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Zakat& Social Security

in Yemen

Rasha Jarhum,Social Research Consultant

Presented for: Arab Forum "Towards a New Welfare Mix: Rethinking the Roles of the

State, Market and Civil Society in the Provision of Basic Social Services "

19 -20 December 2012 , ESCWA, Beirut, Lebanon

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This Presentation 20m

• Background

• Zakat in the Legislations

• Zakat in Social Protection Framework

• Zakat Management Model

• Zakat Types and Zakat Revenues

• Zakat Beneficiaries & Disbursement

• Beneficiaries Targeting & Selection

• Conclusions and Implications

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Background • Yemen was created in 1990 following the unification of Yemen Arab

Republic (North), and the Peoples Democratic Republic of Yemen (South).

• The country went through a turbulent formation process following the unification, resulting in a brief yet devastating civil war in 1994, with political repercussions that destabilize the country until today.

• Population growth outpaces economic development, putting immense pressure on the country to meet any of the MDG goals.

Indicators 1990 2000 2010Population 11.9m 17.7m 24mNational income *1 $45.3b $55.3b $105.2bPublic Expenditure 16% 14% 12%GDP per capita *2 $1812 $2120 $2372

Data Source: World Bank Group Database *1: Constant 2000 US$ *2: Constant 2005 International $

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Zakat in the Legislative FrameworkPre-revolution 1962 & 1967: Speculator System

1970s – 80s: First Institutional Mechanisms (North)

Post 1994 Constitution

Zakat Laws 1996 & 1999

Local Administration Law 2000

Social Welfare Fund Law 2008New Law Project for Independent Authority for Zakat and

Social Protection 2012

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Zakat in the Social Protection FrameworkRegulating Social Protection in Yemen:The Third Fifth Development Plan

for Poverty Reduction (DPPR) 2006-2010, emphasized establishing Social Safety Nets (SSN) as THE major mechanism for reducing poverty.

Transitional Plan for Stability 2012 -2014 identified social security systems as top priority for immediate economic stabilization.

Social Protection spending planned to increase by 17% in 2012.

2007 2008 2009 2010 2011 20120

5

10

15

20

25

0.242.4 2.59 2.35

2.62

20.03

Social Protection Government Spend-

ing %

Social Protection...

Source: MoF, Statistics Newsletter, 2012

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Classification of Social Protection Systems based on governance structures and modalities:Formal systems: Pensions, Social Welfare Fund (SWF)Semi-Formal: Zakat, Welfare organizations & CSOsInformal: Family/Tribal networks, faith-based organizations

Why is Zakat Semiformal?Legal and Regulatory framework exists, but incomplete.Disorganized mechanism with serious inefficiencies.Lack of popular trust with perceptions of corruption.No obligation of accountability.

Zakat in the Social Protection Framework Cont

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Zakat Management Model

Zakat Collection•Zakat

Awareness

Ca

mpaigns•Notifyi

ng

Donors•Zakat

Donors

Discl

osure•Zakat

Amounts

Approval

•Monitori

ng

Zakat

Coll

ecti

on•Cases•&

Appeals

Zakat Distribution• Beneficiaries targeting &

selection• Registration

• Financial aid distribution • Monitoring and evaluation

Zakat Preparations• targeting & selecting

donors• setting Zakat

Collection dates• Policy and strategies

development

Zakat Collection:- Local Administration- CSOs- Faith-based Org.

Zakat Distribution:- Local Administration- Individuals 25%- SWF- CSOs - Faith-based Org.

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Zakat Types No Zakat Type Value Remarks

1

Livestock Zakat

More or less the value ranges between a female baby goat to

a female camel according to the quantity*

Detailed calculation is mentioned in the law, as well as, quorum and categories are clearly

mentioned.

2 Gold & Silver Zakat 2.5% 3 Liquidity Zakat 2.5% 4

Commercial & Trade Zakat 2.5%

-The law states that the bylaw will elaborate the type of Trade, conditions, and application. -Quorum for Zakat is not clear as well as types

of Trade included.

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Cultivation Zakat10% if naturally irrigated

5% if artificially irrigated

Zakat value was set when Yemen's Economy was based on agriculture and cultivation.

It doesn't set a zakat quorum or define categories.

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Zakat Types – Cont.No Zakat Type Value Remarks

6 Leased Products 2.5% 7

Honey, Livestock, & Marine Products

For honey 5%For livestock 2.5% (similar to Trade

Zakat)For Marine products 2.5%

It doesn't specify when it is dueIt doesn't set a quorum for Zakat for

marine products or define its categories.

8 Income Zakat Calculated similar to Trade Zakat. 9

Rikaz & Minerals 20%

It doesn't specify when it is due, Zakat Quorum or types included.

The law states that the bylaw will

define the types, calculations, conditions, application, and

beneficiaries.

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Fitr ZakatEqual to around 2.5 kilograms or 5

pounds worth of basic good per household person

Specifies the poor as beneficiaries for this type of Zakat

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Zakat Revenues in Yemen Indicators 2010 2011 2012

Number of poor people in millions (Multi-Poverty Index)

11.7

% of poor below National Poverty Line

42%

Zakat Revenues % of State's Revenues

0.65% 0.60% 0.71%*

Zakat Revenues in USD 56,106,976 48,302,325 69,934,883*Zakat Annual Growth rate 10.39% -13.91% 44%*Government spending on Social Protection in USD

231,576,744 246,734,883 2,490,530,232*

Social Protection Spending % 2.35% 2.62% 20.03%*Number of Beneficiaries of SWF 1,036,953 1,014,159 NA

SWF Aid in USD 184,996 187,738 NA

*Sources: MPI, MoF Financial Statistics Newsletter 2012, CSO 2011 Statistics Book

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Zakat Revenues Growth Rate

2007 2008 2009 2010 2011 2012

-20

-10

0

10

20

30

40

50

34.49

21.41

10.92 10.39

-13.91

44.79

Zakat Revenues Growth Rate % 2007 -2012

Zakat Revenues Growth Rate

Grains3%

Qat7%

Veg-etables

2%Live-stock0%

Public & Mixed Trade18%

Private Trade42%

Individual12%

Fitr9%

Others5%

Zakat Revenues % by Type in 2011

Source: MoF, Statistics Newsletter, 2012 Source: MoF, Final Accounts for Local Administration, 2011

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Capital SecretariatSana'a

AdenTaiz

HadramoutHodaidah

LahjIbb

AbyanHajjah

DhamarShabwa

Al-MahraSa'ada

Al-BaidhaMahwait

MarebAl-JoufAmran

Dhale'aRaima

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Zakat Type as per Governorate

Grains Qat VeggiesLivestock Public & Mixed Sector Private SectorIndividuals Fitr Others

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0.00

500000000.00

1000000000.00

1500000000.00

2000000000.00

2500000000.00

3000000000.00

3500000000.00

4000000000.00

Zakat Revenue Zakat & other aid allocated to SWF

Zakat Revenues Vs SWF Allocation in millions 2011

Source: MoF, Final Accounts Local Administration, 2011 & CSO Statistics Book 2011

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Zakat Beneficiaries & DisbursementZakat Law indicates 8 groups of beneficiaries:

the poor, the needy, the administrators of zakat, those “whose hearts are to be inclined”, free slaves, the indebted, for “the cause of God” and for those stranded on a journey.

Local Administration Law:District Local Resources: 50% of Zakat revenues is utilized for

the district's collected from. Governorate Common Resources: 50% of Zakat revenues

collected is utilized for the governorate's interest SWF:

Disabled Elderly, Orphans, Women, Unemployed. Cash assistance: 10-20$ every month sent quarterly through Bank, Post, or Committees. Social & Economic Aid. Including training.

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SWF Beneficiaries No Beneficiaries Definition Conditions for Eligibility Assistance

DurationA Social Aid Assistance1 Permanent

Completely disabled

Every male or female who is permanently and fully disabled rendering him/her permanently to fulfill any work;

General Conditions: - Living under the poverty

Line- Registered with SWF within

relevant category.

5 years renewable

2 Permanent partial disable

Every male or female person who is permanently disabled in one or some of his/her organs and rarely be able to work because of his/her case.

General Conditions:- Living under the poverty

Line- Registered with SWF within

relevant category.

3 years renewable

3 Temporary completely or partially disabled

Every male or female who is temporary both fully or partially disabled in one or some of his/her organs and cannot fulfill any work or, if at all, only able to work partly

General Conditions:- Living under the poverty

Line- Registered with SWF within

relevant category.3 years

renewable

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No Beneficiaries Definition Conditions for Eligibility Assistance Duration

A Social Aid Assistance4 Orphan Every male or female

person under the age of 18, whose parents are dead or whose parent’s whereabouts are unknown.

General Conditions:- Living under the poverty

Line- Registered with SWF within

relevant category.Specific Conditions:An orphan who reaches 18 years of age can continue to receive the aid if he's a registered student until he reaches 25 years.

3 years renewable

5 Elderly Every person whose age reached to sixty years (for male) and fifty-five years (for females).

General Conditions: - Living under the poverty

Line- Registered with SWF within

relevant category.

3 years renewable

SWF Beneficiaries –Cont .

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SWF Beneficiaries –Cont .No Beneficiaries Definition Conditions for Eligibility Assistance

DurationB Economic Aid Assistance6 Women

without caregiver

Each woman who has never been married, a widow or divorced woman who did not get married later or whose caretaker is for whatever reason absent and does not pay maintenance.

General Conditions:- Living under the poverty Line- Registered with SWF within relevant

category.Specific Conditions:Not less than 18 years of age unless she's a widow, divorced, or has a child or more than one child.

2 years renewable

7 Unemployed Every male or female person who does not have any work, neither as civil servant, employee or by being self-employed or whose monthly income is below the monthly amount of cash economic assistance.

General Conditions:- Living under the poverty Line- Registered with SWF within relevant

category.Specific Conditions: - Not less than 18 years of age or more than 60

years of age.- Labour Market available.- does not receive any social or economic

assistance from any organization. Enrolled students are not considered.

2 years renewable

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SWF Targeting & Selection of Beneficiaries Beneficiary Targeting:

Policy Level Criteria: Geographical (Urban/Rural) & Poverty Application: Pilot Proxy Means Test targeting.

Selection:Application Forms by Case filled by Social Researchers Criteria & Marks: The selection criteria covers indicators of

family size, illiteracy level, availability of electricity, type of home, number of stories in the house, source of cooking gas, source of water, sanitation service available, and assets owned.

Poverty Assessment 2006:45% of beneficiaries are non poor, 14% extremely poor, 13%

poor.

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Am

anah

Sana

'aAde

nTa

iz

Had

ram

out

Hod

aida

hLa

hj Ibb

Abyan

Hajjah

Dham

ar

Shab

wa

Al-Mah

ra

Sa'ada

Al-Bai

dha

Mah

wai

t

Mar

eb

Al-Jou

f

Amra

n

Dhale

'a

Raim

a0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00% of Zakat Revenues Vs % of Poor People Vs

%SWF Aid

% Zakat Revenue % of Poor people % of SWF Aid

Source: MoF, Final Accounts Local Administration, 2011 & CSO Statistics Book 2011

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Conclusion & Implications:Zakat is an important Social Safety Net but will benefit from

institutional reforms, its potential role to alleviate poverty is still modest.

Strengthening coordination between Zakat stakeholders is important.

Zakat current legislations are incomplete. Calculations and Zakat categorization within type are not clear. Eg. It’s not clear whether Zakat has been collected from Petroleum and Oil sector.

SWF assistance are nominal and do not contribute to acquire assets that may help beneficiaries to overcome poverty level.

SWF still suffers from leakage to the non-poor. Geographical-Poverty targeting is still not implemented effectively.

The End

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Thank You for Listening!