FINANCIAL LITERACY CHALLENGES AND ENTREPRENEURIAL SUSTAINABILITY AMONG ASNAF MICRO-ENTREPRENEURS IN KUALA LUMPUR

Alifah binti Hj Hamid; Ummi Salwa Abdul Rahman; Hashim bin Ahmad Shiyuti; Rossidi bin Usop

doi:10.33102/wd01a365

Authors

Alifah binti Hj Hamid Pusat Tamhidi, Universiti Sains Islam Malaysia, Nilai, N.Sembilan, Malaysia Author
Ummi Salwa Abdul Rahman Faculty Economics and Muamalat, Universiti Sains Islam Malaysia, Nilai, N.Sembilan, Malaysia Author
Hashim bin Ahmad Shiyuti Pusat Tamhidi, Universiti Sains Islam Malaysia, Nilai, N.Sembilan, Malaysia Author
Rossidi bin Usop Kolej Permata Insan, Universiti Sains Islam Malaysia, Nilai, N.Sembilan, Malaysia Author

DOI:

https://doi.org/10.33102/wd01a365

Keywords:

Financial literacy, entrepreneurial sustainability, asnaf entrepreneurs, productive zakat, urban poverty 1.0

Abstract

Financial literacy is a critical determinant of entrepreneurial sustainability, particularly among low-income communities involved in micro-enterprise activities. In Malaysia, zakat institutions have increasingly shifted from consumptive aid toward productive zakat initiatives to empower asnaf recipients through entrepreneurship. However, asnaf micro- enterprises in Kuala Lumpur continue to face severe sustainability challenges driven by high living costs, market competition, and financial management deficits. This study adopts a conceptual qualitative approach to examine the financial literacy challenges affecting the entrepreneurial sustainability of asnaf micro-entrepreneurs, analyzed through the theoretical lenses of the Aqli-Naqli framework and Maqasid al-Shariah (specifically wealth preservation, hifz al-mal). The synthesized findings reveal that asnaf entrepreneurs experience critical operational bottlenecks, including weak cash flow tracking, survival-oriented budgeting, absent record-keeping, commingling of personal and business funds, and reactive decision- making. These deficits directly contribute to liquidity distress, seed capital depletion, and early-stage business failure. The paper concludes that financial capital assistance alone is insufficient without structured financial literacy, behavioral transformation, digital adaptability, and continuous post-capital mentorship. Zakat institutions and policymakers must adopt an integrated capability development framework to transform asnaf recipients from aid dependence to economic self-reliance.

Downloads

Download data is not yet available.

References

Abdallah, W., Harraf, A., & Abrar, M. (2024). Financial literacy and small and medium enterprises performance: The moderating role of financial access. Journal of Financial Reporting and Accounting.

Abdullah, S., Ishak, A. S., Fhiri, N. S. D., Hussin, N. S., Azmin, A. A., Yaakob, T. K. S. T., & Ramli, A. J. (2025). Integrating Zakat capital assistance with social entrepreneurship: A sustainable model for empowering asnaf microentrepreneurs in Malaysia. International Journal of Entrepreneurship and Management Practices, 8(31), 1–13.

Adnan, N. I. M., Roselam, M. A. C., Hamat, Z., & Furqani, H. (2021). The distribution of zakat fund to the poor entrepreneurs using micro finance. International Journal of Academic Research in Business and Social Sciences, 11(2), 231–240.

Ahmad, S., & Ramli, M. A. (2021). The role of productive zakat in transforming asnaf entrepreneurs: A Malaysian perspective. Journal of Islamic Social Finance, 12(2), 45–60.

Amin, H. (2022). Examining new measure of asnaf muslimpreneur success model: A Maqasid perspective. Journal of Islamic Accounting and Business Research, 13(4), 596–622.

Awang, M. D., Noor, M. N. A., Muhammad, J., Abdullah, A., Ab. Rahman, S., & Yahya, M.

H. D. (2016). Acceptance and application of Islamic financial planning among small and medium enterprises halal operator in Peninsular of Malaysia. IJASOS International E-Journal of Advances in Social Sciences, 2(6), 747–752.

Chowa, G. A., Despard, M. R., & Osei-Akoto, I. (2012). Financial knowledge and attitudes of youth in Ghana. Washington University, Center for Social Development.

Esa, M. S. M., Wahid, H., Yaacob, S. E., & Mohamad, A. H. H. (2025). Asnaf development outcome: A systematic literature review and logic model development. SAGE Open, 1– 20.

Hamid, N. A., Ismail, I. S., Yunus, N., Norizan, S., & Palil, M. R. (2024). Insights for growth: Understanding the drivers of ASNAF entrepreneurial success in Malaysia. Edelweiss Applied Science and Technology, 8(2), 108–124.

Hasibuan, R. A. S., Gbla, A., Salawe, M., & Zaid, M. (2024). Zakat and poverty alleviation in Malaysia: A systematic review and bibliometric analysis. International Journal of Islamic Economics and Finance Research.

Ibrahim, A. Z., Taha, R., Hamzah, M. A., Salleh, Z., Ahmad, N., & Azmi, R. (2025). The impact of the Zakat Capital Assistance Program on the entrepreneurship development intention: The case of Malaysia. Journal of Chinese Economic and Business Studies.

Ishak, Z., Abidin, S., & Abd Manaf, N. A. (2025). Cultivating change: Examining the influence of financial management courses on the financial practices of asnaf. Indian Journal of Information Sources and Services, 15(1), 357–365.

Ismail, M. K., Muhamad, M. Z., Zailani, M. N., & Thinagar, S. (2026). Digital inclusion and enhanced multidimensional poverty assessment: Evidence from low-income communities in Kuala Lumpur. MDPI, 1–22.

Larasaty, F., Makaryanawati, & Furqorina, R. (2021). Determinants of financial management behavior in MSMEs in Kediri. Jurnal Akuntansi, 31(10), 2467–2480. https://doi.org/10.24843/EJA.2021.v31.i10.p05

Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5–44.

Lusardi, A., & Tufano, P. (2015). Debt literacy, financial experiences, and overindebtedness. Journal of Pension Economics and Finance, 14(4), 332–368.

Mohamad Halim, A. S., Ishak, S., Che Omar, A. R., Tahir, Z., & Hamdan, H. (2025). Empowerment of economic potential and status through business capital aids of zakat distribution. AZKA International Journal of Zakat & Social Finance, 6(1), 159–189.

Muhamat, A. A., Jaafar, N., Rosly, H. E., & Manan, H. A. (2013). An appraisal on the business success of entrepreneurial asnaf: An empirical study on the Selangor Zakat Board. Journal of Financial Reporting and Accounting, 11(1), 51–63.

Muhamed, N. A., Nor, F. M., Shahwan, S., Nawai, N., Seman, J. A., Abdullah, M., Nooh, M. N., & Kamarubahrin, A. F. (2025). Financial literacy deficiency among micro businesses entrepreneurs from the perspectives of funding providers. Global Business and Management Research, 17(3).

Muyassarah, M., Mawadah, S., Saadah, N., Faizah, F. N., Nurlaily, L., & Mansur, M. (2024). Revised zakat distribution: Perspectives on digital transformation for poverty alleviation. Journal of Islamic Thought and Civilization, 14(1), 193–216.

Noor, N. H. M., & Zaini, S. (2024). Assessing financial literacy of female entrepreneurs in informal economy: Empirical evidence from micro business in Malaysia. Information Management and Business Review, 16(3), 1036–1049.

Organisation for Economic Co-operation and Development (OECD). (2020). Recommendation of the Council on Financial Literacy. OECD Publishing.

Perry, V. G., & Morris, M. D. (2005). Who is in control? The role of self-perception, knowledge, and income in explaining consumer financial behavior. The Journal of Consumer Affairs, 39(2), 299–313.

Rahim, H. L., Kadir, M. A. B. A., Ngah, R., & Lajin, N. F. M. (2026). Business case study: Review of training intervention for poverty stricken (asnaf) entrepreneurs. Review of Integrative Business and Economics Research, 15(2), 311–325.

Rahman, M. S., & Samad, M. F. (2019). Government interventions in promoting entrepreneurship among the poor: A case study of Malaysia. International Journal of Business and Society, 20(2), 601–618.

Rahman, R. A., & Ahmad, S. (2011). Entrepreneurship development strategy for poor and needy recipients on capital assistance through zakat distribution. Jurnal Pengurusan, 33, 37–44.

Rai, K., Dua, S., & Yadav, M. (2019). Association of financial attitude, financial behaviour and financial knowledge towards financial literacy. FIIB Business Review, 8(1), 51–60.

Ramli, N. A., Sabri, H., Awang@Ali, M. N., Shaarani, S. M., & Awang Adi, M. S. (2025). Segmental analysis of financial management challenges in MSEs through the lens of Shariah-based practices. Global Business and Management Research, 17(3), 328–361.

Ramzi, M. I., Mohamad, W. M. F. W., & Ridzwan, R. (2022). Financial management practices: Challenges for SMEs in Malaysia. International Journal of Academic Research in Accounting, Finance and Management Sciences, 12(3), 666–676.

Razak, A. Q. A., Rameli, M. F. P., Man, N. C., Fadzil, M. F. M., Daud, N. M., & Amin, S. (2024). Profiling study of the Asnaf incubator program across Malaysian states. Global Business and Management Research, 16(2s), 1244–1254.

Sabu, Z., Taasim, S. I., & Daud, A. (2025). Navigating digitalisation: Challenges and opportunities for SMEs in Sabah, Malaysia. International Journal of Academic Research in Business and Social Sciences, 15(6), 70–75.

Saurabh, K., & Nandan, T. (2018). Role of financial risk attitude and financial behavior as mediators in financial satisfaction. South Asian Journal of Business Studies, 7(2), 207– 224.

Sulaiman, S., Abd Hamid, N., Othman, R. D., Che Saruji, S., & Aimullah, C. M. F. (2024). Determining the success factors of micro-businesses in the post-pandemic era: Empirical evidence from Asnaf entrepreneurship in Malaysia. Journal of Asian Scientific Research, 14(1), 38–49.

Syahid, A., Mujitaba, M. A., Rameli, N., TS, T. M. Z., & Razali, N. A. (2024). Entrepreneurial human capital on the empowerment of asnaf entrepreneurs planning in the state of Selangor. Planning Malaysia, 22.

Topimin, S., & Hashim, S. R. M. (2020). The financial literacy of the entrepreneurs of micro businesses in Sabah. 1st International Conference on Entrepreneurship and Small Business (ICES2020), 1–8.

Wan Khairi, W. I. A. W. M., Yusof, M. F. M., Mamat, N., & Bhari, A. (2025). Capital assistance to asnaf entrepreneurs: A systematic literature review. Al-Qanatir: International Journal of Islamic Studies, 34(4), 245–260.

Widiyanto, M. C. H., & Ismail, A. G. (2010). Improving the effectiveness of Islamic micro-financing: Learning from BMT experience. Humanomics, 26(1), 66–75.

Yeop Johari, H. S., Awang, C. N. J., & Md Daud, S. A. M. (2023). An exploratory study on the accounting practices among Pasar Tani micro-entrepreneurs in Malaysia. Accounting and Finance Research, 12(4), 23–36.

Zailani, M. N., Satar, N. H. M., Zakaria, R. H., & Rasiah, R. (2024). The multidimensional poverty characteristics of the poor and destitute asnaf in Kuala Lumpur. International Journal of Business and Society, 25(Special Issue), 91–112.