May 28, 2021 / 1.00PM / Bukola Akinyele-Yisau for WebTV /Header Image Credit: EcoGraphics
Islamic Economics in principle encourages the financing of "Asset-Backed Transactions" and risk-sharing amongst participants in the non-interest financial market. Raheemat Alimi, Deputy Registrar, Nungu Business School made this point at a recent discussion on Islamic finance, prohibition of interest, and economic stability.
According to her Islamic economics is viewed through the lens of strong social conscience and moral filters. This means that whatever is not permissible in Sharia would not be allowed in Islamic finance.
She said one of the features of Islamic economics is the partnership and support it provides to entrepreneurs, who are key drivers of the economy.
Speaking further she stressed that the non-interest finance market has high value for justice and fairness, which is why it prohibits the "Riba" practice.
Riba according to her, refers to the increase, addition, or growth in income from a transaction that does not align with Islamic principles.
Highlighting the issues of "Riba" she pointed out that it encourages societal injustice because the participants in the financial transaction bear no risks except the lender.
Giving further insight into the prohibition of "Riba" she said the Holy Quran has seven(7) verses, that mention why every Muslim should avoid any business activity related to it.
In terms of the activities of non-interest banks, Alimi observed that these institutions were more concerned with the viability and profitability of businesses beyond the business plans.
Noting the advantages of Islamic finance for frontier markets like Nigeria, she outlined the benefits to include, encouraging justice and fairness in tbusiness, engendering financial inclusion, discouraging speculation in the financial markets, supporting financial stability, placing high value on transparency and accelerating economic development.
She added that Islamic finance served as an effective tool for deploying capital to the real sector of the economy.