Saturday, July 13

Alliance Islamic Bank Launches Inaugural Zakat Microfinancing Programme for Underprivileged Entrepreneurs

In a pioneering move towards Islamic social funding, Alliance Islamic Bank Bhd has unveiled the Alliance Islamic Bank Zakat Microfinancing Programme (AZAM). This groundbreaking initiative in Malaysia utilizes zakat wakalah to uplift underprivileged micro-entrepreneurs, aiming to foster financial inclusion and equitable development.

AZAM is geared towards providing accessible and affordable financing opportunities, recognizing the pivotal role micro, small, and medium enterprises (MSMEs) play in contributing to Malaysia’s economy, constituting over a third of the national GDP.

Recognizing the significant financing gap for MSMEs estimated at RM90 billion, Alliance Islamic Bank strategically utilized nearly RM4 billion in zakat collected in 2022 to bridge this gap for underserved business owners within the bottom 40% segment.

AZAM operates on an innovative approach by distributing zakat productively through microfinancing, employing a revolving fund structure. This model not only sets a precedent but also effectively aids asnaf micro-entrepreneurs by ensuring the sustainability of zakat funds through repayments channeled back into the pool to support more qualified entrepreneurs.

Aligned with the principles of value-based intermediation (VBI), AZAM aims to create a substantial socio-economic impact and fulfill Shariah’s intended outcomes by justly distributing wealth.

The strategic collaboration between Alliance Islamic Bank and Amanah Ikhtiar Malaysia (AIM) has been solidified through a memorandum of understanding, where AIM, Malaysia’s largest microfinance institution, will oversee beneficiary screening, fund disbursement, and collections, while Lembaga Zakat Selangor (LZS) verifies asnaf beneficiaries.

“This collaboration enables an innovative, Shariah-compliant social funding model that reaches and assists asnaf communities in achieving stable livelihoods, potentially transforming them into future zakat contributors,” commented LZS CEO Mohd Sabirin Mohd Sarbini.

The AZAM programme, introduced via the bank’s “Zakat and Microfinance” book, is fully supported by Alliance Islamic Bank, covering all management costs. The bank has allocated RM225,000 zakat wakalah through a revolving fund to benefit an initial 45 asnaf micro-entrepreneurs, offering up to RM5,000 in zakat microfinancing funds.

To further aid asnaf micro-entrepreneurs, the AZAM programme includes upskilling modules covering areas such as business and financial management and marketing.

Alliance Islamic Bank continues its commitment to positively impact communities by advancing socio-economic development through various initiatives, including the Economic Empowerment Programme and SocioBiz, a Shariah-compliant social funding platform. Since its 2019 launch, SocioBiz has raised close to RM1.7 million, benefiting 1,700 asnaf entrepreneurs and recipients.

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