Role of zakat, sadqat and BISP in poverty alleviation: a case study of Pakistan

Abstract

Poverty is a global phenomenon and has been an issue worthy of extreme inspection not only at global level but also a matter of concern for developing as well as the Muslim World. Half of the global poverty is constituted in the Muslim countries which make up 23% of total world population. Pakistan is also amongst the severely affected countries on account of high prevalence of poverty that is reported to be 39%. Several measures are used in order to tackle the problem of poverty in different countries. Muslim countries can use the religious mandatory tax based measures (like Zakat) along with voluntary charitable contributions and other social safety nets to address this issue. This study is an attempt to examine the role of these religious correlates along with the other important determinants to eradicate the poverty in case of Pakistan using Household Integrated Income and Consumption Survey (HIICS), 2015-16. The results of the study show that overall Social Safety Nets (Zakat, Sadqat, BISP) are playing an important role in poverty elimination; as 26% of the households from total sample size are coming out of poverty with provision of SSNs. Among these SSNs; Zakat has a substantial contribution as 21.3% of the Zakatrecipient households are crossing the poverty line. The findings from the empirical estimations through the Logit regression also support the above mentioned results; Zakat and Sadqat decrease the probability of being poor of a household; while Benazir Income Support Program is not a useful tool in reduction of poverty and retains the households on same poverty levels. Moreover; other socio-economic variables like large household size and greater proportion of unemployed members in a family increase probability of being poor. While; asset ownership, household heads being employed and their education level education level decrease the likelihood of being poor.