Alleviating intergenerational transmission of poverty in Zanzibar via Islamic social finance

Abstract

In Zanzibar, 30.4 percent of the populations are living under the poverty line. Despite the fact that Zanzibar has recorded considerable success in ensuring basic needs of its people, persistent poverty remains as a big challenge in the Islands. The prevalence of persistent poverty in Zanzibar may be linked to financial exclusion which undermined the business activities as well as acquisition of adequate sustainable livelihood. Given this issue, this thesis investigates the impact of Islamic social finance on the alleviation of intergenerational transmission of poverty in Zanzibar. Having adopted positivism as its philosophical assumption, the researcher has mainly employed quantitative research approach with appropriate method of analysis for this study. The sample size for this study consists of 287 head of households from the Islands of Pemba and Unguja in Zanzibar, and survey questionnaire was used as data collection instrument. To achieve a credible study, Structural Equation Modeling (SEM), based on maximum likelihood estimation, and relevant analyses are used to analyse the collected data from relevant respondents. The results indicate that both involuntary and voluntary Islamic social finance exclusion barriers exist in the Islands, and they both significantly account for the financial exclusion of the households. Involuntary Islamic social finance exclusion was found to be a barrier to both the development of micro and small enterprises, as well as the acquisition of sustainable livelihood assets by the poor. However, voluntary Islamic social finance exclusion was found to have an impact on the development of micro and small enterprises, but not to the acquisition of sustainable livelihood assets. Finally, the study has offered several recommendations with regard to the means and practices of poverty alleviation in Zanzibar via Islamic social finance.