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IOS Minaret Vol-1, No.1 (March 2007)
Vol. 10    Issue 01   16-31 May 2015

Combating Poverty in the Muslim World

Professor A. R. MOMIN

Nearly 70% of the world’s energy resources and 65% of natural gas reserves are located in Muslim countries. Despite this vast natural wealth, Muslim-majority countries are among the poorest in the world. More than 40% of the population in Muslim countries live in poverty and account for 40-45% of the world’s poor. The Middle East and North Africa, where the bulk of the population is Muslim, are home to about 70% of the world’s poor, living on less than $2 a day. Ironically, three of the 10 nations with the highest GDP worldwide – Qatar, Kuwait and Brunei – are Muslim, but three of the 10 countries with the lowest GDP per capita – Afghanistan, Niger and Somalia – are also Muslim. The percentage of people living below the poverty line in some Muslim countries is given in the following chart.

The Arab Human Development Report 2009 focuses on economic insecurity associated with poverty from two interrelated perspectives: income poverty and human poverty. Income poverty is defined in terms of people’s enjoyment of goods and services, represented in real per capita consumption expenditure. Income poverty takes into account both the international poverty line at $2 a day and national poverty lines. Human poverty, on the other hand, is defined by income as well as by other significant dimensions of life, such as education, health and political freedom.

The report estimates that the overall poverty rate in the Arab region is 39.9 per cent and the number of Arabs living in poverty could be as high as 65 million or about 20 per cent of the population. The overall poverty rates in the Arab world range from 59.5 per cent in Yemen and about 40 per cent in Egypt to 28.6--30 per cent in Lebanon and Syria. In Somalia alone five million people live in poverty. Income poverty, and the insecurity associated with it, is more widespread in the rural areas. Human poverty, as reflected in the deprivation of capabilities and opportunities, is far more widespread in the Arab countries than income poverty. The report reveals that in most Arab countries, inequalities and social exclusion have increased over the past two decades.

The report points out that despite its abundant natural resources, hunger and malnutrition in Arab countries are rising. According to Food and Agriculture Organisation (FAO) figures, Arab countries have a low ratio of undernourished people to the total population. Yet it is one of the two regions in the world -- the other being sub-Saharan Africa -- where the number of undernourished people has risen since the beginning of the 1990s -- from about 19.8 million in 1990-1992 to 25.5 million in 2002-2004. The report notes that the main direct causes of hunger in the Arab world are poverty, foreign occupation, domestic conflict and economic policies for dealing with globalisation.

Rates of poverty and inequality are extremely high in Indonesia. According to official estimates, 11.7% of the population live below the poverty line. In reality, nearly a third of Indonesians live on less than $2 a day. On the other hand, the ranks of the superrich are swelling, and the gap between the rich and the poor are widening. While consumption by the richest 20% has grown by 5.9%, the share of the poorest 40% of households has been only 1.3%. The luxury sports car Lamborghini opened its stores in Indonesia in 2009 and now the country is its third-largest market in the Asia-Pacific region. The gap between the rich and the poor is starkly reflected in the luxurious lifestyle of Indonesia’s superrich, who love to flaunt the expensive, trendy Hermes Channel and Louis Vuittons handbags that cost from $1,000 to 50,000.

In several Muslim countries, disadvantaged and marginalized groups and ethnic minorities experience widespread discrimination, stigmatization and exclusion. Al-Akhdam (plural of khadim, meaning “servant” in Arabic) are the most marginalized and despised ethnic group in Yemen. Though they are Arabic-speaking Muslims, their dark skin colour, rather short stature and other physical features differentiate them from the mainstream population. According to some researchers, the Akhdam are descendants of Ethiopian invaders who conquered and occupied Yemen for a brief period some 15 centuries ago. They are estimated to number between half a million and one million and are concentrated in segregated shantytowns on the fringes of San’a and other cities. They eke out a living by taking up menial and low-paid jobs such as sweeping the streets, cleaning of latrines and collecting scrap. The Akhdam are considered untouchables and treated with scorn. Very few children from the community are enrolled in school.

In the past couple of decades, governments in Muslim-majority countries, Organisation of Islamic Cooperation, Islamic Development Bank, NGOs and human rights groups have devoted serious attention to the alleviation of widespread poverty and inequality in Muslim countries. A wide range of policies and programmes, including conditional cash transfer, microfinance, harnessing of Awqaf resources and schemes aimed at providing employment to youth and subsidies to farmers, has been adopted for this purpose. Some Muslim countries, including Bangladesh, Indonesia, Egypt, Turkey and Morocco, have launched conditional cash transfer schemes aimed at reducing poverty rates. In 2007 the Jeddah-based Islamic Development Bank established a poverty-reduction fund, known as Islamic Solidarity Fund for Development, with a targeted capital of $10 billion. The main purpose of the initiative is to cut poverty rates in the member countries through the elimination of hunger, disease and illiteracy, reduction in unemployment rates and capacity building.

Bangladesh, one of the poorest countries in the world, has made impressive progress in poverty reduction and human development. The percentage of people living below the poverty line dropped from 49% in 1999 to 32% in 2010. Infant mortality has been cut by half, from 97 deaths per thousand in 1990 to 37 per thousand in 2010. Over the same period, child mortality declined by two-thirds and maternal mortality by three-quarters. Between 1990 and 2010, life expectancy rose by 10 years, from 59 to 69. More importantly, the increase in life expectancy benefited both the rich and the poor. Enrollment in schools rose from 45% in 2000 to more than 90% in 2005. Social indicators such as life expectancy, child and maternal mortality rates, health care, education and gender equality have a crucial bearing on the alleviation of poverty and social inequality. Bangladesh has performed better than India, whose per capita income is nearly double that of Bangladesh, in human development. Bangladesh earmarks about 12 per cent of public spending for social safety-nets, including food for work, cash transfers and direct feeding programmes.

The country’s impressive record of poverty reduction and its commendable achievement in social indicators has been made possible by a pragmatic and far-sighted partnership between government agencies and NGOs. Two non-governmental organizations, BRAC and Grameen Bank, have played a central role in poverty alleviation in the country. BRAC, an international development organization based in Bangladesh, is the world’s largest non-governmental development organization. Established by Sir Fazle Hasan Abed in 1972 shortly after the country’s independence, BRAC operates in all 64 districts of Bangladesh and has offices in more than a dozen countries, including Afghanistan, Pakistan, Sri Lanka, Uganda, Tanzania, South Sudan, Sierra Leone, Liberia, Haiti and the Philippines. BRAC’s operations cover more than 126 million people across several countries. It employs more than 100,000 people, 70% of whom are women.

The main goal of BRAC is lifting the poorest of the poor, particularly women, out of poverty and destitution and their empowerment through education, self-help and harnessing of local resources. The organization offers microcredit, provides health care facilities and runs employment generating programmes. Nearly three-quarters of the population in the country have benefited from the schemes launched by BRAC. Over 90% of microloans given by the organisation have gone to women. BRAC’s campaign to combat diarrhea through a nation-wide Oral Therapy Extension Programme led to a sharp reduction in child and infant mortality rates from 285 per 1,000 to 75 per 1,000.

Grameen Bank is a microfinance organization and community development bank, established by Muhammad Yunus in Bangladesh in 1976. It offers small loans or microcredit to very poor families in rural areas. The bank targets the poorest of the poor, with a particular emphasis on women. An overwhelming majority of borrowers (96%) are women. By the end of 2008, Grameen Bank had given loans worth $7.6 billion to poor families. Borrowers are also encouraged to send their children to school and to take them for regular medical checkups and vaccination. Grameen Bank espouses a unique patter of lending – called solidarity lending – in which loans are given to small groups of women, although each borrower has to take personal responsibility for repayment. Grameen Bank has made a valuable contribution to the reduction of poverty and women’s empowerment. In 2006 Grammen Bank and its founder Muhammad Yunus were jointly awarded the Nobel Peace Prize. Inspired by the success of Grameen Bank, more than 40 developing countries have launched schemes and programmes modeled after Grameen Bank.

Turkey increased spending on anti-poverty programmes by three-fold in 2002-2010, which succeeded in cutting the share of the population living below the poverty line from 30 per cent in 2002 to 4 per cent in 2010.

In 1970 about 60 per cent of Malaysia’s population lived in extreme poverty. In the early 1970s the Malaysian government launched a new economic policy, which was inspired by the Japanese model of economic growth and which favoured active state participation in economic development. The policy emphasized a close working relationship between the public and private sectors with a view to attracting foreign direct investment and espoused the idea of growth with equity. The policy turned out to be effective in accelerating economic growth and reducing levels of poverty and inequality. The country recorded an average growth rate of 6.7 per cent per year between 1971 and 1990. The rate of employment more than doubled and the unemployment rate fell from 8 per cent in 1970 to less than 3 per cent in 1994.

An ambitious scheme aimed at reducing poverty rates and providing free access to education and health care for the poor was announced by Indonesia’s new president, Joko Widodo, on November 3, 2014. According to the scheme, the government will issue a set of three cards to poor families, two of which will enable them to have access to publicly-funded health care and education programmes, while the third card will entitle them to receive cash handouts of $15.75 per month. About 4.5 million cards will be issued in the course of 2015. The scheme is expected to cover 86.4 million people, a third of Indonesia’s population. The scheme will be funded by the money the Indonesian government has saved by ending petrol subsidies – 200 trillion rupiah per year. When set in operation, this will be the largest programme of its kind in the world.

Potential of Awqaf in Poverty Alleviation

The term waqf (plural awqaf) refers to an endowment, including mosque, educational institutions, land, buildings, scientific or academic institutions, libraries, public amenities and health care institutions, which is established by an individual, family or state for the purpose of public welfare, particularly for the benefit of the poor. According to Islamic law, Waqf properties or institutions cannot be sold or disposed off after they have been declared as an endowment. In Islamic history, the first waqf was the mosque of Quba, built by the Prophet in Madinah shortly after his arrival in the city in 622 CE. Charitable activities and endowments date from the time of the Prophet, and the tradition has continued uninterrupted through the centuries.

The institution of waqf had a profound and far-reaching impact on the course of Islamic history and civilization. Large endowments instituted by Muslim rulers, members of the nobility and wealthy merchants supported a wide range of institutions, including mosques, madrasas, public libraries, caravanserais, universities and hospitals. The famed Al-Azhar University in Cairo, founded in 972, was financed by revenues which accrued from waqf properties. In the early decades of the 19th century, waqf land comprised 570,000 acres (over 20%) out of a total of 2.375 million acres in Egypt. In the 19th century, almost half of the total land in Algeria and one-third in Tunisia were under Awqaf. Nearly three-quarters of the land in the Arab region that were part of Ottoman Empire belonged to Awqaf. In Turkey about one-third of the country’s total land area was committed to waqf at the turn of the 20th century. The Shishi Children’s Hospital in Istanbul, founded in 1898, is one of the dozens of hospitals which were supported by waqf revenues. There are an estimated 358,710 Awqaf properties in Indonesia, which cover some 1.5 million square metres. The Islamic Development Bank has recently established World Awqaf Foundation.

In the Indian subcontinent, hundreds of thousands of endowments were created over the past seven or eight centuries, especially during Muslim rule. According to the Sachar Committee report, there are nearly 500,000 registered Muslim endowments in the country, which encompass a total area of approximately 600,000 acres. The state of Bengal has the largest share of endowments (with an estimated 184,000 properties), followed by Karnataka (with more than 33,000 properties). These endowments are worth billions of rupees at current market rates. The 1654-acre waqf land adjoining the shrine of Hazrat Husain Shah Wali in Hyderabad is worth Rs. 32,000 crores at the current market value.

Unfortunately, a very large proportion of Waqf properties in India has been misappropriated, usurped and illegally disposed off or is under illegal occupation or encroachment, thanks to a deeply-entrenched nexus and collusion between trustees and custodians, State Waqf Boards, politicians and ministers, officials and the land mafia. The report of the Joint Parliamentary Committee says that nearly 70 per cent of Waqf properties in the country have been encroached upon.

If Awqaf resources are adequately harnessed and efficiently managed, they can be a potent instrument for the alleviation of poverty among Muslims and for the development of local Muslim communities.

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