Islamic economics is a comprehensive and independent economic theory which defines economics in accordance with Islamic law. It is a new discipline in universities worldwide and is thus constrained by the lack of qualified teachers or instructors. The series “Introduction to Islamic Economics” held from September to December of 2007, and sponsored by the Islamic Development Bank’s Islamic Research and Training Institute (IRTI), seeks to introduce students to the fundamental principles of the discipline, as well as how Islamic economics fits into the broader context of the rapidly integrating global economy.
Habib Ahmed, an Economist at the National Commercial Bank in Jeddah, Saudi Arabia, gave the presentation “Role of Zakah and Awqaf in Poverty Alleviation” on November 11, 2007. Ahmed started by stating that despite efforts by the United Nations and its member countries to mitigate it, poverty remains high worldwide and is in fact increasing in member countries. There is hence a consensus for the need to seek alternative programs and strategies to address the situation, and Islam may provide this. Islam, he said, has various institutions which seek to achieve socio-economic justice and greater distribution of income. Among these are zakah and awqaf. Zakah, Ahmed said, is defined as a percentage of assets that all adults who fulfill the necessary conditions must pay as a religious obligation. It has historically served as a means for poverty alleviation, however currently zakah institutions seem to be weak and ineffective. Ahmed explained that it has untapped potential as a means of redistribution for the poor, among other uses. Ahmed explained that the awqaf is a voluntary and encouraged act of charity, which can be created for one’s own family, philanthropic or religious objectives. Although awqaf also has significant potential for widespread poverty alleviation, Ahmed said, it is often considered only for religious purposes and not maximized. This concluded the first part of the session, which was followed by a question and answer session with participants from different video conference sites.
In the second part of his presentation, Ahmed explained how zakah and awqaf fit into an overall development strategy. Zakah, he said, should be integrated into national development strategies and collecting institutions should be strengthened. The awqaf can cease to be seen as exclusively religious if it is integrated into the third sector. Additionally, Ahmed explained the dire need to update the laws concerning both institutions and how this could help integrate them into the development agenda. In his conclusion, Ahmed stated that the effective institutional development of zakah and awqaf still depends on educating people about the concepts, coming up with new ways to consider Islamic law in contemporary times, law reform, and the use of new and more effective organizational models. Only then will these Islamic institutions fulfill their full potential in poverty alleviation. The lecture ended with a final question and answer session from participants.