Dynamic Role of Zakat in Alleviating Poverty: A Case Study of Pakistan

Poverty is a curse at individual as well as community level. It is a threat to humanity at whatever level it exists. All the societies of the world have made efforts to address this challenge. Islam being the religion of all times has also presented a comprehensive system to alleviate this curse. The present study explores the application of some of these measures in collective way and brought into consideration the Zakat system exercised in Pakistan since 1980. This is hypothesized that weather Zakat disbursement along with other Islamic measures has proved to bail out the poor from poverty. Descriptive as well as empirical appraisal of the existing system showed that the Zakat disbursement among the poor, needy, destitute, orphans and widows has played a significant role in poverty alleviation. The ARDL approach to cointegration is used to evaluate the short run and long run impact of Zakat disbursement along with the other exogenous variables on poverty. The results of the study show that there is an inverse relationship between poverty and Zakat disbursement both in the short run and long run. The study also investigated the certain flaws in the system operated in Pakistan and suggested the remedies.