Zakat Microfinance: A Tool for Poverty Reduction? Evidence from BAZNAS Beneficiaries in the Selected Regions (Bantul, Sukabumi, Aceh, Gorontalo and Kutai Timur)

Abstract

This paper aims at examining the impact of microfinance zakat program distributed by BAZNAS to the beneficiaries in the selection regions of Indonesia; i.e. Sukabumi (West Java), East Kutai (East Kalimantan), Aceh, Bantul (Yogyakarta) and Gorontalo. This has been done through designing the microfinance zakat program that will assist beneficiaries in establishing a business, or upgrading the scale for their existing business. By using the Poverty Index framework (sen index, FGT index), this research provides an actual data on how far the achievement of the zakat microfinance program in improving the welfare of beneficiaries. The data achieved by direct survey to the beneficiaries in those areas was conducted between October and November 2016. Our results show that the microfinance based zakat distribution managed by BAZNAS is positively correlated to the alleviation of poverty and thus improves the welfare.