3rd INTERNATIONAL CONFERENCE ON BUSINESS AND ECONOMICRESEARCH ( 3rd ICBER 2012 ) PROCEEDING
12 - 13 March 2012. Golden Flower Hotel, Bandung, Indonesia

EMBRACING MICROFINANCE   PROPOSED COLLABORATION BETWEEN ZAKAT INSTITUTION AND MICROFINANCE INSTITUTIONS

 

Nurbani Md. Hassan, Abd Halim Bin Mohd Nor, Noor Ashikin Mohd Rom

Abstract  

The ultimate objective of zakat in Islam is to help the needy and the hard-core poor. To accomplish this, the Zakat Institution has introduced various programs for the poor as to ensure the poor will not be neglected and will not permanently living in the cycle of poverty. Due to various responsibilities shouldered by Zakat Institution, the distribution has become less effective and yet to reach its full potential. Collaboration with other institution is expected to assist Zakat Institution in distributing the zakat fund to the rightful recipient in more efficient manner. In the case of business and capital assistance program, past research has highlighted the dimness of this program. Therefore, this paper attempts to explore the collaboration process, especially the criteria(s) needed for effective collaboration and proposed the collaboration model to be adopted by the Zakat Institution and Microfinance Institution in delivering the effective microfinance program for the poor. Second, this paper would like to propose more effective method in distributing the zakat fund for business by suggesting the modus operandi of microfinance. Finally, this paper will provide recommendations on proper instruments for Islamic microfinance as part of the Zakat Institution program.