Revenue of Zakah

The zakah income is directly connected with the sources from which it is collected. The jurists, in the past and at present, have differed on naming those sources between those who choose wide range of sources and those who go for a limited number. The advocates of limited sources base their opinion on the example set by the Prophet (pbuh) in collecting zakah while those who go for wider sources depend on the stated objective of zakah and the general meaning of related texts in Qur’an and Sunnah. A champion of the restricted view is Ibn Hazm who confined it only on the sources utilised by the Prophet (pbuh), namely: gold, silver, wheat, barley, dates, camels and sheep only. On the other hand, Imam Abu Hanifa defined the zakatable sources by all products of cultivated land in addition to horses and jewelry. Many contemporary scholars like Shaikh Abu zahrah, Abdul Wahhab Khallaf, Al-Ghazali, at-Qaradawi and Mustafa al-Zarqa are of the view of widening the sources of zakah keeping in view that through time many new sources of income and wealth-generating have developed since the time of the Prophet (pbuh). Shaikh al-Zarqa said that most of the detailed rulings about zakah as decided by the fiqh schools are their independent judgments (ijtihadi) based on their own interpretations of the texts... The developments that took place in the world since their times call for a revision of interpreting the texts, and make suitable rulings based on new ijtihad. Shaikh al-Qaradawi discussed in detail the different juristic opinions in his invaluable book on zakah, and concluded that the zakatable items should be widened according to the needs of the time. He mentioned a wide range of sources which should be zakatable: all agricultural products, animal husbandry, metal and marine wealth, revenue-generation properties such as buildings and factories, wages and profession incomes, shares and bonds, plus additional sources. This view is appropriate for the needs of our age and it will contribute in alleviating poverty from the Muslim world.

Fortunately the modern institutions of zakah have adopted a similar view to that of al-Qaradawi. The zakah laws in Sudan, Pakistan, Yemen and Malaysia accepted the view that all kinds of crops and fruits are zakatable. Saudi Arabia, Sudan and Kuwait included revenues generated from capital properties, and zakah on wages and professions is adopted by Saudi, Malaysian and Sudanese laws. Yemen alone takes zakah from public firms and commercial organisations, and the Sudanese and Kuwaiti regulations accept zakah on animal products. The Libyan and the Sudanese laws mention metals and minerals as zakatable. The Pakistani law imposed zakah on investment deposits, saving accounts, bonds and shares in specialised banks. Some zakah institutions invest some of their funds in order to generate more revenues. This idea is justified by the action of the Prophet (pbuh) and his immediate successors who allowed the cattle of zakah to reproduce.

We give below some examples of the actual income of zakah in some Muslim countries, the first three collect zakah by law while the last two do so on voluntary basis. Later, we shall compare the actual incomes with the estimated ones as calculated by some researchers.

1-         YEMEN

Zakah revenue in 1973-74 = 15.74 mn Y. Riyal

“                   “          “                                  1989         =  499.5        ‘‘   “

“                   “          “                                  1990      =  511.5            “   “

• Zakah is collected from agricultural produce, livestock, trade goods, money and zakatul fitr.
• Zakah from crops stands between 50 percent to 56 percent of total revenue.
• The US dollar in 1990 = 14 riyals

Source: M.Y Hussain, “Idarat al-Zakah wa Tatbiyaqatiha al-Mu’asirah fi al-Yemen,” a paper to the Third International Zakah Conference, Kuala Lumpur.

2-     PAKISTAN

Zakah revenue in 1980-81 = 844.25 mn. rupees.

“          “          “  1990-91 = 2705.53 “    “

“          “          “   1992-93= 2558.15 “     “

• The agricultural zakah lowered from Rs 179 million in 1982-83 to only Rs 0.2 million in 1993-94 because of failure in collection.
• The US dollar in 1992 - 30 rupees

Source: The Central Zakah Administration, Pakistan, 1994.

3-     SUDAN

Zakah revenue in 10 years (1400-1409 H) = 238 mn.S pounds.

“          “          “    1990-91 = 570       “      “

“          “          “    1992-93 = 3,375    “      “

“          “          “    1994-95 = 15 bn    “   “

• The agricultural zakah is about 76 percent of total revenue.
• The livestock zakah was 293 mn. pounds in 1993 but it amounted to 10 percent only of its estimate. The cattle people were not accustomed to pay zakah.
• The dollar in 1990 - 20 pounds and in 1993 - 40 S. pounds.

Source: Annual Report 1993, Diwan al-Zakah, “Malamih wa Ma’alim Tajribat al-Zakah fi al-Sudan,” Al-Inqaz al-Watani, a government news paper.

4-    KUWAIT

The voluntary revenue of zakah in 1982 - 645,000 K. dinars

“                      “                      “                      “                      “  1983 = 966,000   “     “

“                      “                      “                      “                      “  1993 = 2,032,000 “     “

“                      “                      “                      “                      “  1994 = 2,236,000 “     “

• The government donates four million dinars every year to consolidate the zakah fund. However, like other oil-producing countries the government does not pay zakah on the oil wealth.
• The K. dinar - 3.33 US dollar.

Source:  Al-’Ujail, “Dirasah li Anshatat, al-Haya’at al-Zakawiyah...,” op cit.

5-     EGYPT: NASIR BANK

The voluntary zakah given to NB in 1973 = 29,300 E. pounds.

“                      “                      “                      “                      “     1983  =    4.21 mn. “           “

“                      “                      “                      “                      “     1990  =  21.9 “     “            “

“                      “                      “                      “                      “      1994 =  46.6 “     “            “

The dollar in 1985 = 1.5 E. pounds and in 1994 = 3 E. pounds

Source: F. Ridwan, “Tajribat Bank Nasir al-Ijtima’i; A.A. Hassan, “Dawr al-Zakah fi ‘Ilaj al-Mushkilat al-Usariyyah fi Misr,” Fourth International Zakah Conference, Senegal, March 1995.

All studies agree that the actual zakah revenue in different countries is far less than the potential of zakah on the wealth of those countries. Dr. Abdallah al-Tahir made an estimate of zakah income in 18 Muslim states (8 of them oil-producing) basing it on the statistics of the UN about the income, in 1980, of those countries. He came with the conclusion that the oil-producing countries should collect a zakah between 10 to 14 percent of its GDP. For the non-oil-producing countries the zakah should have been between 3.5 to 7 percent of GDP. These estimates did not include zakah on livestock, money, bonds, gold and silver because the author could not obtain the relevant information about them. Dr. Monzer Khaf made a detailed study of zakah income in eight countries: Egypt, Indonesia, Pakistan, Qatar, Saudi Arabia, Sudan, Syria and Turkey. He assumed that the collection of zakah is made on three different juristic views:

1- that of the majority of jurists;

2- that of Shaikh al-Qaradawi; and

3- that of Ibn Aqil al-Hanbali.

He found out that the percentage of zakah related to the GDP of each country would be as follows according to the three views:

Estimate Of Zakah Income As Percent Of Gdp

The above table shows that the average percentage of zakah income according to the first opinion in these countries is 1.6 percent of the GDP and 3.7 and 4.3 percent according to the second and third opinions respectively. The estimates made by Muhammad Anas al-Zarqa were similar to that of al-Tahir and Kahf. He concluded from his study on Syria and Sudan that the zakah revenue could be 3 percent of the GDP. Dr. Muqbil al-Zakir found out in his doctoral thesis (1993) that the zakah revenue in Saudi Arabia should have reached in 1986 about 5802.4 million Saudi riyal ($1546 m) which is equivalent to 2.73 percent of the Saudi GDP in that year. Unlike Abdallah al-Tahir, he did not include the oil income in Zakah. A study by the Kuwaiti Ministry of Finance, with the assistance of UNDP, estimated the proper zakah from Kuwaiti companies and financial institutions alone would be $733 million in 1992-93 which corresponds to 12 percent of the total revenue of the government in that year.

The applied statistical study carried by Ms Wafa Muhammad Ahmad about the effects of zakah on investment in Egypt showed that the revenue of zakah in three consecutive years could have been as follows:

1985 =    2,309 million Egyptian pounds

1986  =    2,392          “             “             “

1987 =    2,641          “             “             “

The estimate was made according to the official figures given by banks and government department. If we compare the zakah of 1985 in this study with the actual zakah income collected by Nasir Bank in the same year, we find that the bank’s collection amounts only to 1/360 of the potential zakah (Choudhary estimated the potential zakah on agricultural crops alone in Pakistan in 1988-98 to be 11.14 billion Pakistani rupees). The Federal Bureau of Statistics in Pakistan made a field survey in 1991 to reach the figure of 14.4 billion rupees as the total zakah paid by households. The figure is five times more than what was collected by the government in that year which showed that many people pay zakah outside the official channel.

If we examine the five countries, the zakah collections of which were mentioned before and correlate them with their GDP, we shall find how small the actual zakah is compared with its estimated potential:

1. The zakah in Yemen in 1989                           =          0.6% of GDP
2. The zakah in Pakistan in 1990-91         =          0.26% of GDP
3. The zakah in Sudan in 1990-91            =          0.5%                 “
4. The zakah in Kuwait in 1988                           =          0.03%   “
5. The zakah in Egypt in 1988                            =          0.01%               “

These figures show that if the zakah were collected in these countries according to any of the three views mentioned by Kahf (1.6% or 3.7% or 4.3% of the GDP) the revenue would have multiplied manifolds. The main reasons behind the poor collection of Zakah in most Muslim countries are:

• absence of legal compulsion;
• limited sources from which zakah is collected;
• inefficiency of the collecting administration;
• loss of confidence between contributors of zakah and the collecting agency;
• poor propagation of the religious significance of zakah.

Although the zakah revenues in all the countries which institutionalised its collection are far less than its potential resource, it is a healthy sign that there has been an uninterrupted increase in the zakah income in almost all these countries. Furthermore, the number of countries which institutionalised the collection of zakah is on the increase.

Source: Poverty Alleviation in Pakistan: Present Scenario and Future Strategy, Mohibul Haq Sahibzada. Republished with permission.