The Role of Zakat as Financial

Safety Net Instrument in

Indonesia

Presented by:

Dr. Ahmad Mukhlis Yusuf

The National Board of Zakat (BAZNAS) of

Indonesia

Financial Safety Net

• Usually comprises the deposit insurance function, prudential regulation and supervision, and the lender-of-last-resort function

• Central Bank’s definition: The Financial System Safety Net (FSSN) provides the underlying framework for the deposit insurance scheme and the emergency financial facility under the central bank's lender of last resort function

Zakat-based Financial Safety Net (1)

Unlike Central Bank’s definition, zakat-based system financial safety net is aimed at facilitating the poor and the needy a wide access to financial resources that come from zakat and other social fund, such as infaq and cash waqf.

Zakat-based Financial Safety Net (2)

The role of zakat as instrument of financial safety net can be conducted through economically productive-based zakat programs

7 Major Zakat Distribution Programs

1. Mustahiq Service Center

2. Zakat-based Comunity Development

(productive program)

3. Healthy Home of Indonesia

4. Smart House for Children of the Nation

5. Bayt al Ma’mur BAZNAS (productive

program)

6. House of Da’wah BAZNAS

7. Natural Disaster Emergency Response

Program Implementation

• Collaborative program between Central BAZNAS, Provincial BAZNAS and City/Regency BAZNAS

• Collaboration and alignment with

other parties such as university

(e.g. The case of TAZKIA)

1. ZAKAT-BASED COMMUNITY DEVELOPMENT (ZCD)

ZCD is a program that is designed to

empower the community and to

increase their welfare level through

comprehensive and integrated

development approach

CommunityDevelopment

Benefit

Sustainability Participatory

Synergy

Stimulus using

zakat

Basic Principles of ZCD

Program Approach

Geographical Approach

Specific Group

Approach

Local Problem

Approach

ZCD based on Geographical Approach

ZCD based on Local Problem Approach

Program Strategy

ZCD Profile

• Motivation

• Trust

Awareness

• Skill

• Knowledge

• Attitude

Skill Upgrade• Problem solving

through active participation

• Core competence

Empowerment

Geographical Distribution of ZCD Program 2013

https://mapsengine.google.com/map/edit?authuser=0&hl=en&mid=z2hnGqzAFLYU.k_VG96B_ONZw

ZCD Pilot Projects

ZCD in Desa Candikuning, Bali (Strawberry farmer)i)

ZCD in Dusun Srunggo, Yogyakarta

ZCD in Desa Srimartani, Piyungan,Bantul, Yogyakarta (System Of Rice Intensification)

ZCD in Kab. Berau, Kalimantan Timur (Pipeline building) ZCD in Pulau Kera, Kab.Kupang, Prov.NTT

2. Bayt Al Ma’mur (Welfare House) BAZNAS

Bayt al Ma’mur BAZNAS

Definition

• Empowerment program of BAZNAS to increase welfare level of mustahik through qard al hasan financing, financial assistance, and supervision so that independent and productive personality of mustahik can be achieved

Vision• To Develop and Increase Welfare Level of Mustahik

Mission

• Economic empowerment aiming at realization of Prosper Indonesia

• To facilitate micro business of mustahik a wide access of financial resources

• To release mustahik from loan shark

• To develop Islamic values in the economy

OBJECTIVES

• Professional empowerment institution

• Facilitator of capital assistance

• Transforming mustahik to become munfiq

• Increasing income and independency of mustahik

• To increase business practices based on mu’amalah principles

• To reduce the impact of loan shark

TARGET

• Jabodetabek (Greater Jakarta) as pilot project in 2013

• Empowering at least 3000 mustahik per annum

• Replication of Bayt al Ma’mur BAZNAS in all parts of the country

• Optimization of zakat distribution at least 70%

TIPOLOGY OF DISTRIBUTION AND EMPOWERMENT PROGRAMS

PERSONAL

3000 Mustahik

COMMUNITY

• 5 communities

• Trader

• Farmer

• Animal breeder

• Fisherman

• Crafter

GEOGRAPHICAL AREA

• 9 areas

• Bekasi (2)

• Bogor (2)

• Depok (1)

• Jakarta (1)

• Tangerang (3)

BAYT AL MA’MUR BAZNAS

What is the next agenda after this conference?

• Sharing experiences on funding, programs, governance.

• Common platforms for sharing best practices, capacity building. Etc.

• Networking by using digital media and forum

• Etc..

Islamic Micro Finance,

A Case of Tazkia, Aligned with

Baznas Welfare House

Program

Shadaqah/CharityShadaqah/CharityPinjam/Credit

Shadaqah/CharityPinjam/CreditPembiayaan/

Financing

Shadaqah/CharityPinjam/Credit

Mena

bung/

Savin

g

Pembiayaan/

Financing

Shadaqah/

Charity

Micro

financeSaving

Commercial

Financing

Risk Protection/

Social Security

Poverty Eradication through Micro Finance,

Micro Trust Fund and Micro Insurance

Islamic Financial Institution for

the Economic Empowerment

Shadaqah/

Charity

Islamic

Micro

Finance

SavingCommercial

Financing

Risk Protection/

Social Security

Economic Wellbeing

of SMEs

BAYTUL

MAAL

BAYTUT

TA’MIN

BAYTUT-TAMWIL

LKM, BMT, BPRS

Center meeting/Majlis

Community

Micro Fin

Initiatives

(LKM)

The Poorest of the

Poor

The Economically

Active Poor

ISLAMIC

COOPERATIVE

(BMT)

member

Senior member

motiva

tor

pcag

pag

Small Business

Enterprises

Islamic Rural

Bank

(BPRS)

Member/

customers

ECONOMIC EMPOWERMENT STRATEGY

FOR LOW INCOME SOCIETY

Community ABC

Urban poor/village

needy/small and micro

enterprises

BAYTUT

TA’MIN

BAYTUL

MAAL ABC

BAYTUT

TAMWIL

ABC

LKMK

BM

local

KBMT

BPRS

Membership saving

Regular saving

Voluntary saving

Zakat

Infaq

Shadaqah

grant, education,

institutional/capacity building,

soft loan

Deposit, and dedicated

financing

city/small

town/village

life, health,

general,

pension, etc

TAZKIA

Micro

finance

IKAH Tazkia

DBS

BM Muamalat

BNI Syariah

ESQ 165

PEMDA DKI

SUCOFINDO

LKM Al-Hilal

KOSPIN JASA

Pekalongan

LKM Komunitas Tasik

Malaya

BMTs BogorKoperasi Syariah

Iktiar PERAMU

267

KJK-PEMK DKI

BPRS’

SB Foundation

TAKAFUL MIKRO

FIELD

LABORATORY

(campus –village

synergy)

BTTM Kop. Civitas Academica

PT PNM

Qatar Charity

37