The Role of Zakah in Poverty Alleviation: Evidence from Indonesia

Abstract

Zakah is believed to be the main Islamic institution for the alleviation of poverty. Nevertheless, despite an increase in global income levels during the last century as well as continuing implementation of zakah worldwide, poverty persists in Muslim developing countries such as Indonesia. The main objective of this study, therefore, is to comprehensively explore and systematically analyze the economic (monetary) and multidimensional (non-monetary) impacts of the zakah institution in alleviating poverty in the context of zakah implementation in Indonesia as the world’s largest Muslim country. It also identifies the poor and assesses the determinants of poverty amongst the zakah recipients. Furthermore, it investigates the management model of zakah implementation in Indonesia, including its capacity, efficiency and effectiveness in delivering poverty-focused programs.
To achieve the objectives, the study has utilized a mixed-method research design. As part of this strategy, it has conducted a survey and collected primary data on the socio-economic conditions of 685 poor households receiving zakah assistance in nine cities of the Greater Jakarta Metropolitan area in Indonesia in 2011. In analyzing the survey results, a number of quantitative methods including descriptive statistics, inferential statistics (ANOVA and logistic regression) and poverty index analysis were employed. It has also conducted semi-structured interviews with the management personnel of zakah organizations to investigate the model of zakah implementation and assess the capacity and efficiency of zakah organizations in Indonesia. The qualitative data obtained were analysed by using thematic (coding) and content analyses. The rich analytical methods were expected to generate high-quality data and comprehensive analysis that would address the research questions satisfactorily.
The main result generally suggests that the zakah institution has contributed positively to reducing the hardship of the recipients, whose poverty is likely to be related to large household size, lack of assets and certain characteristics of heads of households. Specifically, the incidence, depth and severity of poverty amongst the households have decreased due to the contributions from zakah organizations. The impacts of zakah could be felt not only in the economic (monetary) dimension, but also in multiple dimensions of live particularly in terms of health awareness (health), school attendance (education), praying and fasting (religious/spiritual), business/technical skills (economic) and harmony amongst family member (social). Further analysis suggests that higher impacts seem to be enjoyed by the recipients associated with the non-government zakah organizations and those participating in the programs that integrate economic assistances with provision of basic needs. Based on these findings, a framework for an effective poverty-focused zakah management was proposed. Several policy implications and recommendations for various stakeholders of zakah in Indonesia are also highlighted. The overall results are ultimately expected to provide empirical evidence regarding the contributions of zakah in contemporary Muslim societies as well as to enrich the literature on zakah and Islamic economic implementation in the Muslim world.