The potential for VSE financing via Zakat: The case of Morocco

Abstract

In Morocco, despite the creation of a special fund dedicated to Zakat in 1980, it has never been implemented due to the absence of implementing regulations. In this context, this fund could be a potential lever for social financing, particularly in light of the adverse effects of the COVID-19 pandemic, the war in Ukraine, and the worsening drought.

This article aims to examine the extent to which the institutionalization of Zakat in Morocco might constitute an additional source of financing and support for very small enterprises (VSEs), which are particularly vulnerable to difficulties in accessing financing. To accomplish this, it adopts a descriptive and analytical approach based on the analysis of secondary data from scientific literature, institutional reports, and available statistics.

The analysis highlights both the significant theoretical potential of Zakat in Morocco, based on available estimates, and the persistent financing challenges faced by Moroccan very small enterprises. Furthermore, certain international experiences, notably those of Malaysia and Indonesia, are highlighted to illustrate the opportunities and limitations of institutionalized systems for the collection and redistribution of Zakat.

JEL Classification: G00 – H20

Paper type: Theoretical Research