The role of zakat to alleviate poverty of refugees in Malaysia: issues and challenges

• Main Authors: Mohd Razin, Nur Amirah, Rosman, Romzie
• Format: Book Chapter
• Language: English
• Published: IGI Global 2021
• Subjects: HG3368 Islamic Banking and Finance
• Online Access: http://irep.iium.edu.my/89244/1/89244_The%20role%20of%20zakat%20to%20alleviate%20poverty%20of%20refugees%20in%20Malaysia.pdf; http://irep.iium.edu.my/89244/; https://www.igi-global.com/book/handbook-research-islamic-social-finance/257762#table-of-contents
• Institution: Universiti Islam Antarabangsa Malaysia

Zakat plays an important role as part of the Islamic socio-economic system. Zakat is said to be one of the financial tools to alleviate poverty apart from micro financing and micro credit. However, it is found that most of the benefits are only offered to the citizens of Malaysia and not the other untapped communities from other countries especially the refugees that seeks our government’s protection. Hence, if the existing zakat recipients who are the citizens still unable to avoid from the unruly poverty, let alone the untapped group, especially the refugees. With the majority of refugees hailing from Muslim countries, Muslims around the world fulfilling zakat, a major pillar of their faith, can play an important role in alleviating their suffering and restoring their dignity as human beings. The realization of the incredible philanthropic Islamic social finance such as zakat, which can potentially exceed $300 billion a year, has driven United Nations High Commissioner for Refugees (UNHCR) to launch a Zakat Program in late 2016, namely Refugee Zakat Fund. Currently, the approach by zakat institution to help refugees are less proactive, given that most of the approach are made by the non-government organization (NGO) such as UNHCR Malaysia and local non-government organizations. The issues are very important to be solved as Islamic social finance has a huge potential mechanism to reduce poverty. Hence, the objectives of this study are (1) to explain the role of zakat in eradicating poverty among refugees for improving their socio-economic well-being, (2) to explore the issues and challenges of zakat administration in Malaysia especially in helping refugees, and (3) to explore the issues and challenges of UNHCR in managing refugees’ zakat funds. This study adopted qualitative approach by conducting interview with five experts in relation to Islamic social finance especially on the issues of zakat management. These experts have vast experience in Islamic finance and in Shariah. In general, the findings suggest that (1) zakat can play a crucial role in providing assistance to those in need without exception to fulfil both Maqasid Shariah and Sustainable Development Goals (SDGs); (2) one of the challenges facing the zakat institution is their managements are inefficient and a lack of transparency in terms of how the funds are collected, managed, and distributed, and hence, the adoption of technology is important for effective and efficient zakat system; (3) UNHCR must take important care on governance aspects in order to manage and administer zakat funds for refugees to improve the trust of zakat payers and recipients. This study may contribute to the enhancement policies in relation to both zakat and refugees made by both federal and state government by harmonizing the policies to solve the issues on poverty of the refugees, especially in Malaysia.