From Tradition to Transformation: Revitalising Zakat for Inclusive Development in Bangladesh

In Islamic Civilization, Zakat is not only a religious responsibility but also one of the most practical economic and social systems. As a result, in Islam, Zakat is the third among the five pillars.

Zakat is highly significant in the economy because it circulates money, reduces inequality, and provides financial safety nets for vulnerable people.

In Bangladesh, Zakat has recently become an important factor in Islamic history to reduce poverty and hunger and establish social justice.

Regarding the inclusive development framework, Bangladesh is currently reviewing the zakat system’s institutional structure, which may help the country develop a long-term strategy to address poverty and inequality.

Therefore, for the complete and proper utilization of the zakat system, the zakat policy makers, providers as well as receivers should be well known how it has changed over time and how it can be effectively institutionalized in today’s societies.

Zakat in the Prophetic Era: An Organized Social Institution
The zakat in the era of Prophet Muhammad (peace be upon him) went through the institutional framework, which was very strong and well-maintained, as Zakat was no longer an optional or voluntary duty of charity; instead.

He imposed zakat as a mandatory religious economic requirement, who gathered enough (nisab) property or assets.

In the Holy Qur’an, Allah unambiguously says that zakat should be collected and distributed.

As a result, the Prophet (peace be upon him) himself emphasized paying zakat to the needy and oversaw its collection.

Because of zakat’s importance to economic development, it was collected institutionally during the time of the Prophet.

In his time, the officials known as “amils”, who oversaw collecting zakat only from Muslims who were entitled to receive it in areas where Islamic government was in charge.

There were other officials called “Amirs”, who were responsible for two jobs.

First, helping with zakat collection, and second, supervising administrative and military duties.

Though at the very beginning those procedures were not controlled by the central treasury, unlike modern bureaucratic institutions, people in the same region who were poor and needy received the zakat in a timely and meaningful manner.

This ensured the efficiency of the decentralized approach in reaching out to needy people, especially those who often cannot express their needs to others because of self-respect.

History shows that even in the early period, zakat was a powerful means of combating poverty.

Based on historical records, we can see that the organized collection and distribution of zakat greatly enhanced social welfare in early Muslim society.

Making the Institution stronger after the Prophet
The central zakat system was reinforced by the first caliph, Abu Bakr, after the Prophet’s passing away.

However, the Caliph faced a serious issue during his time when several tribal members disagreedwith paying zakat.

As a religious accountability and an important pillar, it is more than that; it is meant to maintain social order, leading him to take and execute stronger measures against individuals who refused to pay zakat to protect the system’s integrity.

Moreover, the caliph clearly stated that zakat was necessary for economic and social justice.

Then, Umar ibn al-Khattab, the second Caliph, established the Bayt al-Mal, or public treasury, which was even more official and stricter in its collection of zakat in 15 Hijri (638 AD).

Prior to this modification, zakat, land taxes, and other forms of charitable giving were typically distributed immediately.

Umar recognized the necessity for a systematic approach to financial management in the expanding Muslim kingdom.

With Bayt al-Mal, Umar could help the government manage public funds more effectively while still holding everyone accountable.

Moreover, when Umar (RA) was in charge, he built several regional treasuries in several provinces.

The government entrusted professional managers with the handling of public funds and instituted stringent accounting standards.

These alterations constitute some of the first instances of organized public financing ever recorded.

Following them, the subsequent caliphs further made many more improvements to the system.

For example, when Uthman ibn Affan took the administrative role, the zakat payers,especially those who paid with gold, silver, and tradable goods, were given greater recognition and responsibility for determining how much to contribute and how to pay it.

However, this is not all that the government or its officials will do; people still have a moral duty to fulfill their zakat obligations, even if the government can collect zakat. This modification brought forward a fundamental principle.

Zakat in Later Islamic History
Following the four successful caliphs, few rulers came and modified the zakat administrative system.

For instance, during the early Umayyad period, historical records show that administrative issues undermined the zakat system.

However, Caliph Umar ibn Abdul Aziz restored the true purpose of the zakat system by appointing zakat collectors across the Muslim world and ensuring that the money reached its intended recipients.

As a result, he is known as the reformer caliph in Islam.

Bangladesh: A Voluntary Zakat System
The current zakat system in Bangladesh is entirely voluntary. In the spirit of Ramadan, millions of Muslims across Bangladesh independently distribute zakat to those in need.

Although this type of contribution demonstrates deep religious devotion, the system remains largely ineffective and unofficial.

The tremendous potential of zakat to help individuals escape poverty remains unrealized, which motivates us to be organized and central in utilizing this opportunity to develop the economy as well.

New Zakat Organizations in Bangladesh
Among the very few decentralized organizations, the Center for Zakat Management (CZM) is one of the most important groups working to make zakat part of everyday life in Bangladesh.

The primary objective of CZM is to transform conventional charitable giving into zakat programs that empower individuals to achieve economic independence in due course, subject to supervision and regulation.

The organization’s charitable giving goes beyond meeting basic necessities; it also funds initiatives to improve people’s access to healthcare, education, and economic stability.

By using transparent governance processes and expert management systems, CZM has increased public trust in structured zakat programs.

Another well-known Zakat Management Group that distributes zakat funds for social services like healthcare, education, and humanitarian assistance is the Zakat Welfare Foundation.

Hospitals, medical aid programs, and scholarships for deserving students are all part of the organization’s purview.

These initiatives demonstrate the potential of zakat funds to supplement public support in underserved areas, therefore enhancing human development.

A Timeless Institution for Development
In the history of welfare systems, Zakat is one of the first and foremost examples.

From the time of the Prophet Muhammad (SM) to the early reforms of the caliphate, zakat served as a powerful instrument for promoting social justice and economic fairness.

Continued efforts are being made by Bangladesh to achieve inclusive development.

Assisting in integrating faith-based donations with contemporary development objectives could be achieved by reestablishing the institutional ethos of Zakat.

Provided it is well-organized, open, and has a clear strategic vision, Zakat has the potential to be an effective instrument for creating a more compassionate and equitable society.

(The writer is Professor of Finance and Moffett Chair at the University of New Orleans, the 2016 IsDB Prize Laureate in Islamic Banking and Finance, and a member of the AAOIFI Ethics and Governance Board and Chairman of its Education Board, Email: [email protected])