Why Does Business Zakat Contribute Insignificantly to Achieving “SDG-1: Ending Poverty” in Nigeria? Evidence from Recordkeeping Practices

Global poverty eradication is the first sustainable development goal SDG-1 of the United Nations. This study investigated the reason why business zakat does not significantly contribute to poverty alleviation in Kano state, Nigeria. The data were generated through semi-structured interviews with selected respondents based on purposive sampling technique. The study revealed that most of the traders in the state did not keep proper and complete records of their zakatable assets (inventories, cash, and receivables) and deductible liabilities (payables). The study further discovered that in many situations, business owners pay business zakat when they earn profit only and not when their zakatable assets reach the nisab. These findings from the study suggest that the phenomenon of the underpayment of business zakat led to an insignificant reduction of poverty in the state despite the potential associated with zakat as a veritable social empowerment tool. However, the study established the potential of Kano State Zakat and Hubsi Commission in generating revenues as much as the Kano State Internal Revenue Service (KIRS) that could be used to alleviate poverty in the State. Thus, in line with Mustafa et al. (2020), it is recommended that the Kano State Zakat and Hubsi Commission should be transformed into a Ministry. It should also be given all the necessary powers and resources to discharge its duties effectively. The Kano State Traders Associations, the recommended Ministry of Zakat and Hubsi and Nigerian professional accounting bodies (such as the Institute of Chartered Accountants of Nigeria and the Association of National Accountants of Nigeria) need to collaborate to train traders on the imperative for proper and complete recordkeeping of their financial transactions, particularly for the purpose of business zakat.