Zakat Reform: Experts Urge Blockchain and AI for Transparency

As the holy month of Ramadan nears its end, discussions surrounding Sadaqat al-Fitr and Zakat have gained prominence among Muslims. The Islamic Foundation Bangladesh (IFB) collects around BDT 1.2 billion in Zakat annually. However, Islamic scholars and economists believe that this figure could be elevated to BDT 12 trillion with proper reforms.

Experts suggest that incorporating blockchain and artificial intelligence (AI) technology into the existing Zakat management system could eliminate structural inefficiencies and opacity. They argue that leveraging technology could eradicate poverty in Bangladesh within a decade using Zakat funds alone. Highlighting the need for modernization, stakeholders emphasize the importance of revitalizing dormant Zakat funds through digital solutions.

At a recent national seminar on Zakat organized by IFB, experts proposed integrating AI for Zakat collection, distribution, and data management. Dr. Mohammad Omar Faruq, Head of the Economics Department at United International University and founding director of the Islamic Banking, Finance, and Economics Institute, stated, "There is currently no system to store data on Zakat donors and recipients. AI-based blockchain technology can systematically record and secure such data, preventing misuse, such as multiple claims by the same recipient. It will also track how much Zakat an individual pays and how much another receives, ensuring full transparency."

Drawing on international examples, Dr. Faruq mentioned that Indonesia and Malaysia have successfully implemented AI in their Zakat management systems, enhancing efficiency and trust.

Explaining the technology further, Dr. Faruq added, "Blockchain ensures that once data is entered, it cannot be manually or technically altered. This means donor and recipient records will remain intact and can be reused annually. This technology is widely used in modern supply chain systems, and we can implement it for Zakat management as well. A donor will be able to track exactly where their contribution is going, how much is being distributed, and even verify its impact."

Religious Advisor Dr. A.F.M. Khalid Hossain supported this approach, asserting, "Zakat is the most effective solution for poverty alleviation. While it is obligatory in Islam, in Bangladesh, many treat it as voluntary. If properly collected and distributed, Zakat contributions in Bangladesh could reach BDT 10 trillion annually, potentially eliminating begging in the country within a decade."

Echoing this sentiment, Dr. Kabir Hassan, a professor at the University of New Orleans and an Islamic economist, conducted research indicating that "if Zakat is correctly collected in Bangladesh, it could generate BDT 10 trillion annually, significantly transforming the country’s economic landscape."

Data from the Islamic Foundation, supported by at least five domestic and international studies, suggests that with the existing wealth of individuals and institutions in Bangladesh, Zakat collection could reach BDT 10 trillion per year. Currently, 30% of the country’s population lives below the poverty line and qualifies for Zakat assistance. The research concludes that if this amount is properly managed, poverty could be eradicated within seven to ten years.

With this goal in mind, the Islamic Foundation is preparing to launch a nationwide online awareness campaign on Zakat collection starting next year. Abdul Hamid Khan, Director of the Islamic Foundation’s Zakat Fund, confirmed, "Necessary initiatives will be taken for extensive online promotion of Zakat collection from next year." Both the Religious Advisor and Secretary have expressed a positive outlook on utilizing technology for this purpose.