Khutbah: Friday 26 February 2016: Global Inequality and Poverty- The Divine Wisdom Behind the Institution of Zakat by Dr Muhammad Rafiq Khan

 17th Jumada Al Awwal 1437 A.H.

In The Name of Allah, Most Gracious Most Merciful.

 We Beseech of Allah to Bestow His Choicest Blessings and Salutations upon the Best of His Creation, our Leader and Master, Muhammad (PBUH).


All our thanks and praises are due to Allah and Allah alone; He is our Lord and we are His servants. He is Al Mubdi’ (The Originator), Al Khaliq (The Creator) and He is The One Who is Al Muqit (The One Who Sustains) all that is Created. To Him belongs all that is in the heavens and the earth and His Dominion and Possession extends over every form of Creation. He is also Al Malik or the Ruler, He is Al Razzaq, The Provider and Al Wahhab, The One Who Bestows His Bounties upon His Creation.




In today’s khutbah presentation, we focus on two major problems facing mankind, namely that of Economic Inequality and the all-pervasive problem of Poverty. These represent two sides of the same coin. These global problems are inextricably interrelated, and are found within most advanced and emerging market economies. President Obama has called the widening income inequality “the defining challenge of our time.” Pope Francis has spoken out strongly against the “economy of exclusion” which denies a meaningful share of global wealth to the vast majority of the world’s population. 1


Never in the history of mankind have we ever had a completely egalitarian society, one where everyone earns exactly the same. Nor have we had a society in which the gap between the rich and the poor has been so great. A shocking 1% of the world’s population owns nearly 50% of the world’s wealth. Oxfam forcefully brought home the extent of the world’s growing inequality to the annual gathering of the world’s elite in Davos in 2014, pointing out that a bus filled with some 85 of the world’s billionaires, had as much wealth as the bottom half of its population comprising some three and a half billion people. 2 3.




It is ironic that global inequality has risen, whilst total global wealth has increased. This is the end product of a deliberate, and subtle game plan, that has been at work for several decades now. It is time to deconstruct the conventional narratives regarding inequality, poverty, wealth, ownership and value assigned to labour. Inequality and poverty are not inevitable by-products of the currently dominant economic system in the world. It is capitalism plus favourable political directives by governments of the day that have contributed to the global problem of economic inequality. The level of Inequality has never remained static; it has fluctuated from time to time. The reasons for its decline gives us hope that a more just economic order is something both feasible, and highly desirable.


The world’s economy is not a stable structure; it is subjected to periodic crises, which often serve to highlight the underlying contradictions upon which it is built. One such glaring issue is promoting “trickle down economics” in the hope that it will benefit the poor after the top 20% of earners, have siphoned the lion’s share of global income. This is a myth. The rich do not care to pass on the benefits they receive. It is time to think of other ways and means to address these twin issues of inequality and poverty. 4




Earning less than 1.25 USD per day is generally regarded as a measure of extreme poverty. Nearly one fifth of the world’s population still lives on less than this figure per day. People living in extreme poverty cannot afford to provide for their basic, daily needs such as food, shelter, clean drinking water, and sanitation. An additional 2.7 billion people live on less than two dollars per day. Although these people technically speaking, are not living at the extreme poverty level, this significantly low income hinders them from seeking adequate medical care and education, and gives them a shortened life span with very low levels of expectation.




Islam does not preach an economic utopia of complete equality. It regards wealth as a creation of Allah which is given to us as a trust. Ultimately it is Allah Who possesses all wealth. No matter how rich or poor we are, we reach Allah for our Final Reckoning sans wealth, sans family, sans any status. The wealth bestowed on us is a privilege. It fulfils our needs, such that we do not become dependent on others; our dignity is protected. We do not have to beg. So let us spare a thought for those who, through no fault of their own, have fallen on hard times. Learning and informing ourselves of their plight makes us humble and fills us with gratitude. It encourages us to spend our wealth legitimately and not squander it. We also have the responsibility, to enhance its growth by using our ingenuity and innovative skills.


The Qur’an, as our foundational text, admonishes us in several places about the importance of both of salah or devotional prayer and charity (sadaqa) and injunctions to bring about a form of distributive justice via the institution of zakat instituted as a rukn or a pillar of a Muslim’s faith declaration. 5.




I draw your attention to Surah al-Layl or The Night, the 92nd chapter of the Glorious Qur’an. It emphasizes the role of the individual in becoming an instrument for bringing about of social justice, thereby countering the acquisitive and self-serving tendencies which accumulation of wealth can so often generate.  According to various commentators, these verses were revealed when a person who owned a date palm, took offence at his neighbour’s children benefitting from the fruits, which fell spontaneuosly from the tree as it arched over into their backyard.  Their father, a very poor person, was especially aggrieved by this behaviour. One commentator puts it so poignantly, “he snatched the fruit from the mouth of his children.” He complained to the Prophet of Allah. I found it intriguing just how the Prophet of Allah went about solving this problem.


Firstly, he appealed to the owner’s sentiment and faith commitment telling him that if he gives this tree and its fruit to the poor, Allah will grant him a tree in paradise. Not surprisingly he refused the Prophet’s request. The Prophet then publicised a much wider appeal on behalf of these children to the rest of his Companions. He wanted one of them to purchase this tree outright from the owner. The owner sensing his upper hand, put up the price to an exorbitant forty date palms, thinking that no one would be so foolish to take on the challenge. One Companion, however, stepped forward and bought the tree, thus securing its harvest for the poor children. 6.


There are many lessons one can draw from this incident. One wonders of course whether the thought ever crossed the mind of the owner of the tree that he is not the one who created the seed from which this tree took its root, and neither was he responsible for the nourishing precipitation which brought its growth, nor had he created from his bare hands the soil which anchored his prized possession.




Whilst our trade- and business ethics can be modulated by appeals to a higher moral code of behaviour, it is a worldly activity which requires real, tangible material interventions. The world of business and commerce is premised on personal gain, profit maximisation and a competitive spirit, which is not necessarily unhealthy. It is also a challenging environment that requires a bit of grit and strength. It requires a courage and hard work to prevent stagnation and complacency from setting in. It can also spur on innovation which leads to enhancement of trade and commerce and thus generate more wealth. As a social activity, it can however, never be practiced without any ethical considerations. 7.




The interplay between salah and zakat is thus of prime importance for us. Whilst salah is for Allah, the prime beneficiaries of zakat are our fellow human beings. It is a form of financial ibadat; as the position of salah in a Muslim’s life has been characterised in traditions as being equivalent to the relationship of the head to the rest of the body, one can therefore gain some perspective of the importance of zakat and the role it plays in the rest of our social relationships. 8.


Just how did we get to this stage of inequality and poverty? This was certainly no overnight affair. Global inequality was never so pronounced. The Great Economic Depression of the 1930’S and the two World Wars had taken a toll on the western world’s low and middle income population groups. Governments were forced to enact policies that led to a redistribution of wealth and the creation of a welfare state, and thus we saw a dramatic fall in the level of inequality in most advanced economies during the middle decades of the twentieth century.




However, beginning with the Reagan-Thatcher era and their monetarist policies, with emphasis on minimal government involvement, privatization of state assets, and shrinkage of the welfare state, we saw a reversal of the steady fall in global inequality. This was further enhanced by trade liberalization, massive tax cuts for the rich and the creation of off shore tax shelters. It was not only some pariah island nation states such as the Cayman Islands, Bahamas, Seychelles and Mauritius, but also the advanced economies of U.K. and,  USA, which were complicit in these actions. National treasuries were left bereft of the resources needed to support the very many vulnerable members of society, adding further to rise in global poverty.


All human beings living on this planet wish to ensure their well-being; they have both material and non-material needs that have to be met. It is the need for justice, human brotherhood, respect for human dignity, the need to be treated as equals, moral uplift, security of life, property, individual freedom, proper upbringing of children, family and social solidarity, minimization of crime and other social tensions and above all freedom to practice the faith of their choice in an unhindered manner, that count amongst the most important non-material needs people have. Just making more money available for the poor is never on its own going to relieve the problem of poverty. Material poverty is intertwined with many social challenges and impacts people’s lives in a myriad of ways that we can scarcely imagine.




One of the most poignant stories I read was that of a young girl from Guatemala. Every one talks about helping poor families to break the cycle of poverty. One of the best ways to do so is to educate one of their brightest children; so one day one of our young, beautiful daughters leaves home full of hope, only to find herself traumatised for the rest of her life, after she was gang raped on her way school. How do you talk to people here about the value of education as a lever to bring about economic upliftment, without dealing with violence which is so endemic in the teeming slums and poorer socio-economic areas of all major cities in the world? The cards are stacked against the poor and downtrodden. 9.




In materialist or secular societies, A Transcendent or Supreme Being has no role. The universe is thought to have come into being by itself. Human beings are not thought to be responsible to anyone. Hence all efforts are generated towards maximization of individual pleasure, of serving self interest and promoting the survival of the fittest with no qualms

about any prevailing inequities. 10


A religious or a moral world view, on the other hand, teaches responsibility to ensure well being of all, and proper use of limited resources and environment which would be beneficial to everyone.

Religion, din, matters, for it changes individuals. It gives them a purpose in life. It is the religious worldview, which cares for both the spiritual as well as material needs of the human personality. It does so by providing the right direction to all human effort, and transforming individuals into better human beings through a change in their behavior, life-style, tastes, preferences, and attitude towards themselves as well as their Creator, other human beings, resources at their disposal, and the environment. This can help in promoting not only individual reform, but also social solidarity and a more efficient and equitable use of resources needed for the well-being of all. 11

The Enlightenment movement of the 17th and the 18th centuries, on the other hand, though it had a positive aim to free citizens from the oppressive and despotic rule of the Church and the State went overboard denying any role of Religion and Divine Revelation in helping individuals to distinguish right from wrong. It replaced Revelation with Reason as the final arbiter of what is morally right or wrong. What Reason preferred was acceptable whilst Religion was increasingly prescribed a diminished and private role.


It is the loss of sanctity provided by religion that paved the way for the introduction of the products of the Enlightenment and these included, Social Darwinism and Materialism.


Social Darwinism axed human brotherhood in place of survival of the fittest in the realm of human relationships. It provided the justification for the dictum “might is right”. It held the poor and the downtrodden responsible for their poverty and misery.


Materialism made wealth maximization, bodily gratification and sensual pleasures the prime objective of human behaviour; this led to increased consumption and rampant consumerism, causing a multiplication, of human wants above needs, and beyond availability of resources to satisfy demand.


Whilst organised religion has lost much ground to secularism or subservience to a state religion, it is a potent force in many societies, still able to influence, and guide human behaviour. In several places of the Qur’an we are cautioned against developing a religious schizophrenia, of praying but becoming oblivious to the material plight of our fellow human beings, hence the oft repeated phrases of aqimus salah wa atuzzakat. (surah al bayyinah 98;5)

The other objective of the Enlightenment movement was to rid mankind of state despotism. While this objective was laudable in itself, it went to the extreme of denying the role of good governance in the realization of human well-being and gave rise to the concept of laissez faire which stood for government non-intervention in the operation of the market. 12

What secularism has done is to undermine the collective sanction that religion provides to moral values. This has led to the weakening of the critical role morality plays in maintaining a healthy balance between self-interest and social interest in all aspects of human society. Consequently, maximization of wealth and satisfaction of wants and desires has become the primary purpose of human endeavor.

There is an undue emphasis on material ingredients of well-being at the cost of the spiritual. The self-reported subjective well-being of their populations has not only failed to increase, it has in fact declined. The reason is that happiness is positively associated with higher income only up to the level where all basic biological needs get fulfilled. Beyond that it remains more or less unchanged, unless some other needs, which are considered indispensable for increasing well-being, are also satisfied. Most of these other needs are spiritual and non-material in character.

It is man made policies and deliberate attempts by the advanced economies and their local supporters amongst the political elite in emerging economies, which disempowers vast numbers of people in Africa, Asia and Latin America. This is the root cause of global inequality and its concomitant problems of poverty, poor health, illiteracy, malnutrition, shortened life expectancy, environmental degradation, limited production of public goods and utilities and a host of other social problems such as drugs and substance abuse, violent crime and abuse of women and children in particular. 13.




There is a growing awareness that the time has come for a change. Policies that have benefitted the rich or top 20% of income earners has not had the “trickle down effect”

of following pro-market, neo liberal economic programs. Sadly, even the political gains of a historic victory against racism and white domination in South Africa were compromised at the altar of the perceived economic wisdom, stemming from the Washington Consensus. 14




A recent study by five economists from the IMF shows that it is myth that income inequality makes economies more dynamic. On the contrary, a widening income gap between the rich and poor is bad for economic growth. If governments want to increase the pace of economic growth they should rather concentrate on helping the poorest 20% of their populations. Increasing the share of the income for the top 20% actually causes a decline in GDP over the medium term. Money spent on the poorer sector is thus far

more beneficial in the longer run.


One of the key recommendations of this report, include amongst others, an increased access to a good quality education, eliminating financial barriers to higher education and providing support for apprenticeship programs to boost skill levels. In emerging markets and developing countries with low levels of education attainment, it encourages programs and policies that promote more equal access to basic education evens if it means to provide cash transfers to parents aimed at encouraging better attendance at primary schools. 15




One such notable program which has been a pace setter in its field has been the Familia Bolsa programme of targeted poverty relief as a lever for economic growth pioneered in Brazil. Perhaps it is true to say that the now internationally acclaimed achievement of this program would never have been successful had it not been for the visionary leadership of Luiz Inacio Lula da Silva. Born in the country’s destitute North eastern state of Pernumbuco, he was forced to drop out of school after grade two, shining shoes to support his family. By ten he had taught himself to read. By 14 he found he found his way to a job in a factory, losing his little finger in a machine press in the process. By 30 he was a recognized labour leader. Running through three presidential elections, which he lost on a ticket to give the poor a voice on the national stage, his chance at victory came when he was successful in 2002, when he was elected as President of Brazil.


It was not the standard Marxist rhetoric of nationalizing industries and defaulting on the country’s debts that featured his first year in office. He proved himself to be an able administrator, maintaining tight fiscal and monetary policies whilst cutting spending in the national budget by more than 4 billion dollars in the first year alone, and imposing even stricter budget –surplus targets than what the IMF had recommended.


Whilst wooing the money back into the country’s coffers, and trading on his new found political capital, he launched an ambitious new social welfare program called the Bolsa Familia (Family Grant) program, a poverty fighting program that was revolutionary in its size, ambition and design.


Starting with the premise that the best people who understood the poor were the poor themselves, this program did something unheard of. Instead of giving the poor services and goods as most programs did at that time, they decided rather to put money directly into the hands of the recipients. When given the chance, destitute families generally did not squander their increase in wealth. Most spent money quite rationally, especially if the money went into the hands of the mothers. Lula, himself recalls the number one teacher in his life; a woman who was born and died illiterate, his own mother.


Any family who could prove that they were living in extreme poverty defined as earning less than 42 USD per person per month or living in relative poverty, earning less than 100 USD per person per month would be eligible for such grants. Whilst it was easy to meet these entry criteria, participants had to show that their children were taken for regular immunization check up visits, pregnant mothers had to prove that they were attending regular antenatal screening services at clinics and most important, children between 6 and 15 years of age had to be at school for at least 85% of the time.


The results from multiple independent audits have been simply phenomenal. This program has succeeded in lifting an estimated 50 million people or 12 million families out of severe poverty. Yet it had cost the country only an estimated 0.5% of their GDP, far less than what the country would spend, say for example on, pensions or other schemes. It is amazing how beneficial it has been to spend a relatively small amount of money on the most vulnerable sector of the population, and the multiplying effect their new found prosperity has had on real economic growth. For the first time, many families have the means to have bread and milk on the table, generating a vast economy in the process, which in turn provides a basis for business growth and increased revenue to government coffers via taxation. 16

What are the key lessons we derive from studying the Recent IMF report on Global Inequality and the Familia Bolsa Program in Brazil?

  • Firstly, addressing the issue of poverty is a crucial social intervention. It is inhumane to let a vast sector go without even the most basic of means to care for themselves.
  • Secondly poverty is not an insurmountable task. It can be targeted and it can be defeated.
  • Thirdly, it does not cost an arm and a leg to do so. The world has the means to do it.
  • Fourth, addressing poverty is the best, most effective way to produce long term economic growth. Trickle down economics do not work.
  • Lastly, never underestimate the ingenuity of the poor to fend for themselves with evens the most meagre of means. They know how to handle a windfall.


It is with these thoughts in mind that we turn in the final part of our presentation to the Islamic concept of Zakat.

We take deep lessons from other global programs to reduce poverty. There are studies now available which suggests that even in a poor nation such as Bangladesh, effective collection and distribution of zakat can eradicate poverty in that country. 17 In Malaysia, it is estimated that annual zakat contributions could reach well over 1.5 billion USD. 18 If zakat is properly managed at state level, its role in the eradication of poverty could be a significant contribution Muslims could make.

It costs little; just 2.5% of our earnings. The poor have a right to a portion of our wealth. The rest of our wealth is not halal for our use if we do not give the poor their due. Doing so, we are circulating wealth amongst the poor. Wealth which lies stagnant, loses its value. That which is put into circulation generates an economy. The poor buy what they need; when they spend it, it generates business which brings in more revenue to the state, which then has more to spend on the real needs of people without resorting to borrowing.

Zakat, derived from the Arabic word tazkiyya, carries with it the same connotation of purifying or cleansing one’s wealth after the poor have been given their due. It also carries another more profound meaning. Derived from the same etymological root as that which refers to the pruning of a tree, it conveys a meaning of getting an increase in one’s wealth.


If a tree’s branches are allowed to grow wildly and unruly it will, without purpose, drain the soil of its nutrients whilst stressing the support it receives from its roots and trunk. The fruit it bears will be of a poor quality. A pruned tree on the other hand, is a healthier tree; it carries less dead weight. It produces a better harvest. Like wise, zakat spent on the poor, ensures there is no abject poverty, the poor benefit from the Divine Wisdom inherent in Allah’s instructions for us to follow. In the longer term it leads to social harmony. Wealth creation is encouraged, acquisitiveness and greed is controlled in the process. 19

In conclusion let us remind ourselves of the words of The Prophet (PBUH) who said;

“Mankind is the family of God, and the most beloved of them before Him, is the one who is best to His family” (as reported in Imam al-Bayhaqi’s, Shu‘ab al- Iman.) 20.

Wealth is an amanah or trust which Allah has endowed us with. We pray that Allah makes us of those who care for the poor and fulfil all their duties towards Allah’s Creation.


QUR’AN, Chapter 3 verse 189 – The House of Imran, Surah Al-`Imran


  1. Unto Allah belongs sovereignty over the heavens and the earth, and Allah is powerful

         over all things.





The Night, Surah al-Layl


In the name of God, the Gracious, the Merciful.


In the Name Of God, the Compassionate, the Merciful


1 By the night as it enshrouds;

2 by the day as it discloses;

3 by Him Who Created the male and the female,

4 truly your endeavours are diverse.

5 As for one who gives and is reverent,

6 and attests to what is most beautiful,

7 We shall ease his way unto ease.

8 And as for one who is miserly and deems himself beyond need,

9 and denies what is most beautiful,

10 We shall ease his way unto hardship;

11 and his wealth shall not avail him when he perishes.

12 Truly Ours it is to give guidance,

13 and truly unto Us belong the Hereafter and this world.

14 Thus have I warned you of a raging Fire,

15 which none shall enter, save the most wretched,

16  who denies and turns away.

17 And the most reverent shall be removed from it,

18 who gives his wealth to purify,

19 not recompensing any for a favour thereby;

20 save for seeking the Face of his Lord, the Most High,

21 and surely he shall be content


  1. Atkinson, Anthony B, Inequality, What can be done? Harvard University Press. Cambridge, Massachusetts, 2015.
  2. Stiglitz, Joseph E, The Great Divide, Penguin Books, Random House,K.
  3. Piketty, Thomas, The Economics of Inequality, Harvard University Press, Massachusetts. 2015
  4. Inglehart, Ronald, Inequality and Modernization, in Foreign Affairs, Jan-Feb 2016, volume 95, number 1, p.2. Also see contributions by others, Inequality and Globalization by Francois Bourguignon, How to create a society of equals? by Pierre Rosanvallon, Equality and American Democracy by Danielle Allen and How to spread the wealth by Anthony B. Atkinson in same issue.
  5. Al-Qardawi, Yusuf, Fiqh al –Zakah, translated by Monzer Kahf, revised and edited by Iqbal Siddiqui, Islamic Book Trust, Kuala Lumpur, Malaysia.2011.
  6. Nasr, Seyyed Hossein et al , The Study Qur’an, a new translation and commentary. Chapter 92, al-Layl, 1523-1525
  7. Sedlacek, Tomas, Economics of Good and Evil- the quest for economic meaning form Gilgamesh to Wall Street. Oxford University Press, 2011.
  8. Helminski, Camille, Charity (Tazkiyyah) in The Book of Character, The Book Foundation, Watsonville, California, 2004. P.93.
  9. TED Talks, Ideas worth sharing. www. Gary Haugen, The hidden reason for poverty the world needs to address now. Downloaded on 23 02 2106.
  10. Umer, Chapra, Ethics and Economics, An Islamic Perspective, in Islamic Economic Studies. Vol.16 no.1 & 2, August 2008. Downloaded 21/02/16. p.1-3
  11. Ibid, p.15.
  12. Ibid, p.9.
  13. Ibid, p.12
  14. Bond, Patrick, Why South Africa should undo Mandela’s economic ideals, in Costly Policies comment, Business Report, 18 January, 2016
  15. Dabla-Norris, Era, Kochlar, Kalpana et al, International Monetary Fund Staff Discussion Note, Causes and Consequences of Income Inequality; A Global perspective. June, 2015. Downloaded 10 February 2016. p.28.
  16. Tepperman, Jonathan, Brazils’s Antipoverty Breakthrough, The surprising success of Familia Bolsa in Foreign Affairs, January, February, 2016, Volume 95, number 1, p.34.
  17. Hossain, Mohammad Ismail, Analysis on Poverty Alleviation by Mosque Based Zakat Administration in Bangladesh; An empirical study. In Journal of Poverty, Investment and Development. P.120-125
  18. Ali, Isahaque and Hatta, Zulkarnain . Zakat as a Poverty Reduction Mechanism among the Muslim Community: Case Study of Bangladesh, Malaysia, and Indonesia.
  19. Personal communication. Moulana Abdurahman Khan. 21/02/2016
  20. Al-Baihaqi, Abu Bakr Ahmad ibn al-Husain, Shu’ab al Iman, as abridged by al-Qazwini. Translated as The Seventy branches of Faith by Abdal-Hakim Murad, Quillam Press, London, 1990.

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