Wealth redistribution through Zakat?

Ramadan is around, make sure your Zakat makes an impact this year!

Zakat often is utilised poorly and in the same traditional way. Distribution of ration kits, blankets, clothes etc. The quality of distribution gets reduced over quantity, resulting in the inefficient distribution of Zakat and the same level of poverty each year or even more.

Currently, Muslims form 1/5 of the world’s population and the annual zakat is estimated to be $3 trillion worldwide. Roughly estimating 15% of the Muslim population to be needy, each poor can get approx Rs 2 lakhs, considering no lapses in the distribution. Therefore, I have a strong belief that Zakat is the best tool for wealth redistribution. Unfortunately, the same is misunderstood and miscalculated by us time and again. For instance, intangible financial assets sometimes find a miss while calculating the zakat and don’t get accounted for. It can be attributed to the lack of knowledge in Islamic Finance as well.

Moreover, in its original form, Zakat is often channelled informally with several layers of rules and just 1/4th or less is channelled formally through certified organisations. This is a big opportunity area. With collective efforts from institutions and Islamic foundations, Zakat can act as a sustainable solution for the Muslim world to combat lack of education & health, specifically, and poverty at large. A paradigm shift might be needed with our mindsets to bring this change from doing simple ineffective charity to making a developmental impact.