A Brief Report on the 3-day International Seminar on Islamic Alternative to Poverty Alleviation: Zakat, Awqaf and Microfinance (held during 21-23rd April, 2007 in Dhaka)
A 3-day International Seminar on Islamic Alternative to Poverty Alleviation: Zakat, Awqaf and Microfinance was held in Dhaka, Bangladesh during April 21–23, 2007. The seminar was jointly sponsored by the Islamic Economics Research Bureau, Dhaka, Islamic Development Bank Group, Jeddah, Islami Bank Bangladesh Ltd. and Prime Bank Ltd. The seminar was inaugurated by Professor Dr. Iajuddin Ahmed, President of the People’s Republic of Bangladesh at Dhaka Sheraton Hotel on April 21, 2007 at 10-00 a.m. The Business Sessions of the seminar were held at Hotel Purbani International, Dhaka. More than 100 delegates took part in the seminar while experts from 10 countries of the world including USA, Malaysia, Azerbaijan, UK, Indonesia, India and Iran presented erudite papers and participated in the deliberations. The Inaugural Session of the seminar started with Telewat-e- kalam e pak by Quari M. Nurul Islam. Dr. Habib Ahmed, Economist, Islamic Research and Training Institute of the Islamic Development Bank, Jeddah presented his key-note address in the session while Justice Mohammad Abdur Rouf, Former Chief Election Commissioner of Bangladesh and Dr. M. Umer Chapra, Research Advisor of IDB Group, Jeddah addressed the session as Special Guests.
Professor Dr. Iajuddin Ahmed, President of the People’s Republic of Bangladesh in his inaugural address thanked the organizers of the seminar for taking initiatives to bring the forgotten Islamic instruments of poverty alleviation in lime light and gathering the experts, researchers, economists, bankers, sociologists and social scientists to review and analyse their effectiveness in the context of present day relatives. Terming poverty as an acute social menace that erodes ethical values of human beings, retards their dignity and blurs their character, Professor Dr. Iajuddin asked the audience to seek its solution in the Holy Quran and Sunnah other than following the conventional path. Quoting verses of the Holy Quran he emphasized the need for recognizing the right of the poor in the wealth of the rich and told that it was only Islam which could build a society free from all kinds of vices – 114 A Brief Report...... social, economic, spiritual, moral, ethical, intellectual and physical. He lauded the role of Zakat in offering a safety net to the poorest of the poor and asserted that Awqaf and Quad-e-Hassan could offer a best solution to the problem of the poor to start small enterprises as a means to self-employment.
Dr. M. Umer Chapra in his speech as a Special Guest clarified the position of human beings as the vicegerents of God and termed them as brothers unto each other. According to the Quran all the messengers of God came to this world to establish justice, he said and added that this emphasis on justice would not, however, have any significance if the well-being of all the vicegerents of God is not ensured by the efficient and equitable use of the resources that God has provided to mankind as trust. He underscored the need for poverty alleviation, because, it was in conflict with the imperatives of brotherhood, justice and well-being of all because poverty leads to incapacity and misery of the poor. It tends to exacerbate crime and may even, according to the Prophet (Pbuh), drive a person close to disbelief, he further said. Quoting jurists Dr. Chapra held the view that it was the collective duty (Fard kifayah) of a Muslim society to take care of the basic needs of the poor. According to him in a closely knit brotherhood-oriented Muslim country this collective obligation needs to be discharged first by the family, friends, neighbours, Zakat, Awqaf and altruistic organizations. The ultimate objective of all such help, he said, should be to enable those so helped to stand on their own feet through an increase in their ability to earn more. But until such time as this becomes a reality the help must also include income supplements. Islam has a built-in institutional arrangement to get the necessary funds for this purpose through the obligatory payment of Zakat (including Ushar) and voluntary contribution in the form of sadaqah and awqaf, he said. While a part of the fund available through Zakat and Awqaf needs to be utilized for helping those who are handicapped and unable to earn enough for their livelihood, priority needs to be given to the goal of enabling the poor to stand on their own feet by helping them learn the skills in demand and establishing their own micro enterprises, he further added and stressed on the integration of Zakat and Awqaf institution with the micro credit system.
Justice Mohammad Abdur Rouf, Former Chief Election Commissioner of Bangladesh in his speech as special guest lamented the failure of the poverty alleviation models based on capitalist and socialist ideologies and underscored the need for practising the modes of poverty alleviation based on Islamic shari’ah. Justice Rouf termed the secular concepts of development as exploitation, unjust and incompatible with the desired value system of Islam Thoughts on Economics 115 and hoped that the Islamic instruments of poverty alleviation like Zakat, Awqaf, Kadr-e-Hassana, Sadakah will induce paradigm shift in Islamic attempts to eradicate poverty in the Muslim countries. He urged upon the Muslim Ummah to institutionalize the system and advised the government to implement the Islamic tools for poverty alleviation.
Shah Abdul Hannan in his Presidential speech narrated the objectives of the seminar and hoped that the Islamic poverty tackling instruments could help humanity better than the existing secular instruments, if properly understood, and developed afresh and implemented. According to him the waqf instrument could help the nation a lot if on this principle each of the big industrialist family establishes foundations and donate to these waqf foundations a part of their wealth. He thanked the scholars and resource persons from home and abroad and expected that they would deal with and ponder on the above issues and come out with recommendations to reactivate the institutions of Islamic financial instruments to address poverty largely prevailing in the Muslim world. He expressed his special thanks to the Hon’ble Chief Guest, Professor Dr. Iajuddin Ahmed, President of the People’s Republic of Bangladesh for kindly inaugurating the seminar.
It may be mentioned here that the seminar was divided into six Business Sessions over three days where 24 papers were presented by different scholars from home and abroad. All the Business Sessions including the Concluding one were held at Hotel Purbani International, Dhaka. Each session had a chair person to conduct it and after presentation of all the papers earmarked for a session, there were designated discussants who made comments on relevant papers. The floor was then made open for further discussions and suggestions. The session wise presentation of the papers are given in Annex : I.
The concluding session of the seminar discussed, reviewed and considered the draft recommendations and adopted the final ones.
The session was presided over by Prof. A N M A Zaher. The session was also addressed by Capt. Imam Anwar Hossain, Chairman, Board of Directors, Prime Bank Ltd. and Dr. M Umer Chapra, Research Advisor of IRTI, IDB, Jeddah. Prof. Sharif Hussain, Member Secretary, Seminar Committee and General Secretary, IERB gave the vote of thanks.
The recommendations adopted by the seminar are given in Annex – II. 116 A Brief Report......
Annex – I
Business Sessions of the International Seminar on Islamic Alternative to Poverty Alleviation: Zakat, Awqaf and Microfinance
Business Session – I
Venue : Hotel Purbani International
Day and Date : Saturday, April 21, 2007 Time : 2-00 – 4-30 p.m.
Chairperson : Prof. AKM Azhaurl Islam Vice-Chancellor, International Islamic University Chittagong.
Paper Presentation :
1. Prof. Dr. Monzer Kahf : Role of Zakah and Awqaf in Reducing Poverty: A Case for Zakah-Awqaf-Based Institutional Setting of Microfinance
2. Dr. Y. Dadgar & Mr. M. Saadat : Possibility of ‘Waqf in Money’ (As a New Productive Instrument in Islamic Economics)
3. Mr. Ali Ashraf : Incorporating Zakat, Awqaf & Islamic Microfinancing into a Single Model: An Islamic Alternative to Poverty Alleviation
4. Janab Mohammad Zafor : Islamic Alternative to Poverty Alleviation, Zakah, Awqaf & Microfinance: Bangladesh Perspective
Discussants :
1. Professor Dr. Abu Bakr Rafiq, Pro V.C, IIUC, Chittagong.
2. Professor M. Borhanuddin, Vice-Chancellor, the City University.
3. Janab M. Azizul Huq, Islamic Banking Consultant, AB Bank Ltd.
4. Janab M. Zohurul Islam FCA, Director Finance, BOU, Gazipur.
Business Session – II
Day and Date : Saturday, April 21, 2007 Time : 5-00 – 8-00 p.m.
Chairperson : Professor Ayubur Rahman Bhuyan Research Director, Islamic Economics Research Bureau
Paper Presentation : Thoughts on Economics 117
1. Dr. Shariq Nisar : Problems in Resource Utilization by Islamic Financial Institutions in India 2. Mr. Nafisah Mohammad : The Effects of Competition on the Outreach Level of Ar-Rahn Mr. A. Ghafar Ismail Industry in Malaysia Mr. Selamah Maamor
3. Dr. Mahmood Ahmad : Impact of Rural Development Scheme on Poverty Alleviation: A Case Study
4. Mr. Nurul Ahad Chowdhury : The Impact of Qard-Hassan at Higher Education of Muslim Students: A Sample Case Study Discussants :
1. Janab M. Ruhul Amin, Associate Professor, Department of International Relations, Dhaka University.
2. Janab Md. Abdul Awwal Sarker, DGM, Research Department, Bangladesh Bank.
3. Professor Dr. Mohammad Loqman, Chief, International Islamic University Chittagong (Dhaka Campus).
4. Professor Mohammad Musa, Pro Vice-Chancellor, East West University.
Business Session – III
Day and Date : Sunday, April 22, 2007 Time : 9-30 – 12-30 a.m.
Chairperson : Professor M. A. Baqui Khalily Dept. of Finance, Dhaka University
Paper Presentation :
1. Prof. Dr. Ahmad Mojtahed : The Evaluation of Qard-al-Hassan As A Microfinance Approach Dr. Ali Hassanzadeh in Poverty Alleviation Programs
2. Dr. Abul Hassan : The Challenge in Poverty Alleviation: Role of Islamic Roslee Baha Microfinance & Social Capital
3. Mr. Fuad Aliyev : Applications of Awqaf and Islamic Microfinance in a Post- Soviet Secular State: A Hypothetical Model of Awqaf-Based Credit Unions
4. Dr. Asry Yusoff : Mobilizing Zakah Funds through Microcredit Programs to Mr. Mohammad Nor Awang Kechik Expedite Poverty Alleviation in Muslim Societies: A Special Reference to the Malaysian Structure of Zakah Funds and Microfinance Institutions
Discussants :
1. Professor M. Muzahidul Islam, Department of Banking, Dhaka University.
2. Professor Dr. Mahmood Usman Imam, Chairman, Department of Finance, Dhaka University.
3. Janab K. M. Mortuza Ali, Managing Director, Prime Islami Life Insurance Ltd. 118 A Brief Report......
4. Professor M. Azhar-ud-Din, Dean, Faculty of Business Adminsitration, Northern University. Business Session – IV
Day and Date : Sunday, April 22, 2007 Time : 2-00 – 4.30 p.m.
Chairperson : Professor Syed M. Ahsan WBI Resident Economic Advisor Policy Analysis Unit, Bangladesh Bank.
Paper Presentation :
1. Dr. Rahmatullah : Zakat & Poverty Alleviation among Indian Muslims
2. Dr. M. Shahidul Islam : A Matrix of Zakat Entrepreneurship-Technology for Marginal Prof. M.S.J. Hashmi Poor: Few case Studies on Bangladesh Economy
3. Dr. Habib Ahmed : Zakah, Macroeconomic Policies, and Poverty Alleviation: Lessons from Simulation on Bangladesh
4. Prof. Monwar Hossain : Zakat-based Poverty Eradication in Bangladesh: The Millennium Development Goal is Exceedable
Discussants :
1. Dr. M. Abul Hossain, Project Director, Ministry of Women and Children Affairs, GOB
2. Professor M. Shahjahan Mina, Department of Finance, Dhaka University.
3. Janab Mohammad Nurul Islam, Vice-Chairman, Islamic Economics Research Bureau.
4. Professor M. Sadiqul Islam, Department of Finance, Dhaka University.
Business Session – V
Day and Date : Sunday, April 22, 2007 Time : 5-00 – 8-00 p.m.
Chairperson : Professor Muzaffer Ahmad Chairman, Transparency International Bangladesh (TIB)
Paper Presentation :
1. Dr. S.M. Ali Akkas : An Islamic Alternative to Poverty Alleviation: The “PARSHI” (Neighborhood) Model
2. Dr. Reza Djojosugito : Legal Framework to Induce Paradigm Shift in Islamic Alternative to Poverty Alleviation
3. Prof. M. A. Mannan Chowdhury : The Role of Islamic Financial Institutions in Resource Mobilization & Poverty Alleviation in Bangladesh : An Empirical Study of Rural Development Scheme (RDS) of Islami Bank Bangladesh Ltd. (IBBL) Thoughts on Economics 119
4. Dr. Abdel Rahman Yousri Ahmad : Zakah Investment & its Role in Poverty Alleviation in Contemporary Muslim Countries Discussants :
1. Mr. M. Abdul Awal Miah, Assistant Director, Muslim Aid Bangladesh, Dhaka.
2. Dr. Abdur Rahim Khan, Director, Social Science Research Council, Ministry of Planning, Dhaka.
3. Professor Shah Mohammad Habibur Rahman, Dept. of Economics, Rajshahi University.
4. Dr. Md. Akhtaruzzaman, General Manager, Research Department, Bangladesh Bank.
Business Session – VI
Day and Date : Monday, April 23, 2007 Time : 9-30 – 12-30 p.m.
Chairperson : Dr. Quazi Khaliquzzaman Ahmad Chairman, Bangladesh Economic Association.
Paper Presentation :
1. Dr. M. Kabir Hassan : Debt, Zakah & Optimal Taxation in Islamic Economy Mr. Bashir Al-Zu’bi Mr. Haitham A. Al-Zoubi Mr. Aktham Maghyereh
2. Prof. Begum Ismat Ara Huq : Poverty Alleviation through Islamic Micro Financing: A Case Study of Bangladesh
3. Dr. Widiyanto b. Mislan Cokro : Sustainability of BMT Financing for Developing Micro- Prof. Abdul Ghafar b. Islamil Enterprise
4. Dr. M. Umer Chapra : Islamic Vision of Development
Discussants
1. Dr. Syeda Sultana Razia, Associate Professor, Department of Chemical Engineering, BUET
2. Prof. UAB Razia Akhter Banu, Department of Political Science, Dhaka University.
3. Dr. Jahangir Alam Chowdhury, Associate Professor, Department of Finance, Dhaka University.
4. Janab Howlader Moshrraf Hussain, Asst. Professor, Department of Finance, Dhaka University.
5. Dr. Sheikh Maqsud Ali, Former Secretary, GOB and Member, Bangladesh Planning Commission.
Concluding Session
Venue : Hotel Purbani International
Date : April 23, 2007, Monday
Time : 3-00 p.m. to 4-00 p.m. 120 A Brief Report......
Telawat-e-Kalam-e-Pak : Janab Habibur Rahman, SVP, IBBL Address by the Special Guest : Captain Imam Anwar Hossain Chairman, Board of Directors, Prime Bank Ltd.
Presentation and adoption of Recommendations : Professor Ayubur Rahman Bhuyan Vice Chairman and Research Director, IERB.
Vote of Thanks : Professor Md. Sharif Hussain Member Secretary, Seminar Committee and General Secretary, IERB.
Concluding remarks by the Chairperson : Professor A.N.M.A. Zaher, Chairman, Board of Directors, IBBL
Munajat and Refreshment :
Annex – II
The recommendations adopted by the Concluding Session of the International Seminar on Islamic Alternative to Poverty Alleviation Zakat, Awqaf and Microfinance
1. Strategies should be devised to integrate the Islamic instruments of Zakat and Awqaf with microfinance scheme for alleviation of poverty. 2. In order to inculcate Islamic values in the strategies and tools for poverty alleviation, the Muslim countries should exchange technologies, ideas and experiences through organizing study visits, seminars, workshops and training programes on a regular basis. 3. The Islamic countries may also give publicity to each other’s success stories in the field of Zakat, Awqaf and Qard-e-Hasana in their respective print and electronic media. 4. Appropriate mechanism should be developed for exchange of experts on poverty alleviation, Zakat, Awqaf and microfinance in Islamic perspective among the Muslim countries. The Islamic Development Bank group may take an initiative for such an exchange based on projects formulated by research and development institutions in both public and private sectors. 5. Providing Qard-e-Hasana can not alleviate poverty by its own. It is suggested that a targeted model be developed to optimize the distribution of credit resources among the indigent and the disadvantaged. Thoughts on Economics 121
6. The present day micro finance is costly – interest rate reaching 56% and more. Hence it hardly helps reducing poverty, although it may provide temporary relief from the worst consequences of poverty. 7. The creation of a Zakat-cum-Awqaf based micro-finance institution is recommended for financing the poor with charge-free loans. 8. Loans should not be just for meeting consumption needs of the poor but these should be available for productive purposes, including enhancing the productivity of the poor. 9. The objective of micro finance should be to provide sustained support to the poor families until they become self-supported and independent. 10. To bolster Zakat and Awqaf fund, money from other sources (charities) may be used for the micro-finance institutions. 11. For human resource development in poor Muslim families, the tool of Qard-e- Hasana may be encouraged for financing education of bright young students. 12. Poverty can be effectively reduced by creating employment opportunities. There should therefore be provision of charge-free loan (Qard-e-Hasana) for projects which create jobs and generate income earning opportunities. 13. Poverty cannot be eliminated without using Zakat in an effective manner. In order for Zakat to have an impact on poverty, Zakat has to be complemented by sound macroeconomic policies that enhance growth and also redistribute income. 14. The impact of Zakat on poverty would be significant only when a larger portion of Zakat proceeds are used for productive purposes. 15. The target base for micro finance in Bangladesh (which currently is less then 0.5 acres of land) may be raised to one acre. This will enable more people to join micro finance schemes (e.g., IBBL’s RDS) and reduce their overhead costs. 16. In IBBL’s RDS, only one mode of investment (Bai-Muajjal) is currently practised. Other modes of investment may also be tried, if need arises. 17. IBBL’s RDS may be replicated by Islamic Banks in other countries as well. The IBBL may take steps to popularize the idea, which has evidently recorded some success in this country. 18. For Zakat investment to increase, major changes in legislation and government policies may by required, particularly in the Muslim countries where secular fiscal and financial systems are prevalent. 122 A Brief Report......
19. Introduction of growth-oriented schemes by Islamic NGOs/banks, and increased facilities for training for self employment and basic education will help reduce poverty. 20. Collection of Zakat and its distribution is the duty of the State. For this reason, a Zakat Ministry may be created instead of Zakat Board. Zakat shall not be collected and distributed by individuals/institutions but by the Government. 21. A survey may be done about the number of existing Zakat payers in the country. Zakat may be deposited in banks by the Zakat payers. 22. The Central Bank may ask all commercial banks to invest a certain portion of their deposits in rural development. 23. Repayment of microfinance should be ensured through law enforcing agencies if clients fall delinquent. 24. Zakat is to be distributed not only among the poor (Fakir and Miskin) but also in sectors which are not directly related to poverty alleviation but which serve social and humanitarian goals. 25. The seminar feels the need for forming a task force to work for framing an adequate organizational structure and regulations for implementing Zakat, Awqaf and Qard-e-Hasan to eradiate poverty of the Ummah in a global context. 26. The seminar also feels that the oil-rich Islamic countries should provide part of their oil revenue towards addressing poverty of the Ummah. 27. Finally, the govt. cannot abdicate the responsibility of reducing poverty to Zakat, Awqaf and a handful of NGOs and MFIs. They should strike at the root causes of poverty : which are low economic growth extreme income inequality inadequate access to productive assets increasingly reduced public spending on social sectors like education and health, the benefits of which are reaped mostly by the poor.