The absence of zakat’s impact on Yemen’s economy

| Friday, September 11, 2009

Zakat, alms Muslims are required to give to the poor, provide the government with a significant amount of revenue, but the funds are often mishandled despite a 1999 law intended to regulate and streamline the practice, according to academics and officials.

“Unfortunately, local councils, which now are authorized to collect zakat duties do not distribute revenues to the poor and the needy,” said Dr. Mohammed Jubran, professor of economics at Sana'a University. “Most of zakat revenues that local councils collect are spent as rewards and travel expenses for councils’ members.”

Zakat makes up less than .18 percent of Yemen's GDP, according to an online study by Studies and Economic Media Center this year.

“In general, zakat has a big role in any society, but in Yemen, its role is scattered and unclear in terms of its impact on Yemen’s economy,” said Jubran.

Although there is an administration for zakat duties in Yemen which collects the duties and submits revenues to the government, Jubran thinks that the role of zakat in Yemen’s economy is still absent.

“We notice that the amount that the General Administration of Zakat Duties gathers is very little and does not exceed 10 percent of duty amounts that should be collected,” pointed out Jubran.

According to information from the General Administration for Zakat Duties in Sana’a, the government spends more than twice as much providing for poor families than it collects in zakat revenue.

The total 2008 zakat revenue in Yemen was YR 8 billion (USD 40 million) and the Social Welfare Fund alone spends around YR 20 billion (USD 100 million) on poor families in the country.

“Collecting zakat duties is also done by individual efforts from some charitable organizations that distribute it as aid to needy families,” said the professor. “But the distribution is done inaccurately, which leads some families to get aid from more than one organization, whereas other poor and needy families receive nothing.”

Charitable organizations also collect zakat duties in Yemen because the law allows merchants retain 25 percent of the money they are required to pay, in order to personally distribute it to the poor.

Jubran suggested establishing a specialized corporation that is authorized to collect and distribute revenues to avoid duplication in distribution.

The professor said this measure would reduce poverty. According to 2008 UN statistics, 45 percent of the people in Yemen live on less than USD 2 a day. Extra zakat revenues can then be used to he
lp unemployed young people that lack direction.

Additionally, Jubran said that if zakat revenues were distributed efficiently, there would be income redistribution flowing money from rich to poor. Zakat will activate the economy because poor families will spend more money.

“The current authority of zakat duties does not do the task properly as evidenced by the fact that there is no tangible impact of zakat on Yemen’s economy,” said the professor.

“If zakat duties were collected correctly, zakat revenues would have reached around YR 100 billion (USD 500 million)” said Jubran.

A study by the Studies and Economic Media Center about the reality of zakat authorities in Islamic countries also pointed to failings within collection systems.

All Islamic countries have weak collecting systems, including Yemen, it says. The study attributes the weaknesses to bad performance of officials and flimsy legislative structures.

Mohammed Kawkaban, the general manager of the General Administration for Zakat Duties in Sana’a, admitted that challenges deter the improvement of collection performance.

“Performance of any foundation is connected with the level of awareness and efficiency of its employees," he said. "Frankly, the employees of the General Administration for Zakat Duties in Sana’a and its branches are still not qualified.”

“We need to organize specialized training courses for our employees in zakat accountancy, how to deal with zakat payers and training courses for all employees including managers in Islamic law of zakat,” said Kawkaban.

He recommended building a network to facilitate counting the zakat revenue. The total amount collected in Yemen has not been accurately counted for seven years, he added.

He suggested awareness campaigns because many people are ignorant of zakat issues and some of them think that people only one have to pay one duty and the end of Ramadan, and are not aware of other kinds of zakat, such as commercial item zakat and income zakat.

According to Kawkaban, the total revenue from zakat in Sana’a is increasing since in 2008 reached over YR 5 billion (USD 25 million) whereas in the first half of 2009 alone reached over YR four billion (USD 20 million).



Zakat Al-Fitr

Zakat al-fitr is required at the end of Ramadan from every Muslim who has the sufficient food, according to the Yemeni law.

According to Islamic literature, companion to Proph
et Mohammad Ibn Umar said, "The Prophet (PBUH), imposed a payment of one sa'a [2.5 kilograms] of dates or one sa'a of barley or one sa'a of wheat as zakat al- fitr from every Muslim, young and old, male and female, free and slave."

The purpose of zakat al-fitr is to purify Muslims from indecent acts or speech they may have committed while fasting, as well as to help the poor.

According to Islam, it is important that this zakat is paid before the Eid Al-Fitr prayers take place at the end of Ramadan. Some Islamic schools say it must be paid in foodstuff. However, Yemeni law allows people to give money instead of the required amounts of food, as long as the value is equal.

Some religious scholars also say that Zakat Al-Fitr can be given as money equal to quantity of foodstuff. That means if you are the head of a family of seven, you have to give eight sa'as of wheat, or the most served food in the country, or the value of this quantity.

Muslims all over the world are obliged to pay this kind of zakat. In some Arab and Islamic countries, it is the responsibility of the government to collect this zakat and in other countries non-governmental charitable organizations do this job.

In Yemen, it is the government that does this task through the General Administration for Zakat Duties.

Zakat al-fitr revenues increase yearly because, unlike other zakats, every Muslim who is not poor is required to contribute, and the Yemeni population is growing rapidly.

In 2008, zakat al-fitr in Sana’a revenues were about YR 272 million (USD 1.3 million) compared to about YR 187 million (USD 935,000) the year before according to Kawkaban, general manager of the administration.



Zakat on commercial items

Another kind of Zakat required by Islam applies to wealthy Muslim merchants. Traders are obliged to pay charity out of their commercial revenues, and in Sana'a, most zakat revenue is commercial.

Merchants are obliged to pay 2.5 percent of the value of commercial items they own for a full year. For instance, if he or she has commercial items worth YR 600,000 (USD 3,000), and one year of ownership passes and he or she still owns the property, YR 15,000 (USD 75) must be paid.



Zakat of livestock

In Islam, farmers are required to give animals that can be utilized, including camels, cows and sheep.

The animals have to have a minimum value, owned for one year for the farmer to be required to pay. The animals also must be grazing, as apposed to doing work such as plowing, watering, and carrying weights or riding.

Zakat of sheep

Far
mers who own 40 to120 heads of sheep for the entire year, which are grazing, are required to give one sheep as zakat. Farmers that own 121 to 200 have to give two sheep. If they own more, they have to give one more sheep for every hundred that they own.



Zakat of camels

People that have five camels or more are required to and if he or she does have less than that, no charity is imposed.

If a Muslim farmer owns five camels for the entire year, he or she is required to give one sheep for every five camels- up 25 camels. Farmers that own 25 camels must give bint mukhadh (a 1-year-old female camel). And if it was reached 36 camels he or she must give bint laboon (a 2-year-old camel). The required donation continues to increase, with the amount of camel’s owned by the farmer.



Zakat of cows

A farmer that has 30 or more cows and is also required to contribute livestock.

If the Muslim farmer owns 30 to 39 cows, he or she must give one, 1-year-old calf. If he or she owns 40 to 59, the duty is a cow that is two years old.If he or she owns 60 to 69, the duty is two calves.

However, this kind of zakat in Yemen can be paid with money that has the same value as the animals.



Who is entitled to be given the zakat?

Yemeni law says the that zakat revenue must be distributed to the poor, the needy, those employed to administer zakat, recent converts to Islam, to free the captives and slaves, debtors, in the cause of Allah, and to travelers.



Special administration against those who refuse to pay

In the General Administration for Zakat Duties, there is a special administration for those who underpay or refuse to pay zakat duties, according to Kawkaban.

“This administration sends a letter notifying him to pay the duty and gives him one month as an extension,” explained Kawkaban

“If he or she, after this extension, does not pay, the administration again gives him extra month but if he refuses to respond, the administration refers him to prosecution,” added Kawkaban.

“Many cases have been referred to prosecution,” said the manager.

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