2nd Yayasan Tun Ismail Berdafter Public Lecture on Islamic Finance at Kuala Lumpur
Plan of Lecture:
- Opportunities Finance in Islam
- Institutions of Islamic Philanthropy
2.1. Institution of Zakat
2.2. Institution of Waqf
- Meeting the Resources Gap
3.1. Estimating the Resource Gap
3.2. Estimating the Potential Resources from Zakat
3.3. Estimation of Potential Resources from Waqf
- Empowering the Poor with Zakat and Waqf Resources
4.1. Microfinance with Zakat and Waqf
4.2. Zakat for Emergency Credit
4.3. Micro-Takāful with Zakat and Waqf
4.4. Guarantee Fund with Zakat
- Towards Optimal Mobilization of Zakat and Waqf Resources
5.1. Trends in Mobilization of Zakat and Waqf Resources
5.2. Good Practices in Mobilization of Zakat Resources
5.3. Good Practices in Mobilization of Waqf Resources
- Towards Better Management of Zakat and Waqf Resources
6.1. Trends in Utilization of Zakat & Waqf
6.2. Good Practices in Zakat Utilization
6.3. Good Practices in Waqf Management
- Concluding Remarks: Selected Examples of Zakah and Waqf in Opportunities Finance
The paradox of today’s world is nowhere more clearly reflected than in the dynamics of globalization. It brings at the same time extraordinary potential and huge risks. On the one hand, human society has never withnessed such fast-paced wealth creation. Cited by scholars as one of the signs of end-times, never before in the history of mankind, we have had so many young billionaires. Accoring to Forbes, fourty-six of the world’s wealthiest people are under 40 years old. Evan Spiegel the 24-year-old CEO of Snapchat with a net worth of $1.5 billion, is officially the youngest billionaire in the world. He once said at a conference. “I got really, really lucky. And life isn’t fair.”
At the same time, consider this:
More than a billion people still live on less than one dollar a day, and almost 3 billion on less than two, suffering from acute income poverty. The United Nations Food and Agriculture Organization estimates that about 805 million people of the 7.3 billion people in the world, or one in nine, routinely go hungry and suffer from chronic undernourishment. World Health Organization and UNICEF estimate that 750 million people around the world lack , which is again approximately one in nine people, access to safe water and almost 2.5 billion do not have access to adequate sanitation. Another UN study reports that there are approximately 100 million people without any kind of shelter, whatsoever. Thus, there is a need for “opportunity finance” because capital is not yet aligned with social, economic, and political justice.
There seems to be a consensus among the international community that poverty, at a fundamental level, is a denial of choices and opportunities. Being poor does not mean living below an imaginary poverty line, such as an income of two dollars a day or less. It means having an income level that does not allow an individual to cover certain basic necessities, taking into account the circumstances and social requirements of the environment. It is a violation of human dignity. The poor generally lack a number of elements, such as education, access to land, health and longevity, justice, family and community support, credit and other productive resources, a voice in institutions, which are best termed as access to opportunity.
Economic growth gives people the opportunity to lift themselves out of poverty. Human development builds their capacity to do so. This therefore, is the main driving force in empowerment and development. Indeed, growth though necessary, may not create sustainable opportunities unless it is equitable, employment intensive and pro-poor. Denial of opportunities takes the form of lack of access to food, shelter, basic social services, such as education and training, health, sanitation, water and security. Therefore, integrated strategies of empowerment, targeted assistance as well as attention to equity issues are essential to enable the vast majority of mankind to progress out of poverty and deprivation.
The need to create and sustain fair and equitable opportunities for all humanbeings is entirely compatible with the Islamic worldview driven by the Maqasid al-Shariah. As articulated by modern day Islamic economists, the Islamic worldview emphasizes the significance of promoting falāh (فلاح) or real well-being of all the people living on earth, irrespective of their race, colour, age, sex or nationality. Indeed, there seems to be a consensus in all societies across the world that the primary purpose of development is to promote human well-being. There is, however, considerable difference of opinion in the vision of what constitutes real well-being and the strategy to be employed for realizing and sustaining it. According to the secular and materialist worldview, the primary measure of development is a rise in income and wealth. A number of religious scholars as well as moral philosophers however, disagree and emphasize the spiritual and non-material as well as the material contents of well-being. It may not be possible to sustain long-term development of a society without ensuring all of these. The satisfaction of all these needs is a basic human right and has been addressed in Islamic literature under the generic term maqāsid al-Sharī‘ah (goals of the Sharī‘ah). The framework for the same was originally enunciated by Imām Abū Hāmid al-Ghazālī, wherein, he classified the maqasid into five major categories by stating that:
“The very objective of the Sharī‘ah is to promote the well-being of the people, which lies in safeguarding their faith (dīn), their self (nafs), their intellect (‘aql), their posterity (nasl), and their wealth (māl). Whatever ensures the safeguard of these five serves public interest and is desirable, and whatever hurts them is against public interest and its removal is desirable.”
Later day and contemporary scholars have made several modifications to the list as well as in the order of the list of such maqāsid: faith (dīn), the human self (nafs), intellect (‘aql), posterity (nasl) and wealth (māl) that must be protected and enriched in the interest of long-term development of mankind. Some later scholars have altered the sequence of the maqasid (for instance, some scholars place the human self at the top) and some have added further maqasid.
An Islamic economy is a maqasid-driven economy in which all policies, regulations, rules and procedures, institutions and organizations are designed and configured with a view to achieving the maqasid. In this paper we restrict ourselves to the institutions of philathropy, e.g. zakat, sadaqa, waqf and infaq. A direct linkage may be established between these institutions with the protection and enrichment of maqasid. For instance, according to Chapra, some of the common contributing factors to “enrichment of self” are: (1) dignity, self-respect, human brotherhood and social equality, (2) justice, (3) spiritual and moral uplift, (4) security of life, property and honour (5) freedom (6) education (7) good governance (8) need fulfilment (9) employment (10) equitable distribution of income and wealth (11) marriage and proper upbringing of children (12) family and social solidarity (13) minimization of crime and anomie (14) mental peace and happiness. A positive impact of philanthropic action on some of what Chapra terms as the corollaries of maqasid, is hypothesized here.
Shariah strongly encourages philanthropic action on the part of Muslims.
“The parable of those who spend their property in the way of Allāh is as the parable of a grain growing seven ears with a hundred grains in every ear, and Allāh multiplies for whom He pleases, and Allāh is Ample-giving, Knowing” (2:261).
“O you who believe! Give in charity of the good things you earn and of what We have brought forth for you out of the earth, and do not aim at giving in charity what is bad” (2:267).
“If you give in charity openly it is well, and if you hide it and give it to the poor it is better for you. (2:271).
“Righteousness is this that one believes in Allāh and the last day and the angels and the Book and the prophets, and gives away wealth out of love for Him to the near of kin and the orphans and the needy and the wayfarer and the beggars and for the emancipation of the captives, and keeps up prayer and pays the zakāt” (2:177).
At the same time, Shariah emphasizes that the beneficiaries of philanthropic action should be the poor, deprived and excluded sections of the society.
“The offerings (zakah) given for the sake of Allah are (meant) only for fuqara (poor) and the masakeen (needy), and ameleen-a-alaiha (those who are in charge thereof), and muallafat-ul-quloob (those whose hearts are to be won over), and for fir-riqaab (the freeing of human beings from bondage), and for al-gharimun (those who are overburdened with debts), and fi-sabeelillah (for every struggle) in Allah’s cause, and ibn as-sabil (for the wayfarer): (this is) an ordinance from Allah- and Allah is all knowing, wise.” (9:60 )
“(Zakāt) charity is only for the poor and the needy, and the collectors appointed for its collection, and those whose hearts are made to incline to truth, and the ransoming of captives, and those in debt. and for the way of Allāh, and (for) the wayfarer” (9:60).
By defining the eligible beneficiaries, the Shariah prescribes philanthropic action to be directed at meeting the needs of the deprived and the excluded sections of the society and simultaneously proscribes the application of annual zakat for others, thus creating a stable source of financing opportunities for the former.
 Al-Ghazālī, al-Mustasfā, 1937, Vol.. 1, pp 139-40; see also al-Shātibī (d.790/1388), n.d., Vol..1, p.38 and Vol..3, pp.46-7.
Mohammed Obaidullah | August 12, 2015