A question that is often asked in the context of the role of zakat and indeed, of all forms of charity andÂ philanthropy in poverty alleviation is: Arenâ€™t we making the poor dependent on charity? Arenâ€™t weÂ discouraging the poor from doing hard work and becoming economically active and productive if weÂ continue to dole out cash period after period? Some organizations seek to curb dependence byÂ maintaining a central database of the mustahiq or zakat recipients and monitoring if they areÂ repeatedly approached by the same individuals and families for assistance year after year. ForÂ example, the Islamic Religious Council of Singapore (Majlis Ugama Islam Singapura) or MUIS whichÂ maintains a central baitulmal under the law has opted for this mechanism to address the problem ofÂ continued dependence. Some organizations however, prefer to tackle the problem through programsÂ and projects that involve â€œhand-holdingâ€ of the poor zakat beneficiary (mustahiq) and help transformÂ his/her life within a finite time period, to the extent that he/she turns into a zakat giver (muzakii). IÂ hope to present in a series of posts highlighting a few successful programs that aim at M2MÂ 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 anÂ Indonesian organization Baitulmal Muamalat. A sister concern of a leading Islamic bank, the BankÂ Muamalat Indonesia (BMI), the Baitulmal Muamalat has been seeking a transformation of the lives ofÂ the poor through zakat and other charity funds. Called KUM3 program, it seeks to transform theÂ mustahiq into muzakki in a span of three years by turning him/her into a micro entrepreneur. TheÂ program has some interesting features.
While the KUM3 program seeks economic empowerment of the poor, it also stresses on activities toÂ build faith and piety among them. The local masjid and the imam play a major role in organizingÂ â€œspiritual treatmentâ€ sessions that inculcate in them a sense of self-respect and dignity underlining theÂ need to come out of poverty through halal livelihoods. The poor who are willing to participate in theÂ program regularly meet at the masjid after the daily prayers. Support for identifying and undertakingÂ income-generating activities are continuously provided by local volunteers who are often students orÂ employees of BMI residing in the locality. Tiny interest-free loans in the form of qardul hasan areÂ provided to the these prospective micro-entrepreneurs. This constitutes Phase I of the program. In thisÂ phase, the objective is to transform the poorest of the poor from potentially passive to potentiallyÂ active entrepreneurs. Every effort is made at this stage to proactively guide them on site.Â As these entrepreneurs diligently repay their rolling qará¸ al-á¸¥asan (the quantum is increased everyÂ time the earlier loan is repaid and the process is repeated several times over a two-three year period)Â and their micro-enterprises enter the â€œfeasibilityâ€ domain, they are organized into Islamic financialÂ cooperatives or Baitul Mal wat Tamweels (BMTs). The BMTs are member-based cooperatives whereÂ each micro-entrepreneur is a member. Often the student volunteer is given the opportunity to becomeÂ 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 withÂ the BMT under an agency (wakala) agreement. Alternative mechanisms â€“ partnership (musharaka)Â and execution are also used for the funds placement. The BMT now finds additional capital to grow.Â All members naturally benefit when there are profits made by the BMT.
Mohammed Obaidullah | February 26, 2014