A question that is often asked in the context of the role of zakat and indeed, of all forms of charity and philanthropy in poverty alleviation is: Aren’t we making the poor dependent on charity? Aren’t we discouraging the poor from doing hard work and becoming economically active and productive if we continue to dole out cash period after period? Some organizations seek to curb dependence by maintaining a central database of the mustahiq or zakat recipients and monitoring if they are repeatedly approached by the same individuals and families for assistance year after year. For example, the Islamic Religious Council of Singapore (Majlis Ugama Islam Singapura) or MUIS which maintains a central baitulmal under the law has opted for this mechanism to address the problem of continued dependence. Some organizations however, prefer to tackle the problem through programs and projects that involve “hand-holding” of the poor zakat beneficiary (mustahiq) and help transform his/her life within a finite time period, to the extent that he/she turns into a zakat giver (muzakii). I hope to present in a series of posts highlighting a few successful programs that aim at M2M transformation with a clear time frame.
KUM3 Program of Baitulmal Muamalat
In the first such story, let me share with you about the transformation program launched by an Indonesian organization Baitulmal Muamalat. A sister concern of a leading Islamic bank, the Bank Muamalat Indonesia (BMI), the Baitulmal Muamalat has been seeking a transformation of the lives of the poor through zakat and other charity funds. Called KUM3 program, it seeks to transform the mustahiq into muzakki in a span of three years by turning him/her into a micro entrepreneur. The program has some interesting features.
While the KUM3 program seeks economic empowerment of the poor, it also stresses on activities to build faith and piety among them. The local masjid and the imam play a major role in organizing “spiritual treatment” sessions that inculcate in them a sense of self-respect and dignity underlining the need to come out of poverty through halal livelihoods. The poor who are willing to participate in the program regularly meet at the masjid after the daily prayers. Support for identifying and undertaking income-generating activities are continuously provided by local volunteers who are often students or employees of BMI residing in the locality. Tiny interest-free loans in the form of qardul hasan are provided to the these prospective micro-entrepreneurs. This constitutes Phase I of the program. In this phase, the objective is to transform the poorest of the poor from potentially passive to potentially active entrepreneurs. Every effort is made at this stage to proactively guide them on site. As these entrepreneurs diligently repay their rolling qarḍ al-ḥasan (the quantum is increased every time the earlier loan is repaid and the process is repeated several times over a two-three year period) and their micro-enterprises enter the “feasibility” domain, they are organized into Islamic financial cooperatives or Baitul Mal wat Tamweels (BMTs). The BMTs are member-based cooperatives where each micro-entrepreneur is a member. Often the student volunteer is given the opportunity to become a paid-manager of the BMT. Financing is now provided for expansion of the micro-enterprises on the
basis of murabaha and other for-profit modes. The Islamic bank now moves in and places funds with the BMT under an agency (wakala) agreement. Alternative mechanisms – partnership (musharaka) and execution are also used for the funds placement. The BMT now finds additional capital to grow. All members naturally benefit when there are profits made by the BMT.
Mohammed Obaidullah | February 26, 2014