Shari’ ah Finance Part 2: Ramadan Provides Opportunities to Leverage Social Capital

by: Mehrunisa Qayyum

In this month, PITAPOLICY is highlighting Shar’iah Finance and its related Islamic components. The August 4th post identified the purpose and reasons for increased interest in Shari’ah finance. Also this month, the world’s 2 billion-ish Muslims engage in the holy month of Ramadan. Muslims from the “pita-consuming” region, Central & Southeast Asia, Sub-Saharan Africa, Europe, Australia, and the Americas seize this opportunity of exercising self-discipline by engaging civically, socially, and economically. Ramadan provides an opportunity for Muslims beyond MENA to leverage its social capital through: a) fundraising iftars (the moment of breaking fast), b) Zakat giving lectures, and c) volunteering human and intellectual capital at philanthropic institutions.

Fundraising Iftars Leverage Social Capital
Before I describe the three opportunities, or mechanisms above, I will explain which definition of ‘social capital’ highlights Ramadan’s purpose. According to Social Capital Research, the term may refer to both internal and external influences, or ‘inputs.’ As a result, many definitions have emerged in the literature, but this essay refers to, “the web of social relationships that influences individual behavior and thereby affects economic growth (Pennar 1997, p. 154).” Hence, Ramadan provides about 30 daily opportunities to engage with networks and identify human and financial resources—essentially to leverage social capital.

Yes, I am arguing that iftars provide a platform to go beyond ‘inter-faithing’ and facilitate networks focusing on civic improvement and human development—or more briefly: leveraging networks, social media and institutional knowledge in a given space. The nationwide Islamic Relief USA (IRUSA) fundraisers for the Africa Famine serve as a prime example. Their Twitter handle,@IR_Worldwide and @IR_UK, share the updates of their global implementation efforts. The international development community can track Islamic Relief’s progress as it raises funds during its iftar event. Conversely, other organizations can virtually reach out to them when there is a confluence of interests. Thus, Islamic Relief among 25 largest online fundraising orgs in US in 2010, according to the Chronicle of Philanthropy.

At the same time, iftar attendees obtain the IRUSA literature and feel the emotional drive generated by the speakers’ pleas, the vivid images of starving Ethiopian, Somalia, and Kenyan children, and alarming statistics. For example, last year the World Bank estimated food price spike pushed additional 44 million people into poverty. Essentially, this emotional drive motivates the iftar attendees to collect the literature and hold their own fundraising iftars for the Africa Famine cause. Welcome to the social capital dimension of iftars.

Zakat Giving Lectures
Ramadan also provides a forum to better understand the applications of Shar’iah finance, the related Islamic principles of philanthropy and ‘Zakat.’ Also, Ramadan provides a consistent opportunity to regularly donate the yearly obligation of ‘Zakat’ because it is the month of giving. An Arabic term, ‘Zakat’ means “purification, growth and blessing” and is the fixed portion of wealth given by all Muslim adults who meet certain requirements, known as ‘nisab’. According to Islamic Relief, ‘nisab’ is the minimum amount of wealth a Muslim must have after minus the necessary expenses. ‘Zakat’ recipients include the orphans, the poor and the needy (Source: Qu’ran 9:60).

Essentially a Muslim’s wealth is liable for ‘Zakat’ if it means the following three criteria:
-The wealth is yours (no need to pay on debts that have not been cleared);
-Wealth is subject to development and increasing; and
-Personal necessities (e.g. home, car, clothes, utilities) are exempt from ‘Zakat.’

Organizations like, Islamic Relief, leverage its social capital to target human development and poverty challenges in the ‘pita-consuming’ region. Islamic Relief also provides Ramadan Relief. See Table 1 for the breakdown of MENA countries:

Table 1# of Ramadan Relief Packages Delivered in 2011
Yemen=7,500
Afghanistan=10,000
Palestine=21,000
Jordan=5,000
Egypt=15,000
Iraq=21,000
Pakistan=32,500

Last year I attended an iftar seminar that explained how the use of ‘Zakat’ would be more effective, and economical, in my immediate community—not just the countries abroad that Islamic Relief, the International Red Cross/Crescent Societies, and World Vision address. Children in poor neighborhoods exist everywhere. Therefore, targeting my ‘Zakat’ would ensure that we are strengthening our neighborhoods and investing in local children prepares the next wave of human capital. Alternatively, donating ‘Zakat’ to organizations that invest abroad, or buy from the countries that they are targeting, further enhances the purpose of ‘Zakat’: empowering the local communities. Perhaps that is why Islamic Relief procures food locally to help local farms and merchants in Egypt, Iraq, Jordan, Lebanon, Pakistan, Palestine, Tunisia, and Yemen.

Next week, I will cover the last opportunity of leveraging social capital in Ramadan within the Shari’ah Finance and related institutions…

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Filed under Analysis, Interests, PIDE (Policy, International Development & Economics)

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