Zakat mired in trust deficit

Last Friday, the government announced a nisaab - minimum amount at which Zakat is liable to be charged - at around Rs 61,000. On the first or second day of Ramazan, 2.5 percent of the amount in all bank deposits measuring up more than this minimum amount will be deducted for Zakat.
Those whove submitted Zakat declaration forms and are current account holders will be spared, but those who haven would have been busy on Saturday extracting the cash out of their bank accounts and stashing it up where it cannot be identified.
This attitude of account holders is a reflection of the overall approach of citizens towards trusting the state with their Zakat donations.
According to the SBP, the net Zakat received in FY10 was around Rs 4.8 billion. The Ministry of Zakat and Ushr shows a net collection of Zakat of about Rs 7.9 billion, plausibly inclusive of the Zakat collected by local and district Zakat councils.
The Rs 7.9 billion collected by the Ministry of Zakat and Ushr made up about 0.05 percent of GDP. On the other hand, a recent paper by two college professors from the International Islamic University, Malaysia tells that Pakistan can potentially collect a minimum of 1.6 percent of GDP through Zakat.
Though the figure of 1.6 percent was surveyed back in 2004, the potential figure in absolute terms, $4810 million (about Rs409 billion in the current exchange rate) pales the current collection of even FY10 miserably.
Further, according to the latest annual reports of The Citizens Foundation - a local NGO for the provision of education - and of Shaukat Khanum Memorial Hospital - a non-profit organisation for the treatment of cancer patients, - these institutions alone received about rupees one billion in Zakat.
Considering these institutions are only two of many NGOs and social service institutions in the country - including the likes of the much-commended Edhi Foundation, SOS Village, Fatimid Foundation, etc. - whose financial accounts were not easily accessible for perusal, payments for Zakat to private institutions is likely to be much larger than rupees one billion.
All this hints at the mistrust of citizens in the state. And looking at the auditor general reports which detected irregularities of over Rs 137 million in the Zakat Council for FY11, one would be hard-pressed to question the citizens lack of faith in state institutions with regard to an effective disbursement of the charity.
Given that collection and distribution of Zakat is largely an undocumented activity, especially distribution, theres considerable leeway for loopholes and misappropriation of funds. With the kind of reputation built by the religious ministries over the past few years, it is no wonder that people trust private institutions and NGOs much more, even though all of them may not be clean sheets either.
There is a need for institutional strength in effectively collecting and distributing funds, as well as for establishing trust through documentation and integrity-based, result-oriented efforts by the Zakat-focused state institutions. Otherwise, the great potential of Zakat as a targeted subsidy for alleviating poverty may remain untapped in a country that needs it direly.