Digital Technology To The Rescue

COVID-19 is a black swan event that has turned back the global poverty clock. Millions have lost their jobs overnight and have no way to find employment due to the lockdown measures taken to adequately deal with the pandemic and save humankind from being extinct. The lockdowns, imposed by governments all over the world, caused disruption in all major economic activities and in most cases led to increase in unemployment causing extreme poverty as immediate financial help was scarce.

Islamic social finance (ISF), though a relatively new term compared to Islamic commercial finance, has been practiced in Muslim societies. For instance, as a form of ‘ibadah (worship), zakat has been implemented as it is the third pillar of Islam. Other ISF instruments include sadaqah and infaq, waqf, takaful and microfinance.

As the pandemic has fast-tracked digital technology adoption worldwide due to restricted physical movements, we can galvanise technology to improve effective collection, management and distribution of the modes of ISF.

Here are several ways in which the disadvantaged population can be assisted in the midst of the pandemic.:

  • Prior to the pandemic, the way to collect zakat and other charity funds from the public is normally through physical interactions. Switching to online payment instant transfer modes out of necessity due to the no-physical-interaction rule may be a permanent practice in the future. However, marketing such options to the masses in the midst of a pandemic might be challenging and as such, innovative ways to promote these contribution channels is important. One way of doing this would be to initiate a charity round-up concept using retail transactions at either a retail store’s point of sale terminal or via an online website charity. Purchasers of goods/ services could round up the price of the transaction up to the next decimal, with the extra monies going to charity.

Furthermore, online platforms for charity can be introduced in such a way that, payers can directly contribute an amount to the receiver he/ she selects without involvement of a third party. Crypto charity platforms could be one option where the technology used in the platform will instil confidence among the contributors that their contribution will reach the intended.

  • In distributing financial assistance to the poor, it is vital that we put in place a distribution mechanism that does the job in a fast and convenient way without their physical presence. One way of doing this could be via online money transfer where the receiver is able to have a bank account or through agents who could be shops or businesses run near the recipient’s geographical location. Using the crypto charity platform, the poor could be registered and given digital wallets that would enable the charity payer to pay directly pay to the poor selected by the payer.
  • Installing sensors with a formulated yardstick in a smart gadget could assist in determining the poverty level of poor households. As such, using the data in the smart gadget, the ISF provider can determine whether each household is still in need of financial aid, thereby eliminating cumbersome paperwork and red tape.

By Assoc. Prof. Dr. Aishath Muneeza

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