Zakat and Poverty Alleviation: Roles of Zakat Institutions in Malaysia

Abstract

In Islam, poverty is defined based on an individual failure to fulfil any of the five basic human requirements of life that is based on Maqasid Syariah: i) religion, ii) physical self, iii) knowledge, iv) dignity, and v) wealth. Consistent with the brotherhood concept in Islam, Muslims were strongly encouraged to look after the poor in their community. Thus, in 9AH, the obligation to pay zakat on wealth was received by the Prophet Muhammad (pbuh). History proves that zakat is an effective tool to alleviate poverty as during the period of Umar bin Al Khattab and Umar bin Abdul Aziz poverty is completely eliminated. However, with the fall of Islamic Empire and the increasing European influence during the colonialism period, Zakat Institutions have lost their glory. Therefore, the objective of this paper is to provide a conceptual study on the roles of zakat in alleviating poverty especially in Malaysia by examining both theory and practical aspects. It is also suggested that the effectiveness of Zakat Institutions may improve by collaborating with other institutions such as Microfinance Institutions.

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