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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.
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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.
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(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
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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]
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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
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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
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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
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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.
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