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Inclusion and Resilience: The Way Forward for Social Safety Nets in the Middle East and North Africa
(UNDP 2002), the system of Zakat may be enabling large segments of the Arab and Muslim populations to escape visible poverty and need. Quantitative data on this issue are scarce, but new data on the Republic of Yemen reveals that Zakat • Is an important SSN; • Does not serve all the functions of an SSN (such as promotion of resilience and of human capital formation) and overlaps with (thus does not fully crowd out) other private and public SSNs; and • Poses interesting political economy issues (see box 3.3 and Silva, Alloush, and Wodon 2012).
BOX 3.3
A Private, Informal Safety Net: Zakat in the Republic of Yemen Data As part of the SSN review, the World Bank piloted the Yemen Survey on Social Networks and Solidarity Mechanisms. The survey included traditional modules on socioeconomic characteristics in addition to new modules that specifically targeted the giving and receiving of Zakat as well as attitudes toward Zakat. It also included modules on social networks, the incidence of shocks, risk coping mechanisms, and household decision making. A sample of 795 households (5,500 individuals) was surveyed. The sample was representative of the capital city of Sana’a. The data have been used to study the determinants of giving and receiving Zakat and its effects on poverty (Silva, Alloush, and Wodon 2012). Facts on Zakat Giving Zakat: Do most households give? How much do households give? Thirty percent of all households in Sana’a indicated they have given Z akat, and the finan-
cial ability to give was the most important determinant of both the likelihood of giving and the amount given. Other important determinants of giving were social networks, trust in personal connections, and religiosity. On average, the reported amounts were below 2.5 percent of annual income. Receiving Zakat: Is Zakat an important source of financial support for the poor? Among receivers in the poorest income decile, it represents about 25 percent of their pre-Zakat income. Does it provide good coverage of the poor? It reaches over 35 percent in the poorest quintile—higher coverage than that of formal SSN programs in Sana’a. Is it well targeted? Yes, the data show that more than 70 percent of Zakat recipients were in the lowest wealth quintiles. What do receivers use Zakat assistance for? Zakat is used mostly for necessities, and the most common reason for receiving Zakat is financial difficulty. However, having
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BOX 3.3 Continued suffered a shock is not significantly associated with a higher likelihood of receiving Zakat. Nor do income losses significantly increase the probability of receiving Zakat, but decreases in wealth do, suggesting that Zakat is more likely to focus on the chronically poor than the transitory poor. Who falls through the cracks? Zakat reaches more poor households in Sana’a than other safety nets, and those who receive it are poor. However, the receivers are usually related to or live near the givers: 82 percent of givers said that the person to whom they gave Zakat was related to them or their households, and 60 percent of givers say the person to whom they gave Zakat last year had already received Zakat from them for more than three years. Silva, Al-
loush, and Wodon (2012) show that social networks of the household head are significant determinants of the likelihood of receiving Zakat. Is Zakat perceived positively as an SSN? Zakat is a well-respected institution that is perceived positively. People trust Zakat and think it is an important part of society. It sets a high standard for formal SSN targeting and distribution. However, its role is to ameliorate poverty, not to promote the formation of human capital, which calls for the use of other forms of SSN to complement it. In Sana’a, people’s attitudes about making SSNs conditional on behaviors conducive to human capital formation were positive.
In the context of this report, an interesting survey was conducted: the Yemen Survey on Social Networks and Solidarity Mechanisms. This household-level survey added modules on giving and receiving Zakat, attitudes toward Zakat as a form of SSN, and complementarities between receiving Zakat and other forms of SSN, to other modules on socioeconomic characteristics and income. Its main findings were threefold: • First, Zakat is an important SSN because it is an important source of financial support for the poor, and most households that receive it are poor and vulnerable. • Second, for full coverage of the poor and of all the functions of an SSN, Zakat needs to be complemented by other forms of SSN because (a) part of the chronically poor are not benefiting from Zakat, which reaches about one-third of the poor (based on the survey in Sana’a)—a coverage nevertheless better than other existing SSNs in Sana’a—and although those who get it are poor, because it entails an existing link between receiver and giver, poor households that are not well connected to social networks are systematically excluded; and (b) Zakat does not serve all the functions of an SSN because it does not promote spending on human capital formation or health. Public programs