ROLE OF ZAKAT IN REDUCING POVERTY IN ISLAMIC COUNTRIES

Abstract

Poverty can be defined in the simplest terms as a lack of basic necessities like food, clothing and shelter, etc. Around 3 billion people are living in poverty of which 35 % are from Muslim world [1]. And the number of poor people is increasing day after day worldwide. The main objective of this study is to determine the relationship between poverty and zakat, and examine the effectiveness of zakat in reducing poverty in Islamic countries which includes Indonesia, Pakistan, Malaysia, Egypt, Algeria, and Sudan. This study identifies the correlation between zakat distribution and poverty according to zakat rates and poverty lines data in the listed Islamic countries from the year 2003 to 2011. This study concludes that if zakat collections are collected and distributed according to Shariah compliance, it will reduce poverty and the society will become a better place. In the other hand if zakat payments are distributed unequally a number of poor people will increase. This study recommends that wealthy individuals must be oriented and encouraged to pay their zakat in order, to help the poor segment of the society and develop the community