The Safety Fund: A Pilot Programme for Combating Poverty
12 March, 2015KHARTOUM (SUDANOW)—The Zakat (Islamic tax) is a factor for purification and redemption of the soul of the individual and the society. Our gratefulness is humbly proffered to Al-mighty, Omani-perfect and Omani-majestic God that our country has founded a chamber for the Zakat and has realized the exigency of raising it from those who are committed to paying it and has become attentive to its outlets and to those who deserve it.
The Zakat Chamber has developed means and channels through which it can reach the persons upon whom the Zakat is a duty to pay and has knocked various gates covered by the Zakat jurisprudence so that the advantage can reach all of the eight outlets in a bid to find a society of solidarity and compassion.
The Safety Fund is one of the systems created by the Chamber in 2010 in partnership with the commercial banks as an action in which the roles of the public and private sectors are integrated and through which the Chamber provides a huge database about persons eligible to micro-financing of projects from which the miserable and the poor can benefit. The micro-finance falls within the limits of 1000 to 10,000 Sudanese pounds to be provided by the commercial banks under terms similar to those currently applied by the banks.
But a novelty accompanying the Fund is the role being played by the Zakat committees which are spread all over the Sudan, exceeding 17,000 committees, for providing thorough information on persons eligible to this form of financing. In the case of genuine insolvency of failure to repaying the loan on time or due to failure of the project as a result of a disaster or a pest attack, the Chamber considers the loan recipient as an insolvent. The committees offer advice and follow up the project up to its success when the poor gets out of the circle of poverty and gets into that of productivity.
The capital of the Fund is around 200 million Sudanese pounds to which the Zakat Chamber contributes 50 million and the banks, totaling 32, pay the remaining 150 million pounds. The Bank of Khartoum was appointed a leader of the Fund, extending the finance to the beneficiaries from its branches which are spread all over the Sudan.
The partnership between the federal Zakat Chamber and the banks is aimed at mitigating the poverty by scaling up the incomes of the poor and relieving them from poverty to self-sufficiency and donation. It also provides financial resources for the micro-financing sector, increases finance for the investment projects and persuades the private sector to participate in social-impact projects.
The Fund has approved all forms of Islamic funding such as the murabahah (joint profiting), musharakah (joint sharing) and salum (loan of terms accepted by the borrower). It has implemented numerous individual projects in different parts of the Sudan under those forms with about 84,590,714 Sudanese pounds covering about 98,000 beneficiaries with a performance rate of 115%.
The Fund has carried out numerous collective projects including Abu Halima protected farms project in Khartoum State that cost 7 million dollars benefitting 725 university graduates, the gum Arabic producers' project which was implemented under the mudarabah (speculation) form by the Savings Bank that provided funds for 4158 farmers of small producers through approximately 80 societies in North Kordofan, South Kordofan and North Darfur states, and the project of linking small-scale farmers with the markets. This project is a partnership between the Safety Fund and the World Food Programme (WFP) and was implemented in the states of North Kordofan, South Kordofan, North Darfur, South Darfur, the White Nile, the Blue Nile, Kassala and Red Sea for a total 1000,000 farmers, each of them paid 450 Sudanese pounds.
As regards getting back the debts, the rate of the paid installments was 81%.
In spite of the positive deeds scored by the Fund, the Board of Directors is not happy with performance of the Chamber in the Fund, pointing out that the Chamber has failed to pay its contribution as stipulated in the contract that was concluded by the two parties and, moreover, the Chamber has hinted to the clients that the funds are not refundable. Furthermore, most of the projects (rickshaws, motorcars) which were submitted by the Zakat Chamber were not included in the micro-financing system, while some projects submitted by the clients were lacking in economic feasibility.
The Zakat secretaries in the states have indicated that the activities of the Fund have been confined only in the towns where there are branches for the Bank of Khartoum while most of the individual projects financed by the Bank have been given to persons who are not nominated by the Chamber. They have further complaint about slow procedures and insufficient money offered for financing operations.
A number of experts have pinpointed the obstacles impeding the Safety Fund operations which, according to those experts, include a lack of desire by the targeted groups in building up their capacities for administration of the projects and non-existent training programmes for the beneficiaries. They have indicated that those obstacles also include the fees and taxes imposed on the micro-financing operations in addition to a similarity of the submitted projects (rickshaws, perfumes and ready-made clothes) and the differing visions and viewpoints held by the Zakat Chamber and the banks.
The experts concluded that those obstacles and problems confronting the Fund can only be addressed by a committee of coordination, which includes all concerned bodies, to follow up the financing flow, undertake coordination on all issues, resolve the problems that face the projects and assist the beneficiaries for the success of their projects.
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