KanoOnline Online Forum

Very very good article... Hajia Husna you should put this on the general board .. I can't wait to read some particular individual responses..

Assalamu alaikum,
Facinating stuff Jack, I must say I honestly applaud the way you throw challenges and questions on Islamic issues. That is the true spirit of Islam. The spirit of open debate, discussion and sharing of ideas, towards achieving greater enlightenment for all, as long as you make yourself open to learn. The question though is, are you open to learn? (honest?).

Ok, I will attempt to address the issues you have raised by simply saying that Islam and Shariah serve as core enablers of economic development and not barriers. This is because, the Islamic civilisation is essentially a faith driven civilisation. Infact, most of the advancements of the Islamic empire in fields as diverse as medicine, astronomy, mathematics, physics, economics, philosophy etc emerged and blossomed due to the strength of Islam and shariah; and its core focus on humanity and human advancements. Have you heard of polymaths? Go to wikipedia and search for the term. Nearly all early polymaths were Muslims doing fascinating stuff when Europe was very much in the dark ages). (and therefore I correspondingly argue that most of our failures resulting in lawlessness, Murder, “terrorism”, etc, all emanate from the Muslims neglect of the understanding of the core values of Islam, but alas that is for another thread).

Now let me attempt to answer your questions.

Regarding Islamic finance:

While there are others, the fundamental basis of Islamic finance is built around 3 key prohibitions as reflected in the Quran and in the sunnah:
1.   The prohibition of Interest:
2.   The prohibition of “uncertainty” within transactions i.e. you must not sell that which you don’t have possession of.
3.   The prohibition of Speculation: Not commercial speculation evident in most commercial transactions, but gambling, hedging, etc.

Now your specific concerns

The prohibition of Interest.

Interest in Islam is not synonymous with profit as you have alluded to. Interest according to shariah is simply put “money earning money”. It refers to money being used as a “commodity” in itself “rented” out and from which a fixed amount or percentage is earned in return. Please note that the prohibition here is not on “loaning” money out (which is permissible), but the rental which that money in itself is expected to earn. In the context of business transactions, where the money is loaned out based on a percentage basis built around potential profit as well as loss then that is permissible, because it accounts for realities in which the potential return on Investment is unknown. Therefore, such a percentage ensures that both positive and negative returns of Investment are shared by both parties (i.e. profit and loss).

To use your example, if you have $100, you can loan it out to your neighbour for a business transaction on say 10% profit/loss share arrangement. The fundamental difference here is that if he succeeds you get 10% but if he fails then you also loose. The rental value (or interest rate) must be fixed prior to the transaction being carried out, that is permissible but the transaction must take into account that no profit may be made at all; or potentially may result in a loss, in which case you stand to loose some part of your wealth. That is the basic difference.

Emanating from that is the question of interest rates. Based on the above, interest rates are not forbidden in Islam, because as you have quite rightly said, they are a measure used by central banks to determine ideal costs of borrowing at a given time but what Islam teaches is that all transactions carried out must be governed by a balanced system of risk sharing between parties. Therefore going back to your Neighbour example, the percentage can change, that is permissible only when the fixed change is agreed prior to the transaction and also, as long as the transaction itself is governed by such risk sharing methods.

You must understand that Islam is built on social cohesion and mutual interdependency between Individuals, communities and societies. Therefore, what is sought is always a means to ensure that while individuals have the sufficient framework to advance themselves and aspire to great things, all parties are adequately protected from potential exploitation and hardship. 

Regarding the Quran borrowing from the old testament

Jack you mention that Islam borrows the prohibition of Interest from the old testament. This shows that you don’t quite grasp the concept of Islam (not merely the name of the religion) and its relationship with other faiths. You see Jack, Islam did not start with the prophet Muhammad (SAW). In fact, Muslims believe that the religion of God has always been 1 religion preached through history. The fundamental basis i.e. Monotheism has always been the same as preached by Noah, Abraham, Jacob, Solomon, Jesus, and all the other great personalities (which Muslims believe in). The message is thus the same, and Muslims believe that all prophets came to guide people back to the original message. Hence, while variations do exist accounting for human advancements through time, or socio-economic/political situations of the time, the fundamental message is and has always been the same i.e. there is only one God and He (i.e. the prophet speaking at that time) is the messenger of God. That accounts for the consistency in many areas and the massive similarities between the 3 “abrahamic” religions of Islam, Christianity and Judaism, including the concept of Interest as you remarked above.

Capitalism vs Mercantilism

This is an issue for which I agree with you JACK, and where I feel Hajia Husna, you are wrong. Islam does not ban capitalism. It also does not ban, capitalism, socialism, welfarism, mercantilism or any other economic system. That is a fundamental mis-understanding which many people have. It is like going into a restaurant and saying Islam bans “steak and chips”.

What Islam does is provide a framework around which you may build any economic system which suits you. It only highlights those things which you must avoid. That is all. Thus if a people decide that capitalism is best for them, excellent, so long as Islamic principles are adhered to. Similarly if mercantilism is preferred, again excellent. That is why the Quran makes no direct reference to any “system”, but simply highlights those things which are forbidden as part of any transaction. It accounts for the fact that societies differ, civilisations differ and generations differ. Therefore such differences will inevitably give rise to more innovative products and ways of doing things. Islam is a very flexible religion that does not impose, but simply provides sign posts of pitfalls to be avoided. So long as such pitfalls are avoided, then the system whatever it may be will emerge as permissible. Thus, using the steak and chips example above, it will simply say that the meat used for the stake should be halal, and if so, enjoy your meal!

Islam encourages individuality and limited government interference within the real economy, except on a regulatory capacity and to ensure Justice to all parties. It preaches that we should all seek the favours of Allah and it is He who provides, thus debasing the notion of dependency on others. In advocating social and charitable projects as a means to God’s pleasure, it implies that individuals should therefore seek the means through which they can carry out such ventures while meeting their personal and family needs. This requires economic development and perhaps some capitalist ideals.

Drawing from Islamic history, during the time of the prophet and the rightly guided Khalifs, the role of the state was in certain key areas, i.e. Ensuring Security; Ensuring equal justice for all; Providing Infrastructure; Promoting education; Enhancing social capital and generally creating a conducive atmosphere for all round development. Economic development as they defined it, fundamentally hinged on competency, means and confidence (for further information on this, read “Mudaddima” by Ibn Khaldun, one of the best books on politics, economics and societies ever). And the role of state was to create an environment in which all three blossomed.

While I am in no way saying mercantilism was forbidden, it was not exactly the mode of transaction during the time of the Prophet (SAW) and the rightly guided caliphs. Interference in individual transactions (which mercantilism was riddled with) was not carried out except during the latter years of the Islamic empire.

The difference between Muraba, Ijara and non-Islamic financial instruments

Your assessment of Murabaha is correct exept for 1 salient omission. You are correct in saying a fixed amount is charged for repayment over a given period. But as I have explained above, that is entirely permissible within Islam and does not constitute interest. It is infact profit and profit is very much allowed. This is because the commodity being traded is the “house” and not “money”. Thus the fixed charge with added percentage is profit, determined by a rate, all permissible in Islam. (but such a rate must be fixed at the time of the transaction and may perhaps not be referred to as “interest” rate).

Now the salient omission (and thus the fundamental difference with mortgages), is that the property in question is bought by the bank (and thus it becomes the owning party) and is then sold to you (or me) at cost + profit (fixed at the time of purchase). While the repayment period can be negotiated, this overcomes two distinct issues forbidden in Islam:

1.   Fluctuations of repayment rates arising due to variations in Interest rates during the repayment period.
2.   The purchase of the property by the bank and then selling it to you creates a 2 party business transaction in which the selling party actually has the commodity at hand before selling it, hence overcoming the ban on selling what you don’t have.

So unlike interest rates, the repayment amount is fixed at the time of the transaction (or an agreed formula is to be used) and is not subject to the variations of interest rates. By owning the property at the time of the transaction, the “uncertainity” prohibition has been overcome. It also means that, it is the property that is being traded for a profit (which is permissible) and not the money to buy the property being traded for a profit (which is not permissible). Therefore, in borrowing your words Jack, I am not “fooling” myself in knowing (not thinking) that these instruments differ from traditional mortgages and very much conform to the teachings of Islam.

The place of Shariah in Economics.

Shariah has an immensely positive effect on economics because it provides a framework around which transactions between individuals can be very easily and effectively carried out in a manner mutually beneficial to both parties. The problem is not that of shariah Jack, but the sad inability of we as Muslims to understand Economics on the one hand with all its beautiful innovations, and also Shariah with all its very simple and fundamental concerns, ultimately proffering lasting solutions that serve the desired goal, i.e. the benefit of humanity.

Sadly though, where we fail in understanding the economics and how to get the best out of it, you fail in understanding the Shariah and what it says and does not say. You must understand the concept of Islam first, including its spirit in order to understand its restrictions. It provides social guidance on what to avoid but then says, anything not prohibited is therefore allowed. Thus it allows for infinite innovations to cater to emergent human needs with minimal restrictions to ensure that the goal of “benefit to humanity” is always sought.

Thus, where we see failures in certain societies, widespread ignorance, lack of eduction, an indiscriminate disregard for life, corruption, conflict, tribalism, backwardness, etc (I was trying not to say Northern Nigeria), the fault remains ours as Muslims and not the message of Islam. To paraphrase an African-American saying Jack, “Hate the PLAYER, don’t hate the GAME”.

Hope this helps. I also have some words about the way out of poverty in Northern Nigeria but that would be for another time Insha Allah

As-salam alaikum

Hmm.. I was hoping to refrain from commenting on this thread as I think the level of discussion here is way beyond me.. However, I'm tempted to drop in my two pennies worth..

While I agree with you Jack on the problem of "victimisation" excuses and the negative effects it has on individual responsibilities, I fear your argument here has a tragic flaw. Without a shred of doubt pro-activity is a problem in many African communities and it has led to our continued endemic decline. Our inability and sheer unwillingness to solve our own problems in certain cases (just look at Sudan!) continues to do us more harm than good, all clearly pointed out by Dave, yourself and also King and Hajia Husna (in the sudan ICC warrant post). Now comes the part where I disagree. Are we as Africans right to blame foreigners (I don’t use the expression “whites”) for a lot of our problems? I say yes for a few problems but not for all. Like honour, I tend to give blame to whom blame is due. I’ll explain why (and also dare to suggest solutions).

Most of Africa’s problem lies in three key spheres: Religion/culture; politics; and economics. While we take full responsibility for the first, the latter two spheres are riddled with the impact of “externalities” way beyond the power of regular Africans like myself.

Taking economics as the key point here, the global nature of trade implies that for example, tax decisions in Australia can damage the Ugandan economy. It’s synonymous with the butterfly effect. Hence without even sending a single marine, or “coalition” force to take out “hostile” regimes, poverty alleviation through African agricultural development can be spurred by favourable taxation and economic policies in say for example the US. An example in point.

Subsidies, tax breaks and importation blocks mean that the US and European markets are pretty much un-accessible to African and south American farmers. That means the incentive to produce in order to service the obvious demand is reduced. Farmers are stuck with excess produce which they cannot sell and even when they do, (due to supply exceeding demand) they sell in already saturated markets, at rock bottom prices. Conversely, the non-farmers among them who go and get (the very few available) jobs as civil servants, in banks etc seem to be earning more with considerably less physical effort. So the farmer thinks, why am I wasting my time? Agricultural development then stagnates and starts to decline the direct effect of which is that food supplies begin to dwindle. Compounding things further, donor agencies then flood the market with free/dead cheep food to feed the poor who have lost their livelihood through the trade imbalance (which they, the donor countries, were partly responsible for). That then means that even the poor farmers who still produce food, have no reason to do so anymore, after all, who will buy from you at a price when they are getting from else where for free? Also for the poor farmers, why should they waste any energy farming when they can cue up on a daily basis and fill their stomach with considerably less effort?

Now it begins to get messy. If you stop the feeding program, the poor will starve because all internal agricultural development has already stopped. People will undoubtedly start to die and other problems will follow. Do you begin to see the picture? There is a lot of blame which we as Africans have which I haven’t highlighted here and I wholeheartedly acknowledge. But this example is just to show you that while we have our problems for which we are responsible, “externalities” way beyond our control serve to make a lot of these problems highly endemic.
Let me put it in perspective Jack, if your grand parents were North Korean migrants granted refugee status and not allowed to legally engage in any economic activity in the US, will they have been able to do what they so courageously did? The boundaries which they overcame such as prejudice, poverty and multiple jobs/commitments were challenges which they could respond to because they had control over them, but such VISA restrictions (using the example above) would’ve been beyond them i.e. externalities. They would not have been able to overcome them and that would have affected your current economic position. That is why African Americans (not the present generation) blamed the whites. And that is why south-africans like Nelson mandella fought the apartheid. Because they proved to be externalities which meant that irrespective of individual aspirations, their people could never prosper.

 So yes, that is why I say foreigners have their own share of the blame which they should honourably accept. But then again (going back to the agricultural trade example), as a colleague of mine will say, “it’s not personal its business”, which leads me to my next point.

The US government gives billions of dollars in aid to Africa as part of a food program which has undoubtedly saved lots of lives especially in places like Ethiopia and recently Kenya and Somalia. But then again is Africa the greatest beneficiary? Is that the best way to save lives and promote economic empowerment?

Analysing the food aid program, I’m sure you know Jack that under the food aid, the president is congressionally bound to ensure that all the food is actually purchased within the US, unless otherwise is inevitable. A past UN report showed that for every $100 spent, $70 was spent within the US, with the other $30 being transportation, logistics, man power (as per salaries) and fuel. Again, please indulge yourself in my logic here. The money is made available to and accessed by American farmers with which they boost their production capacity and produce a lot of food. That extra production capacity is then bought off them, and transported to we, the lesser mortals and given to us for free.

Now, the positive benefits of this complex cycle (which I clearly understand) is that American farmers win as they become very much better off by selling even that extra bit of production capacity increasing the efficiency of their businesses. The government wins because they seem to show concern for other citizens of the world, and save lives in the third world, while also ensuring the economic development of the local agricultural industry. Unfortunately though, we Africans who don’t see the wider picture of such economic policies are the ultimate loosers. We have been impoverished then fed and to add insult to injury, we then turn around and say how grateful we are for the intervention of our concerned friends. But is that the best way out?

Uganda and Rwanda of the last few years have witnessed sufficient political stability that economic development has surpassed even Nigeria (on an average GDP basis). Now during the last Kenyan crisis, food was flown in from donor countries, while neighbouring Uganda had a lot of surplus food which could have been purchased for far less. While the Ugandan people do not have the economic might to give out their produce for free to their Kenyan neighbours, can you imagine the economic stimulus buying their excess produce would’ve had on them? To put it plainly, it would have increased the incentives of farmers to produce food; would have increased the incentive for people to invest in agriculture and improve the efficiency of their farming practices to maximise yield and ultimately income. The income disparity between agricultural earnings and white collar job earnings would’ve been reduced, and more people would’ve embraced agriculture as a workable business. Hence a more productive aids package to both Kenya and Uganda (neighbours if I may add) is if the world had said, we would make so-and-so amount of money available to buy excess production capacity from Uganda. That would’ve stimulated the Ugandan economy and fed a lot more Kenyan people (considering the cheaper cost of both production and transport). But then again, no super power would have directly benefited from that deal. In fact, that would have been detrimental to local agriculture within their countries. Yet that would also have been true aid. You see the paradox?

The funny thing is I clearly understand the position of world powers on such protectionist policies, after all, its business and nothing personal. They have to look after their own, that is absolutely logical to the capitalist and I take no offence on that. What I take offence with is the fact that people like Jack, then turn around and deny it, absolutely blaming us for everything, conveniently neglecting the other side of the argument of which we as Africans have no control. Yes we have our flaws, yes there are ways to overcome this which as Africans we have failed to explore but the truth is Jack, we all have our share of the blame. I have accepted ours, why don’t you accept yours?

Mugabe in my view was a leader who over stayed his welcome. He is a freedom fighter, a warrior who fought gallantly of which he deserves absolute credit, but lacks the intellect of a leader upon whom successful states are built. He is naïve to the realities of global economics and the strong level of economic inter-dependency between nations. While his land reclamation policy is again understandable, he should have backed that up with sound legal compensation to those affected, and economic rehabilitation to heal the wounds which such policies would have surely caused. Afterall, two wrongs don’t make a right. He should show them that as Africans we are people of justice and fairness, and will not replicate the legacy of exploitation and oppression brought upon us through colonisation. Afterall, in what he has done, how different is he from those he so gallantly fought?

I blame his absolute lack of understanding of socio-economics for the plight of the Zimbabwean people. But the truth is, it was not the lack of production capacity brought about by his policies that destroyed Zimbabwe, it was the great power of the externalities, the reaction to his policies by the powers that be, which brought the countries to its knees. From a business and capitalist point of view that reaction is logical and again I clearly understand. But as I said and say again, share the credit, share the responsibilities and indeed Jack, share the blame, afterall, there is joy in sharing. Is there not?

Salam.

If only we all could think like this...

WASHINGTON, 27 May 2008 — Here's a story of a man with guts... and a big heart. The recipient of one of Israel's most prestigious prizes donated his $33,333 portion of the shared award yesterday to a Palestinian university and an Israeli human rights group that tries to ease Israeli travel restrictions on Palestinian students.

US mathematician David Mumford, a professor at Brown University's Applied Mathematics Division, was co-winner of the Wolf Prize on Sunday for his groundbreaking theoretical work in algebraic geometry. Mumford announced yesterday he would donate his prize money to Bir-Zeit University in the West Bank and to Gisha, an Israeli lobby that works to help Palestinian students travel to their places of study.

He received the award at a ceremony on Sunday from Prime Minister Ehud Olmert at the Knesset in recognition of his groundbreaking theoretical work "on algebraic surfaces; on geometric invariant theory; and for laying the foundations of the modern algebraic theory of the moduli space of curves and theta functions."

"Mathematics in Israel flourishes today on this high international plane. Its lifeblood is the free exchange of ideas with scholars visiting, teaching, learning from each other, traveling everywhere in the world," Mumford, professor emeritus at Brown University and Harvard University, said in a statement. "But this is not so in occupied Palestine where education struggles to continue and travel is greatly limited."

He added: "Access to education determines how the next generation of Palestinians will grow up, specifically whether potential mathematicians will have the opportunity to join the international community."

Israel has withstood international criticism of its closures on the Gaza Strip and West Bank, saying they aim to prevent terrorist infiltrations. But these closures make it next to impossible for many Palestinian students to travel to their schools.

"Education for people in the occupied territories gives them a future. The alternative is chaos," Mumford said, adding that his decision was not aimed at Israel. "I have tremendous regard for Israel, which is without a doubt a major force in the mathematics world. But unfortunately, the Palestinians cannot take part in this prosperity."

"I decided to donate my share of the Wolf Prize to enable the academic community in occupied Palestine to survive and thrive," he told Israeli daily Haaretz.

http://www.arabnews.com/?page=4&section=0&article=110287&d=27&m=5&y=2008&pix=world.jpg&category=World.

While I wasn't there in person (so therefore cannot fully attest), this report Jack is most likely not true and beats logic for a couple of reasons

1. The practice of kidnapping people's daughters and marrying them off are not practiced in Islam (and definately not northern Nigeria) at all, as an absolutely neccessary precondition for marriage is consent.

2. For all our ills as a country, the practice of freedom of expression and media reporting is very strong. 6 churches is a lot of buildings and not just a kiosk or a trailer or a caravan somewhere. If this was true it would surely have been reported by media houses in Nigeria (at least one!!).

3. I am facinated by the monumental church in Nigeria built for 130 people and costing 13 million Naira.

4. I also did a brief search and noticed that compass Direct News was the only place where the incident was reported (all other citations were secondary citations from Compass direct news). That either means they are by far the most prudent and caring news agency in the world, diligently concerned about reporting facts as and where it happens, or...... (do the math!!) (Muda's piece was quoted from the BBC and I took the pain of validating it).

Like all people, We the Muslims in Nigeria are not perfect. We do have our problems and we do commit wrong deeds which myself and other members in this forum have explicitly condemned on numerous occasions. However, on this article Jack, I fear we are wrongly accused.

If however it is proven that this incident did happen (which is highly unlikely), then like all true Muslims I will be the first to condemn it.

Muda, on the issue of the Islamic school, while it may seem odd, I believe that as much as the Australian Muslims felt they had a right to build the school in the first place, so also the people of the town have a right to say they dont want it. There is nothing wrong with either party in my view, afterall as citizens, they both have equal rights and in fairness they must both be listned to.. At the end of the day, it was all about numbers and what the majority of the people wanted. The overwelming said no, then no it is..... (until a time when they are made comfortable enough with the idea to say yes)..

Jack, on the case of the WMD Hans Blix, the chief UN weapon's inspector at the time of the war will strongly differ .. Afterall, what happened to the expression "innocent until proven guilty".. Or maybe Iraq is as guilty as Iran (Who the CIA just confessed have had no weapons program since 2003?).... No one especially in the UK even brings up the issue of the WMD anymore because it is absolutely clear that it was a hoax ... (stick to the moral argument, in my experience, that tends to do better)

On the legality of the war, just ask Kofi Anan till this day he says without mincing his word,that it "according to all international laws, is absolutely illegal"... Curiously, John Bolton the UN secretary general during the war (he followed John Negroponte) was asked to sum up the tenure of Kofi Anan and he remarked "I'll pass" . A genuine remark from a tough man of war about a Nobel prize winner and a tough man of peace.. (the tale of two worlds eh!)

I apologise for being brief Jack, I do not intend to get dragged into this debate, but I just feel like many of my very good American friends, you risk being extremely myopic, making your mind up without having the luxury of seeing that their is a lot more to the world than America .... I mean no disrespect and please take no offence but truthfully, I have to say.. open your mind!!..

For a self learning student of strategy, history and economics like myself, the sad unfolding reality of this scenario as evidenced throughout Mankinds over 3000 years of nation building is that the "denial", "myopism", "non-inclusivity" and "blindness" of America's foreign policy, was the beginning of the end for all the previous world powers (including the Turks, the Brits and especially the Soviets) .... A fact highlighted even in the earliest texts of Sun Tzu (The art of war 544 BC).. While previous super powers could be excused for living in a world of "Zero sum" solutions. Globalisation and rapid economic and technological change have altered dynamics significantly, making the best solutions for everyone mainly "Non-zero sum" solutions.... (As an economist, I'm sure you'll understand, but then again, our schools of thought may be different!!) .... My advice, travel the world, meet its people (not the one's in hotels but in the markets and villages) then open your eyes.. (My travel agent has some facinating deals if you're interested .. lol!!)

Hajia Husna, while I wouldn't say Sadam was pure evil, I don't think he's as innocent as you paint him to be either .... Like all leader's he had his faults and I feel justice should be done by accepting his limitations as well... But I do say that for the approximately 450,000 civilians killed in the fighting so far, (Iraq body count group, I thought I should reference before I am also accused of relying on google!!), and not to mention all that have been displaced, the seemingly philosophical question (depending on if you're sunni, shi'a or kurd) would always be... was it worth it?

Assalamu alaikum, Allah ya saka da alheri,
I am seeking clarification, does this hadith imply that the recitation of fatiha from the "Mamu" be done as the Imam is reciting Fatiha, or After he has recited already?

Also, while the Hadith mentions the deficiency of prayer without Fatiha, we also know from other authhentic ahadith that if you get only the ruku'u it is as though you have gotten the whole raka'a. While I agree that there is no contradiction, might this imply therefore that the recitation of Fatiha as highlighted in the sahih hadith above is not in all circumstances? If so, then does it include when you join the prayer after the Imam has FINISHED reciting Fatiha? I merely ask to seek clarification and make no assertions of my own...