Financial Exclusion and Saving Motives in Brunei: A Need to Re-define Zakat & Awqaf Institutions

In the past, zakat and awqaf institutions have played significant roles towards mitigating poverty in Islamic societies. Meanwhile, the current era has witnessed numerous changes in personal finance, with the proliferation of financial products and contemporary financial issues such as financial exclusion and retirement planning. In this paper, I contend that zakat and awqaf institutions need to refine their approaches in line with the personal financial issues of today. More specifically, this study looks at the financial exclusion issues and saving motives of welfare recipients in Brunei, to ascertain how best zakat and awqaf institutions can facilitate financial inclusion and their saving needs. The findings are based on analysis of structured interviews with 431 individuals (215 welfare recipients and 216 non-welfare recipients). Further insights on financial exclusion are sought from semi-structured interviews with 39 welfare recipients. The findings suggest the existence of a hierarchical structure, where financial exclusion and saving motives are concerned. The findings also highlight the need for bank accounts and credit facilities that meets the needs of welfare recipients – their daily needs as well as saving for children’s/grandchildren’s education, i.e., for welfare recipients whom save. The implications of these findings points out that poverty alleviation solutions created by zakat/awqaf institutions will need to adapt to contemporary challenges and avoid a one-size-fits-all solution, tailored instead to fit financial needs, in line with the contemporary nature of personal finance.