Zakat & Social Security in Yemen

1. Zakat& Social Security in Yemen Presented for: Arab Forum "Towards a New Welfare Mix: Rethinking the Roles of the State, Market and Civil Society in the Provision of Basic Social Services" 19-20December 2012 , ESCWA, Beirut, Lebanon RashaJarhum, Social Research Consultant

2. This Presentation 20m • Background • Zakat in the Legislations • Zakat in Social Protection Framework • Zakat Management Model • Zakat Types and Zakat Revenues • Zakat Beneficiaries & Disbursement • Beneficiaries Targeting & Selection • Conclusions and Implications

3. Background • Yemen was created in 1990 following the unification of Yemen Arab Republic (North), and the Peoples Democratic Republic of Yemen (South). • The country went through a turbulent formation process following the unification, resulting in a brief yet devastating civil war in 1994, with political repercussions that destabilize the country until today. • Population growth outpaces economic development, putting immense pressure on the country to meet any of the MDG goals. Data Source: World Bank Group Database*1: Constant 2000 US$ *2: Constant 2005 International $

4. Zakat in the Legislative Framework • Pre-revolution 1962 & 1967: Speculator System • 1970s – 80s: First Institutional Mechanisms (North) • Post 1994 Constitution • Zakat Laws 1996 & 1999 • Local Administration Law 2000 • Social Welfare Fund Law 2008 • New Law Project for Independent Authority for Zakat and Social Protection 2012

5. Zakat in the Social Protection Framework Regulating Social Protection in Yemen: • The Third Fifth Development Plan for Poverty Reduction (DPPR) 2006-2010, emphasized establishing Social Safety Nets (SSN) as THE major mechanism for reducing poverty. • Transitional Plan for Stability 2012 -2014 identified social security systems as top priority for immediate economic stabilization. • Social Protection spending planned to increase by 17% in 2012. Source: MoF, Statistics Newsletter, 2012

6. Zakat in the Social Protection Framework Cont • Classification of Social Protection Systems based on governance structures and modalities: • Formal systems: Pensions, Social Welfare Fund (SWF) • Semi-Formal: Zakat, Welfare organizations & CSOs • Informal: Family/Tribal networks, faith-based organizations • Why is Zakat Semiformal? • Legal and Regulatory framework exists, but incomplete. • Disorganized mechanism with serious inefficiencies. • Lack of popular trust with perceptions of corruption. • No obligation of accountability.

7. Zakat Management Model • Zakat Collection: • Local Administration • CSOs • Faith-based Org. • Zakat Distribution: • Local Administration • Individuals 25% • SWF • CSOs • Faith-based Org.

8. Zakat Types

9. Zakat Types – Cont.

10. Zakat Revenues in Yemen * Sources: MPI, MoF Financial Statistics Newsletter 2012, CSO 2011 Statistics Book

11. Zakat Revenues Growth Rate ZakatRevenues % by Type in 2011 Source: MoF, Statistics Newsletter, 2012 Source: MoF, Final Accounts for Local Administration, 2011

13. Zakat Revenues Vs SWF Allocation in millions 2011 Source: MoF, Final Accounts Local Administration, 2011 & CSO Statistics Book 2011

14. Zakat Beneficiaries & Disbursement • Zakat Law indicates 8 groups of beneficiaries: • the poor, the needy, the administrators of zakat, those “whose hearts are to be inclined”, free slaves, the indebted, for “the cause of God” and for those stranded on a journey. • Local Administration Law: • District Local Resources: 50% of Zakat revenues is utilized for the district's collected from. • Governorate Common Resources: 50% of Zakat revenues collected is utilized for the governorate's interest • SWF: • Disabled Elderly, Orphans, Women, Unemployed. Cash assistance: 10-20$ every month sent quarterly through Bank, Post, or Committees. Social & Economic Aid. Including training.

15. SWF Beneficiaries

16. SWF Beneficiaries –Cont.

17. SWF Beneficiaries –Cont.

18. SWF Targeting & Selection of Beneficiaries • Beneficiary Targeting: • Policy Level Criteria: Geographical (Urban/Rural) & Poverty • Application: Pilot Proxy Means Test targeting. • Selection: • Application Forms by Case filled by Social Researchers • Criteria & Marks: The selection criteria covers indicators of family size, illiteracy level, availability of electricity, type of home, number of stories in the house, source of cooking gas, source of water, sanitation service available, and assets owned. • Poverty Assessment 2006: • 45% of beneficiaries are non poor, 14% extremely poor, 13% poor.

19. Source: MoF, Final Accounts Local Administration, 2011 & CSO Statistics Book 2011

20. Conclusion & Implications: • Zakat is an important Social Safety Net but will benefit from institutional reforms, its potential role to alleviate poverty is still modest. • Strengthening coordination between Zakat stakeholders is important. • Zakat current legislations are incomplete. Calculations and Zakat categorization within type are not clear. Eg. It’s not clear whether Zakat has been collected from Petroleum and Oil sector. • SWF assistance are nominal and do not contribute to acquire assets that may help beneficiaries to overcome poverty level. • SWF still suffers from leakage to the non-poor. Geographical-Poverty targeting is still not implemented effectively. The End

21. Thank You for Listening !