It would be an interesting fact for most of our readers that Pakistanis are quite active in philanthropy. Although the financial condition of the majority is in teeters still many would spend some money for social causes. The reason for this apparent generosity is the religious obligation according to which every person who has amassed a certain amount of wealth in a year is bound to give some in charity. Wikipedia defines Zakat as under:

Muslims to pay 1/40th (2.5%) of the wealth which they have had for a full lunar year, 2.5% of goods used for trade, and 5% or 10% of certain type of harvests depending on irrigation. Exempt from Zakat are a person’s house and personal transportation. Zakat is not mandatory on harvest if the total did not reach the minimum limit of about 653 kilograms ^[1], nor on gold amounts if the owner has less than 85 grams or silver less than 595 grams.

So how much does Pakistanis pay in Zakat each year and to whom? - unfortunately no concrete survey, except one, has yet been conducted to document the giving trends of Pakistanis. The one survey conducted by Aga Khan Development Network reported that Pakistanis donated upward of Rs. 70.5 billion (approximately $2.0 billion at that time) in cash and kind during 1998 (year of that survey). Even if the amount remains the same and adjusting for inflation, $2.0 billion is not a mean sum for a developing country. Pakistani diaspora also add significantly to this collective fund. The amount, if channelized in the right direction, can do wonders.

Let me also narrate another amazing fact for our readers that the Pakistani government has imposed mandatory deduction of Zakat from the bank accounts. The regulations were quite strict when this ‘law’ was promulgated but now you can exempt yourself from this forced deduction and many have done exactly the same. Still the government earns quite some bucks thanks to those who are content with the older arrangement. The money collected in this regard is spent on mostly governmental expenditures and with much dubious practices though there are proper institutions for Zakat distribution among the poor.

Future perspectives:

Zakat is an excellent way of supporting those in need and given the immense popularity of this religious giving, the Zakat revenues can be used in societal uplift. The current trends of giving resemble plain charity and is of no practical use as the poor become used to easy money and don’t work hard to improve their conditions. Government tried to streamline the Zakat revenues but the corruption and mismanagement has spoiled its efforts. The ideal way of dealing with this sizeable source of money is to use it in education and health sector and also in microfinance. More on this in my next post.

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