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ISLAM AND POVERTY: THE APPROACH, POLICY FRAMEWORK

AND ECONOMIC POLICY AGENDA

Sayyid Tahir*

Abstract: This study reconstructs the Islamic position on poverty. The argument

is divided into (1) the Islamic viewpoint on poverty, (2) the Islamic approach to

poverty, (3) the policy framework for poverty relation action and (4) the economic

policy agenda from the Islamic point of view. The Islamic approach is explained as a

grassroots approach in which private initiative rules both for initiative and necessary

action for addressing anti-poverty action. It is also said to make allowance for right

vs. wrong, as opposed to good vs. bad, considerations, and have a multi-dimensional

character. In lieu of policy framework, the necessary institutional setup, the criteria

for ascertaining individuals’ entitlements and criteria for affirmative action at the

government level are elucidated. As for economic policy agenda, significance of

macroeconomic policy for smooth working of the economy, empowering the people

through education and training, zakah, microfinance and waqf are highlighted along

with the criterion for resort to tax-transfer mechanism when all other options are

exhausted. The paper ends with a comparative look at the existing approach to

poverty and problems created by that approach.

JEL classification: I39, P40, Z12

Key Words: Poverty, Grassroots Approach, Institutional Framework, Economic

Policy Agenda

1. Introduction

Poverty is a social concern since time immemorial. Responses of different religions and

economic and political ideologies vary according to their respective value systems. For

example, socialism sought common ownership of the means of production, and proposed an

agenda calling upon everybody to contribute according to his ability but get according to his

need. Capitalism, with an overwhelming emphasis on individualism, developed its solution in

the form of a welfare state in which poverty-related issues are addressed at the macro level

with better off individuals sharing in the costs in a state-sponsored tax-transfer mechanism.

This is manifest from the various income support and social security programs in the North

America, Scandinavia and Western Europe. The capitalist response developed over time. It

may be termed as revealed preference of the society resulting from a process of

socioeconomic evolution spread over the last few centuries. The institution of democracy

played a critical role to help shape it. Where does Islam stand in this regard?

*The author is Professor of Economics of Economics at the International Islamic University Malaysia. He was formerly

associated from 1981-2011 with the International Institute of Islamic Economics, International Islamic University Islamabad,

where most of work on this paper was done. The author is grateful to several batches of students at both the institutions with

whom successive drafts of this paper were tested over the last 20 years.

This paper is prepared for 10th International Conference on Islamic Economics being organized in Doha by the Qatar

Faculty of Islamic Studies, Islamic Research and Training Institute (IRTI) and International Association for Islamic

Economics.

Some of the ideas in this paper were presented by the author at a seminar on “Poverty Alleviation” organized by

Institute of Policy Studies, Islamabad, during 16-17 December 1995. The said ideas appeared in the book Poverty Alleviation

in Pakistan (Islamabad: Institute of Policy Studies, Islamabad, 1997) in the chapter “Conceptual Framework” (pp. 245-52)

under the name of Mohibul Haq Sahibzada, the editor of the said book.

10th International Conference on Islamic Economics and Finance

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Islam is not only a religion but also a system of life. Concern for the poor and the

destitute ranks at the top of the Islamic economic agenda. This is manifest from scores of

Ayat and Ahadith related to the issue of distribution. While zakah is a well-known standing

institution to address needs of the poor, Islam also offers a lot for them in the form of

nafaqat-e-wajibah (obligatory rights of near-relatives), rights of neighbors, infaq (voluntary

spending for the sake of Allah), etc. It is unique, as compared with other isms, in that it

defines the targets as well as the modus operandi for achieving them.

The issue of poverty has always attracted the attention of Islamic scholars. However,

most of the theoretic discourses remain general, and empirical studies follow the established

tradition in mainstream economics. In formal theoretic works on the subject, such as Ahmad

(1991), the subject of poverty is discussed using a broad brush. Undesirability of poverty is

noted. Poverty is seen as a part of the general problem of distribution of income and wealth.

The Islamic approach to poverty is discussed against the backdrop of capitalistic and

socialistic thought. The policy framework and the agenda offered are stated in general terms.

In empirical works, focus is on gaging the extent of the poverty problem in Muslim

countries by using head-count ration, poverty gap and other traditional measures of poverty.

Poverty profile across rural-urban divide, linkage of poverty to income inequality and

economic causes of poverty are part of inquiry. In the end, existing poverty alleviation

programs are evaluated, and Islamic solutions by way of zakah, waqf and microfinance are

highlighted. Studies by Salih (1999) Obaidullah (2008) are representative works of this type.

Works based on seminar proceedings, such as Iqbal (2002), by and large address the same

issues as noted here.

It is not noteworthy that none of the existing works address the subject of poverty—in

terms of its nature, general approach to it, policy framework and economic policy agenda in

lieu of it—with direct support for the argument from the Qur’an and the Sunnah. This has

sidelined the difference between Islamic economics and mainstream economics in their

respected treatment of the issue of poverty. The study uses the phrases “Islamic perspective”

to indicate that the argument is based on and supported by the Qur’an and the Sunnah.

This study, unlike the other works so far, is a concept paper. It seeks to fill an important

gap the discipline of Islamic economics with a systematic analysis of important issues in the

domain of poverty from the Islamic perspective. It takes note of the Islamic viewpoint on

poverty (section 2). Based on the Qur’an and the Sunnah, it delineates the Islamic approach

that is multipronged: a grassroots approach with an allowance for right vs. wrong—as

opposed to good vs. bad—considerations and addressing the social dimension of the problem

of poverty (section 3). Most importantly, the Islamic approach is shown to rely on private

initiative for both initiating and taking necessary action for poverty alleviation. Such an

approach would require a special policy framework at governmental level consisting of


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institutional setup, criteria for ascertaining individuals’ entitlements and guidelines for

affirmative action, if necessary, at the government level (section 4). General economic policy

agenda at the government level is seen to play a supporting role for the success of Islamic

approach to poverty (section 5). Islamic approach to poverty calls for a paradigm. The paper

concludes by coparing the Islamic and the existing approaches to poverty (section 6). In the

end, the study is expected to dispel the impression that Islamic economics is economics with

some Islamic input, not a discipline in its own right.

2. Islamic Viewpoint on Poverty

Poverty is an economic state. There is no doubt that it gives rise to social problems and a

poverty subculture. But in Islam poverty does not constitute a basis for social stratification.

Allah SWT has declared all believers as brothers (al-Hujurāt 49: 10), and, hence, equal

before the Shari’ah. Social recognition of an individual is linked to his Allah-consciousness

(al-Hujurāt 49:13) manifested in one’s practice of Islam and his contribution to the society—

not necessarily the economy. Thus, the poor do not constitute a social class that can be bane

of dialectical processes for social change.

Islam recognizes the possibility of poverty in an Islamic economy. This point is implicit

in the following Ayah:

And, it is He (Allah SWT) Who has made you Khalifah (viceroy) on the earth, and has

made some of you some of you above others in rank so that He may test you in the

blessings that He has given you. Verily your Lord is quick in punishment, and yet He is

indeed Oft-Forgiving, Merciful. [al-An`aam 6:165]

But, as also made clear by this Ayah, Islam’s view of poverty is quite different. Whereas for

the rich this life is a test in plenty, for the poor it is so in poverty. Islamic teachings are quite

wide-ranging. They provide the criteria against which both the poor and the rich would be

judged, albeit separately, and rewarded in the life hereafter. For example, the rich are

obligated to recognize explicitly (through the payment of zakah) that whatever they own

actually belongs to Allah SWT. And, the poor are required to adopt legitimate means and

hard work for bettering their lots.

Reference to personal example of the Prophet SAAWS is the best way for correctly

appreciating the Islamic viewpoint on poverty. A large number of Aḥ adith imply that the

Prophet SAAWS lived the life of a poor. Two representative Aḥ ādith supporting this point

are as follows:


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‛Arwah b. Zobair RAA reports from Ayeshah RAA, wife of the Prophet SAAWS, as

follows. She narrated that the family of the Prophet SAAWS never had even barley bread

on two consecutive days, until the Prophet SAAWS expired. (Muslim, 2007, Kitāb al-

Zohd wa al-Raqā’iq, 29-(2974))

Anas Ibn Malik (RAA) reported as follows. Once he (Anas Ibn Malik) took a barley

bread and some low quality fat to the Prophet SAAWS (for eating). At that time the armor

of the Prophet SAAWS was pawned with a Jew of Madinah in order to buy barley for his

family. Anas said that he heard the Prophet SAAWS as saying: "This evening the family

of Muhammad, SAAWS, does not have even a sā‛ (a bowl) of wheat, barley or some

grain." Anas also noted that at that time the Prophet SAAWS had nine wives. (al-

Bukhari, 1997, Kitāb al-Boyū‛, 2069)

The personal example of the Prophet SAAWS does not imply that one should glorify poverty.

On the contrary, the most likely point behind his choice of an austere life for himself is the

declaration of Allah SWT that in the life of the Prophet SAAWS there is an example for the

believers to follow (al-Aḥ zāb 33:21). Had he SAAWS chosen to live like a well-to-do

person, the Muslims eager to emulate the Sunnah would have been completely lost in the

quest for economic well-being and material pursuits. Notwithstanding these points, from the

policy perspective the position of Islam on poverty can be inferred from the following

Aḥ adith:

Hisham (b. ‛Arwah) reports it from his father (‛Arwah b. Zobair) who, in turn, reported it

from his maternal aunt (Sayyidah Ayesha RAA) as follow. The Prophet used to seek

refuge of Allah as follows: "O our/my Allah! I seek Thy refuge from the affliction of the

Fire and from the punishment in the Fire. And, I seek Thy refuge from the affliction of the

grave and punishment in the grave. And, I seek Thy refuge from the affliction of

wealth/prosperity. And, I seek Thy refuge from the affliction of poverty. And, I seek Thy

refuge from the affliction of al-Masih al-Dajjāl." [al-Bukhari, 1997, Kitāb al-D‛awāt,

6376]

Abu Horairah narrated this Hadith to me (the reporter): The Prophet SAAWS said as

follows. "Seek the refuge of Allah from poverty, want (shortage), abasement and causing

or suffering wrong.” [an-Nasaee, 2008, Kitāb al-Iste‛ādhah, 5641]

The first Hadith implies that sometime poverty can be a real test, a tormentor of faith for the

ordinary. According to the second Hadith, the Prophet SAAWS instructed his companions to

make, as in the third Hadith. Taken together, both the Aḥ adith imply that refuge from

poverty ought to be concern of everyone. When something is concern of everyone in a

society, that automatically becomes policy concern for those at the helm of affairs. To

conclude, among other things supported by the Qur’an and the Hadith, poverty would rank


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among public policy targets in an Islamic milieu. It is, therefore, not surprising that Islam

prescribes a detailed anti-poverty framework (see section 4).

3. The Islamic Approach to Poverty

The Islamic approach to poverty, as noted above, has three distinguishing features. One, it is

a grassroots approach. Two, it makes allowance for right vs. wrong, as opposed to good vs.

bad, considerations in the design of anti-poverty programs. And, three, it also takes

cognizance of the need for multidimensional effort. These points are separately explained

below.

2.1 The Grassroots Character

The foremost feature of the Islamic approach to poverty is that it is a grassroots approach. It

allows maximum leeway for initiative and necessary action at the individual level. This stems

from Islam’s perception of this life being a test for man, and is substantiated by the great

emphasis placed by Islam on infaq—spending for the sake of Allah SWT.1

Helping those in need is an important means for improving one’s standing before Allah

SWT and for achieving success in this life and in the hereafter. This point is stressed in the

Qur’an as follows:

Who is he that will loan to Allah a beautiful loan that Allah will double unto his credit

and multiply many times? It is Allah Who giveth (you) want or plenty, and to Him shall be

your return. [al-Baqarah 2:245]

It is clear that Allah SWT, the Creator and Owner of everything, does not need to “borrow”.

This Ayah is, therefore, a manifestation of His extreme Kindness and Graciousness to treat

any help given to the less fortunate as an obligation against Himself to be paid back manifold.

The Qur’an does not stop at this. There is also a stark warning for the believers against

turning a blind eye to spending for the sake of Allah SWT:

O ye who believe! Spend out of what—the bounties—We have provided for you, before the

Day comes when no bargaining will avail, nor friendship nor intercession. Those who

reject Faith/this advice/turn a blind eye to this advice, they are the wrong-doers. [al-

Baqarah 2: 254]

The essential point for our purpose may now be seen as below.

It is well known in the conventional economics literature that if some rigidity exists on

the supply side, fiscal action by government for enhancing aggregate demand may not

increase aggregate output. And, instead, increase in government expenditure will only crowd

1 On numerous occasions in the Qur'an, the believers are invited to spend for the sake of Allah SWT. All

main collections of the Hadith devote a separate section to the Aḥ ādith enjoining the same.


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out private investment. For some reason, in mainstream economics relevance of this point on

the distribution side is ignored. The following possibilities cannot be ruled out.

If the responsibility for anti-poverty action is delegated to government, as in the Western

democracies, it is most likely that the concern at private level will abate. In addition, room for

action at the private plane will shrink. A natural consequence of both these factors would be

active role by the government displacing private action. Is such a thing consistent with the

Islamic view of this life as test for man? Is it be compatible with the goal of increasing

options for individuals to seek the Pleasure of Allah SWT through voluntarily spending for

His Sake? The answer is clear.

Notwithstanding the above, it is well known that the public sector is inherently

inefficient. The basic reasons are understandable. The ruling elite—representatives of the

people—makes policy decisions for expenditures in a democratic environment. The

bureaucracy executes them. And, financial obligations fall on the shoulders of yet another

group, the taxpayers—many a time future generations. This tracheotomy between primary

decision making, implementation and financing makes the true revelation of society’s

preferences impossible. Missing the target is the only logical consequence. More often than

not, this takes the form of over-shooting the targets. This argument about inherent

inefficiency of the public sector implies that one should not insist on the government to take

the charge on the distribution front, as in most welfare states in the present age.2

In passing, it is pertinent to mention that the early Islamic scholars and contemporary

Islamic economists generally take a paternalistic view of government. Traditional treatises on

the government’s role and functions have mainly focused on what an Islamic government

“should”—or, in the same vein, “ought to”—do. Al-Aḥ kam al-Sultania of Al-Mawardi (972–

1058 AD) and Hakumat Nama of Nizam al-Mulk Ṭ usi (1018–1092 AD), among others, fall

in this category. More recently, Chapra (1980) and Siddiqui (1986), for example, brought

virtually every good thing under the functions of state, and relegate all social responsibilities

and goals to government.3 No convincing Shari’ah rationale is provided to justify the above

stance. The Shari’ah is concerned with rules and regulations for dealing of people with one

another, in addition to ibadat (acts of personal worship). Fiqh mostly focused on individual

matters, and provided detailed guidelines for what an individual can or cannot do in different

matters and circumstances. Where and how does the person of government fit in that context?

Fiqh is mostly wanting on this subject. It is, therefore, not surprising that Islamic scholars

mostly take a benign, rather than a Shari’ah, view on the matter.

2 See section 6 for further discussion on this point.

3 Siddiqui made a valiant effort to generalize the scope of fard kifaya (collective social obligations) to the

economic domain.


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The dominant approach seems to have been inspired by the notion of man as khalifah

(vicegerency of Allah SWT on earth) and “Islamic state”. Ahmad (1991, p.16) notes, for

example, “Man is the vicegerent of God on earth, and it is his duty therefore to so arrange the

affairs of the world that all have their due share in the ‘good things’ of life”. The perception

of man as khalifah means that man should be considerate and caring for others. This is

expected all the more from those who are at the helm of community affairs. Such was indeed

the case during the time of the Prophet SAAWS. The example set by the second caliph

Sayyidena Omar strengthened this view, and became the standard by which later Muslim

rulers came to be judged. Sayyidena Omar is known to have taken personal charge of the

wellbeing of his subjects. He is on record to have regarded himself personally accountable

before Allah SWT (on the Day of Judgement) even for a dog dying of thirst on the banks of

the river Euphrates—thousands of miles away from the capital. The thrill and excitement

generated by such a view is beyond words. Nevertheless, this approach needs to be reviewed.

Some of the reasons are as follows.

During the reign of Sayyidena Omar, the economy was a resource surplus economy. The

government faced no financial constraints for achieving the targets set for itself, and could

assume all responsibilities. Technically speaking, the government of the time was performing

a distributive function—not a coordinating function. Today resource constraints are binding.

It is virtually impossible for any government to give to one person or a group of people

without taking the same away from another. Where such is the case, the Shari’ah principle on

when a person’s property can be taken from him, has to be applied first (see below). This, in

turn, denies government an automatic right to intervene on behalf of the poor.

That the Islamic approach is a grassroots approach also means that remedies are to be

available at the doorstep of the needy without necessarily their beseeching the same: zakah is

the responsibility of the wealthy to give and not that of the poor to seek. Of course, this subtle

point has to be reflected in the government's administration of zakah—both a state

prerogative and state responsibility in the Islamic milieu.

Effectiveness of a grassroots approach to address the problem rests on two things: (1)

codification of the rights and responsibilities of everyone concerned and (2) inspired

individuals. Both these points are not neglected in Islam. Nafaqaat-e-wajibah, rights of the

neighbor, top priority given to the rights of the poor in zakah and guarantee of fundamental

economic rights address the legal side.4 Ample details about the scope of the zakah levy and

its administration are available in the books of fiqh (Islamic law). As to the second point, it is

important to note that success of any grassroots approach would ultimately depend on the

personal initiative. Islam inspires man in this regard as follows. It inculcates in man the love

4See Siddiqui (1986) and Tahir (1995) on the point of fundamental economic rights.


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of Allah SWT and a desire to do something for His sake as well as for His Pleasure. It also

develops in him the concern about his abode in the life hereafter and a desire to do something

to save it. These themes of love for Allah SWT and fear about the hereafter are ingrained in

every believer through daily routine of 5-times daily prayers, 30 days of fasting every year

and numerous other acts of personal worship. Islam history is full of examples of personal

initiatives and sacrifices for the wellbeing of the others.

2.2 Allowance for Right vs. Wrong

The present approach at the level of government is to set the targets, determine their financial

impact, work out financing arrangements and rely upon legislative support for legal cover. In

democratic setups consensus or majority decision provides justification for anti-poverty

schemes and regulates them. The society’s values about good and bad play the defining role

in this process. As hinted in the preceding section, in the case of Islamic approach the matter

is not so straightforward.

Islam is not just a religion. It is also Shari’ah, a code for life. It is about rights and

responsibilities. Given that any discourse on poverty and its solutions is about “ends” and

“means”, compliance with the relevant Shari’ah criteria, becomes imperative.

A general Shari’ah principle is that the ends as well as the means must be Shari’ah-

compliant. Strictly speaking, the Shari’ah recognizes everything as “right” provided it meets

the relevant Shari’ah criteria.4 On the other hand, “wrong” is something that involves

violation of some or all of the relevant Shari’ah parameters.

At an individual level, right or wrong occurs in the framework of an individual’s

observance of the Ahkam of the Shari’ah in his ‘personal’ matters. For example, establishing

salah with some prescribed etiquette is right. No salah or salah without fulfilling its

requirements is wrong. Likewise, in human affairs observance of relevant Shari’ah conditions

in transactions is right, and violation of any such condition renders the action wrong. For

example, a genuine sale on deferred payment basis is right. And, it creates a debt in favor of

the seller that ought to be settled on equal basis in compliance with the Ahkam on riba.

Similarly, if claims generated in lieu of a permissible transaction are not honored, a wrong is

committed. As may be seen, in human affairs all rights give rise to legally enforceable claims,

while the wrongs to something against which legal redress may be sought. This right vs.

wrong, as opposed to good vs. bad, distinction is not fully appreciated in the Islamic

economics literature on development and poverty. But it has profound policy implications.

In the context of poverty-related action, the issue of right vs. wrong might become

relevant at three levels: (1) an individual seeking redress against poverty, (2) use of the

4Note that this is a stronger statement than the traditional fiqhi view that fundamentally every thing is right

unless it is explicitly prohibited in Shari’ah.


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available resources for anti-poverty programs, and (3) the government taxing the people for

anti-poverty action. The fine points can be seen as follows.

The first issue is about entitlement: when and to what extent an individual might claim

redress for his poverty-related concerns. Can we rely upon a subjective assessment

determined by either the individuals or some sort of consultative process at the national level?

The Shari’ah recommends objective, as opposed to subjective, measures in this regard.

Definitive guidelines are available in the Sunnah. For example, the Prophet SAAWS forbade

any claims if a man had an equivalent of forty dirhams or more. He SAAWS also indicated

the limit to which a person might seek help. The relevant Ahadith and their policy

implications are discussed at length in the next section.

As to the use of available resources for anti-poverty action (point 2 above), it should

be clear that in an Islamic milieu public money is amanah—trust in the hands of those at the

helm of national affairs. The availability of resources alone is not sufficient to justify any

expenditure. Some relevant principles in this regard are as follows.

First and foremost, the Shari’ah has set expenditure priorities for proceeds of zakah,

sadaqāt, ghanimah (war-booty) and fay (property and wealth surrendered by the enemy

without any battle taking place). If revenues are available under one of those heads, they

ought to be disbursed in the prescribed manner. For example, zakah and sadaqaat are to be

spent on eight categories, with care for the needy ranking at the top (al-Taobah 9: 60).

Ghanimah can go to those involved in its creation after earmarked for the sake of Allah SWT

and His Prophet SAAWS (al-Anfāl 8: 41). Fay is for Allah SWT, His Prophet SAAWS and a

select group of people so that the gap between the haves and the have-nots is reduced (al-

Ḥashar 59: 7). Technically speaking, import duties can be seen as charges from foreigners,

who are not members of the Islamic fraternity, for allowing their merchandise to enter into

the domestic market. Thus they are not a direct charge on any citizen. Accordingly, if the

revenues generated through import duties are spent in favor of the poor, a particular segment

of the society, there would no direct clash with the interest of another group of the society.

And the expenditure on anti-poverty programs would be above reproach on Shari’ah grounds.

Apart from the above and similar other cases, public money is to be spent for the purpose

it has been raised for. Any surplus revenue is common property of all citizens, and can be

spent either on shared goals of all or with their mutual consent. On same grounds, diversion

of money from one head of expenditure to another might not be automatic. Any action taken

in disregard of such considerations is wrong on technical grounds in the Shari’ah framework.

As to the relevance of the right vs. wrong criterion in the context of government

“taxing” the citizens towards anti-poverty action, the essential point is as follows. The

issue may arise because resources available through the regular means, such as zakah, may be


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deemed insufficient to address the poverty problem. The question is: does the government has

unlimited to initiate such an action.

It is noteworthy that a Muslim pays zakah due to the obligation he creates against himself

by becoming a believer. Any other sadaqah or infaq fall under voluntary acts of giving.5 For

any additional obligations, as per an-Nisā 4: 29, willing consent of the payer has to be in

place in advance. For our purpose the fine point here is that to the extent the poor have

legitimate claims against the society at large (or, the state) that cannot be met through other

available Shari’ah means, government can call upon the better-off persons to finance anti-

poverty programs through taxes, but not otherwise. The claims of the poor against the state,

in turn, are determined by a host of factors. The most crucial is fundamental economic rights

of the poor in the Shari’ah perspective. Firstly these are to be set against revenues available to

the government through zakah and other Shari’ah-prescribed levies and any other revenues,

such as ‛ushūr, which foreigners may be called upon to contribute to enter the Islamic state.

Of course, an allowance also needs to be made for the various other Shari’ah claims on zakah

and other similar levies. The net difference between the quantum of fundamental economic

rights and the said state revenues constitutes the net claims of the poor on the society at large.

Any taxation beyond the above would require express consent of the rich (through proper

consultation): the government cannot do infaq in favor of the poor out of the pockets of the

rich against the latter’s express permission.

The message of the above notion of right vs. wrong is as follows. To the extent the have-

nots have justifiable claims against the society at large, such as the fulfillment of their

fundamental economic rights, the state can make a recourse to a tax-transfer mechanism if the

society fails to alleviate poverty on its own. Beyond this, government must act like a neutral

umpire. This point is also supported by the famous Hadith on tas’eer (price controls) in

Sunan Abu Dawūd according to which the Prophet SAAWS refused to place limit on the

sellers’ rights to earn their rewards (through profits).

To say the least, there is no automatic Shari’ah sanction for recourse to the tax-transfer

mechanism in favor of the poor. If need be, however, some options might be available. Three

such possibilities are as follows. First, if the state has revenues from, say, import tariffs and

business registration fees, both of which have independent Shari’ah sanction, those may be

used in favor of the poor—provided that there is a prescribed criteria for determining the

expenditure priorities. Second, the state can resort to deficit financing (money creation) in

favor of the poor, especially when aggregate demand in the economy is depressed. Third, the

5 Some ṣ adaqāt may stem from inability to obey some commands of the Shari‛ah in letter. Examples to be

inserted.


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state can "manage" or guarantee loans and credit-sale operations in favor of the poor with the

debts to be cleared by the latter according to prescribed schedules.6

2.3 Multidimensional Character

The multi-dimensional character of the Islamic approach to poverty may be traced to Islam's

emphasis on human dignity. Allah SWT has declared man to be His best creation (Surah

#:##). Rich and poor are alike in sharing this honor. While most systems and isms

concentrate on the economic side alone, Islam also accords extreme importance to the social

dimension of the poverty problem. The significance of this point is that usually a bout with

poverty is traumatic, and many a time tragic, experience for most of the people. Poverty has

its own culture. It breeds hatred and vengefulness. The Islamic concepts of equality of

mankind, akhuwwah (the bond of brotherhood among the believers) and Allah-consciousness

as the basis for man's dignity help to address this important problem. The Islamic teachings,

in general, and the concept of al-Akhirah (the hereafter), in particular, if properly cultivated,

ensure that a poor may come out of the poverty trap with his self-respect intact. On the side

of material help, technically zakah is paid to Allah SWT, and the beneficiary gets the things

on His behalf. Thus zakah is free the stigma of charity.

The would-be helpers of the poor and needy are given exhaustive guidelines on how to

spend for the sake of Allah SWT. Those guidelines cover both the motivational and practical

sides. Reference to Al-Baqarah 2: 261-274 is revealing. The givers are told to give to those

who don’t ask for it but can be recognized to be in need. They are also advised to put

themselves in the position of the would-be taker, and give only those things that they

themselves would like to take. Last but not least, the givers are instructed not to put a blemish

on their goodly act with harsh words following their giving.

The importance of selflessness in acts of charity is highlighted in the Ḥadith in a unique

way. Muslim (2007, Kitāb al-Imarah, 152-(1905) gives a detailed account of the fate of a

martyr, a religious scholar and a rich person on the Day of Judgment. Each one would be

reminded about the blessings of Allah SWT upon him in the life of the earth, and called upon

to explain what he did. The rich would claim that he spent for good causes as desired by

Allah SWT. But his explanation will not be entertained, and he would be doomed for being

charitable in order to be famous philanthropist, not really for Allah SWT’s sake. According to

the Prophet SAAWS, one of the eight persons under the shade of (i.e. belonging to) Allah

SWT on the difficult Day of Judgment, would be a man who gave charity so secretly that his

right hand did not know what his left hand was giving (Al-Bukhari, 1997, Kitāb al-Adhān,

660; Muslim, 2007, Kitāb al-Zakah, 91-(1031)). In the Islamic institution of charitable waqf

This would also require streamlining the institution of debt, and enforcement of zakah, to come up with an 6

acceptable definition of ghāremīn, etc.


–12–

(endowment), the person of the one establishing it goes out of the picture. There is hardly any

need to explain the implications of all these points, as also several others not mentioned here,

for protecting the dignity of the poor and the needy. To conclude, it can be justly claimed that

Islam offers an all-round approach to poverty alleviation: it addresses not only the economic

but also the social dimensions of the poverty problem.

4. The Policy Framework

The policy framework is taken here to mean the overall framework for visualizing all

poverty-related steps. This consists of (1) the institutional setup, (2) criteria for ascertaining

individuals’ entitlements, and (3) some standing guidelines for affirmative action at the

government level. These three things are separately discussed in what follows.

3.1 The Institutional Setup

The following points, among others, call for attention. First of all, Islamic solutions work best

in Islamic environment, namely the Islamic economy. This is quite natural. Islamic remedies

applied in a Shari‛ah-noncompliant framework may yield positive results. But the relief will

not last long if contravening force remain at work. For example, according to the Shari‛ah in

the case of a person’s death only his assets (after making allowance for his outstanding debts)

are transferable, not his liabilities. If there exist a system in which people are required to clear

outstanding debts of their fathers or forefathers, the indebtedness problem may reemerge

despite provision of relief to the burdened people through zakah. Take another example.

Allah SWT strictly prohibits gambling. If lottery schemes remain in operation, ordinary

people may be slip into poverty circle by the lure of winning lots of money. The Shari‛ah is

strict on the bona fides of a person before initiating an exchange. One may enter into a

transaction with something only in three cases: (i) the thing belongs to him, (ii) the actual

owner appoints him as agent for doing the needful, and (3) there exist genuine reasons

bearing witness to his becoming the owner at an appointed future date. Any other claim is

fictitious. Modern banking standing of the mirage of debit-credit can only multiply economic

disparities. To sum up, Islamization of economy should always be on the top of any agenda

for eradication of poverty.

The next important this is role, or responsibilities of government. “Government” is most

misunderstood and misused concept. Decision-making in the name of the government is by

one group of people, i.e. the rulers.—The rulers come and go, but they make decisions and

create obligations in the name of the state. Implementation of the said decisions is in the

hands of another group of people, namely administration or bureaucracy. And, financing

obligations are borne by the public. The situation among the public is more complicated.

When demands are placed on the shoulder of the government, everyone conveniently

overlooks the fact that someone (among the present population or future generations) has to


–13–

pay for fulfilment of those demands. But when it comes to paying taxes, everyone wants

concession for himself. In these circumstances, there is need to review the status of

government on the economic plane. “Governance” needs to be viewed as an occupation like

any other profession in an economy. And, it should exist and work according to the Shari‛ah

principles. That is, government should be only for governance and, where the Shari‛ah so

demands, act as operational arm of the Shari‛ah and the state. Thus, for example, government

should strengthen the institution of zakah and waqf and limit itself to monitoring poverty

situation and facilitating private initiative in that regard.

3.2 Criteria for Ascertaining Individuals’ Entitlements

If financial accommodation is available for free, several claimants would crop up. Some

restrictions are necessary to reduce excessive claims for help in the name of poverty

alleviation or eradication. The Shari‛ah provides practicable guidelines in this regard. The

following Ahadith are insightful in this regard.

Ata b. Yasar reported this Hadith from a man of Bani Asad. The man narrated as follows.

I arrived at Baqee’ al-Gharrqad wit my wife. My wife told me to go the Prophet SAAWS

and ask for something for us to eat and to tell him about our needs. I accordingly went to

the Prophet SAAWS. I found with him a man who was pressing him for something. The

Prophet SAAWS was telling the person that he SAAWS had nothing to give. That man,

while turning his face (away from the Prophet SAAWS) and emphasizing his age factor,

was muttering that the Prophet SAAWS was giving only to those whom he SAAWS

wanted. The Prophet SAAWS said that the man was getting angry with him because he

SAAWS had nothing to give to that person. He SAAWS also said as follows:

If one of you (the believers) ask for help while he has an ouqiyyah [of silver]

or its equivalent, indeed he does so to embarrass others.

The man from Bani Asad then said: I told myself that I had a she-camel that was worth

more than an ouqiyyah, and an ouqiyyah equaled 40 dirhams. I, therefore, came back

without asking for anything. Later on when the Prophet SAAWS received some barley

and raisins, he SAAWS sent us also a part thereof.—Perhaps the man from Bani Asad

also said something like ‘until Allah made us self-sufficient’.

Abu Dawūd said that this is how the Hadith has been reported by [Sufyan] Thauri, as

Malik said. [Abu Dawūd, 2008, Kitāb al-Zakah, 1627 – emphasis added]


–14–

This Hadith is narrated by Qabeesah b. Mukhariq al-Halali who stated as follows. I was

guarantor of a loan. I came to the Prophet SAAWS for help. He SAAWS asked me to

wait until he SAAWS received some sadaqah (to give to Qabeesah). The Prophet SAAAS

said as follows: ‘O Qabeesah! It is not permissible for a man to claim help except

three persons. One, a person burdened by the obligations of a guarantee. Such a

person can seek help to the tune of the guarantee. Two, a person who lost his property

due to some calamity. He too can seek help to the extent of his need. And, three, a

person in some special need which three wise (reliable) men confirm. He too can seek

help to the extent of his need, and should stop at that. Except in these three cases, it is not

permissible for a person to seek help. And, O Qabeesah, other than these three persons, if

someone begs and eats therefrom, he eats haram’. [Abu Dawūd, 2008, Kitāb al-Zakah,

1640 – emphasis added]

Both the Ahadith reveal that the Prophet SAAWS received two requests for help on two

separate occasions. On both these occasions, the Prophet SAAWS had nothing readily

available with him. But in one case he SAAWS refused the request then and there, while in

the other He SAAWS asked the Sahabi, Qabeesah RAA, to wait until some sadaqah things

arrive. Here it is pertinent to mention that sometimes the Prophet SAAWS did not have

anything readily available for giving to the needy, but he SAAWS asked his companion, such

as Sayyidena Bilal, to address need of the concerned person through borrowing.—Debt

created in such instances was retired with the help future zakah and ṣ adaqah proceeds.

Against this backdrop, the refusal of the Prophet SAAWS to grant request in the first Hadith

means that the request did not merit further consideration.

Both these Ahadith contain clear guidelines on addressing poverty-related matters, that is,

when claims for help can be sought from the exchequer, and how far those in charge of the

exchequer can go to provide help. According to the first Hadith, the Prophet SAAWS set the

limit for filing request for economic assistance from the public exchequer at one wuqiyyah or

silver or 40 dirhams (during his time). This Hadith also implies that such a request from

anyone with means equal to 40 dirhams or more, would not be legitimate. The second Haidth

implies that in exceptional cases the 40-dirhams benchmark might be substituted by an

objective criteria. For example, unintentionally created debt burden in lieu of some guarantee

given in good faith, losses due to natural calamities or other objectively verifiable genuine

needs

As for the extent to which economic assistance might be provided from the public

exchequer, according to the first Hadith the help would depend on the availability of

resources. If resources are available and there is no other claim on them, the assistance may

exceed 40 dirhams benchmark. The second Hadith implies that in special cases, the amount

of help can go up to the extent of absolving an indebted person of debt claims against his,

restoration of original position of the person affected by a natural calamity, and so on. Of

course, availability of resources would also matter in this regard.

Last but not least, the third Hadith also implies that a verification process may be

instituted in order to establish genuineness of claims addressed to the government. A


–15–

verification mechanism and objective criteria for assessing any request for public money are

two musts for any anti-poverty program at government level.

3.3 Guidelines for Affirmative Action at Government Level

Three things need to be taken into account in this regard: (1) recourse to direct action in the

government’s name only as a matter of last resort, (2) focus on poverty alleviation as opposed

to poverty eradication, and (3) recourse to least costly options.

Primary emphasis should be on building capacity of the private section for addressing the

poverty issue, whether through zakah or through voluntary charity. The Shari‛ah already

provides ample guidelines in this regard. Thinking on zakah is stalled for ages. The life has

changed in the meanwhile. Serious effort is called for in order to determine the application of

zakah to new cases, such as poultry farming, fish farming, logging, increase in the life of

vegetables through cold storage for gainful purposes, works of art, and so on. If proper

homework is done, and allowance is made for all these and several other new forms of

wealth, reliance on affirmative action through the government budget may be substantially

reduced.

Government should limit its role to poverty alleviation. The idea of poverty eradication

(or, empowerment of the poor) has its charm. Its proponents, however, conveniently ignore

other fiscal claims on limited government resources. Public debt is created in state’s name,

not in a government’s name. Governments come and go. Those in power do not have to pay

because that is headache of the next government or future generations. Governments have

temptation to go for big welfare schemes. This has turned poverty, which is essentially an

economic problem, into a political problem. The rising public debts all over the world, sooner

or later, call for review of governments shouldering the responsibility in welfare matters.

Beneficiaries of anti-poverty action normally do not pay for what they get. They are,

therefore, likely to seek more and more. Fiscal constraints do place a check on this. However,

as a matter of policy, innovative solutions need to be explored and implemented that are least

costly for the public exchequer. For example, instead of addressing economic needs of the

less privileged within a metropolis, they may be given six-months expenses and some

additional funds, and resettled in barren lands that they may bring under cultivation, stand on

their own feet and possibly be helpful to others.

5. The Economic Policy Agenda

The economic policy agenda means agenda at the government level for addressing the issue

of poverty in an economy. The point relevant in this regard may be briefly stated as follows:

1. Islamization of economy. If economy runs according to the Shari‛ah and exploitative

and speculative transactions are weeded out, that would put a cap on the growth of


–16–

poverty. In fact, it is illogical to talk of Islamic solutions to problem without

following the Islamic prescriptions for life.

2. Strengthening the institutions of zakah and waqf. This is also subsumed under the

above point. However, its importance calls for separate mention, especially due to

changes in fiscal management of the economy that might be necessary.

3. Promotion of Islamic microfinance in the light of the Shari‛ah principles. This is

important for promotion of entrepreneurship and self-employment. But when one

talks of Islamic solutions, it means Shari‛ah-based microfinance.

4. Promotion of education and human resource development. Long-term solutions for

the problem of poverty is responsible and productive human resources. In the spirit of

main point of this paper, as mush as possible private sector should be mobilized for

this purpose.

5. Little or no reliance on either tax-transfer mechanism or public burrowing for anti-

poverty action. This is also importance for checking growing public debt.

6. Comparative Look at the Islamic and the Existing Approaches to

Poverty – Concluding Observations

As mentioned at the beginning, poverty is common problem of all humanity. But it is not

given the same recognition by the various religions and economic ideologies. Capitalism has

gone through some transformations. Importance of keeping the population at large satisfied is

now considered vital for both growth and stability. This is the age of humane capitalism, free

market economy with abundant welfare programs for the poor and the needy.

In mainstream economics, the dominant approach against poverty is as follows. Public

contributes to government in the form of taxes. The government sets poverty criteria, defines

poverty line, identifies the poor and the needy, provides the assistance where it is needed. Of

course, public also take some action at its level. But that is independent of the formal

arrangement for address the problem of poverty. Achievements in the contemporary West

and other developed countries in this regard are truly impressive. At what cost? One finds

here failure of conventional economic theory. Whereas neoclassical economics is all for free

market economy in lieu of economic activity, it has sidelined private initiative on the

distribution plane, and re-routed the public’s role through the public exchequer. Populist

policies and sitting governments (ruling classes) under no personal binding obligations have

created the monster of public debt.—To put a cover on the gravity of the matter, public

discourse has been intelligently shifted from the size of public debt to debt-GDP ratio. Most

of the said debt stems from welfare claims on government.

As against the above, this study in the Islamic economics tradition show how public-

government-the poor circuit may be replaced by direct pubic-the poor link. Individuals


–17–

ultimately bearing the expenses of anti-poverty measures but getting no personal credit in the

eyes of their Creator is at variance with the Islamic approach to poverty. A byproduct:

riddance from inefficiencies of the public sector on the distribution plane as on the economic

plane: truly 100% private initiative. This compare favorably with partial emphasis on private

initiative under neoclassical economics.


–18–

Bibliography

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Abu Dawūd, Abu Sulaymān bin al-Ashʽ ath al-Sijistānī (2008), Sunan Abī Dāwud (Arabic-

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