Introduction and Methodology
Introduction
Sudan suffers from a high percentage of its total population, more than 65%, living in poverty. This percentage is affected by poor economic growth, the spread of civil conflicts and the resulting migration and destruction, and loss of livelihoods. With such a high incidence of poverty, social protection networks do not cover large segments of the Sudanese population.
Since the early 1990s, Sudan has embarked on economic reform programs that include the removal of subsidies on basic, government-subsidized commodities such as bread and fuel. As is well known, the implementation of these policies requires effective social protection networks to minimize the effects of these policies on the poor, which is not an easy task in a low-income country where there are already serious questions about the government’s ability to develop an effective social protection system.
In light of limited government resources and a large security and military budget, especially during the period of al-Bashir’s rule from 1989 to 2019, the government’s ability to allocate resources to support social protection programs has been weak. This means that the Zakat Chamber is considered the main provider of social protection interventions in Sudan. It targets poor and vulnerable segments, as Zakat resources represent about 87% of the total interventions of government social protection networks (excluding government support).
This study starts from the premise that Zakat can be an effective tool in financing and implementing social protection programs, as well as social protection institutions in Sudan, if properly managed. As such, the paper traces the historical development of the Zakat system in Sudan and the impact of the ruling regimes on Zakat’s roles in the social protection system. The study also examines the impact of the Bashir regime (1989-2019) on the Zakat system from the perspective of economic and political empowerment, and the extent of the regime’s impact on Zakat’s ability to strengthen social protection networks in Sudan. The nature of the political system plays a role in determining the frameworks of the Zakat system: the Zakat Chamber law authorizes it to disburse Zakat under the discretionary authority of the ruler as the original authority. In other words, the ruler’s discretion affects the distribution of Zakat resources to projects.
The study examines the period of Omar al-Bashir’s regime, which lasted from 1989 to 2019. The study then deals with the period following the fall of the Muslim Brotherhood rule in the transitional period from 2019-2021, and proceeds to shed light on the role of the Zakat Chamber after the outbreak of the Sudanese war on 15 April 2023. The study concludes with the positives and challenges facing the role of Zakat in social protection in Sudan. It also provides recommendations aimed at reviewing the program, which, despite its expansion, is accompanied by issues in terms of its use in collecting and providing resources that are not subject to appropriate exchange and institutional controls and as a tool affected by the nature of the ruling political regime and its priorities, which may contradict the goals of Zakat and social protection.
The importance of addressing the relationship between Zakat and social protection in Sudan lies in the fact that Zakat is categorized as one of the most important social protection resources. Zakat, for much of the period under study, was a compulsory religious tax, a fact that goes against the principles of Islamic countries in dealing with the Zakat obligation. The link between Zakat and social protection needs a careful approach that separates the roles that Zakat can play in social protection. Zakat is not just a charitable act and can have macroeconomic effects, falling into the trap of being used as an easy tax resource by which governments evade their roles in developing and institutionalizing social protection. This paper attempts, through the experience in Sudan, to contribute to the development of the debate and experience on the roles of Zakat in social protection.
Methodology
The study examines the role of the Zakat system and its institutions in enhancing social protection in Sudan. In addition to using a historical approach to examine the development of the Zakat system and its various influences, it also looks at the political economy of the impact of successive political regimes on the Zakat system in Sudan.
The paper covers the period from 1980 to 2021, with an addendum to cover the events of the war in 2023 that falls outside the scope of the original paper. The paper relies on interviews with former government officials and academics as primary sources of information, and on a desk review as secondary sources through previous topics and studies related to the topic.
Conceptual Framework
Social Protection
The concept of social protection is flexible. It can be defined as a set of public measures that aim to confront the fragility of individuals’ lives through social insurance and provide protection from risks and adversities for life through social assistance, providing financial support to the poor, and empowering marginalized people through social inclusion efforts that enhance their opportunities to obtain such social insurance and assistance. Thus, social protection contributes to achieving social justice and – if the concept of social protection is associated with the concept of a social welfare state – the move toward structural reforms and neoliberal applications
Since the end of the 1970s, Sudan has been embarking on structural reform packages that reduce the role of the state, reduce public spending, and enhance the role of the private sector. These measures need corresponding social measures to address their side effects, resulting in a need for effective institutions to provide social protection services. This is a major challenge considering the high rate of poverty in Sudan and the high percentage of workers in the informal sector, which in some studies reaches almost 60% of the overall labor force. Of workers in the 25-54 age group, about 65% are involved in the informal sector. In addition, wars and civil conflicts in many regions of Sudan (eight states) make the economic situation more complex.
The most prominent social protection institutions are the National Health Insurance Fund (NHIF), the National Pension Fund, the Zakat Chamber, the Anti-Poverty Commission, the Social Security Investment Agency, the National Council for Persons with Disabilities, the National Student Support Fund, the Savings Bank, and the Humanitarian Aid Commission. Although most of these funds and structures are supervised by the Ministry of Social Development, there is no coordination and coherence between these institutions to prevent duplication or maldistribution of social protection services. During the period of the transitional government (2019-2021), there was an uncompleted project to register individuals with a social number to organize the process of receiving benefits.
Given the resources available to the various social funds, their impact could exceed the effective contribution to social protection programs to positively affect the macroeconomy according to the size of the liquidity and resources available to them, if they were properly managed.
Zakat and Social Protection
“Zakat” is the term for charitable alms that Muslims are expected to pay as a religious duty as one of the five pillars of Islam, paid to specific groups under particular conditions. Zakat is the largest contributor to the provision of social protection resources and even supports some programs of other social institutions such as the Anti-Poverty Commission.
One of the advantages of Zakat’s contribution to government protection programs is its independence from the government budget: it is not only a sustainable source for social protection resources but also a source that can be increased. The Zakat bowl is a large one that includes different sectors and resources, both material and in-kind, and the Zakat pay sheet (Diwan) covers all cities and villages in Sudan. One of the advantages of the Zakat Chamber is that it is obligated to spend all that it collects within a specific period of time, as it is a spending institution as well as a collecting institution; this gives it a faster and more effective ability to respond to emergencies and disasters faster.
Roles of the Zakat Chamber in Social Protection
The roles played by the Zakat Chamber in the field of social protection are diverse and numerous. Zakat funds are used in support of education, including supporting free basic education, sponsoring university students, providing school supplies, and providing school meals; health; improving housing; income-generating projects; direct support, including microfinance and financing with a social dimension; supporting people with special needs by providing basic necessities; and creating job opportunities for youth and women in programs such as with microfinance or the qard al-hasan (benevolent loan) and housing initiatives.
The Zakat Chamber therefore contributes to supporting poor families in health and education services, as it provides support to more than 80,000 university students and contributes to providing health insurance services to poor families who are not otherwise covered by health insurance services.
The Zakat System and Social Protection
The Zakat System from 1980-1989
The first Zakat law in Sudan was issued in April 1980, with the aim of reviving Zakat. For this purpose, the Zakat Fund was established to collect and distribute Zakat on a voluntary basis. The Fund’s management consisted of an executive committee whose members were selected from governmental institutions. In March 1984, following President Jaafar Mohamed Nimeiri’s 1983 announcement of the application of Shari’a, a new law was issued that merged the Zakat Fund with the Taxation Department under the Ministry of Finance, renaming the new entity the Zakat and Taxation Fund. Under this law, Zakat became compulsory; all direct taxes were abolished; a social solidarity tax was imposed on non-Muslims equal to the Zakat rate; and a board of trustees, a high committee for grievances, and specialized departments were formed to administer the new Fund.
The legal and structural revival of Zakat cannot be examined without also looking at the Islamic orientation of President Nimeiri, which resulted in his declaring the application of Shari’a as a law in Sudan and then amending all laws to fall in line with Shari’a. After the fall of Nimeiri’s regime following the popular uprising in April 1985, a new Zakat law was issued in 1986 that separated Zakat from taxes and established the Zakat Chamber as an independent body. The first secretary general of the Zakat Chamber was appointed in January 1988, and the Chamber was supervised by the Ministry of Social Affairs, with branches spread throughout all the states in Sudan.
The Zakat Chamber faced important challenges during this period, the most important of which was the famine that hit many areas in the Horn of Africa and areas in western Sudan. Sudan suffered from migration from neighboring countries and internal displacement from areas hit by drought. Economic conditions had been deteriorating since the late 1970s, and the economic reforms that were enacted in that period with the intention of upwardly adjusting the trajectory not only failed to do so, but rather exacerbated the downward spiral of poor economic and social conditions.
This period also witnessed a few transitions in the administration of Zakat: from voluntary to compulsory Zakat, and the transition from being independent of taxation, to being linked to taxation, before being separated again.
The Zakat Chamber from 1989-2019: Islamist Rule
This section discusses the Islamic movement in Sudan, which worked to implement its beliefs about Islamic governance into the Sudanese government, including the application of an Islamic economy as opposed to socialist or capitalist economies. Zakat is at the heart of an Islamic economy as a basis for achieving social justice and solidarity among Muslims. In Sudan’s experience of the Islamic movement’s rule, the model applied to the economy was an extension of the applied structural reform policies but distorted to achieve one of the goals of the movement: controlling the state economically, politically, and socially through what is known as the policy of empowerment and providing state resources in service of this empowerment. This period witnessed significant development in the Zakat Chamber’s work, in terms of both expanding the amount of Zakat resources and in spending, but with a caveat: this expansion in spending was related not only to Zakat goals, but also to providing resources for institutions and activities related to the Islamic movement and its government.
Legal amendments regarding Zakat were issued in this period – first in 1991 and again in 2001 – that represent the foundation for Zakat work. These laws work in addition to regulations and systems that constitute the basic rules of Zakat work, and they are supplemented by guides and work manuals on Zakat collection; banking and administration; publications that determine how to apply the Zakat laws; and methods from the administrative point of view related to collection, disbursement, and Zakat work implementation.
The Sudanese government did not follow a specific doctrine on the subject of Zakat, but rather moved between different schools of thought to expand Zakat collection and the banks to which Zakat was routed. The political use of Zakat resources was evident in these Zakat banks. Zakat funds were spent on the war in South Sudan and security expenses, while Zakat money was routed to organizations and educational institutions controlled by the Islamic movement (such as the Islamic Call Organization or Africa International University, respectively). The Zakat Chamber also employed many people affiliated with the Islamic movement.
The fluctuation between the Zakat Chamber’s stipulated independence and its subordination to the minister and the presidency of the republic resulted in political handling of the funds not subject to appropriate accounting tools. The expansion of Zakat banks not only represented a jurisprudential openness but was also an entry point for using Zakat funds outside the usual scope in order to achieve the goals of those in power. This period witnessed financial excesses that resulted in accusations of corruption, which is a natural byproduct in light of the legal imbalance and lack of transparency in the governance of the Zakat Chamber. The executive authority had a free hand in directing the funds to support its own priorities; the danger of this – especially in a totalitarian system lacking accountability and its tools – is that it makes Zakat a resource for government expenses instead of being reserved for social protection for vulnerable segments of society.
The work of the Zakat Chamber has been predominantly based on tax collection. This has distorted the religious ritual of collections in a coercive manner, leading people to perceive Zakat as taxation, especially given its collection by force of law and punishments for those who refused to pay it. This distortion has also led to a sort of “tax evasion” for Zakat payments and a subsequent loss of estimated financial resources for the Chamber.
Table: Zakat collections from 2003-2018 in millions of Sudanese pounds
The Zakat Chamber experienced one of the most influential periods in its role in social protection during the Islamic movement’s rule. It underwent an organizational expansion to include all of Sudan, and it represented a priority for the government as an institution already in accordance with their ideological framework of rooting Sudanese life in religious practice. The Chamber also represented a significant financial resource away from the tools and control procedures that are governed by other governmental budgets.
However, despite the Zakat banks being tightly linked to social protection, and the fact that the Zakat Chamber provides the majority of funding for Zakat programs, the public view of Zakat from the angle of social protection seems to have been limited. Zakat was viewed as a religious ritual that the state was responsible for collecting, rather than as the most effective means of social protection in Sudan.
Instead, if we look at Zakat through the lens of social protection, we see that coordination between the different organizations linked to it is essential. Improved coordination at this level would allow for optimal use of financial resources available for social protection, leading to a positive impact on the Zakat Chamber’s partnerships with development actors and other government agencies that are involved in the provision of social protection services.
Despite the development of capabilities and resources in this period, the Zakat Chamber has not had the required technical and administrative development, such as automating its work and adopting more effective and transparent systems.
The Period of the Transitional Government: 2019-2021
This period witnessed the emergence of major economic challenges affecting the Zakat Chamber and its contribution to social protection programs. Perhaps the most important of these challenges was the outbreak of the COVID-19 pandemic, and the implementation of an economic reform package created out of the transitional government’s efforts to benefit from the World Bank’s Heavily Indebted Poor Countries Initiative to address external debt, which for Sudan exceeded $60 billion.
The transitional government made administrative changes to minimize the impact of political empowerment that had been enacted by the former regime on the Zakat Chamber. Administrative changes were also made to strengthen governance and fight corruption, as work was automated at the Chamber and the General Directorate of Audit and Inspection was directed to investigate the Zakat Chamber’s systems.
The Zakat Chamber played an important role in addressing the COVID-19 pandemic by responding quickly, as compared to other government agencies and even international organizations that provide aid. The Chamber had experience in reaching the affected areas, identifying beneficiaries, distributing aid, and understanding the needs of those targeted for support. The Zakat Chamber also played important roles in addressing the humanitarian crises that followed sporadic incidents of tribal violence in western and eastern Sudan. It worked in cooperation with the Ministry of Finance in identifying the target groups for the World Bank-funded social support cash transfer program through its existing database. Finding or creating a database of those targeted by the cash transfer program was one of the biggest challenges of this program, which was suspended by donors after the coup of 25 October 2021.
Financial Flows for the Transition Period of 2019-2021
The details below show the magnitude of the increase in financial flows during the transitional period: the first half of 2019 amounted to 2 trillion Sudanese pounds (about US$3.3 million), whereas the second half of 2021 amounted to 57 trillion Sudanese pounds (about US$94.8 million).
We can see that many reforms started in the 2019-2021 democratic transition period in the Zakat Chamber in terms of developing its work in the field of government and computerization. These reforms were in addition to its rapid response to the humanitarian needs that emerged due to the pandemic and the accompanying lockdowns that negatively affected workers in the unorganized sector, as well as in addition to the assistance it provided to areas of civil conflict. Despite these reforms, the lack of coordination and cohesion between social protection service providers remained. Although attempts have begun to coordinate and standardize information related to service delivery, the law has not addressed making the Zakat Chamber more transparent and reducing the influence of government authorities, regardless of their nature, on its work.
The Zakat Chamber’s Role in Social Protection Following the Outbreak of War
This section was written after the initial proposal for this research paper was finalized. The outbreak of war in Sudan before the paper was published necessitated some limited additions to reflect the current situation.
The war that broke out in the center and capital of the country between the armed forces and the Rapid Support Forces contributed to the disruption of many state institutions including the Zakat Chamber. With the exception of some assistance provided by the state Zakat offices, the Zakat Chamber has not played a significant role in addressing the horrific humanitarian situation due to the outbreak of the war, especially compared to the local efforts made by some international organizations and local actors, such as emergency rooms and some national organizations.
Overall Outlook on the Work of the Zakat Chamber in Social Protection
The Zakat Chamber faces the following challenges:
- Lack of a clear social protection policy in Sudan.
- Lack of coordination between organizations that provide social protection services.
- Difficulty maintaining independence and the influence of ruling regimes on the Chamber’s priorities.
- Lack of understanding of the Chamber’s role as one of the largest social protection institutions in Sudan and not just the fulfillment of a religious obligation.
- Lack of sufficient and accurate information on poverty in Sudan.
- Possibly insecure financial flows in light of the security conditions and wars in some areas.
- The high cost of distribution in some areas due to the weak infrastructure in Sudan.
Despite these challenges, the Zakat system has some notable advantages: the ability to reach all regions and villages in Sudan; the availability of information about poverty and the poor in Sudan; and the diversity and multiplicity of activities carried out by the Zakat Chamber in the field of social protection.
However, the use of Zakat in Sudan also has some serious flaws. First, the Zakat Chamber resources have been used for political uses and empowerment: political use here means providing part of the Zakat Chamber’s capabilities in favor of serving the political goals of the ruling regime, as was evident in the Chamber’s experience from 1989 to 2019 during the rule of the Islamic movement; and political empowerment means empowering elements of a political organization from the Chamber. The Chamber also has weak auditing and transparency in its financial performance and resource allocation. The focus on collection makes Zakat more of a tax to be evaded than a tool of social solidarity, especially under totalitarian regimes, where confidence in the political system and its commitment to allocating Zakat resources to its required expenses is weakened. Finally, there are no methods of grievance and appeal at the village and local levels.
Conclusion and Recommendations
Zakat is an important resource that can help develop social protection programs and institutions in Sudan, especially in light of the paucity of government resources allocated to social protection programs and the increasing rate of economic vulnerability for multiple reasons, including armed civil conflicts and existing economic policies and their consequences, especially on the poor segments that represent two-thirds of Sudan’s population.
There are issues related to the Zakat Chamber’s governance, administrative and institutional control, transparency, and the Zakat payers’ confidence that Zakat the money is going to the right banks, which can in turn lead to attempts to avoid paying Zakat to the Chamber. There is also the lack of a social protection strategy that includes clear policies for the role of Zakat in social protection, the absence of accurate statistics, and the lack of institutionalized exchange of information between multiple social protection institutions. All of this reduces the Chamber’s effectiveness and impact.
The shift in Zakat from being voluntary to = becoming compulsory may reflect its treatment as a tax resource rather than a religious ritual, and this issue is evident in the experience of the Islamic movement’s rule from 1989 to 2019. Therefore, in the institutional reform of the Zakat system, it would be wise to strengthen social protection in Sudan and better harmonize the voluntary giving of Zakat with a strong and effective Zakat institution that is better protected from becoming a political tool to be used by associations and charitable organizations with special goals. This aim would be further bolstered by a return to laws insulating Zakat from the tax framework and developing its institutions to better complement and work effectively with other social protection institutions.
The nature of the political system affects the effectiveness and fairness of the Zakat effort in the field of social protection. During the Islamic movement’s totalitarian rule, the government increased the Zakat Chamber’s tax capacity but used its resources for political purposes and to support organizations loyal to the Islamic movement, which negatively affected the reputation and role of the Chamber. Despite the challenges and failures of the Chamber in Sudan, there are great opportunities for Zakat to play a key role in supporting social protection. The existence of significant financial resources, an information base, and the ability to reach out to different rural and urban areas can help the Chamber play a significant role in improving and developing social protection services in the country.
Viewing the Zakat Chamber as a key and important platform for social protection and placing it at the heart of the state’s social policies, while distancing Zakat and its institutions from political exploitation and polarization, would lead to increased confidence in it, enhance voluntary contributions, and increase its resources in a way that makes it more effective. Establishing transparency in the work of the Zakat Chamber and clarifying its budget and spending to the public would also contribute to creating good communication with the people, whether they are sources of funding or spenders of Zakat.
Recommendations
- Linking the Zakat Chamber’s social protection services with other funds and institutions that work in the field of social protection.
- Improve the planning and coordination of Zakat resources between the core and the periphery/ rural areas to achieve realistic estimates and integrate annual budgets.
- Encourage partnerships with development partners and institutions that combat poverty, and create integration and harmony in mobilization and the use of resources.
- Establish transparency in the Zakat Chamber to enhance people’s confidence in it.
- Review the legal framework of Zakat so that it does not become a mere tax resource, especially since the first law regulating Zakat dealt with it as voluntary religious almsgiving.
- Develop the capacities of Zakat Chamber employees, recognizing the importance of knowledge and professional development for them and for Zakat beneficiaries, and link the mission of the Zakat Chamber to the realization of social protection.
The views represented in this paper are those of the author(s) and do not necessarily reflect the views of the Arab Reform Initiative, its staff, or its board.
