Factors influencing zakat payment among Ethiopian Muslims: a PLS-SEM analysis

PurposeThis study aims to examine socio-economic, religious and institutional factors influencing zakat payment intentions among Ethiopian Muslims. The findings highlight the critical role of zakat institutions, literacy and religiosity, contributing to the broader discourse on Islamic finance and its potential as a tool for poverty alleviation in under-researched contexts.Design/methodology/approachThis study used a quantitative approach and utilised a partial least squares-structural equation modelling technique for data analysis. The research investigated Muzakki's intention to pay zakat, focusing on the main variables of the theory of reasoned action (TRA), namely, attitude and subjective norm, while also incorporating zakat literacy, zakat institutions (Amil) and religiosity. A total of 394 structured questionnaires were distributed with a five-point Likert scale to capture respondents' views and experiences regarding zakat payment, using both convenience and snowball non-probability sampling methods to select participants.FindingsThe findings indicate that zakat literacy, positive attitudes towards zakat, institutional support through well-established zakat institutions and high levels of religiosity significantly influence the intention of Ethiopian Muslims to fulfil their zakat obligations. These findings underscore the need for robust, centralised zakat institutions that prioritise transparent administration and effective collection mechanisms. Lessons from successful zakat models in other countries could inspire the development of similar systems tailored to Ethiopia's sociocultural dynamics, directly supporting poverty alleviation and socio-economic development.Research limitations/implicationsThis study opens up several avenues for future research. Comparative studies could examine how successful zakat systems in countries such as Malaysia and Indonesia have achieved their goals and identify lessons applicable to Ethiopia. In addition, longitudinal studies can track the long-term effects of enhanced zakat compliance on poverty alleviation and social welfare in Ethiopia. Exploring the integration of financial technologies such as blockchain into zakat administration represents another valuable research direction.Practical implicationsThese findings underscore the Ethiopian Islamic Affairs Supreme Council (MEJLIS) need to establish robust, centralised zakat institutions that prioritise transparent administration and effective collection mechanisms. Such improvements in the zakat infrastructure could enhance muzakki compliance, directly supporting poverty alleviation and socio-economic development in Ethiopia.Originality/valueThis study provides unique insights into the factors shaping zakat payment intentions in Ethiopia, highlighting critical areas for improvement within the zakat collection and distribution framework. These findings provide a foundation for developing policies to foster a more effective zakat system that aligns with Ethiopia's sociocultural dynamics.