Zakat Microfinancing: Alliance Islamic Bank Eyes Expansion Of AZAM Programme Nationwide

By Anas Abu Hassan

KUALA LUMPUR, Sept 8 (Bernama) -- Alliance Islamic Bank Bhd plans to expand its Zakat Microfinancing Programme (AZAM) nationwide after the initiative showed positive outcomes in improving the livelihood of asnaf micro entrepreneurs.

AZAM is a microfinancing facility based on Qard (Shariah concept), utilising the bank’s zakat wakalah funds, with no fees or additional charges. 

Asnaf micro-entrepreneurs are able to use the microfinancing facility to start or expand their businesses, and they also receive training to enhance their skills in business, finance, and marketing through the support of the programme’s strategic partner, Amanah Ikhtiar Malaysia. 

Repayments from participants are channelled back to support other eligible asnaf micro-entrepreneurs -- in this way, the zakat funds not only empower more beneficiaries but also generate broader benefits for the community.

Since its launch in December 2023, the programme has channelled zakat wakalah funds totalling RM450,000, benefiting 154 asnaf micro-entrepreneurs.

Alliance Islamic Bank chief executive officer, Rizal IL-Ehzan Fadil Azim believes that the success of the programme marks a pioneering effort in redefining zakat as a strategic tool for economic empowerment in Malaysia.

He said the bank's long-term plan is to expand the AZAM initiative nationwide, building on its successful implementation in Selangor through collaboration with Lembaga Zakat Selangor.

To support this expansion, the bank is currently engaging with state zakat management bodies and relevant religious authorities.

"Our goal is to scale it up even further and extend the reach of AZAM to other states as we have seen the positive impact and proven the concept of this programme.

"A few State Fatwa Councils are currently considering the initiative, and we are in discussions to finalise the operating model with them," he told Bernama in an exclusive interview recently.

According to Rizal, the Muzakarah Committee of the National Council for Islamic Religious Affairs Malaysia (MKI) is also supportive of the AZAM programme, recognising its benefits.

“However, as matters of religion and culture fall under state authority, each state will need to undergo its own governance process before approving the programme.

“We are also conducting an advocacy campaign to encourage more states to adopt zakat microfinancing,” he said.

The bank also welcomes zakat wakalah contributions from the public, which will be used to help more asnaf entrepreneurs start or expand their businesses.

"We also welcome partnerships with any parties, including like-minded corporations that are committed to improving the lives of the poor, raising their socio-economic standards and quality of life -- basically those that have the same kind of mindset, goals and vision," said Rizal.

He added that the bank is already in collaboration with Lembaga Zakat Selangor and Amanah Ikhtiar Malaysia.

Significant Socio-Economic Gains from AZAM Programme

According to Rizal, a recent AZAM programme impact report revealed that the initiative has made a significant difference in the lives of participants, raising their average monthly incomes by up to 36 per cent within a year.

He noted that more than 90 per cent of the participants reported positive improvements in their quality of life, not only in financial terms, but also in their overall well-being.

"If you break it down further, some participants have seen their monthly income increase by as much as 150 per cent.

“One participant from Puncak Alam, who runs a spectacles business, increased her income by about 44 per cent and achieve a monthly income of RM13,000 — effectively moving out of the asnaf category,” he said.

Rizal noted that the bank sees a repayment rate of 100 per cent from the participants, reflecting their high level of responsibility and commitment, as well as the effectiveness of the participant-friendly and non-burdensome Shariah-compliant financing approach.

"Interestingly, eight out of 10 participants expressed their desire to encourage more asnaf entrepreneurs to participate in this programme, reflecting the real impact of the programme," he added.

-- BERNAMA