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An Islamic Alternative to Poverty Alleviation: The “PARSHI” (Neighbourhood) Model
Paper Presented By

Dr. S. M. Ali Akkas
Policy Leadership Unit Ministry of Women and Children Affairs Government of the People’s Republic of Bangladesh
Email: akkas54@gmail.com, info@cdss.ingeniousbd.org Web: www.cdss.ingeniousbd.org

Paper Presented in the

International Seminar on Islamic Alternative to Poverty Alleviation: Zakah, Awkaf and Microfinance 24-26 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 the current 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 transfer mechanism 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 whatever might be the size of loan.

Thus, endorsement of “entitlement to basic minimum initial asset/capital” is the sinqua-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 People’s 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 author’s 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

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.html 3 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, 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 author’s 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 5

Ibid 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
Fig-1: Income Inequality through Market Mechanism
[high education HH] [med education HH] [low education HH] [illiterate HH] [non agriculture HH] [large farmer HH] [small farmer HH] [marginal farmer HH] [landless HH] 0%
1% 4% 7% 5% 10% 9% 17% 26% 2% 6% 5% 8% 8% 8% 17% 27% 16% 24%

happens only when they have at their disposal a basic minimum

asset/capital of their own to start 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

5%

10%

15%

20%

25%

30%

Shares Hp

Shares hhY

6

Ibid.

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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) collected Bangladesh during period the under An to be
In Million Tk.

Fig-2: Zakah Collectable in Bangladesh
160,000
100,919

140,000
76,080 83,751

in

120,000
53,187 57,516 61,175 65,149 69,254

100,000
47,213 44,224

80,000 60,000 40,000 20,000 0

simulation.

1998

1999

2000

49,698

2001

2002

2003

2004

2005

2006

2007

2008

91,777

2009

amount of Tk. 28,337 may million be

Zakah Bangladesh

2010

110,517

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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 evident Fig-3

is from that

quite the
F ig - 3 : P e rc e n t o f R u ra l P o v e r t y G a p c o u ld b e c o v e r e d b y R u r a l Z a k a h 1 0 0 .0 % 8 0 .0 % 6 0 .0 % 4 0 .0 % 2 0 .0 % 0 .0 %

Zakah

collected from rural area can cover only 14.8% of the rural poverty gap in

1997. The coverage rises over time and

97

98

99

00

01

02

03

04 20

19

19

20

20

20

becomes 24.7% in 2005.

Z a k a h /P o v e rty G a p :R u r a l

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.

20

19

20

05

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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 2 years: First year to create their asset base and 2nd year 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
Fig-4: Percent of Urban Poverty Gap could be covered by Urban Zakah
100.0% 80.0% 60.0% 40.0% 20.0%

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 intervention under for

0.0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 Zakah/Poverty Gap:Urban

immediate

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

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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 Per capita Zakah receipt by ultra poor Per capita Zakah receipt by very poor Per capita Zakah receipt by ultra & very poor Per capita Zakah receipt by moderate poor 3,409 3,750 3,830 4,133 4,286 4,479 4,768 5,073 5,395 3,756 4,133 4,221 4,555 4,723 4,935 5,254 5,591 5,945 5,337 5,871 5,996 6,471 6,710 7,012 7,464 7,943 8,446 12,686 13,957 14,255 15,382 15,950 16,669 17,744 18,881 20,076 1997 1998 1999 2000 2001 2002 2003 2004 2005

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 of suratul 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, 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. 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 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, socioeconomic 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, PARSHI

Prayer

Assistance Rearing Raising Resourcefulness Society Savings Honesty Humanism Investment

raising, resourcefulness), organisation building for economic wellbeing (society, savings), promoting human virtues (honesty, humanism) and undertaking income generation 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 of economically 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

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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 sociopolitical 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, socioeconomic 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 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,

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.

Abbreviating PARSHI/ Program Components: Prayer

The Program Objectives 1. Establishing Salat

Assistance

2. Establishing Zakah

PARSHI

Rearing Raising Resourcefulness Societal Savings Honesty Humanism Human Rights Investment

3. Caring 4. Socioeconomic uplift 5. Promotion of Human Qualities & Human Rights 6. Income Generation through Growth Promotion

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

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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 of Parshi would comprise with only of those who perform salat five times a day. Praying five times a day shall be the necessary condition for being a member of the Parshi. For the Muslims having income above nisab level i.e., sahib-emal 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 Jum’a 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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PARSHI
Program Management
To be run by Centre for Development Studies and Services Network (CDSSNet) initially for 3 years

PARSHI Pilot Program 1

Parshi 1
Mosque

Parshi 2

Parshi 3

Parshi 4

Program Steps
Formation of Local PARSHI

PARSHI Program Components

P A R S H

Prayer

Assistance Rearing Raising Resourcefulness Societal Savings Honesty Humanism Human Rights

Conducting Baseline Survey of the Parshi

1. Establishing Salat 2. Establishing Zakah 3. Caring 4. Socioeconomic uplift 5. Promotion of Human Qualities 6. Income Generation through Growth Promotion

Orientation on the Role of Muslim as Vicegerent

Making Mosque a Centre of all Parshi Affairs
Making Zakah a vehicle for comprehensive Parshi Development Program

I

Investment

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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.

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