THE ROLE OF ZAKAT IN SUPPORTING ISLAMIC MICROFINANCE: A SURVEY AMONG IJOK RESIDENTS

Abstract

Zakat stands as the greatest charity in Islam, and it serves as an Islamic financial model that is instrumental in poverty alleviation and economic development within Muslim societies. It acts as a mechanism for wealth transfer so that aid is provided to the economically depressed groups. Zakat, when combined with Islamic microfinance, can serve as an entity that can offer sustainable finances through compliant Shariah services. On the contrary, Islamic microfinance has a number of problems such as low levels of education, lack of infrastructure, poor governance systems, and slow response times to fund allocation. Various microfinance projects funded with zakat suffer from lack of clear objectives which results in poorly controlled and monitored spending. In addition, low public awareness and weak marketing efforts reduce community. This paper examines the issues, challenges and roles of integrating zakat within Islamic microfinance in order to for Muslims in Ijok. The study adopts a quantitative design where data was collected through survey questionnaires focusing on the issues, challenges, and the role zakat can play towards aiding micro-financing initiatives. Most of this research showed very clearly that the finding indicate a predominantly positive perception that zakat plays a critical role in poverty alleviation, economic development, and support for small-scale business development, but challenges such as limited awareness, delays, and lack of governance do overshadow the data. In response to these concerns, the study suggests strengthening community activities, increasing disclosure, and encouraging collaboration between zakat institutions and microfinance companies. Such strategies seek to improve an existing zakat microfinance model to better aid underserved communities through improved financial inclusion and sustainable economic development.