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A Treatise on Socioeconomic Roles of Zakah


  • Shehu Usman Rano, Aliyu


A major preoccupation of policymakers is the design and implementation of public policy for efficient resource mobilization, allocation, stabilization of the economy and redistribution of wealth to guarantee minimum standard of living for all. At the extremes, the Capitalist and Socialist systems are characterized by the supremacy of self-interest in the former and total state control in the latter. Exacerbated by the prevalence of riba in the systems, unwanted economic outcomes; social and economic inequality, poverty, unemployment, crimes, booms and recessions, thrive. The Islamic economic system which blends the material pursuit with spiritual upliftment tailors economic policies towards attainment of Maqasid al-Shari’ah. As a pillar of Islam and an omnibus instrument of economic stabilization, Zakah serves as an automatic catalyst with backward and forward implications on resource mobilization, allocation, stabilization and redistribution of wealth. Using a heuristic approach, the paper conducts an in-depth assessment of the socioeconomic impact of Zakah in an Islamic economy. Evidences from review of both classical and empirical literature unveil the positive impact of Zakah on consumption, savings, investment leading to employment and higher productivity, (Kahf 1980; Metwally 1983; Khan 1984;Ahmad, 1985; Kuran 2006; Azmi, 2009 and Norulazidah, Ali & Myles,2010. Further, Zakah acts as an expansionary tool to those at lower income level and a discretionary tool to those at higher income level to redistribute income, remove poverty and facilitates provision of desired public good for the benefit of the poor Faridi (1983). The paper posits that in view of the overwhelming empirical evidences in the literature, Zakah is an effective tool for tackling socioeconomic problems of our modern times.

Suggested Citation

  • Shehu Usman Rano, Aliyu, 2017. "A Treatise on Socioeconomic Roles of Zakah," MPRA Paper 81155, University Library of Munich, Germany, revised 05 Sep 2017.
  • Handle: RePEc:pra:mprapa:81155

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    References listed on IDEAS

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    More about this item


    Zakah; socioeconomic; resources allocation; stabilization; redistribution; poverty;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • P24 - Economic Systems - - Socialist Systems and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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