Zakat, Persistence of Poverty and Structural-Incidental Segmented Approach: A Survey of Literature

Abstract

Scholars and researchers in the field are almost unanimous that poverty reduction is one of the primary goals of zakat and targeted upliftment is pivotal for poverty alleviation. Generally it has been argued that faqir (destitute) and miskin (needy) are the primary target groups and their poverty alleviation is possible through effective collection and distribution of zakat. Throughout history zakat had an ameliorative effect, but due to a lack of systemic understanding about poverty, a lack of systemic commitment to its eradication, and ineffective use of zakat, poverty has been a persistent feature of the Muslim societies. Since the emergence of Islamic finance, broader interest in zakat as part of the development aspirations has grown and empirical research has enhanced knowledge and understanding of zakat in light of the experience from various Muslim-majority countries. Zakat, as part of Islamic finance, can play a valuable role in poverty reduction, when it becomes part of a national strategy of development with interventions focused on target groups, segmented into incidental and structural pool. This paper provides a survey of the pertinent literature, with a special focus on a segmented approach that recognizes different needs, priorities and frameworks for effective intervention using zakat.