The potential of Zakat as a source of poverty eradication is optimistic and positive. However, the gulf between theory and reality can often be significant. In South and South East Asia, this gulf unfortunately exists. Zakat implementation has had limited success and suffers from significant inefficiency. The woes of modern day Zakat are in stark contrast to the success of Umar bin Abdul-Aziz, who is oft-mentioned as the poster child of Zakat success. Historical accounts show that there was a surplus of Zakat funds during his reign i.e. there was so little poverty, that Zakat eligible recipients were scant (As-Sallabi, 1999, p574).
This article will discuss the success of Umar bin Abdul-Aziz in implementing Zakat, and using it to substantially reduce poverty. A brief introductory note will be given about Umar bin Abdul-Aziz, followed by a discussion of three factors which contributed towards his success; trustworthiness of Umar as an encouragement to pay Zakat, local distribution of funds, and using funds to develop productive capacities.
A brief definition is as follows; Zakat is mandatory alms-giving, to be taken from those who hold more than a minimum threshold of assets over a lunar year, and to be given to the poor and needy.
Who was Umar bin Abdul-Aziz?
Umar bin Abdul-Aziz succeeded Sulayman bin Abdul-Malik as the caliph of the Muslims in the 99th year of the Islamic calendar until his death in 101 AH (As-Sallabi, 1999, p102-109). His rule was remarkable, with many referring to him as one of the Rightly Guided Caliphs (As-Sallabi, 1999, p49), a group bearing the gold standard of early Muslim leaders, including Abu Bakr As-Siddiq, Umar ibn Khattab, Uthman ibn Affan and Ali ibn Abi Talib. During his rule, he navigated through theological and political controversies, including the Kharijite uprising (As-Sallabi, 1999, p281-197).
Indeed, his talents stretched beyond the spheres of leadership and politics; Umar was a mujtahid (an issuer of Islamic legal rulings), and a hafiz (one who has memorized the entire Qur’an, verbatim) (p48). As-Sallabi’s (1999) biography of Umar is gushing with praise over this piety, character and conduct.
The most significant praise given to Umar, is that he was is regarded as the first Mujaddid (Reviver) of Islam; that is to say, scholars regard him as the first of those to fulfil the following hadith: ‘Allah will raise for this community at the end of every hundred years the one who will renovate its religion for it’ (Sunan Abu Dawud). As-Sallabi (2010, p204) states that this is at least partly a result of exerting his capacity as caliph to rejuvenate the Muslim community.
Given the magnanimous praise heaped upon Umar, perhaps it is no surprise that his implementation of Zakat is seen as paragon in Islamic history.
The success of Umar bin Abdul-Aziz
Historical accounts show that there was a surplus of Zakat funds during his reign i.e. there was so little poverty, that Zakat eligible recipients could not be found (As-Sallabi, 1999, p574). To add nuance to this account, total poverty eradication might not have happened; in the absence of fast communication and travel, there likely were some people who were poor enough to receive Zakat, but were not found. At any rate, significant poverty reduction was achieved. There are a number of factors that can be attributed to this successful implementation. They are; Umar’s commitment to justice and fairness as encouragement for people to pay Zakat; the emphasis upon local distribution of funds; and using Zakat funds for building productive capabilities.
First is the remarkable commitment to justice and fairness of Umar. He was first made Caliph by the previous Caliph, Sulayman bin Abdul-Malik. His first act as Caliph was to impeach himself. Umar insisted that he would only be Caliph if the people voted for him, which they did (As-Sallabi, 1999, p106). It is argued that the unwavering commitment to justice, and renowned piety of Umar caused a strong relationship of trust between himself and Zakat payers (As-Sallabi, 1999). This was in stark contrast to previous leaders who had misused Zakat funds. As such, they very willingly gave Zakat to officials who Umar deemed as trustworthy. This would be crucial in reducing poverty. Contemporary studies show that if everyone were to pay their Zakat in particular Muslim countries, absolute poverty would be significantly reduced, or even eradicated (Islamic Social Finance Report, 2014). However, actual mobilisation of Zakat funds is particularly low. In this respect, Umar’s commitment to fairness was a factor which reduced the gap between actual and potential Zakat funds. From this we can garner that trustworthiness of a Zakat institute is crucial to encourage people to pay Zakat.
The second factor contributing to Umar’s success is his emphasis on local distribution of Zakat funds. Umar instructed Zakat officials to distribute the funds in the areas in which they were collected, unless there was a greater need elsewhere. The personal knowledge that would accompany a localised distribution of Zakat is indeed a powerful thing; Friedrich Hayek, John Maynard Keynes’ intellectual rival, argued in defence of market forces, that individuals are best placed to spend their own money and make their own decisions. He argued this based upon an individual having access to ‘knowledge of the particular circumstances of time and place’. Such knowledge, Hayek contends, is by its nature unquantifiable and inexpressible to other parties. Hayek further argues that this particular type of knowledge constitutes most of the sum of total knowledge. It follows then that the State, when compared to the individual, would have far less information to make a decision. As such, the individual is best placed to make their own decisions (Hayek, 1945). Apply the same reasoning to Zakat; an individual could potentially have superior knowledge of where best to use Zakat in a locality, as compared international charities and NGOs. Intimate knowledge of a community and its needs could perhaps lead to better usage of Zakat funds. Although Hayek’s argument is not without its flaws, the broad notion of localised distribution of Zakat bettering its poverty alleviation capabilities by virtue of local information is a salient point. In this regard, Umar’s insistence upon local distribution meant that Zakat funds were utilised in a more efficient way.
Thirdly, the way Zakat funds were used was also a major success factor. The focus was upon encouraging agriculture and general productive capacity. This contributed towards an increase in income, causing more to be eligible for paying Zakat, and less people eligible to receive Zakat. As such Zakat revenues increased (As-Sallabi, 1999, p574). Economic theory also supports the focussing upon agriculture as a starting point of economic development. The Lewis Model of Development argues that the process of economic development is contained within the movement of workers from agriculture to industry. However, before this can happen, the agricultural sector must be sufficiently productive, so as to create a surplus of food. When a surplus of food exists, an economy will tend towards developing manufacturing goods (Lewis, 1954). However, the Lewis Model was developed in the late 1950s, so applying it to such a distant era will certainly not yield the crisp results that the model predicts. We can however use the Lewis Model as a line of reasoning; by bettering agricultural capacity, Umar created scope for individuals to move beyond subsistence, into more productive economic activity, thereby reducing poverty.
In summary, the trustworthiness of Umar, local distribution of funds, and emphasis upon agriculture and productive capacity were significant success factors in determining the success of his Zakat implementation.
Umar bin Abdul Aziz, the caliph who is regarded as the first Mujaddid of Islam, is said to have eradicated absolute poverty during his two-and-a-half-year reign. This article has attributed three factors to this; Umar’s justice and trustworthiness as an impetus for people to pay Zakat, the focus upon local distribution which increased the efficiency of distribution, and a using funds for developing agriculture and productive capacity. This is not an exhaustive set of factors; other factors have been omitted due to a lack of scope, such as the legal implementation of Zakat.
The case of Umar is an extremely optimistic and encouraging one; it shows the potency of Zakat. Perhaps then, the lack of similar success in today’s age in even more disappointing. The community of Islamic Financiers and thinkers need to pay deeper regard towards this problem; the academic literature on Zakat today is thin, eclipsed by concerns with other, arguably less important elements of Islamic Finance. But this lack of attention is shocking, given the scale of what Zakat can achieve, as is aptly demonstrated by the case of Umar. The Muslim community at large should intensify its efforts towards addressing this situation. Education, policy and academia should be lenses through which these efforts are channelled. But before any of that, Zakat should never be forgotten as a pillar of Islam, and as worship of God. Only when this is kept in mind will the Muslim community gain the fervour and zeal that is needed to implement Zakat as successfully as Umar did.
As-Sallabi, Ali Muhammad. Umar Bin ‘Abd-‘Aziz. London: Darussalam, 2015. Print.
Hayek, Friedrich. ‘The Use Of Knowledge In Society’. The American Economic Review 25.4 (1948): p519-530.
Lewis, W. Arthur. (1954). Economic Development with Unlimited Supplies of Labour. Manchester School, 22(2), pp.139-191.
Qaradawi, Yusuf. Fiqh Az-Zakat. London: Dar Al Taqwa, 1999. Print.
The Islamic Research and Training Institute,. Islamic Social Finance Report 2014. Zawya, 2014.