National Zakat fund in the works in Tunisia

The Tunisian Association of Zakat Sciences has proposed amendments to the Finance Bill 2019 for the establishment of a national Zakat fund — a potential financing tool for the government in dire need of new sources of funding as austerity measures weigh heavily on people’s shoulders. MARC ROUSSOT writes.

Violent protests over unemployment, inflation, new taxes and a one percentage point value-added tax hike left one dead in January and triggered fears of broader unrest in the country where the ‘Arab Spring’ started.

The government claimed that it had to enforce its harsh fiscal policy combined with a steep austerity plan as it did not have new income streams to reduce the country’s budget deficit expected to reach TND5.22 billion (US$1.82 billion) at the end of the year. However, it acceded to the introduction of social measures for the poor, to restore peace.

Suggesting to tap Zakat funds as a new source of financing for social, health, education and employment programs, the Tunisian Association of Zakat Sciences proposed amendments to the Finance Bill 2019 for the establishment of a national Zakat fund. To date, the country is bereft of such a vehicle and has no regulations in place for the collection and utilization of Zakat funds at a national level.

Linked to the Ministry of Finance, the fund would be managed by a commission to be set up called the National Commission for Management of Zakat and Donation Funds where representatives from the Ministry of Finance, Religious Affairs, Social Affairs as well as members of several Tunisian professional confederations and unions would be sitting to decide on the investment strategy.

“According to our estimates, if every single Tunisian had paid Zakat in 2017, TND5 billion (US$1.74 billion) could have been raised. It represents around 5% of Tunisia’s GDP and 12% of the government’s budget. Of course, even though it is one of the five pillars of Islam, we know that there are Muslims in Tunisia who do not want to pay Zakat and our proposition is not to make it mandatory of course. Overall, we expect to raise TND25 million (US$8.71 million) during the first year and we are targeting TND100 million (US$34.85 million) after a couple of years,” shares Mohamed Megdich, the chairman of the Tunisian Association of Zakat Sciences.

For a few years, Tunisian companies have been calling for such a fund to be set up in order to obtain official accounting and fiscal proofs when they allocate money for Zakat. It would also be a way for them to be sure that the funds are properly used.

Claiming that the initiative already has the support of the Ministry of Social Affairs, Religious Affairs and Finance, Mohamed affirms that he is now discussing with members of parliament for the amendments to be introduced into the finance bill and he has received good feedback.

Although he is confident that the necessary steps will be taken for the national Zakat fund to be created, Mohamed noted that a similar proposition he made in 2014 was rejected but this was mainly due to the particular political context following the Jasmine Revolution that happened only three years before.

The plan was then to establish an independent institution for the management of the national Zakat fund but in the wake of revelations of bad governance and embezzlement around the Tunisian National Solidarity Fund, also known as the 26-26 Fund, the people’s lack of trust in the authorities to properly manage such funds was running high and the proposal was buried.

This article first appeared in IFN Volume 15 Issue 44 on the 31st of October 2018