Abstract
This chapter 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% of their wealth every year to the poor and needy. Refugees represent one of the main beneficiaries of zakah. Recently the UNHCR has established a zakah fund to mobilize zakah funds to help refugees. This chapter argues that instead of assisting refugees with cash money, zakat funds or at least part of the zakat funds can be used to provide microcredit grants 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 solution to refugees in particular those trapped in protracted situations.
TopIntroduction
The last few years have witnessed an unprecedented rise in the number of refugees worldwide. In 2010, approximately 200,000 new refugees were registered by the UNHCR (UNHCR, 2012). In 2017 the number of newly registered refugees reached 2.7 million, more than thirteen times higher than it was in 2010 (UNHCR, 2018). The UNHCR report (2019) affirms that by the end of 2019 the total number of forcibly displaced populations worldwide had hit a new record high of 82.4 million including around 26.4 million refugees. Since 2012, the overall number of refugees under the UNHCR’s mandate has nearly doubled (UNHCR, 2019; 2020; 2021).
An examination of this large number of refugees reveals three undeniably facts, these facts will be highlighted as follow:
FACT NO. 1. almost all world refugees come from developing countries and many of them are from the least developing countries. According to the latest UNHCR report issued in June 2020, at the end of the decade, 8 out of 10 people displaced across borders more specifically, 83% are originated from just 10 countries as shown below in figure 2.
The above figure does not include around 5.6 Palestinian refugees registered under the mandate of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA).
FACT NO. 2. 85% of global refugees are hosted by developing countries. Turkey continues to host the largest population of refugees mainly from Syria followed by Colombia, Pakistan, Uganda and Germany. The top ten countries with the highest number of refugees as presented in Figure 3.
Many of the host countries are in fact the neighbouring countries of the refugee-generating countries. This applies to Turkey, the host of Syrian refugee, Colombia, the host of Venezuela refugees, Pakistan the host country of Afghanistan refugee. An exception could be Germany which is hosting 1.1 million refugee mainly come from Syria.
Key Terms in this Chapter
Islamic Social Finance: The Islamic perspective of managing investments that generate financial returns with positive social and environmental impact.
JAWHAR: The Department of Wakaf, Zakah , and Hajj in Malaysia.
Refugee: Someone who is unable or unwilling to return to their country of origin owing to a well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group, or political opinion.
Microenterprises: Small businesses that are often targeted by microcredit and microfinance programs.
Lembaga Zakah Selangor (LZS): The official authority that oversees managing zakah affairs in the state of Selangor in Malaysia.
Zakah: A religious obligation to contribute a certain portion of one's wealth in support of the poor or needy.
Dompet Dhuafa Republika, Indonesia: A philanthropic institution that serves to help the poor using donated assets including zakah , sadaqah and waqf from individuals, groups, companies, or institutions.