shari’ah foundation and application of islamic microfinance presented at global islamic...
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Shari’ah Foundation and Application of
Islamic MicrofinancePresented at
Global Islamic Microfinance Forum - Dubai
Presented on 06 October, 2013
By: Mufti Aziz Ur Rehman [email protected]
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Outline
1) Islam / Shari’ah and Faqeir2) Treatment of Financially Distressed in Islam3) Protection of Freedom4) MENA Region and poverty5) Main issue with Muslim Traders6) IFIs and awareness 7) Recommendations8) Final Words
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Islam and Faqeir
Islam treats Faqeir according to his need and extent of poverty Faqeir is subjected to.
Three types of Faqeir;1. Incapable of Earning(عاجز)
2. Financially Distressed ( مالية (كارثة3. Capable of Earning( Aا مكتسًب (قويًـا
A Social Security System of Islam. Baitul Mall, Zakat.etc.
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Man born with some inalienable (absolute) rights.
That are recognized by majority of the nations but are enjoyed by very few people around the globe.
A set of these rights give rise to development, which everyone should ideally have access to.
F. Distressed & Cap. of Earning
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Excess to no. 2 & 3 by IslamFinancially Distressed ( مالية (كارثة Support and provision of funds to meet one’s
needs enabling the distress to be eased. I mean;
Freeing captives or slaves, those in debts and to pay Diyyat money etc.
Imam Abu Yousuf RA said; بيت من كفايته لفقره الخراجية أرضه زراعة عن للعاجز يدفع
أرضه يستغل و ليعمل قرضا (المال عابدين) ابن
Give him Freedom from such situation
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Islamic Economic prosperity
Islam postulates the concept of welfare state to work for the economic prosperity.
Economic Prosperity connotes betterment of standard of life through;
Enhanced capabilities Reduced vulnerability (Liabilities) and Protect Freedoms lowness of income is a means for
capability deprivation only
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Protection of freedoms
There are five kinds of Freedoms
1. Freedom of social opportunities,2. Freedom of transparency guarantees,3. Freedom of protective security, 4. Freedom of political and civil rights,
and5. Economic freedom including opportunities
to get credit.Since without freedom people cannot make the choices that allow them to help themselves and others.
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Economic Freedom
To get credit;Are begging, being dependant on charity and / or
being under debts supported and encouraged ?
but taking the Fifth Freedom “Economic freedom including opportunities to get credit” Now; how Islamic finance can enhance access, reduce vulnerability, augment capability and so reduce poverty? Of course Faqeir is to come near.
No
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Faqeir in MENA Region
About 70 million; < US$ 2 per day and 20 million; < US$1.25 per day. • 95% of the adults residing in MENA define
themselves as religiously observant. Gallup survey• > 19 m avoided interactions with FFIs for religious
reasons. (Reba)• A mere 18 % of adults (above 15) have accounts in
FFIs, the lowest in the world. • 27% of adults in Tunisia and Morocco having no
account at a FFI and 3 % of respondents in Kuwait & UAE (for only religious reason) Global Findex, 2011
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Main Issue with Muslim Traders
• The main issue here is that many Muslim-headed households and micro, small, and medium enterprises may voluntarily exclude themselves from Formal Financial markets because of religious requirements. Freedom?
• The combination of above facts has produced a growing interest in IF as a possible tool for reducing poverty through financial inclusion among the religiously conscious Muslim population.
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• Increasing access to Shari’ah compliant or Islamic law, and the use of various financial services can reduce poverty and its severity (harshness)
• With no access to Islamic Financial Services, many of the poor in MENA will continue to be trapped in poverty with little to no chance of escaping it in the foreseeable future.
Faqeir in MENA Region
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Islamic Legal SystemThe Islamic legal system has guidelines and regulations pertaining to the financial transactions of Muslim believers. The prohibition of pre-defined interest-bearing loans. Loss-Sharing Profit-Sharing of the business activities. Islamic microfinance instruments, such as;
Musharakah Murabaha
could be particularly attractive tools for reaching and providing vital credit to the region’s poor, who represent about 17% of the total population of the MENA countries.
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Final Word
As repeatedly mentioned in such gathering:‘If you give a man a fish you feed him for one day’ But ‘if you teach him how to fish you feed him for a life time’.
We have to fix the meaning of
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