Zakat- based poverty eradication in Bangladesh: The Millennium Development Goal is exceedable

Poverty alleviation has been a priority in Bangladesh’s development plans and programs since 1972. In 2005, the Institute of Hazrat Mohammad (SAW) in Dhaka proposed a new methodology of zakat payment and utilization to achieve optimal success in poverty eradication, This paper shows, on the basis of some simulation analysis using household income and expenditure data, that following the proposed methodology of converting zakat from a temporary consumption item to investable wealth, utilizing it in both micro projects, like pisciculture in a village, and macro projects such as an IT software company in Dhaka, through a dedicated and professional Islamic institution, poverty can be eradicated in Bangladesh in 10-12 years. It could also pave the way for the existing interest based micro-credit programs to make a transition to interest free Islamic microfinance as well as macro-finance.