Why is the govt backed Zaakat fund struggling?

Experts believe the government-run Zaakat Fund can play a significant role in helping financially marginalised people during this inflationary period. However, as things stand, the fund, which is operated by the Islamic Foundation Bangladesh, does not have sufficient reserves.

Despite this setback, the fund authority is planning to do something for people who are eligible to receive Zaakat in the coming days, as traditionally, Zaakat inflow peaks during Ramadan.

Though the fund does not get the expected response from Zaakat donors, the Zaakat collection has in fact gradually increased over the last few years.   

"We have several plans for the poor and underprivileged population, including selling commodities at a subsidised rate through TCB (Trading Corporation of Bangladesh). But right now, we don't have enough money to take such initiatives using the Zaakat Fund, "Md. Faridul Haque Khan MP, State Minister for Religious Affairs and the Chairman of Zaakat Board, told TBS.

In response to why general people are not coming forward to contribute to the government-run Zaakat Fund, he said, "Zaakat revival has increased to double this fiscal year from the previous one, and 70% of them have been sent to the adhering districts as per the rules." "We have tried to do enough campaigning. Whichever district I visit, I bring up the Zaakat issue," he added.

According to the Zaakat Fund authority, Tk4.60 crores in FY 2018-19, Tk5.18 crores in FY 2019-20, Tk3.53 crores in FY 2020-21, Tk7.01 crores in FY 2021-22 were collected and disbursed. Tk10.21 crores have been collected in FY 2022–23, which is still in the process of disbursement.

"Focusing on the upcoming month of Ramadan, we have determined a goal of Tk20 crores for the next Zaakat year. We want to send this message to the pious, rich Muslims that by contributing to the government-run Zaakat Fund, they can take an active part in reducing poverty," Dr Md Harunur Rashid, director of the Zaakat Fund under the Islamic Foundation, told TBS.

Asked how much money is in the fund at the moment, he said, "As the disbursement process is still undwerway, we cannot provide you any updated information without the bank statement."

He also discussed disbursing Zaakat among the impoverished and needy in the present circumstances, "During the coronavirus pandemic, we had taken special initiatives for the needy people. At that time, we disbursed Tk5,000 per head. In light of Islamic law, the Zaakat Board will also do the same in the coming days. We will have a discussion on this topic in the coming board meeting."

According to the Zaakat Board ordinance, from 1 Ramadan to the last day of Shaban of the Hijri calendar is considered a Zaakat year. This is why the highest amount of Zaakat is generally collected during Ramadan.

Maolana Shah Waliullah, a member of the Shariah Supervisory Board, Centre for Zaakat Management and Khatib, Sobhanbagh Jame Masjid, Dhaka, told TBS, "Those people who are finding the commodity price to be out of their reach are eligible for the Zaakat. There are eight different categories of people to whom Zaakat could be disbursed.

"The first on the list is 'fakir', one who has nothing whatsoever. Then comes the 'miskin', someone who has very little, which is not adequate at all. In today's period of inflation, the second group of people is the most numerous. Maybe they have Tk10 in hand, but they need Tk20."

Mentioning that Zaakat can give a sustainable solution, he added, "Zaakat money can also be disbursed in the aftermath of natural disasters such as floods, earthquakes, etc. The state collects Zaakat and, in case of emergency, can disburse it among the affected."

Holding onto the Zaakat long after collecting them is morally unethical, said Maolana Shah Waliullah. "All the fakihs (pundits) around the world agree that if any non-government organisation collects Zaakat with permission from the government, then they will let the eligible people know about it within a maximum of one month. And when the government is collecting and disbursing Zaakat, they can also spend a part of the money for social security brackets under their planning."

Why is the Zaakat Fund gettting such a poor response?

The government founded the Zaakat Fund on 5 June 1982. There is a 13-member Zaakat Board for fund management.

As mentioned before, the government-run Zaakat Fund received Tk10.21 crores in the last Zaakat year, while an NGO named the Centre for Zaakat Management (CZM) received more than Tk70 crore along with some other assets.

The management claimed that the ordinary people did not have much of an idea about the government-run Zaakat Fund. But now, the fund authority is gradually increasing its promotional activities to spread the word.

Opining that the commoners do not lack faith in the government fund, Dr Md Harunur Rashid, director of the Zaakat Fund, told TBS, "The procedure of Zaakat collection and disbursement is totally transparent. Once people have a clearer idea about it, the contribution rate will also increase."

The Zaakat Fund Management Act 2023 has already been passed. In light of this act, a new board is being formed.

"When the message of the Zaakat Fund Management Act reaches the people, I believe they will begin to allocate a part of their Zaakat to contribute to the government's Zaakat Fund," said the director.

Since 2008, the Center for Zaakat Management (CZM) has worked on several projects to collect and distribute Zaakat funds. It runs an emergency humanitarian assistance project called 'Insaniat' that provides food assistance, winter clothing, house building, relief and rehabilitation to more than 7 lakh people.

"CZM's livelihood development initiative, 'Zeebika, is being implemented in order to ensure sustainable socio-economic development of the poor and needy.

"CZM also operates Gulbagicha, which aims to improve the quality of life of underprivileged children by providing education, food, and healthcare services," CZM Senior Manager Weis Khan Nur Sohel told TBS.

The aggregate potential of Zaakat in Bangladesh was only $809 million in FY2000–2001. However, it rose to $9,749 million in FY2018-2019, according to a study led by Dr. M Kabir Hassan, an expert on Islamic Finance and a Professor of Finance in the Department of Economics and Finance, University of New Orleans, USA.

"Compared to the Zaakat amount in FY2000-2001, the current amount of Zaakat is 12 times higher. It is undoubtedly a positive indication of Zaakat increment since it can help reduce the income disparity with economic growth," he told TBS.

"Hence, the potential can be a blessing for the deprived communities if the growth of Zaakat can maintain alignment with the economic growth and the value is efficiently used for the welfare of people. The vulnerable sections of a society should be studied to determine how to allocate Zaakat most efficiently," he added.

How does the Zaakat Fund operate?

The government oversees the Zaakat Board, which is in charge of collecting and disbursing Zaakat. At the Upazila level, there are Upazila Zaakat Committees under the leadership of UNOs, while there are Zila Zaakat Committees under the supervision of district administrators.

Zaakat collected at the local level is sent to the central Zaakat Fund. Then 70% of the funds amassed from each district are returned to that district again. The Zila Zaakat Committee distributes the Zaakat among the eight sectors mentioned in Islamic law.

Some applications are also submitted centrally to the Islamic Foundation outside the Zila committee. Those applications are sent to the concerned districts for scrutiny. Then the necessary amount is sent to the Zila Zaakat Committee from the remaining 30% of the money.

There is a Zaakat Board Child Hospital in Tongi, where underprivileged Muslim patients are given free treatment and medicines.

Besides, there are 24 sewing training centres nationwide where marginalised women are  trained. The poorest women also receive sewing machines.

Since its inception, the Zaakat Fund has provided education, medical treatment, and employment to approximately 10 lakh poor people.

According to the Zaakat Board, it spent Tk35 crore on children's hospitals, sewing training for poor women, rehabilitation of the disabled, employment of poor men, neo-Muslim self-reliance, monga and rehabilitation of victims of natural disasters until 2020.