A treatise on socioeconomic roles of Zakah

الملخص EN

A major preoccupation of policymakers is the design and implementation of public policy for efficient resource mobilization, allocation, stabilization of the economy and redistribution of wealth to guarantee minimum standard of living for all.

Capitalism and socialism at the extremes are characterized by the supremacy of self-interest and total state control, respectively.

Exacerbated by the prevalence of riba in the systems, unwanted economic outcomes; social and economic inequality, poverty, unemployment, crimes, booms and recessions, thrive.

The Islamic economic system which blends the material pursuit with spiritual upliftment tailors economic policies towards attainment of Maqasid al-Shari’ah.

As a pillar of Islam and an omnibus instrument of economic stabilization, zakah serves as an automatic catalyst with backward and forward implications on resource mobilization, allocation, stabilization and redistribution of wealth.

Using a heuristic approach, the paper conducts an in-depth assessment of the socioeconomic impact of zakah in an Islamic economy.

Evidences from review of both classical and empirical literature unveil the positive impact of zakah on consumption, savings, investment, employment and higher productivity (Kahf 1980; Metwally 1983; Khan 1984; Ahmad, 1985; Kuran 2006; Azmi, 2009 and Norulazidah, Ali & Myles, 2010.

Additionally, zakah acts as an expansionary tool at lower income and discretionary tool at the higher income levels with a view to redistributing income, poverty and provision of public good for the benefit of the poor (Faridi, 1983).

The paper argues that in view of the overwhelming empirical evidences in the literature, zakah is an effective tool for tackling socioeconomic problems of our modern times.

It is recommended that the Muslim Ummah, especially in Muslim majority countries, should establish zakah institutions to improve socioeconomic condition of their people.