Alliance Islamic Financial institution Berhad (Alliance Islamic Financial institution) at present launched the Alliance Islamic Financial institution Zakat Microfinancing Programme (AZAM), Malaysia’s first zakat microfinancing programme.
The programme utilises zakat wakalah to uplift asnaf (underprivileged) micro-entrepreneurs within the nation and promotes monetary inclusion and equitable growth by means of the availability of accessible and reasonably priced financing alternatives.
In line with the Securities Fee Malaysia (SC), micro, small and medium enterprises (MSMEs) are a key driver of the Malaysian financial system, contributing over a 3rd of Malaysia’s nationwide Gross Home Product (GDP).
“The supply of appropriate financing choices obtainable to MSMEs stays sparse with an estimated financing hole of RM90 billion.
“In 2022, near RM4 billion in complete zakat was collected by numerous zakat establishments and when strategically harnessed, is ready to bridge this financing hole for underserved enterprise homeowners within the B40 phase,” it mentioned at present in a press release.
The financial institution mentioned AZAM is launched as an revolutionary strategy to zakat whereby it’s productively distributed by way of microfinancing by means of a revolving fund construction, setting a precedent in how zakat is harnessed to assist asnaf micro-entrepreneurs.
“The programme targets eligible asnaf micro-entrepreneurs and is disbursed in accordance with the Qard idea (reimbursement with out curiosity or revenue).
“Repayments are then channelled into the pool, concurrently increasing the programme’s affect by supporting extra certified asnaf entrepreneurs and guaranteeing the sustainability of zakat funds.
“Aligned with the rules and targets of value-based intermediation (VBI), AZAM intends to create a larger socio-economic affect and obtain the meant outcomes of Shariah by guaranteeing the distribution of wealth in a simply and efficient method.
Its chief govt officer Rizal IL-Ehzan Fadil Azim mentioned zakat is an important financial instrument that helps bridge the wealth hole throughout the neighborhood by means of monetary inclusion.
“We pioneered the programme with the endorsement and steering of knowledgeable events to productively distribute zakat to asnaf micro-entrepreneurs whereas serving to them to develop a sustainable supply of revenue and escape poverty,” he mentioned.
Alliance Islamic Financial institution additionally signed a Memorandum of Understanding (MoU) with Amanah Ikhtiar Malaysia (AIM) because the strategic microfinancing accomplice in a ceremony witnessed by Lembaga Zakat Selangor (LZS).
AIM, the biggest microfinance establishment in Malaysia is chargeable for overseeing a number of features of AZAM together with screening of beneficiaries and offering the infrastructure for fund disbursement and collections whereas LZS verifies asnaf beneficiaries.
LZS chief govt officer Mohd Sabirin Mohd Sarbini mentioned the collaboration between Alliance Islamic Financial institution and AIM allows an revolutionary social funding mannequin that’s Shariah-compliant and has the power to succeed in and help asnaf communities obtain a steady livelihood; reworking them into future zakat payers.
“We hope that this Programme encourages extra private-public collaborations that may uplift the livelihood of the asnaf communities and contribute to the general welfare of society,” mentioned Mohd Sabirin.
The programme pilots the idea first launched by way of the financial institution’s ‘Zakat and Microfinance’ guide printed in September 2022.
Following analysis, the financial institution submits a proposal to the Selangor Fatwa Council to develop this Islamic social funding mannequin and obtained approval, to culminate into the launch of the programme.
The financial institution mentioned it is going to bear all administration prices related to the programme and is allocating a complete of RM225,000 zakat wakalah by means of a revolving fund to profit an preliminary 45 asnaf micro-entrepreneurs.
Eligible asnaf micro-entrepreneurs who require working capital or capital expenditure help can entry as much as RM5,000 in zakat microfinancing funds.
AIM managing director Mohamed Shamir Abdul Aziz mentioned to additional help the asnaf micro-entrepreneurs, the programme consists of upskilling modules on areas reminiscent of enterprise and monetary administration and advertising and marketing.
“Our collaboration allows us to help low-income micro-entrepreneurs improve their enterprise expertise by means of coaching and monitoring classes,” he added.
AZAM enhances the banks ongoing efforts to empower communities by means of training, upskilling, funding, amongst others.
It had beforehand launched SocioBiz, a Shariah-compliant social funding platform that was launched in 2019 has managed to lift near RM1.7 million for 1,700 asnaf entrepreneurs and recipients.