ZAKAH AS AN ISLAMIC MICRO-FINANCING MECHANISM TO PRODUCTIVE ZAKAH RECIPIENTS
Journal Title: Asian Economic and Financial Review - Year 2014, Vol 4, Issue 1
Abstract
There are various forms of zakah distribution practiced by the zakah institutions. One of them is the distribution of zakah in a form of business capital given to productive zakah recipients. This form of zakah distribution is recognized as micro-financing mechanism. Thus, this paper attempts to analyse the potential of zakah fund as a source of Islamic micro financing to productive zakah recipients. The analysis is divided into several parts. Firstly, this paper discusses on the rationale of zakah fund as a source of micro financing to small Muslim entrepreneurs. It is then followed by the feasibility study of zakah as a micro financing mechanism. Thirdly, this paper shares the practicality analysis of the mechanism by sharing the experience of Selangor Zakah Board (Lembaga Zakat Selangor - LZS). In addition, it also highlights the problems and challenges of LZS in performing the role of ‘micro-finance institution’. Lastly, suggestion on the proper mechanism of zakah micro financing to ensure its effectiveness is given in the final part of the paper. This is to ensure that the objectives of zakah in alleviating poverty and reducing income inequality are met.
Authors and Affiliations
Patmawati Ibrahim| Senior Lecturer, Faculty of Technology Management and Business, Universiti Tun Hussein Onn Malaysia, Johor, Malaysia, Ruziah Ghazali| General Manager, Nordant Management, Taman Sri Bt Caves, Selangor, Malaysia
Keywords
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