Suad Hamid Bafagih Relationship Manager Corporate Banking at Gulf African Bank

Riba is an Arabic word for Usury. Linguistically it means increase.

Riba was explicitly prohibited in the Quran. It was heavily practiced in the pre-Islamic times among the Arabs. The prohibition of usury was done gradually until finally made haram. Some people during the times of the prophet Muhammad PBUH tried to justify Riba to be same as trade and Allah revealed the verse below;

“That they say: ‘ Exchange is like usury’, but Allah hath permitted exchange and forbidden usury…’ “(Quran 2:275).

There are different types of usury but this article will discuss Riba al- Qard i.e. loan riba. In the current world, there are still people who believe that Riba is like trade. How are the two different? Islam encourages trade but prohibits Riba, why is it so? 

Despite knowing that Riba is Haram and is considered one of the major sins of Islam, it is still treated as a lesser sin compared to murder and adultery. Muslims consume Riba and justify the consumption to be a necessity. Did you know that all Abrahamic faiths i.e. Judaism and Christianity at one point prohibited Usury? But now, consumption of Usury has become normal and it’s only Muslims that still treat it as a sin. The prohibitions of taking Riba are viewed as a restriction and the society feels that Muslims are disadvantaged through this prohibition. Whilst Muslims and society do not realize that the prevention of Riba is a blessing to society and not a hindrance.

One may wonder, how is trade better than Usury and both increase fortune? Trade is encouraged in Islam, there is an exchange; where one party acquires goods and services against money exchanged. It increases economic interdependence. This justifies the profit earned. With trade, there is a risk taken and there is no guarantee of an increase in wealth without a contingent liability and that makes it fair and just.

On the other hand, usury is where one earns more money by lending it. Money is a medium of exchange, its role is to facilitate trade but when it’s converted to be an item priced and traded then the concept of a fair economy is distorted. In trade, there are actual goods and services that are exchanged unlike in lending money, the lender creates money from nothing i.e. no real goods and services produced or exchanged. Usury takes away wealth from the real economy and allows the lender to have money which ought to be used in the production of more goods and services.

Why is Riba detested in Islam that Allah and His Prophet declared war to a person who consumes it? What harm does Usury bring to society?

It distorts the distribution of wealth, where the moneylender earns more money without capital contribution to society. The moneylender becomes wealthier since his wealth grows by the mere fact of lending it. Wealth circulates in a few people’s hands and makes the rich create more wealth and become richer while the poor are ripped off their work and wealth and become poorer. Usury creates greediness since the moneylender will continue wanting more money through lending while the poor struggles to pay the debts.

A good practical example is the foreign debts that keep on increasing in Africa. Most African countries are in debt crisis where the government debt to GDP ratios keep on rising. The interest keeps on compounding and the debt never gets settled. The lender gets wealthier and the African countries become poorer. This is the injustice created by Usury. Global wealth is concentrated in a very small percentage of the world’s population and this creates the economic instability we witness today.

As earlier mentioned, Muslims deal in usury transactions in one way or the other. Allah curses the one who consumes Riba, gives it, witnesses, and even the one who records the transactions. And they are all equal in sin. With that in mind, Muslims should strive to have alternative financing rather than giving in to interest-bearing financial solutions. There have been huge improvements in the last decade in the aspect of Islamic Finance where we see more Islamic banks, Takaful, and even Islamic capital markets coming up. We do agree, these institutions need improvement in their dealings and structure to ensure there is complete shari’ah compliance especially since the world’s entire financial system is based on usury. However, we do appreciate the effort and there is a need for Muslims to increase experts in this field and look for innovative solutions that will be fully Shari’ah-compliant In Sha Allah.

Do we loan money in Islam?

Loan in Islam falls under charity and it is not for an increase in wealth. Loans are called Qard in Arabic and are free of any interest. Qard Hasan is a benevolent loan in which the borrower is required to pay only the principal. This loan is meant to help the one in need and never to earn the lender wealth. The Quran constantly compares giving charity to charging usury.

“Allah will deprive usury of all blessings but will increase for deeds of charity.” (Qur’an 2:276)

A financial system can survive and thrive without usury but it cannot be sustainable with Riba. And we are living proof of that concept, the poverty level has increased significantly, inflation is high, a lot of wealth is in the hands of a very small population and the majority live in debts.

A financially weak and poor society is the source of many evils and usury is the main cause of this weakness in our current financial system. This is why war has been declared by Allah and His messenger to anyone who deals with usury.

By: Ammar AlShukry

The promises of Allah are seen throughout holy places. Abraham was told to build a house for Allah and upon its completion, he was told to call the people to Hajj.

“And proclaim to the people the Hajj [pilgrimage]; they will come to you on foot and on every lean camel; they will come from every distant pass -“

And so Abraham called out into the desert, with no one around and no one to be seen. A heart that relied purely on sight might have scoffed at this commandment and scoffed at that promise. And for thousands of years, after Abraham made that call into the desert, millions upon millions of people have responded and continue to respond to that call, they come riding on mounts, sailing on ships, and flying through the air. They come from every distant place responding to the call of Abraham, the promise of Allah fulfilled.

Thousands of years later, the people of Mecca were terrified. The call of the Prophet Muhammad, sal Allahu alayhi wa sallam, was a recipe for absolute economic ruin. They were the people of the haram, the benefited greatly from the pilgrimages of the Arabs to the universally recognized house of Allah that they were the hosts of. To that effect, they had over three hundred idols there to satisfy the worship of every pilgrim, where all would find the idol that they wished to venerate and exalt. How could any sense be made of disassociating from all gods but one?

Even more so, in the ninth year, Surat Al-Tawbah was revealed, declaring the polytheists to be spiritually impure and no longer welcome to the haram.
“O you who have believed, indeed the polytheists are unclean, so let them not approach al-Masjid al-Haram after this, their [final] year. And if you fear poverty, Allah will enrich you from His bounty if He wills. Indeed, Allah is Knowing and Wise.”

Quraysh did fear poverty, and they could not see, they could not imagine in their wildest fantasies, that by calling mankind to worship one God and shunning their idols, that this would not lead to fewer pilgrims, but more…much more. That they would no longer just have the Arabs visiting the house of Allah, but the entire world.

And a thousand years later from the revelation of the Quran we are witnesses to these promises being fulfilled, and being fulfilled in the most spectacular and magnificent of ways.

And yet even now we continue to challenge ourselves to submit in our belief in the promises of Allah. The brother who is not yet ready to give up an income that is impure or a sister who is afraid to wear the hijab because she is afraid that it will negatively affect her career, Allah promises them,

“And whoever has taqwa of Allah, Allah will provide for them a way out, and will provide for them from where they did not expect.”

And what causes people to be afraid of taking that step is because they do not see where the provision will come from, just like Quraysh did not see how their economy would prosper by worshipping one God, but included in that promise is that Allah will provide for us from where we don’t expect.

We will not see where it will come from, we must take that leap of faith and recognize that the promises of Allah will no doubt come to pass sooner or later.

Blue economy is about sustainable use of sea, ports, coasts, other water bodies as well as related water resources including underwater for social-economic development while preserving the environment. Zanzibar development vision 2050 regards the blue economy as a priority area for the next 30 years, serving as an effective and sustainable means of improving livelihoods and transforming the Zanzibar economy.

Zanzibar had prepared Blue Economy policy in 2020, of which the then Minister of Finance and Planning of Zanzibar Hon. Amb. Mohd R. Abdiwawa said, ” By 2030, given the implementation of Zanzibar Blue Economy policy, we expect Zanzibar to be the leading hub for the blue economy in the Western Indian Ocean region.”

According to Zanzibar policy, priority areas are; Fisheries and Aquaculture, Maritime trade and infrastructure, Energy, Tourism, Marine and Maritime governance.

In each of these areas, there is a lot of funds that are needed in order to address the challenges in each area in order to contribute massively to the economy. One of the key sources of funding that Zanzibar government needs to resort to is using Islamic financial instruments.

Islamic financial industry in Tanzania is at a nascent stage of development. Despite of that, it has shown a positive impact in enabling financial inclusion, MSME growth, and contribution to the government revenue. However, URT and ZRG have yet to tap into financial resources that are available in Islamic banks and windows as well as from the Muslim local and international institutions and investors due to public official lack of awareness, status quo mentality as well as failure to think of the future.

No doubt, Islamic finance is the future for people of Zanzibar social-economic development agenda after having spent years under a conventional financial system that has not delivered prosperity to Zanzibar people. No wonder, current CCM manifesto for Zanzibar promises the use of Islamic financial mechanisms.

Let us give few examples to illustrate how Islamic financial instruments can play a huge role; First example, our fishermen lack capital to buy large boats and vessels as well as lack of modern cooling facilities to store fish. Being majority of Zanzibar fisherman are Muslims, they abhor interest based loans. Islamic microfinance and Islamic banks / windows, through profit and loss sharing arrangements, trade based or leasing arrangements can be of great value to required finance to meet fishermen needs.

Another example is on lack of capacity and facilities of Malindi seaport to handle volume of arriving vessels which leads to a lot of time wastage and revenue leakages among others. The government can issue retail government Sukuk, that will enable common people to invest as little as Tzs 50,000/- to raise billions that are required either to build modern seaport, acquire new equipment’s among others. Retail Sukuk shall enable Zanzibar people to finance directly their government on reasonable commercial terms rather than existing arrangement of government borrowing on interest basis from commercial banks at high commercial interest rates. The former arrangement brings income directly to people whereas the later is largely for the bankers and shareholders.

Last example is on massive potential for renewable energy particularly through solar and wind among others that can be financed through multiple Islamic financial instruments such as Sukuk, syndicated financing through local and international players that will enable Zanzibar to be self-reliant on energy sources particularly renewable energy. Besides, Solar equipment’s financed through Islamic financing arrangements can enable remote villagers and urban dwellers to get reliable source of energy, light and improve their livelihoods.

Therefore, Islamic financial instruments has huge potential to finance Zanzibar blue economy agenda. To achieve this, government officials and other stakeholders must be open to learn and re-learn Islamic financial mechanisms, promote financial sector policies, laws and regulations that promote Islamic finance, attract and retain talent with Islamic finance qualifications, consult and involve Islamic financial practitioners locally and abroad to address several economic challenges facing the Isles.

Insha Allah, with the clean intention, calculated actions under the visionary leadership of H.E. Dr. Hussein Mwinyi, the blue economy vision shall be realized. Do your part!

Wealth protection is one the five objectives of Islamic Law (Maqasid Sharia’h). In wealth management field, wealth protection is one of key area that is addressed and several ‘standard’ methods are employed, developed and tested. In short, wealth protection focus on ways to mitigate risks that evolve around individual and businesses (personal and business risks).

Personal risks involves earning risk, longevity risk, financial asset risk and personal items risks where as business risk involves price risk, credit risk and pure risks among others. Wealth protection specialists will assess risk, evaluate likelihood and impact of the risk and suggest appropriate risk management method such as risk avoidance, risk control/reduction, risk transfer / sharing or hedging. I call these methods as ‘standard / text book’ methods.

Unfortunately, Islamic wealth protection specialists have ignored spiritual methods despite Islam valuable contribution on methods of protection and the valuable role that they can play towards achieving wealth protection objectives. Here below i shall discuss six methods but the list is more than these.

a) The two protectors (Muawidhatayn). These are Surat Falaq and Surat Nnas. Their recitation provide protection from the evils of jinn and mankind as well as misfortune. The prophet is reported to have said ” Read Surat al Ikhlas and Muawidhatayn, morning and evening three times, they will be enough to protect you from anything.”

b) Morning prayer in congregation. The prophet pbuh said “Whoever prays Subh in congregation then he is under protection of Allah. So don’t fall short with regards to Allah’s rights over you (fulfill his commands and avoid prohibitions), for anyone who does that Allah will seize him and throw him into Hellfire.”

c) Mindful of Allah. The Prophet pbuh said to Ibn Abbas r.a “O lad, be mindful of Allah’s commands and prohibitions, He will protect you…” God-consciousness comes with a lot of benefits including protection of your reputation for there is no valuable human social need like respect. The recent sexual scandals at holy wood involving female actress or convicted corruption cases of some political leaders or fraudulent practices of corporate leaders have not only costed them fortune but caused irreparable reputation damage.

d) Constant remembrance (Dhikr). Upholding morning and evening adhkaar have numerous benefits including protection. The prophet pbuh said ” When a man goes out of his house and say, “Bismillahi tawakaltu ala llahi wala hawla wala quwatta illa billahi.” The following will be said at that time ‘You are guided, defended and protected…”

A man came to prophet pbuh and said ” What a trouble I suffered from a scorpion which strung me last night. The prophet pbuh said “Had you said, ‘Audhu bikalimati llahi taamati min sharri maa khalaq.’ it could not have harmed you.”

e) Supplication (Duah). Allah said “Call upon me and I will respond to you” (Ghafir: 60). Supplication to Allah is a form of worship and he who wants himself and his business to be protected by Allah, let him first ensure he eats halal food, he does not slander others and has no envy in his heart for his fellow muslims and pray to Allah to grant him his best wishes. It is highly encouraged to supplicate to Allah for any need, small or big.

f) Mandatory Alms giving (Zakat). The prophet is reported to have said “Protect your wealth through giving out Zakat.” Even voluntary charity protect from calamity as the Prophet said “Give charity without delays for it stands in the way of calamity.”

Perhaps someone might say that these methods tends to protect individual more than my valuable/ materials possessions. You are partly right, some of these methods focus on protection of individuals and that should not come as a surprise. From an Islamic point of view, physical health and well being of an individual is better than material possessions. It is reported that the Prophet pbuh said ” There is nothing wrong with being rich for one who has piety but good health for one who has piety is better than riches and being of good cheer is a blessing.” What good will material possession do to a person who spends a lot of resources to protects his wealth but ignore to protect his physical or intellectual or spiritual well being? No wonder, in objectives of Islamic law, has put protection of self (nafs) on top over protection of material wealth (mal).

Islamic wealth protection specialists should now combine spiritual methods and standard methods in their wealth protection advisory practices. Only through wholesome approach to wealth protection, we can help clients to attain their objectives as well as retain our peace of mind that we have served them to our best!

The “Five Deadly Business Sins ” first appeared in The Wall Street Journal in August 1993. In it, Peter Drucker says “There is no excuse for management to indulge in the five deadly business sins.” These sins, according to Drucker are:

• Sin One: Worship of High Profit Margins and Premium Prices. He says, the worship of the high profit margin is thus not only a dangerous fallacy — it is worshiping a false god. According to Drucker, the worship of high profit margins presents an opportunity for competition to take over the market.
• Sin Two: Charging for New Products What the Market Will Bear. Drucker advocated that the new product should be initially priced at what it would have to be sold for within three years as a likely result of new competitive, or substitute, products being sold at lower prices. This initial pricing strategy, he felt, makes it difficult for competitors and substitute products to enter the market.
• Sin Three: Cost – Driven Pricing vs. Price – Driven Costing. “What is the price the average customer is willing to pay for a very basic automobile that came in one color, black?” Many businesses fail to ask this question that Henry Ford the inventor of Model T Ford assembly line asked. His marketing research concluded that $ 500 was the right price, still high in those days, and he therefore instructed his engineers to determine how they could manufacture the auto and make a profit selling it for $ 500. The rest commit the cost-driven pricing sin by totaling costs and then adding a profit to arrive at the price to be charged the customer.
• Sin Four: Killing Tomorrow ’s Opportunities on the Altar of Yesterday. As a result of attempting to preserve yesterday, opportunities for tomorrow are lost. Drucker also argued that often times the best performing people in the organization are assigned to such problems instead of focusing on opportunities.
• Sin Five: Feeding Problems and Starving Opportunities. Drucker commented that better-performing organizations assign their best people to pursuing opportunities for growth. They also have two pages to their management reports, the typical problems and status page, and an Opportunity page. Organization that focuses on problems when periodic objectives are not met and ignore to search for new opportunities and innovate will not survive.

While above points are acknowledged in some circles, and criticized by others. Our attitude is never to ignore ‘sins’, be real, small or by far. In addition, there are other four business sins, that Muslims must be aware of. These are not only taking the business to the grave but the businessperson is going to hell and misfortune however long it may seem to take. These are;

• Engaging in interest / usury based borrowing to finance business growth or lending on interest to generate further income for the business. Ibn Mas’ud reported that the Prophet (ﷺ) said: “There is no one who deals in usury a great deal (to increase his wealth) but he will end up with little (i.e., his wealth will be decreased).”
• Not paying Zakat when it is due. “And let not those who covetously withhold of that which Allaah has bestowed on them of His Bounty (wealth) think that it is good for them (and so they do not pay the obligatory Zakaah). Nay, it will be worse for them; the things which they covetously withheld, shall be tied to their necks like a collar on the Day of Resurrection. And to Allaah belongs the heritage of the heavens and the earth; and Allaah is Well‑Acquainted with all that you do” [Aal ‘Imraan 3:180] Imam Ali r.a said “When people do not pay Zakat the prosperity of their agricultural lands and mines will be lifted from the earth.”
• Evil intention. The Prophet pbuh said, he who goes to work to feed his children or parents or distance from begging, he is on the path of Allah. But he who goes out in order to show off or to boast, he is on the path of devil. Surely, business is for a Muslim like prayer. It has its own rules, conditions and code of conduct. The first rule is purity of intention, for Allah’s sake and for what he is pleased with.
• Unethical practices such as lies, cheating, bribe, stealing, robbery, forgery, swearing, misrepresentations, manipulating scales, hoarding, environmental pollution among others have no place in the Islamic business norms. The Prophet said “The swearing (by the seller) may persuade the buyer to purchase the goods but that will be deprived of Allah’s blessing.” So is every unethical practice may win you some gold or silver but have no blessings in it. Such is the first punitive consequence just as He said ” Allah deprives interest all blessings.” (2:276).

In conclusion, business people eagerness in generating revenue for their business and their investors should be cautious not to fall into these costly sins. More important, remember our motto in the words of Ertgul Bey, “Don’t forget. We are not battling (doing business) for loot or treasure or reputation but for God’s will and our holy mission. Don’t let that slip from your mind, so you wont give up!”