Analysis of The Effectiveness of The Management and Distribution of Zakat Funds by Batam City Baznas in The Empowerment of Mustahik Economy Based on Sharia Finance

The transition from consumptive to productive zakat has positioned Islamic charitable giving as an instrument of economic empowerment rather than merely a means of meeting immediate needs. Batam City, as a major industrial and commercial center experiencing rapid urbanization, faces income disparities, employment uncertainty, and rising living costs, highlighting the need for targeted and sustainable zakat management. However, research explicitly examining the relationship between the effectiveness of zakat governance and distribution and multidimensional economic empowerment based on Islamic finance principles in industrial and urban settings remains limited. This study aimed to evaluate the effectiveness of zakat fund management and distribution by the National Amil Zakat Agency (BAZNAS) of Batam City in promoting the economic empowerment of mustahik (eligible zakat beneficiaries), identify distribution mechanisms and empowerment strategies, and develop a conceptual model of productive zakat effectiveness. A descriptive qualitative approach was employed, with data collected through in-depth interviews, observations, and document analysis and analyzed using the Miles and Huberman interactive model of qualitative data analysis. The findings indicated that zakat management was guided by the principles of amanah (trustworthiness), justice, transparency, sustainability, and maslahah (public benefit). Zakat distribution encompassed both consumptive and productive assistance, with productive programs integrating business capital, skills training, and entrepreneurial mentoring. However, empowerment outcomes varied among beneficiaries. One mustahik demonstrated improvements in production capacity and business income, whereas another continued to experience challenges associated with limited financial literacy and inadequate bookkeeping practices. These findings suggested that the effectiveness of productive zakat programs remained suboptimal, particularly because of limitations in mentoring, program evaluation, and financial literacy development. The study concluded that productive zakat should be managed through a sustainable, multistage economic empowerment framework integrating Islamic governance principles, business capital provision, continuous mentoring, financial literacy, entrepreneurial capacity development, and the progressive economic independence of mustahik.