Wealth & Poverty in Islam: Ending Poverty, a Moral Imperative

“O God! I seek refuge in You from poverty,

from lack of livelihood, and from

degradation; and I seek refuge in You

from wronging others, or being

wronged”  

(This is one of Prophet

Muhammad’s prayers, reported by Abu

Hurairah, and recorded by Abu Dawud and

An-Nasaie).

Poverty is a timeless problem that existed since mankind existed. It is a complex issue suffered by humanity almost in all their times. Yet it is sure that the real problem is not in scarcity of food, but in its production and distribution.

Abundance of material:

According to the Qur’an, God had created all elements needed by human beings, before He created Adam, the first human being (see: Qur’an, 2:29-30); then He entrusted them for mastering and administering all what is in the universe (33:72), as the vicegerent. This is no doubt an abundant wealth bestowed to Mankind. Together with this mastership, God has given them guidance, and empowerment with all necessary faculties to produce and raise all what they need for their livelihood. Of course God does not provide His bounty as the recipients wish, but according to a definite Plan of His.

Individually, no one can produce all what they need, and that is why God has not equalized individual skills and powers between people. Such differences in ability and capacity are important for exchange of services, as God says in the Qur’an: “And He it is Who has made you inherit the earth, and has raised some of you by degrees above others, so that He might try you by means of what He has bestowed upon you. Verily, your Lord is swift in retribution; yet, behold, He is indeed much-Forgiving, a Dispenser of grace” (6:165).

But such differences in abilities and capacities also create in them a lot of characters, bad and good. God sent messages to all people, through His messengers selected from among them, to guide them to the right way, and to show them how to behave uprightly in the society, so that they could work together and cover all their needs collectively with just. God says: “We have verily sent Our messengers with all evidence of truth, and through them We revealed the Scripture and the Balance, so that mankind may uphold justice. And We sent down iron, wherein is great might, and (many) uses for mankind, and so that God might mark out those who would stand up for Him and His messengers, even though He (Himself) is beyond the reach of human perception. Verily, God is Powerful, Almighty” (57:25).

Lack of cooperation:

History informs us that the cooperative aim for mankind to get their needs justly has been seldom achieved, due to the egoism of the more skilled or the more fortunate ones. Egoism is the most dangerous of all human characters; so dangerous that God’s religion guides people to apply many methods to lessen this bad character, and to arise mercy and love of helping others or giving to the needy. However, most people not only do not care for that, they deny God’s ordinances and are too lazy to apply most exercises ordered by God. Such indifference towards the guidance of God has resulted in the widening of the gap between the rich and the poor.

The World Development Bank has estimated that 1.2 billion of the total world population lives on less than $1 a day. Of these 1.2 billion individuals, 44% are concentrated in South Asia. The World Bank defines poverty and reports that people living on less than $1 per day live in extreme poverty while those who earn less than $2 a day live in moderate poverty (web.worldbank.Org). While in India and in Sub-Saharan Africa 34% and 41% of the population respectively lives on less than one dollar a day, in Yemen nearly 54% of the population lives below the poverty line. About one billion people in the world are undernourished: in Sub-Saharan Africa 32%, in Ethiopia 46%, in India 20%, and in Latin America 10% of population are undernourished.

According to a recent study by the Organization for Economic Cooperation and Development (OECD), even in the world’s most advanced economies the gap between the rich and poor is at record high levels. In most of the 34 countries in the OECD the income gap is at its highest levels in past three decades, with the richest 10 percent of the population earning 9.6 times the income of the poorest 10 percent. In the 1980s this ratio stood at 7 to 1, the OECD said in a report. In 2012 the wealth gap is even larger, with the top 1 percent owning 18 percent of the household wealth while the bottom 40 percent own only 3 percent.

A study by World Institute for Development Economics Research at the United Nations University (in Tokyo) reports that in the year 2000, the richest 1% of adults alone owned 40% of global assets, and that the richest 10% of adults accounted for 85% of the world's total riches. The bottom half of the world adult population owned barely 1% of global wealth. In 2013, Oxfam International released a report to the World Economic Forum that and stated that the richest 1% owned 48% of the global wealth. In 2014, Oxfam reported that the 85 wealthiest individuals in the world had a combined wealth equal to that of the bottom 50% of the world’s population, or about 3.5 billion people. In January 2015, Oxfam reported that the wealthiest 1% would own more than half of the global wealth by 2016.

Maybe the Syrian refugees are undergoing one of the world’s most horrendous crises at the moment, losing homes, belongings, livelihoods, subject to random violence, forced into underserved communities and robbed of any hope of future security while their country burns around them. The poverty to be found in a refugee camp, leads to severe physical and psychological trauma. It would be difficult to look at a refugee and state that their suffering was less profound than that to be found in the Congo, simply because it began more recently.

The Must to do:

Humanly speaking, this mass poverty in the world is not a normal situation. It is a great wickedness that should be removed. Something must be done about it. The able people should help those who are challenged and the wealthy should help the needy. This can be achieved through the wealthy willingly investing some of their wealth for the benefit of the poor without aiming for material benefit or subjecting the poor to any usury.

As Jeffrey D Sachs (the most famous economist) has said: “Economic growth and poverty reduction can’t be achieved by free markets alone. Decease control, public education, the promotion of new science and technology, and protection of the natural environment are public functions that must align with private market forces” (“International New York Times”, September 24, 2013).

Some initiatives:

Microfinance Institutions:

Microfinance was an initiative that began in Bangladesh by Dr. Muhammad Yunus in 1976. The idea picked up by donors leading to the creation of the Grameen Bank in 1983. It now serves more than 4 million borrowers. Such banks are called Microbanks. They lend small sums of money, often as little as $125, to those who possess skills and sound business plans, but lack capital or collateral to secure a loan through the traditional banking system and launch a business venture.

Microbanks lend money to individual entrepreneurs in groups of five, each member being responsible for their own loan. All five members in the group must repay their respective loans before anyone of them can apply for the next level of funding. In this way they use each other as collateral for their loans. The micro-financing business banking system has achieved and maintained an over 95% success rate in repayment and in flourishing businesses. Clients are charged, however, interest rates in the order of 25% and are expected to repay their loans within 25 to 40 weeks, depending on the amount borrowed.

BRAC (Bangladesh Rural Advancement Committee):

This initiative was launched by Sir Fazle Hasan Abed in1972, as a small-scale relief and rehabilitation project to help returning war refugees. By 1974 BRAC had turned towards long-term development needs of its clients, reorganized itself, and started providing micro credit to eligible projects. In 2002 BRAC launched a new initiative it called: Challenging the Frontiers of Poverty Reduction, which offers micro lending. Today, it is considered the largest micro lender in Bangladesh to which, the world renowned Grameen Bank is only a close second. Later, BRAC expanded its operations to also include Afghanistan, Pakistan, Sri Lanka, Tanzania, Uganda, Sierra Leon, Haiti, and the Philippines.

Greece Crises:

Even in the European Union Countries, they find it so difficult to solve the sovereign-debt crises in Greece. In simple terms, it is because the Creditors do not want to extend or to relend some of the due payment, or to postpone it. Addressing the current debt problem of Greece, Dr. Jeffrey Sachs said: “Sovereign-debt crises such as the one in Greece can be resolved only through bold steps by both debtor and creditor. The debtor needs a fresh start through a debt write off; the creditor must find a way to provide one without rewarding bad behavior. For a deal to be struck, both sides must have their needs addressed. Thus serious reforms and deep debt relief need to go hand in hand. It is for this reason that Greece and Germany, its largest creditor, need a new modus vivendi in order to resume negotiation” (New York, July 7^th, 2015).

In 2012 Greece’s government had the largest sovereign debts default in history. On June 30, 2015, Greece became the first developed country to fail to make an IMF (International Monetary Fund) loan repayment against its record debt of 232 billion Euros.

We have to know that the interest on the debts was 4%, and only in October 2014 the private sector investors and banks agreed to voluntarily accept a 50% write down on the value of Greek government bonds.

If that is the case in a developed country like Greece, how could we imagine the possibility of poverty reduction in under developed countries? I think it is only possible through interest-free worldwide voluntary cooperation to help the poor get rid of poverty. Given the greedy nature of human beings, only God-consciousness of individuals should be cultivated in the hearts and minds of people everywhere. There should be a religious awakening.

The Qur’an, in addressing such a problem, encourages the creditor to give concessions for the debtor, either to extend the assignment, or even to write off a part of the debt, or to write off the debt altogether as an act of charity: “If, however, (the debtor) is in straitened circumstances, (grant him) a delay until a time of ease; and it would be for your own good – if you but knew it – to remit (the debt entirely) by way of charity” (2:280).

What we need:

People should be conscious that God has bestowed upon everyone excellent skill and capability, and all humanity should live together with mutual exchange, and fair cooperation.

In the Qur’an we find a statement which illustrates the characters of many people, saying: “And as for man, whenever his Lord tries him by His generosity and by letting him enjoy a life of ease, he says: My Lord has been (justly) generous towards me; whereas whenever He tries him and restricts his provision for him, he says: My Lord has disgraced me. No, indeed! Rather, you are not honoring the orphan, and you do not urge one another to feed the needy; and you devour the inheritance (of others) with devouring greed, and you love wealth with boundless love! (89:15-20).  This statement indicates the bad side of most wealthy people (and of course not all of them).

Zakah Institution:

ISLAM has the solution for this problem, and Muslims in certain periods of their history have properly implemented the Islamic solution to the problem of poverty. Muslims have properly and successfully used the Institution of Zakah to resolve this problematic issue. But unfortunately, they have not always been in the same pattern. For centuries most Muslim countries were occupied by European colonialists, then divided into different “independent” countries. By the time they gained their so-called “independence”, they had already become so much influenced and even addicted to secular system in the State administration that they, too, blindly followed steps of their "former" occupiers. In fact, they are still under Big Power’s domination to the extent that they are not able to repeat their ancestors' successful experience in reduction/eradication of poverty.

Let me now shed some light on the Islamic solution to poverty. The third pillar (out of five basic tenets of Islam) is the Institution of Zakah. It is an instrument instituted by Islam where worship converges with socio-economic affairs of society in the Islamic pattern to combat poverty. This institution demands authority to organize the processes and practices that govern the collection of certain portion of the wealth of every individual in the society, and the distribution of what have been collected over the needy.

To pay zakah means worshiping God by giving that which He has enjoined of wealth, to those who are entitled to them, according to the guidelines prescribed by God, and is based on income and the value of all one’s possessions. It is 2.5% of a Muslim’s total wealth every lunar year above a minimum amount estimated by scholars in the country. For agricultural crops the zakah is between 5% and 10%, depending on the tools and watering systems used. The collected amount is to be given to several sectors of beneficiaries,

This obligation, ordained by God, has been implemented for centuries in many Muslim countries in a broadly encompassing framework, and is the fiscal support of the poor and needy, enabling them to enhance their livelihoods and thereby alleviate poverty. At the same time, Zakah is considered a spiritual purifying tool for those who expend.

This pattern institution could function only in a society, which believes in God and in the resurrection after death. The concept of the Hereafter is fundamental in Islam. According to Islam, the objective of human endeavour is to get the excellent life in the Hereafter. The life of this world is a test and the result of this test will determine the outcome of one’s destiny in the eternal life in the Hereafter. It is this belief in the faith that leads to the understanding of why the wealthy should willingly expend certain portion of their wealth for the poor and needy. According to Islamic teachings, the poor are entrusted to the wealthy to take care of through the prescribed Zakah.

I should note here, that after the collapse of the Islamic State, conscious Muslims all over the world have spent and distributed their zakah individually, or through trusted organisations that operate the collection and distribution of the zakah here and there. While it has reduced the pain of many poverty-stricken individuals and families, the result is neither satisfactory nor effective to eradicate poverty: why? Because when the payment is made under ruling obligation together with God’s ordinance, certainly it is more affective than when there is no sovereign authority behind it. In addition, most people do not think enough about what will happen in the Hereafter, on Judgment Day:

 “Nay, but (how will you fare on Judgment Day,) when the earth is crushed with crushing upon crushing, and (the majesty of) your Lord stands revealed, as well as (the true nature of) the angels, rank upon rank? And on that Day Hell will be brought (within sight); on that Day man will remember (all that he did and failed to do): but what will that remembrance avail him? He will say: Oh, would that I had provided beforehand for (this) my life!” (89:21-24).

The Qur’an indicates that those who do not share their wealth with the needy will be punished while those who share their wealth with the poor and the needy will be well rewarded.

Voluntary Charity:

Apart from zakah, there is a voluntary charity, which is termed as sadaqah in the Islamic Jurisprudence. Sadaqah is encouraged by the Qur’an calling it, infaq (expending).

To encourage the believers to give more (expending for the poor and the needy), the Qur’an gives a parable: “The parable of those who spend their possessions for the sake of God is that of a grain out of which grow seven ears, in every ear a hundred grains: for God grants manifold increase unto whom He wills; and God is infinite, all-knowing” (2:261).

More than that, the Qur’an considers the voluntary charity as a goodly loan for God: “Who is he that will lend God a goodly loan which He will amply repay, with manifold increase? For God straitens and enlarges; and to Him you shall be returned” (2:245).

So the spending of wealth for the needy (apart from what is necessary for a person in this life), is considered an excellent investment: it is a charity, a means to purify one's soul and character and, at the same time it is an excellent investment: a goodly loan for God Who will repay in manifold increase in the Hereafter. And the withholding of the wealth (apart from what is necessary) is considered greed and selfishness, and is strongly condemned: “And they should not think – they who niggardly cling to all that God has granted them out of His bounty – that this is good for them: nay, it is bad for them. That to which they (so) niggardly cling will, on the Day of Resurrection, be hung about their necks: for unto God (alone) belongs the heritage of the heavens and of the earth, and God is aware of all that you do” (3:180).

Abu Sa’id al-Khudri narrated: While we were traveling along with the Messenger of God (peace and God’s blessings be upon him), a man came to him on his she-camel and began to drive her right and left. The Messenger of God addressed to all of us: “Anyone has a spare riding beast should give to the one who has no riding beast; and he who has surplus equipment should give it to the one who has no equipment”, until we thought that none of us had a right in surplus property (Abu Dawud).

Umar bin Khattab narrated the Prophet as saying: “The food of one person is sufficient for two, and the food of two is sufficient for three or four, and the food of four is sufficient for five or six” (Ibn Majah).

These examples of what is advised by the last Messenger of God, gives us lessons for the necessity of more solidarity between people in the world. It is indeed shameful that we see millions of people who neither have enough food to live on, nor even enough clean and drinkable water while it is not impossible to help them if we all leave our selfishness behind.