How Blockchain Impact Investing Can Be Leveraged in Combating the Level of Standard Living Issues Pursued by the $200B Annual Contributions Under Islamic Social Finance.
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Muslim Scholars believe that Islamic Social Finance is a vital mechanism for alleviating global poverty and improving standard of living especially in low-income countries.
Mr. Shehu Nasiru Muhammad, Managing Director, Samaaha Institute of Training and Research made the observation with Proshare while assessing the “Role of Islamic Social Finance in Alleviating Economic Hardship”.
Islamic social finance, according to him, places emphasis on social welfare, equity and poverty alleviation. The eradication of poverty is among the primary objectives of Islamic social finance.
Islamic Social Finance Products:
Speaking on Islamic social finance products, he highlighted the Zakat, Waqf, Qard Hassan and Islamic microfinance as tools that can achieve economic empowerment.
According to the Islamic Relief Worldwide, Zakat contributions globally are estimated to be between $200 billion and $1 trillion annually.
He explained Zakat is a mandatory obligation under Islam where there is 2.5% on wills, bank savings, investment income, bonds, and other securities.
He noted that Zakat is also payable on residential properties, rentals, commodities and property purchased for the sake of profit and investment and extends to agricultural produce.
Waqf on the other hand is non-refundable and covers perpetual donation of a property for social welfare and the community. While Sadaqat is voluntary almsgiving, Islamic microfinance is the center of financial enterprise activities. This type helps entrepreneurs to relieve them from burdens and make them independent.
The Issues Bordering Islamic Social Finance
He noted that an effective legal framework would enable Zakat collection, adding that a proper orientation, transparency, accountability and fairness is required
“Transparency and accountability will help in the collection and redistribution of Zakat”. He suggests Non-Governmental Organizations (NGOs) as a good approach.
Blockchain Impact Investing Approach
Blockchain Impact Investing will help provide accountability, transparency and productivity on work progress.
Impact Investing approach ensures that the suggested NGOs and entrepreneurs work and fulfil whatever mission they are working to achieve. The approach through blockchain encourages funding for common good based on Impact per level of progress made in achieving the goal.
Funding is automatically released where productivity is confirmed and validated by benefactors, users or the community. Where proves are all recorded on the blockchain for credibility and authenticity.
The Islamic Microfinance banks can also serve as a tool to help entrepreneurs access funding for building projects that supports social good with impact progress per level of work as a measure to progressive funding.