Being a Paper delivered at the Launch/Public Presentation of the IBILE Muslims Community Zakat and Sadaqah Foundation on Saturday the 6th of July, 2024 at the Main Auditorium, University of Lagos
In the name of Allah, the entirely and the especially Merciful
Zakat, the third pillar of Islam, if properly administered, can make a significant difference in the global efforts towards poverty alleviation and addressing the overall economic imbalance, particularly in the developing countries.
Since 2018, the global Zakat contribution has been estimated to have a value of about $1 trillion. What this implies is that Zakat alone, can provide more than one third of the needed funds for the realization of SDGs in developing countries.
According to UN Conference on Trade and Development (UNCTAD) World Investment Report 2014, $2.5 trillion needed every year to achieve the 17 SDGs.
More recently, the UNHCR Refugee Zakat Fund Report of 2022 declares that “Strong linkages have been identified between the impact of Zakat/Sadaqah and the realization of several of the Sustainable Development Goals (SDGs), primarily: No Poverty (SDG 1), Zero Hunger (SDG 2), Good Health and Well-being (SDG 3), Quality Education (SDG 4), Gender Equality (SDG 5) and Clean Water and Sanitation (SDG 6).
As a matter of fact, in 2021, UNHCR’s Refugee Zakat Fund distribution impacted the lives of more than 1.2 million beneficiaries in 14 countries, including Nigeria.
And by the way, what is Zakat? One-fourth of the one-tenth of your wealth, or just 2.5% out of 100 % of your wealth, payable only once in a year! You can even use to empower you own kith and kin, if they qualify. You empower them, and you earn the pleasure of the Almighty Allah as you are complying with his directives.
As simple and easy it is to comply, any Muslim that fails to do so exposes him/her self to severe punishment in the hereafter.
In one hadith narrated by Abu Hurairah (may Allah be pleased with him), the Prophet salla Allahu alayhi wa sallam said, “Whoever is made wealthy by Allah and does not pay Zakat of his wealth, on the Day of Resurrection his wealth will be made like a bald-headed poisonous male snake with two black spots over the eyes. The snake will encircle his neck and bite his cheeks and say, ‘I am your wealth, I am your treasure.’ ” Then the Prophet recited the Quranic verse:– ‘Let not those who, stingingly, withhold that which Allah has bestowed on them of His bounty think that it is good for them. No, it is (actually) bad for them . . .’. (Al Imraan 3:180). (Sahih Al- Bukhari)
مَن آتَاهُ اللَّهُ مَالًا، فَلَمْ يُؤَدِّ زَكَاتَهُ مُثِّلَ له مَالُهُ يَومَ القِيَامَةِ شُجَاعًا أقْرَعَ له زَبِيبَتَانِ يُطَوَّقُهُ يَومَ القِيَامَةِ، ثُمَّ يَأْخُذُ بلِهْزِمَتَيْهِ – يَعْنِي بشِدْقَيْهِ – ثُمَّ يقولُ أنَا مَالُكَ أنَا كَنْزُكَ، ثُمَّ تَلَا: {وَلَا يَحْسَبَنَّ الَّذِينَ يَبْخَلُونَ بِمَا آتَاهُمُ اللَّهُ مِنْ فَضْلِهِ هُوَ خَيْرًا لَهُمْ بَلْ هُوَ شَرٌّ لَهُمْ سَيُطَوَّقُونَ مَا بَخِلُوا بِهِ يَوْمَ الْقِيَامَةِ وَلِلَّهِ مِيرَاثُ السَّمَاوَاتِ وَالْأَرْضِ وَاللَّهُ بِمَا تَعْمَلُونَ خَبِيرٌ} [آل عمران: 180] أخرجه البخاري.
As this Foundation is set to start working by giving a practical expression to Zakat fund administration in Lagos State, it would be necessary to have some words of advice for the Foundation at this juncture.
The first issue I would like the Foundation to address is what purpose do we want the IBILE Zakat fund to serve; to liberate people from the shackles of poverty by way of empowerment, or to give them palliatives while they continue to wallow in abject poverty?
I believe answering this poser would be determined by a number of factors, including but not limited to the size of fund available, the number of targeted and potential beneficiaries, and of course the socio-economic realities of our environment.
Whatever may be the case, I sincerely hope that a Foundation constituted by highly respected and experienced people led by the Grand Chief Imam would not repeat the mistakes of many several attempts at Zakat fund administration in the past, as evident in the little or no impact they have had on the society.
A situation where Zakat is distributed in envelopes or as cash handouts of ten thousand, twenty thousand naira would never serve the cardinal objective of Zakat in Islam. Perhaps a reference here to the positions of Muslim jurists of the four schools of Islamic Law on Zakat distribution/allocation will give us the necessary insights on this issue.
In the Shafii School, a Zakat beneficiary shall be given what would be enough to transform him from his status of need to a status of permanent self-sufficiency, to the extent that he too may qualify to pay rather than receive Zakat in subsequent year(s).
The Maliki and Hanbali hold a slightly different view, by positing that what a Zakat beneficiary deserves is what would be enough to cater for his needs, including that of his dependants, for a whole year. For the Hanafis, he must be given an amount equivalent to the minimum nisab (200 dirhams).
When you look at all these, there is no way you would interpret Zakat distribution in the form of palliatives that may not sustain the beneficiary for even a month. Yes, we may find an excuse in the fact that given the prevailing economic situation in the land, not some many eligible people will get a share of Zakat if administered the way it ought to be administered. But the question is must we capture all eligible candidates in one fell swoop, especially where that has been done for many years without any meaningful result.
We can also learn from other jurisdictions where Zakat has been used either as social assistance or as a microfinancing mechanism, by identifying the productive and unproductive categories of beneficiaries.
The former are categories of people eligible for Zakat who can work and earn their own income, while the latter are people who cannot do so, such as old poor people or people with disabilities.
Another issue that requires the revered Foundation’s deep consideration is who/what should benefit from Zakat fund. A situation where a substantial amount of Zakat would go to administrative expenses, or for capital-intensive projects is detestable.
For the avoidance of doubt, Zakat fund is not for mosque or school construction, neither can it be used for religious book publication or conference or seminar organization, even when such are for religious purposes. This is the position of the vast majority of Muslim jurists, living and dead. Unlike Sadaqah that may have open-ended lists of beneficiaries, Zakat is strictly and exclusively for the eight categories of people mentioned in Surat Tawbah, verse 60.
{إِنَّمَا الصَّدَقَاتُ لِلْفُقَرَاءِ وَالْمَسَاكِينِ وَالْعَامِلِينَ عَلَيْهَا وَالْمُؤَلَّفَةِ قُلُوبُهُمْ وَفِي الرِّقَابِ وَالْغَارِمِينَ وَفِي سَبِيلِ اللَّهِ وَابْنِ السَّبِيلِ فَرِيضَةً مِنَ اللَّهِ وَاللَّهُ عَلِيمٌ حَكِيمٌ } [التوبة: 60]
Eligibility criteria are also key to ensure effective and efficient Zakat fund administration. Whatever criteria set by the Board of Trustees in line with the Sharia parametres must be blindly and religiously followed, and there should be no room for lobbying “or knowing someone” to qualify as a beneficiary.
There are many global best practices out there that this Foundation can adopt while setting its own criteria. Proof of lack of asset ownership, having income below the poverty line, and proof of not benefiting from a similar institution are some of the internationally tested benchmarks to determine eligibility, avoid payment duplication, increase coverage and improve verification processes.
People with mental and physical disabilities, students who genuinely fail to meet their school fees obligations, victims of natural disaster and internally displaced people may also qualify for Zakat distribution, when other Shariah laid eligibility conditions (شروط) are met, and all likely impediments or encumbrances (موانع) are avoided. The local communities particularly mosque communities and the ratibi imams usually play a major role in Zakat and Sodaqah eligibility determination.
The ease of payment has also been found to be a key enabler for proper Zakat and sodaqah mobilization. The Foundation should look into multiple methods in mobilizing resources for the Fund. Cashless transaction, mobile app transfer, blockchain technology and crowdfunding mechanism are all suitable payment options that may be explored.
When proper arrangements are made with concerned authorities, regular or intermittent deductions from source are also potent in encouraging more people to pay Zakat or give general donations either as sodaqah or waqf.
Transparency and accountability would also become inevitable if we are desirous of gaining and maintaining the confidence of every party involved in Zakat related activities, particularly the payers or donors, as the case may be.
In this regard we must take the advantage of technology for enhanced transparency. Through various Zakat apps in different parts of the world today, donors can track their Zakat at any time on the app, check the live reports to learn how many people are being supported with their Zakat contributions, and receive real-time financial statements of the used and yet-to-be used Zakat funds.
When we talk of transparency in relation to Zakat administration, we have three things in mind, namely, Financial Transparency, Managerial Transparency and Programmatic Transparency.
Financial transparency happens through the availability of published and easily accessible financial reports, as well as the use of external auditors. Managerial transparency entails having a readily available work and strategic plans indicating the direction and the short and long terms goals of Zakat. While programmatic transparency presupposes the existence of a database of Zakat recipients and payers, as well as data on the timeliness of Zakat distribution.
One important tool that I would urge the Foundation to consider in its bid to ensure a transparent and accountable Zakat fund administration is the Accounting Standard on Financial Reporting for Zakah (Standard 39) by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), which emphasizes among other things, disclosure of sources of Zakat, the use of Zakat fund for each category of Asnaf, and the remaining balance or undistributed Zakat.
It is also important to assess not just the process of Zakat collection and distribution, but also the impact of Zakat on the livelihoods of beneficiaries. To achieve this, a Monitoring and Evaluation (M&E) mechanism would be necessary, with clearly designed KPI and measurable targets. Grievances Redress Mechanisms (GRMs) would also go a long way in getting the voices of our targeted beneficiaries heard, and adjustments and modifications made when necessary.
There are other issues that I believe the Foundation will not hesitate to engage experts on the Shariah position relating to them whenever the need arises. For instance, can we invest Zakat fund before its distribution and to what extent, cross-state distribution (surplus), cross-state collection (deficit) of Zakat, and a whole lot of other issues that are technical in nature and I don’t want to bother this august gathering with too much technicalities. Looking at the formation of the IBILE Zakat Fund initiative, the Foundation will also have to look into its model of operation, whether it is going to be a centralized or decentralized one.
In conclusion, just as it is done in other countries, there is a need for uniform standard in measuring the minimum Zakatable income/earnings (nisaab) in Nigeria. Yes, the nisab is either 85 grams in gold or 595 grams in silver, but how does this translate into the naira equivalent, having regard to both the domestic and global market rates that are ever-changing. The uniform standard can be achieved at a national level by a body like the NSCIA, or at sub-national level by the Lagos State Council of Ulama, if there is any, or any similar body.
We in Kwara State are lucky to have a relatively young and energetic Grand Kadi, who since assuming office about two years ago has included monthly release of nisab for Zakat as part of the primary functions of the State Shariah Court of Appeal.
We also appeal to the government of the land to emulate other countries where Muslims constitute a substantial percentage of the citizens, by considering adequate incentives for Zakat payers, in view of the numerous socio-economic benefits the Zakat institution delivers in the society. Tax incentives for Zakat payers are usually provided in two ways, either in the form of deduction of Zakat paid from tax payable, or as deduction of Zakat paid from taxable earnings in any assessment year.
Zakat, Waqf, and Sadaqah have tremendous impacts on the society. They contribute to poverty alleviation, social welfare, and community development. Through effective and efficient management, the trio could help bridge the gap between the rich and the poor and provide a safety net for the most vulnerable members of the community.
Waqf simply means you can do better for yourself (why must you restrict yourself to the 2.5 % compulsory charity?). The beauty of it is that unlike Zakat, you can decide how much to pay, select your favoured beneficiaries, appoint your preferred administrator and design how the waqf should be administered. You may even prescribe a timeline or duration for your waqf (in the Maliki school).
Thanks for listening.
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Prof Alaro is a Lecturer, Department of Islamic Law, Faculty of Law, University of Ilorin, Ilorin. He is also a Member, Financial Regulation Advisory Council of Experts, Central Bank of Nigeria
A wonderful lecture and presentation on a very important topic that all Muslim communities in the world, especially in Africa need to pay attention to. Indeed establishing well managed Zakat Funds as outlined by the Professor is necessary to achieve the SDGs in our communities.