Assessment the Impact of Zakat on Aggregate Consumption and Poverty: Evidence From Egypt

Abstract

This study aims at investigating the impact of Zakat on aggregate consumption and poverty alleviation in Egypt. To achieve this, the study presents the concept of poverty and the strategies of poverty alleviation in a conventional economy, and then discusses the concepts of poverty in Islam and the ability of Zakat to eliminate poverty in the Muslim community. The most important results are the potential Zakat collection in Egypt cannot eradicate poverty from the Egyptian economy and the other types of charities may play an important role in eradicating poverty in Egypt. The study recommends the need to pass legislation that requires the collection of Zakat from different sectors, organizations and institutions as well as individuals. Finally, the study emphasizes the need to voluntary charities as complementary tools in poverty eradicating. The study recommends also the Egyptian government to monitor and control the processes of collecting and distributing Zakat where the more directed to the poorest eligible (first of the eligible categories), the greater the effect on consumption then on poverty.