Bangladesh, Malaysia, and Indonesia

Abstract

Poverty reduction remains the most important challenge for policy makers in Islamic communities. The World Bank (2010: Poverty profile in Muslim world, from http://www.worldbank.org) estimates that approximately 3 billion people are living in poverty and 46 million more people will come under the income level of US$1.25 a day due to the recent global economic meltdown and slow economic growth rates. Thirty‐five percent of these people are Muslims from Islamic countries. The global Muslim community has an essential role to play in addressing the injustice of global poverty through zakat. Zakat is an Islamic faith‐based institution and is being underutilized for poverty reduction in many of these poor Muslim countries. Since zakat constitutes one of the pillars of Islam, it is logical to assume that policy makers among Muslims should pay serious attention to it. However, that is not the case for many Muslim countries and this paper will show that not all Muslim countries are seriously applying zakat in its strategy of combating poverty. This paper will specifically examine the role and effect of zakat in three Muslim countries (Bangladesh, Malaysia and Indonesia) providing the facts of countries that practise zakat in comparison with those that do not.