Islamic social finance: Mobilizing Zakah (almsgiving) funds to support refugees’ microenterprises pogroms

Abstract

This paper examines the prospects and challenges of using zakah as a source of funding in microenterprise support programs for refugees. According to the literature, lack of funds represents a fundamental obstacle in supporting refugees’ livelihood in particular in microenterprises programs. Zakat is one of the five pillars of Islam. All Muslims have to pay 2.5 percent of their wealth every year to the poor and needy. Refugees represent one of the main beneficiaries of zakah. Recently the UNHCR has established zakah funds to mobilise zakah funds to help refugees. This paper argues that instead of giving the refugees cash money, zakah fund or at least part of the zakah funds can be used to provide microcredit grands to support the refugees and help them to help themselves. Despite all the challenges of microfinance programs in particular in the context of refugees, well-designed microfinance programs can provide a more sustainable solutions to refugees in particular those trapped in protracted situations.