The Role of Zakat and Waqf in Poverty Reduction: An Islamic Approach in the Context of Pakistan

Abstract

This paper critically examines the roles of Zakat and Waqf—two pivotal instruments of Islamic economic justice—in alleviating poverty and reducing inequality within the Pakistani context. Drawing upon a multidisciplinary framework, the study first outlines the theological foundations of Zakat as a compulsory redistributive levy and Waqf as a voluntary endowment mechanism, tracing their evolution from early Islamic society to modern-day applications. Employing qualitative methodology, the research analyzes primary sources (Qur’anic injunctions, Prophetic traditions) and secondary literature (classical jurisprudential treatises, contemporary policy reports), alongside semi-structured interviews with key stakeholders in Pakistan’s zakat and waqf administrations. Findings reveal that, despite their enormous potential, both systems suffer from pervasive challenges: fragmented legal structures, inconsistent institutional oversight, and limited public awareness undermine optimal resource mobilization and distribution. Zakat collections frequently fall short of their target due to non-compliance, outdated nisab thresholds, and opaque crediting processes. Similarly, many waqf properties remain underutilized or are mismanaged because of archaic waqf laws and inadequate endowment management capacities. These inefficiencies disproportionately impact the most vulnerable segments, including rural poor, female-headed households, and internally displaced persons. To address these gaps, the study proposes a series of reforms: harmonizing zakat regulations across federal and provincial jurisdictions; modernizing nisab calculation in line with inflation; deploying digital platforms for transparent collection and disbursement; and professionalizing waqf management through capacity-building initiatives and public–private partnerships.