An Islamic Alternative (Zakat) to Poverty Alleviation : the PARSHI Model

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Copyright CDSS 2000-2009 1

An Islamic Alternative to Poverty Alleviation:

The PARSHI (Neighbourhood) ModelPaper Presented By

Dr. S. M. Ali AkkasPolicy Leadership Unit

Ministry of Women and Children Affairs

Government of the Peoples Republic of Bangladesh

Email: [email protected], [email protected]

Web: www.cdss.ingeniousbd.org

Paper Presented in the

International Seminar on

Islamic Alternative to Poverty Alleviation: Zakah, Awkaf and

Microfinance24-26 November 2006

Sponsors:

Islamic Research and Training Institute, IDB

Islamic Economics Research Bureau

Islami bank Bangladesh Limited


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Abstract

The paper, first, analyses inadequacies of the market mechanism as well as thecurrent interventions both at government and non-governmental levels under it as tools of

poverty alleviation and points out the need for introducing a continuous basic minimum

initial asset/capital transfermechanism like Zakah as follows:

Government safety net programs are often seasonal, poorly covered and aptly

regarded as least organized thereby having very marginal impact on poverty. The

important government safety net programs are Food for Works (FFW), Food for

Education (FFE), Vulnerable Group Development (VGD) Program for disadvantaged

women, and Test Relief (TR). It should be noted that the safety net programs are based

on donors humanitarian grants with high degree of fluctuations. At the same time, it is

hardly a net transfer mechanism since FFW, the major component of the safety net

programs, is given as wage to construct and repair rural infrastructure.

Market mechanism, on the other hand, has nothing to do with poverty except the poor

receive something by its trickle down effects emanated from higher growth. Setting

safety nets for the poor is an out of the market solution, which has been proved to be

extremely insufficient in taking care of poverty. Government transfer mechanism, another

out of the market intervention, works heavily against the poor favouring more who are in

higher income echelons.

NGOs role is generally applauded in their effort to ameliorating poverty situation in

Bangladesh. Target group approach adopted by NGOs faces challenges at least on three

sustainability grounds. These are:

Ultra poor are hardly covered by any of these target group approaches due to reasons

such as: (a) either the people targeted withdraw themselves considering the program

is not suitable to them; and/or, (b) the program organizers find them relatively too

risky to include on recovery grounds. That means, organizations sustainability

becomes increasingly threatened by more and more inclusion of ultra poor;

Graduation of the target group people, generally having no asset, has been

exceedingly arduous as they are put in a situation to survive on utilization of a very


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small amount of loan hardly more than Tk. 5000/-. This puts borrowers sustainability

at stake; and,

The micro-finance institutions are mostly based on donors funds, which is not by

nature sustainable.

With the above-mentioned three sustainability grounds, endorsing of entitlement to a

basic minimum initial asset/capital seems to be the sin-qua-non of any approach to

poverty alleviation. One can find here the real implication of introducing Zakah in the

economy as the most effective tool to eradicate poverty. Once Zakah creates this initial

asset base, only then one can expect smooth functioning of a financing scheme whatevermight be the size of loan.

Thus, endorsement of entitlement to basic minimum initial asset/capital is the sin-

qua-non of any approach to poverty alleviation. Current poverty alleviation programs

lack this vital component in their program design. As a result, all PAPs currently under

application are bound to be unsustainable on grounds of their donor dependence, inability

to provide initial basic minimum ownership-capital and less organizational sustainability

due low capital productivity. Zakah creates such a provision in an economy. It is a

continuous transfer mechanism ensuring transfer of resources from well-to-do to the poor

and needy. Once this basic entitlement is granted, access to credit adds a new dimension

to graduation process of borrowers.

Secondly, the paper provides a model known as PARSHI (neighborhood) which

internalizes the local development process by bringing in its fold the institution of Zakah

and microfinance integrated with other mutually reinforcing socio-religious and

economic programs.

Thirdly, in order to validate the model, experiences from practices close to this line

would also be analyzed and presented.


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An Islamic Alternative to Poverty Alleviation:

The PARSHI (Neighborhood) Model

Dr. S. M. Ali Akkas

1. Introduction

In a situation of poor response to the public management of Zakah fund after

enactment of Zakah Act in Bangladesh, there should be a fresh look to the reasons why it

is so and what could be a new approach to organizing collection and disbursement of

Zakah. To this author, public management of Zakah in Bangladesh could not gain

adequate trust because of the nature of the government and the fact that payment of

Zakah by the Zakah Act has been made voluntary. Assuming that the present Zakah Act

will continue to be with same characteristic until a qualitative change in the nature of the

government, the paper attempts to respond to the query in Section-1 why an initiative of

the type of a pilot scheme should be undertaken. Section-2 argues why current safety net

programs of the government and the microfinance activities of NGOs can exert very little

effect on poverty and why Zakah (a regular transfer mechanism) needs to be put in place

to effectively address the poverty issue. Section-3 presents strengths of Zakah as an

effective poverty alleviation tool. While Section-4 deals with who should take the

initiative, Section-5 illustrates how the program should be approached. Section-6 tables a

preliminary thought PARSHI The Neighbourhood Model and Section-7 provides a

brief idea on how to attempt institutionalisation of the PARSHI Model

2. Why Poverty is sustaining in Bangladesh?

2.1 Almost Non-functional Zakah Board in Bangladesh

Zakah collection by National Zakah Board has come down to a million for the past

few years. Zakah administration at governmental level has virtually been non-functional.

This reflects lack of confidence on the government machinery as regards its eligibility of

Policy Leadership and Advocacy Unit, Ministry of Women and Children Affairs, Government of the

Peoples Republic of Bangladesh.


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collecting and disbursing Zakah. The other most important factor for undertaking

community initiative of Zakah management is the persisting high percentage of below

poverty line population in spite of so-called successful interventions by NGOs. This has

become rather inevitable when the traditional NGOs target group approaches face

difficulty in reaching the ultra poor. Following discussions throughout Section-2

summarises authors recent policy research on the subject.1

2.2 Staggering Poverty Situation in Bangladesh

Bangladesh has been ranked 139 (among 177 countries) in the Human Development

Report 2005 and categorized as one of the poorest countries of the world and worst

performer in South Asia. As per Human Poverty Index (HPI-1), Bangladesh ranks 86th

among 103 developing countries with HPI-1 value 44.1% again being worst performer in

South Asia.2

About half of its population live below poverty level in terms of per capita

daily calorie intake. Poverty line defined accordingly provides a worrisome picture of

poverty situation in Bangladesh. Rural population below poverty line is estimated to be

46% in 1993, which has declined to 40% in 1997. Below poverty line urban population is

reported to be 43.3% and 43.4% respectively during the same period.

Rural Bangladesh

Of the total 98.77 million rural populations in 1999 (model generated), 5.2 million are

ultra poor representing 4.1%. Number of moderate poor is estimated to be 54.37 million

representing 42.7% of the rural population.3

1 Akkas, S. M. Ali (1999). Simulating Role of Zakah in Poverty Alleviation of Bangladesh under a

Dynamic Computable General Equilibrium Model, Policy Studies Series 1, Centre for Development

Studies and Services Network (CDSSnet), Dhaka.2 HDR 2005 Country Fact Sheets, Bangladesh,

http:/hdr.undp.org/statistics/data/country_fact_sheets/cty_fs_BGD.html3 Akkas, S. M. Ali (1999). Simulating Role of Zakah in Poverty Alleviation of Bangladesh under aDynamic Computable General Equilibrium Model, Policy Studies Series 1, Centre for Development

Studies and Services Network, Dhaka.


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Urban Area

Urban population is estimated to be 28.44 million in 1999 (model generated). Of this,

below poverty line urban population accounts 12.31 million. Among these huge urban

poor, number of ultra poor, very poor and moderate poor are accounted to 1.7 million, 4.1

million and 6.5 million representing respectively 6.1%, 14.5% and 22.7% of total urban

population.4

2.3 Inequality in the Distribution of Govt Transfer

The present outrage of poverty in Bangladesh is conditioned by size and growth of

population, distorted play of market mechanism, and less judicious allocation of

government transfer payment leading to a distribution mechanism which has built-in bias

to transfer resources from the poor to the rich. The study conducted by the present author

shows extremely an iniquitous distribution of government transfers depriving altogether

those household groups (landless and marginal farmers) who badly need it by any

consideration of priority. Landless and marginal farmers representing respectively 4%

and 26% of total household population get zero allocation of government transfer. On the

other hand, medium and high education household group representing 8% and 3% of total

household population appropriate respectively 34% and 38% i.e., 72% in total of the

government transfer payments effectuated in 1993, the base year of the model run.5

Inadequate Government Safety Net programs

Government safety net programs are often seasonal, poorly covered and aptly

regarded as least organised in terms of leakage. The important government safety net

programs are Food for Works (FFW), Food for Education (FFE), Vulnerable Group

Development (VGD) Program for disadvantaged women, and Test Relief (TR). Among

these programs FFW is the largest, but the fastest growing and second largest program is

the FFE. The authors same study depicts extent and coverage of the safety net

interventions. It is evident that the highest level of delivery of these programs took place

in 1995-96 distributing 1078 thousand metric tons of wheat costing Tk. 13,970.9 million

4 Ibid5 Ibid


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and 70 thousand tons of rice valued Tk. 907.2 million. That means, food grains costing a

total of Tk. 14,878.1 million were distributed in 1995-96. It should be noted that the

safety net programs are based on donors humanitarian grants with high degree of

fluctuations. At the same time, it is hardly a net transfer mechanism since FFW, the major

component of the safety net programs, is given as wage to construct and repair rural

infrastructure.6

2.4 Income Inequality through Market Mechanism

Market mechanism, if allowed to work perfectly, is considered to be the most

efficient way of allocating/distributing income and resources among the economic agents.

Thus free-play of market mechanism, without any kind of planned intervention, would

likely to create poverty for those who fail to be in the marketplace for whatever reason.

One of the basic postulates of market mechanism is that resources flow to activities or

economic agents where these can be used most efficiently. Thus market mechanism, in its

pure sense, does not allow being compassionate to specially make provision for resources

to those who are considered to be less efficient. Hence, any program for the poor

designed purely with market character are unlikely to sustain. This is simply because the

programs in question do not

admit that the poor first

need to be fit for the

marketplace and this

happens only when they

have at their disposal a

basic minimum

asset/capital of their own tostart with. Saying simply

that the poor are efficient

and that is why they are

entitled to have their access

to credit is denial of the

6 Ibid.

Fig-1: Income Inequality through Market

Mechanism

4%

26%

17%

5%

27%

8%

5%

6%

2%

1%

7%

9%

10%

17%

8%

8%

16%

24%

0% 5% 10% 15% 20% 25% 30%

[landless HH]

[marginal farmer HH]

[small farmer HH]

[large farmer HH]

[non agriculture HH]

[illiterate HH]

[low education HH]

[med education HH]

[high education HH]

Shares Hp Shares hhY


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aforementioned truth. This argument is applicable to the poor irrespective of whether

they are moderate poor or ultra poor. Crippled, physically or intellectually, do not come

within the purview of this argument because they require, in any case, doles for their

survival.

However, market mechanism has nothing to do with poverty except the poor receive

something by its trickle down effects emanated from higher growth. Setting safety nets

for the poor is an out of the market solution, which has been proved to be extremely

insufficient in taking care of poverty. Government transfer mechanism, another out of the

market intervention, works heavily against the poor favouring more who are in higher

income echelons as has already been noticed in Appendix-1.

On the contrary, Zakah is an obligatory social security arrangement for making those fit

who are unfit as market player and also a security for survival of those who will never be

fit for the marketplace.

Fig-1 illustrates clearly the income inequalities prevailing in different categories of

households. Landless household group representing 4% of total population receives only

1% of total household income. Marginal farmer household group being 26% of total

population gets only 7% of total household income. On the other hand, high education

household group representing 2% of total population receives only 24% of total

household income and medium education household group being 6% of total population

gets 16% of total household income. Thus below poverty line rural household population

consisting of landless, marginal and small farmers being 47% of total population receive

only 17% of total household income. On the other hand, high and medium education

household constituting 8% of total population receive 40% of total household income.

Income Inequalities created in the market and by intervention of government transfer

payment are pervasive. More pervasive is the role of government transfer payment than

in the marketplace.7

7 Ibid.


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2.5 Marginal Success of NGOs in Poverty Alleviation

NGOs role is generally applauded in their effort to ameliorating poverty situation in

Bangladesh. 681 MF-NGOs, whose statistics are available, have in their command

12,696,574 members receiving cumulative disbursement of loan of Tk. 187,339.24

million.8

NGOs, working as micro-finance institutions, are providing loans without

collateral to target group people who were otherwise not considered to be eligible for

bank loans. Recovery rates of loan money stand over 90% in most of the cases. There are

also government-run poverty alleviation programs providing similar as well as variant

kind of services to that of the NGOs and their performance is nonetheless inferior. In

spite of that target group approach faces challenges at least on three sustainability

grounds. These are:

Ultra poor are hardly covered by any of these target group approaches due to reasons

such as: (a) either the people targeted withdraw themselves considering the program

is not suitable to them; and/or, (b) the program organizers find them relatively too

risky to include on recovery grounds. That means, organizations sustainability

becomes increasingly threatened by more and more inclusion of ultra poor;

Graduation of the target group people, generally having no asset, has been

exceedingly arduous as they are put in a situation to survive on utilization of a very

small amount of loan hardly more than Tk. 5000/-. This puts borrowers sustainability

at stake; and,

The micro-finance institutions are mostly based on donors funds, which is not by

nature sustainable.

With the above-mentioned three sustainability grounds, endorsing of entitlement to a

basic minimum initial asset/capital seems to be the sin-qua-non of any approach to

poverty alleviation. One can find here the real implication of introducing Zakah in the

economy as the most effective tool to eradicate poverty. Once Zakah creates this initial

asset base, only then one can expect smooth functioning of a financing scheme whatever

might be the size of loan.

8 CDF: Microfinance Statistics, 2002.


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2.6 Root Cause in the Failure of PAPs

It has already been mentioned that endorsement of entitlement to basic minimum

initial asset/capital is the sin-qua-non of any approach to poverty alleviation. Current

poverty alleviation programs lack this vital component in their program design. As a

result, all PAPs currently under application are bound to be unsustainable on grounds of

their donor dependence, inability to provide initial basic minimum ownership-capital and

less organizational sustainability due low capital productivity. Zakah creates such a

provision in an economy. It is a continuous transfer mechanism ensuring transfer of

resources from well-to-do to the poor and needy. Once this basic entitlement is granted,

access to credit adds a new dimension to graduation process of borrowers.

2.7 Need for Establishing a Reverse Asset Transfer Mechanism

Market system thus represents a transfer mechanism, which has built-in biases to

direct resources from low income to high-income groups. This trend has to be reversed.

Zakah can set such a reverse transfer mechanism.

3. Strength of Zakah as an Effective Poverty Alleviation Tool

3.1 Aggregate Zakah Receipts: Rural and Urban

Fig-2 shows

total amount of

Zakah (Zakah &

Ushr) to be

collected in

Bangladesh

during the

period under

simulation. An

amount of Tk.

28,337 million

may be

Fig-2: Zakah Collectable in Bangladesh

47,

213

44,

224

49,

698

53,

187

57,

516

61,

175

65,

149

69,2

54

76

,080

8

3,

751

91,

777

100,

919

110,

517

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

InMillionTk.

Zakah Bangladesh


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collected as Zakah (including Ushr) in the base year of the simulation, which stands at

Tk. 47,213 million in 1998 and becomes Tk.110,517 million in 2010.

3.2 How Much of the Poverty Gap Zakah Can Cover

Strength of Zakah as a poverty alleviation tool depends on how much of the

prevailing poverty gaps would be financed by Zakah proceeds. The strength can be

measured by portion of poverty gap that Zakah can finance at rural and urban areas. This

rural-urban segregation does not have any legal implication but it provides insights on the

effect of interventions pursued on regional basis. The information so received may help

preparing policies which will encourages resources to be transferred wherever these

would be of best use.

It is quite

evident from the

Fig-3 that Zakah

collected from rural

area can cover only

14.8% of the rural

poverty gap in

1997. The coverage

rises over time and

becomes 24.7% in

2005.

3.3 Urban Zakah as a share of Urban Poverty Gap

Per capita urban Zakah receipts covers 67% of the urban poverty gap. The coverage

increases up to 84.3% by the year 2005 as seen in Table-1 and Fig-4. A more elaborate

illustration may also be seen in Appendix-IX.

F i g - 3 : P e r c e n t o f Ru r a l P o v e r ty G a p

c o u l d b e c o v e r e d b y R u r a l Z a k a h

0 .0%

20 .0%

40 .0%

60 .0%

80 .0%

1 0 0 . 0 %

1997

1998

1999

2000

2001

2002

2003

2004

2005

Z a k a h / P o v e r t y G a p : Ru r a l


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Table-1: Portion of Urban Poverty Gap can be covered from Zakah

Time 1997 1998 1999 2000 2001 2002 2003 2004 2005

Zakah/Poverty Gap 67.0% 71.4% 70.7% 74.1% 74.6% 75.8% 78.5% 81.3% 84.3%

Source: Model generated data based on simulation run of the 26-Sector CGE model.

The extremely low coverage of poverty gap by rural Zakah receipts shows severity of rural

poverty compared to urban poverty and the limitation of any poverty alleviation strategy solely

based on rural Zakah. This warrants for mitigation strategy with tools beyond Zakah with the

necessary condition that the intervention package must be rural biased and ensures net transfer of

resources primarily from the rich to poor and equally from urban to rural.

3.4 Intervention by Zakah to Eradicate Rural Poverty

Since per capita Zakah availability of rural poor is extremely low (Tk. 365/- in 1997)

compared to rural poverty gap (Tk. 3783/- in 1997), policies are to be devised so that income as

well as Zakah proceeds increase over time. Under a situation of low Zakah receipts per capita,

phased intervention strategies need to be devised to cover different categories of the rural poor

until poverty is totally eradicated. The model simulates percentage distribution of rural ultra poor

(landless households) 4% and rural moderate poor (marginal farmer households 25-26%, and

small farmer households 16-17%) 41-43% over the period of simulation. Of course, if only the

rural ultra poor are selected first for disbursing whole amount of Zakah collected in rural area, per

capita Zakah receipt stands at Tk. 4594/-(1997) which is well above the rural per capita poverty

gap. That means, with an average family size of six members each family is likely to receive Tk.

27,384/- (1997). The amount is nonetheless a small amount to create an asset base for a poor

family.

Step 1: Mobilise all rural Zakah to finance ultra poor Cut off poverty eradication time 2years: First year to create their asset base and 2

ndyear to form working capital.

The model projects that 10.5 years would be required to cover all moderate poor (marginal

farmer households and small farmer households) to bring them above poverty line if each

moderate poor family is provided with Zakah equivalent to the amount planned to be given to an

ultra poor family. Since the per capita income of marginal farmer household population is double

the amount of the ultra poor and thereby the poverty gap being smaller time to be required to


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cover this group would be half i.e., 5 (five) years instead of around 10 (ten) years. The period

may lessen further poverty gap with the small farmer households is considered. Per capita income

of small farmer households being four times higher than that of the landless/ultra poor and the

poverty gap with this household group being further narrowed the actual time to be required to

cover all the moderate poor may be even less than 4 (four) years. If creation of asset base and

provision of working capital to these household groups are considered as in line with the ultra

poor, at best 8 (eight) years would be required to bring this moderate poor groups out of poverty.

At this stage it is important to recall that poverty income was defined to include only the calorie

intake. However, after having been covered all the poverty poor under this definition, poverty

may be redefined to include other essentials in the commodity bundle in phases with increase of

income level of the common people.

Step 2: Mobilise all rural Zakah to finance marginal farmer households and then small farmer households (moderate

rural poor) to create their asset base. The second year to form their working capital. Cut off poverty

eradication time 10.5 years.

Step 3: Redefining poverty to include other essentials in the commodity bundle in phases with increase of income level

of the common people.

3.5 Interventions by Zakah to Eradicate Urban Poverty

Urban poverty gap is

estimated to be Tk. 2,666 in

1997. That means both urban

ultra and very poor can be

covered by Zakah receipts

each year. Per capita Zakah

receipts by urban ultra and

very poor being Tk. 3,756 they

can be brought under

immediate intervention for

poverty alleviation. If so, per

household annual Zakah receipts would be around Tk. 22,536. In 1999 per capita Zakah receipts

by urban ultra and very poor would be Tk 4,221 which would lead to a per household annual

Fig-4: Percent of Urban Poverty Gap could be

covered by Urban Zakah

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

1997 1998 1999 2000 2001 2002 2003 2004 2005

Zakah/Poverty Gap:Urban


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Zakah receipts of Tk. 25,326. The amount, if provided at a time, should form an initial capital for

running at least a subsistent level livelihood possibly without requiring further help in the next

year.

Table-2: Interventions to alleviate urban poverty

Time 1997 1998 1999 2000 2001 2002 2003 2004 2005

Per capita Zakah receipt by

ultra poor 12,686 13,957 14,255 15,382 15,950 16,669 17,744 18,881 20,076


very poor 5,337 5,871 5,996 6,471 6,710 7,012 7,464 7,943 8,446


ultra & very poor 3,756 4,133 4,221 4,555 4,723 4,935 5,254 5,591 5,945


moderate poor 3,409 3,750 3,830 4,133 4,286 4,479 4,768 5,073 5,395

Source: Model generated data based on simulation run of the 26-Sector CGE model.

Assuming that ultra and very poor are covered in the first year of urban intervention

for poverty alleviation, all moderate urban poor can be covered immediately in the next 1

(one) year. That means, within two years time it would be possible to eradicate income

poverty (in terms of calorie intake). This will allow release of urban Zakah money from

the third year to make available for eradication of moderate poverty in rural Bangladesh.

This strategy, if pursued, will lessen the period of eradicating poverty of rural moderate

poor to 5 (five) years instead of 10.5 years.

4. Who Should Take the Initiative?

The first five verses ofsuratul Baqara tell clearly about who should take the initative

and why. The fifth verse categirically says about those who should take this initiative will

surely prosper. The translation of the verses read as follows:

A.L.M.

This is the Book, in it is the guidance sure, without doubt, to those who fear God;

Who believe in Unseen, aresteadfast in prayer, andspend out of what We have provided for them;

And who believe in revelation sent to thee, and sent before thy time, and (in their hearts) have the assurance of the

Hereafter.

They are on (true) guidance, from their Lord, and it is these who will prosper.


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Whoever possesses the above qualities can join their hands in taking the initiative.

Not necessarily that initiators must be the persons with nisab level income only. Anybody

who wants to contribute (including Zakah) to the cause of Allah out of his or her income

can be member of the Parshi. The Zakah Fund administration can help organize the

Parshi.

5. How the Program should be approached

The program would be more than establishing charitable centres covering area of

population that forms neighbourhood. Basis of the program would be the notable sayings

of the Prophet (S.M) that those who go to bed leaving their neighbours unfed are notMuslims. This will be an initiative, which will work for a hunger-free community able

to discharge their duty as vicegerents of God. The program components may include

Zakah assistance to eligible persons with a view to build enabling environment for them

so that they are able to lead a sustainable livelihood. Assistance, capacity building, socio-

economic and religious orientations for discharging the responsibility of vicegerency

would be some of the important functions of the program. It would be ideal if the

neighbourhood community can be based centring a mosque.

6. PARSHI The Neighbourhood Model - An Overview

PARSHI is a Bengali word, which means neighbours. In Islam taking care of

neighbours has great religious importance. If family is the first tier of Islamic society then

neighbourhood should be the second tier. Normally PARSHI comprises approximately

forty families surrounding a Muslim. PARSHI can be used to mean in broader sense as

well. Then it would mean next locality, village, Union Parishad, Thana, District,Division, Province or even a country. From the viewpoint of Zakah administration and its

management the wider meaning of PARSHI has great implication.


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So far as program components are

concerned, PARSHI may consist of the

following program objectives as outlined

in the adjacent figure. These program

objectives clearly spell out nature and

dimensions of the neighbourhood model.

Along with establishing salat (prayer)

and zakah (assistance), caring (rearing,

raising, resourcefulness), organisation building for economic wellbeing (society,

savings), promoting human virtues (honesty, humanism) and undertaking incomegeneration activities (i.e., investment) are major activities of the model.

6.1 Creation of a Zakah Forum

Zakah Forum may be formed with the persons intending to pay Zakah in each area of

Parshi operation. The Zakah payers should have the belief and understanding that

payment of Zakah individually does not correspond to the Quranic injunction of

establishing Zakah. Moreover, the Zakah payer should have the feeling that taking care ofeconomically unsound neighbours is a religious obligation. People with this mentality

forming a Zakah Forum can then think for institutionalizing Zakah at local level and can

start implementing Parshi Model.

6.2 Attempting Institutionalisation of the PARSHI Model A Practical Way

Forward

Motivated by the spirit of discharging the responsibility of Muslim as vicegerent of Allah in

this world, one or few Zakah payers may select their own area preferably centring a mosque to

start operation. Selecting an area around prospective Zakah payer(s) own habitation forms

necessary condition of PARSHI. In essence this is a self imposed responsibility motivated by the

world view of Islamic philosophy. Institutionalisation of the PARSHI should start first on

experimental basis. One or few areas may be selected preferably centring mosques where Zakah

payers (shahib-e-mal) want to organise themselves under the proposed Zakah Forum (ZF) to

collect and disburse Zakah as ordained in the Holy Quran. Wherever applicable, the mosque

Prayer

Assistance

RearingRaising

Resourcefulness

Society

Savings

HonestyHumanism

PARSHI

Investment


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committee may take this responsibility. An effective motivation that establishing Zakah is a

compulsory religious obligation should be the starting task. This should be followed by forming

Zakah Forum with the Memorandum of Understanding that ZF would be a comprehensive

platform taking care of specific socio-economic and religious activities which will build a model

for hunger-free Muslim community capable of discharging responsibility as vicegerent of God.

Institutionalizing collection and disbursement of Zakah at community level was

emphasized in a seminar organized in July 2000. In that seminar Parshi (neighborhood

model) a concept of Islamic community development - was also presented, discussed

and agreed upon for implementation on a pilot scheme basis. The present author was

requested in that seminar to develop a detail modus operandi of the Parshi concept to

fit to the requirements of its implementation as a pilot scheme. This paper is a response

to that exigency bringing forward a workable design that can be thought of for

experimentation.

6.2.1 Who Should Take the Initiative?

Since institutionalisation of Zakah by the state authority under the present socio-

political context is not encouraging in Bangladesh, initiative should come from the

community who believes in and does have the commitment to the role as vicegerent of

Allah.

The first five verses of Suratul Baqara tell clearly about who should take the

initiative and why. The fifth verse categorically says about persons taking initiative who

will surely prosper. The translation of the verses read as follows:

A.L.M.

This is the Book, in it is the guidance sure, without doubt, to those who fear God;

Who believe in Unseen, are steadfast in prayer, and spend out of what We have provided for them;

And who believe in revelation sent to thee, and sent before thy time, and (in their hearts) have the assurance of

the Hereafter.


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They are on (true) guidance, from their Lord, and it is these who will prosper.9

Whoever possesses the above qualities can join their hands in taking the initiative.

Not necessarily, initiators must be the persons with nisab level income only. Anybody

who wants to contribute (including Zakah) to the cause of Allah out of his or her income

can form Zakah Forum and be its member.

6.2.2 How the Program should be approached

The program would be more than establishing charitable centres covering area of

population that forms neighbourhood. Basis of the program would be the notable sayings

of the Prophet (S.M) that those who go to bed leaving their neighbours unfed are not

Muslims. This will be an initiative, which will work for a hunger-free community able

to discharge their duty as vicegerents of God. The program components may include

Zakah assistance to eligible persons with a view to build enabling environment for them

so that they are able to lead a sustainable livelihood. Assistance, capacity building, socio-

economic uplift and religious orientations for discharging the responsibility as vicegerent

would be some of the important functions of the program. It would be ideal if the

neighbourhood community can be based centring a mosque.

6.2.3 PARSHI The Neighbourhood Model

An Overview

PARSHI is a Bengali word, which means neighbours. In Islam taking care ofneighbours has great religious importance. If family is the first tier of Islamic society then

neighbourhood should be the second tier. Normally PARSHI comprises approximately

forty families surrounding a Muslim. PARSHI can be used to mean in broader sense as

well. Then it would mean next locality, village, Union Parishad, Thana, District,

9 The Quran: 2: 1-5.


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Division, Province or even a country. From the viewpoint of Zakah administration and its

management the wider meaning of PARSHI has great implication.

So far as program components are concerned, PARSHI may consist of the following

program objectives as outlined in Fig-5.

These program objectives clearly spell out nature and dimensions of the

neighbourhood model. Along with establishing salat (prayer) and zakah (assistance),

caring (rearing, raising, resourcefulness), organisation building for economic wellbeing

(societal, savings), promoting human virtues (honesty, humanism) and undertaking

income generation activities (i.e., investment) are major activities of the model.

Institution of Zakah at Community Level The Zakah Forum

There should be an institution of Zakah at community level. The persons intending to

pay Zakah at community level in an organized manner may form Zakah Forum and run it

by themselves. The Zakah payers should have the belief and understanding that payment

of Zakah individually does not correspond to the Quranic injunction of establishing

Zakah. Moreover, the Zakah payer should have the feeling that taking care of

economically unsound neighbors is a religious obligation. People with this mind can then

Abbreviating PARSHI/Program Components:

The Program Objectives

Prayer 1. Establishing Salat

Assistance 2. Establishing Zakah

RearingRaisingResourcefulness

3. Caring

Societal

Savings

4. Socioeconomic uplift

HonestyHumanismHuman Rights

5. Promotion of HumanQualities & HumanRights

PARSHI

Investment

6. Income Generationthrough Growth

Promotion


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think for institutionalizing Zakah at community level. Memorandum of Understanding of

the institution should spell out that the institution would be a comprehensive platform for

taking care of specific socio-economic needs and discharging religious obligations that

form core of the model to establish a hunger-free Muslim community capable of

discharging responsibility as vicegerent of God.

Formation of Local PARSHI

Institutionalisation of the Parshi should start first on experimental basis. Initially

interested Zakah payers (shahib-e-mal) may form local Parshi within a mosque

command area. Imam of the mosque or a Zakah payer may assume the leadership of the

Parshi. Each and every adult, male and female, should eventually be made member of the

Parshi. But initial members ofParshi would comprise with only of those who perform

salatfive times a day. Praying five times a day shall be the necessary condition for being

a member of theParshi. For the Muslims having income above nisab level i.e.,sahib-e-

mal they can be members of the Parshi if the person subscribes the view that paying

Zakah is a religious obligation and the person is ready to pay Zakah. Parshi may be

divided into number of sub Parshis or Parshi Mahallas with one or few sahib-e-mal in

each Mahalla taking care of certain number of below poverty level households.

Therefore, Parshi Mahalla would be the lowest unit under Parshi taking care of all the

socio-religious and economic wellbeing of the Mahalla.

Conducting Baseline Survey of the Parshi

After formation of the Parshi a baseline survey will be conducted to identify and

assess Zakah payers and amount of Zakah to be collected along with people with below

nisab level income and their poverty gaps. The survey will be a comprehensive one to

collect complete demographic data of all households in the Parshi area, practice of their

religion, their education status, and their health and sanitation conditions. On the basis of

the baseline survey Parshi Mahallas would be formed phase by phase.

Orientation on the Role of Muslim as Vicegerent

During or after Juma congregation on each Friday, orientation program can be

organized to provide religious discourse on the necessity for establishing Salat and


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Zakah, infaq fi sabilillah, and responsibility as vicegerent towards building Islamic

society (ummah) around a Muslim. This should be followed by motivational programs

with a view to introduce with Parshi concept, its necessity and modus operandi.

Making Mosque a Centre of all Parshi Affairs

None of the aspects of human life is beyond boundary of Islam - a concept to be

clarified to each member of the Parshi. Social, economic and cultural life of the Parshi

members must be organized in the light of the sayings of the Holy Quran. A true model

of Islamic community is to be built up within the Parshi area as a model case. The Parshi

should develop within a very short period time as a society, which is educated,

prosperous, hunger-free and peaceful in terms of social security, tranquility and cohesion.

Making Zakah a vehicle for Comprehensive Parshi Development Program

Mechanism of paying Zakah would be associated with a comprehensive Parshi

development program. This will help build up capital base of the below nisab level

people so that they can come out of poverty quickly and can lead a prosperous economic

life helpful to carryout the role of vicegerent in a meaningful way.


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Mosque

Parshi 3 Parshi 4

Parshi 1 Parshi 2

PARSHI

Pilot Program 1

To be run by Centre for

Development Studies and

Services Network (CDSSNet)

initially for 3 years

PARSHI

P Prayer 1. EstablishingSalat

A Assistance 2. EstablishingZakah

R RearingRaising

Resourcefulness3. Caring

S SocietalSavings 4. Socioeconomicuplift

H HonestyHumanism

Human Rights

5. Promotion ofHuman Qualities

I Investment

6. IncomeGeneration

through Growth

Promotion

PARSHI Program

Components

Formation of Local PARSHI

Conducting Baseline Survey of

the Parshi

Orientation on the Role ofMuslim as Vicegerent

Making Mosque a Centre of all

Parshi Affairs

Making Zakah a vehicle forcomprehensive ParshiDevelopment Program

Program Steps

ProgramMana ement


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7. Conclusion and Policy Recommendations

The foregoing analysis attempts to substantiate that Zakah can be an effective tool for poverty

alleviation in Bangladesh. This presupposes readiness of the Bangladesh society to pay Zakah the

way it has been prescribed in the holy Quran. Islamic Development Bank may support pilot

schemes demonstrating effectiveness of Zakah as a successful poverty alleviation tool based on

Parshi Model concept. This is certainly a preliminary concept and requires refinement,

elaboration and giving concrete shape through discussions. The practical process of refinement of

the idea would be through lessons learnt from field level application.

An Islamic Alternative (Zakat) to Poverty Alleviation : the PARSHI Model

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