The Effect of ZISWAF Funds and Government Expenditure on Poverty Levels in Indonesia

Abstract

Poverty is a structural problem that remains a major challenge in national development in Indonesia. Although various intervention programs have been implemented by the government, social gaps and economic inequalities are still quite high, especially in underdeveloped regions. This research aims to analyze the influence of Islamic social finance—particularly zakat and infaq—on the poverty level in Indonesia, with a focus on provincial panel data during the period from 2020 to 2022. Using a mixed-method approach, this research combines a panel data regression model with qualitative studies related to the management of zakat and infaq by formal institutions like BAZNAS. The research findings indicate that zakat has a significant negative impact on the poverty level, signifying its effectiveness in wealth distribution and the economic empowerment of the poor community. Conversely, infaq actually shows a positive correlation with poverty, indicating weaknesses in its management and distribution systems. This study recommends strengthening zakat governance, reforming infaq management, integrating social finance programs with government policies, and enhancing public literacy regarding the strategic role of zakat and infaq in inclusive development. With optimal and systematic management, Islamic social finance has the potential to become an important instrument in eradicating poverty sustainably in Indonesia.