Expert View

Taiyibat and Islamic Finance

All followers of Islam are supposed to offer three basic kinds of prayers; namely Tahiyyat (verbal prayers), Salawat (physical prayers) and Taiyibat (materialistic prayers)1. There are so many Quranic Ayats to guide seeking help or support to sustain (or perform at best) in this world by offering Salah (prayers) and Sabr (patience).2   Notably the best way to perform in the world by a true Muslim is to offer At-Taiyibat because it restrains the believers from the forbidden acts and encourages performing the righteousness by seeking Bless of Almighty Allah.

At-Taiyibat is specifically a kind of worship guided by Shariah laws to restrain Muslims from Al-Munkar (all that is forbidden); to allow them for At-Taiyibat (all good and lawful) and to prohibit Al-Khabaith (all evil and unlawful as regards deeds, beliefs, foods, etc.). There are severe threats in holy Quran who deviate from way of Taiyibat and keep hoarding wealth instead of helping the needy and poor people.

Muslims around the world in large is not averse of performing Taiyibat. Lack of Taiyibat is allowing the devils to deviate the Muslim Ummah from Sirat al Mustaqeem (right path); and as a result the focus of Muslim community is observed deviated from seeking falah to aim conquering the materialistic world. Today we may observe the spirit of Taiyibat among Muslims at its lowest degree. As a result the community has not only neglected the system of Baitulmaal; but adopted the model of Islamic banking wherein the savings of rich are not being used for helping the needy but channelized in a manner to provider permissible mode of higher returns to their investors. This greed to seek best possible returns by investment surplus of income over expenditure into Shariah Complaint businesses is creating disorders in Muslim’s economic world. The difference in standard of living for rich and poor Muslims is increasing day by day; and the so called Islamic finance is not in a position to take up this issue at all.

To reduce economic disparities among followers of Islam and to alleviate global poverty, Muslims need to develop micro finance business as part of Taiyibat so as to inculcate required spirit and ethical guidance in process of socio-economic developments. The social enterprises promoting micro finance can well generate required funds if they succeed promoting it as part of Taiyibat model because spiritual teachings guide us to help poor  .

The holy Quran clearly states that we cannot attain righteousness unless spend (from what we love to possess)6 for welfare of the poor people.  There has been serious warning for those who hoard wealth and not spend for welfare of poor.  According to Islamic belief whatever excess we get is due to invocation and blessings of poor among us.

Clear directions in the holy Quran that capital should not (merely) make a circuit among the richer but be allowed to flow towards the poorer9 so as to enable them improve their livelihood. But we see that not even one percent assets of Islamic banks around the globe is allocated for micro finance to poor people.

Philanthropists should realize that it is better to promote livelihood through micro finance compared to aiding beggars.  We should follow the Sunnah i.e. the act and sayings of Prophet Muhammad (ﷺ) that guides us helping the poor. Sunnah discourages begging and encourages promoting livelihood through micro finance.

The Hadith sourced from Sunan Ibn Majah guides humanity to alleviate poverty through linking micro finance with livelihood. There are following five basic lessons in that specific Hadith –

  1. Converting the dead assets into micro finance (working capital).
  2. This also draws the social resources (to pool finance by way of auctioning low value assets) for poverty alleviation.
  3. Working capital should be linked with livelihood.
  4. Market linkage and skill support is required along with micro finance.
  5. We need to monitor the progress in poor’s livelihood.

According to world Atlas Factbook 2014, Qatar economy (with 68% Muslim population) records highest per capital income, where 14% households are dollar millionaire. On the contrary the data on poverty reveals that every second poor in this world believes in Islam – a religion that teaches how to alleviate poverty and ensure socio economic justice. Perhaps the world is heading towards higher number of believer in Islam rather than followers; otherwise we would not have seen such a high level economic disparities among Muslims countries itself.

According to World Islamic Banking Competitiveness Report 2014-15 QISMUT countries (Qatar, Indonesia, Saudi Arabia, Malaysia, UAE and Turkey) with US$ 625 billion commanded 80% of the International Participation Banking Assets worth US$ 778 billion in 2013.  Saudi 247 US$ Billion holds 31.7% of global Participation banking assets and captured 48.9% of national banking market.  Al Rajhi Bank, the first among Participation Banks with capital over 10 billion US$ is also head quartered in Saudi Arabia. How can they justify possessing wealth if they collectively can’t meet supply of financial resources to help even one percent poor Muslims around the world?

Estimated asset of global Islamic Microfinance in July 2013 set to US $ 1 billion. This amount could only help 1.3 million Muslims out of 650 million poor Muslims (with less than $ 2/ per day income) around the world, leaving 649 million Muslim in their poverty, to look forward for any additional source of Islamic micro finance assistance. Do investors possessing excess financial resources in QISMAT countries would not be questioned about it on the final Day of Judgment? Do the investors need not to offer Tayyibat so as to seek Blessings along with returns over their investments? This could be done if financial leaders in QISMAT countries successfully establish Islamic Micro Finance Bank with parking just 5% of their net reserves or assets.

We need to explore untapped markets for successful implementation of participatory micro finance. Considerably countries in Asia Pacific (India, Pakistan, Afghanistan and Bangladesh etc.) share 61.7% of global Muslim population compared to 19.8% by Middle East and North African countries.

Prophet Muhammadﷺ) ) and their Caliphs used Baitulmaal as institutional infrastructure to optimally allocate financial resources for socio–economic welfare of the people.  Institution like Baitulmaal cannot be operative in absence of Khilafa / community leader; and Khilafa is allowed without Advisory Council (Majlis E Shura). Without promoting Taiyibat, we cannot ensure sustainable Islamic governance with due supports from institutions like Baitulmaal and Majlis E Shura. Islamic laws regarding inheritance (for distribution of wealth), Paying Zakat (Saving tax), Sadqa (Alms), Awqaf (Assets for public welfare), Fitra (Festive Aid), Adahi (Sacrificial) and reserving Fai (fixed percentage allocation) all are part of Taiyibat. Without spirit for Taiyibat we may not succeed guiding the humanity to alleviate poverty through diverting the surplus wealth of rich for supporting the poor.

There are threats about severe punishment for those who hoard wealth negating charity. Prophet Muhammadﷺ) ) and his companions used to donate their excess wealth for welfare of humanity. The first waqf was created by the Prophet Muhammadﷺ) ) in the form of securing land on which the mosque in Madinah, (known as the Prophet’s Mosque today) could be built. Hazrat Umar (R.A.) established a waqf by making Sadqah of a land in Khaybar, which meant the land, could not be sold or given as a gift. The fruits from the farm were then distributed to the poor in the community. Money was also used to liberate slaves and help the wayfarers. Today Muslim philanthropists should come out with Cash Waqf to help alleviating poverty by means of promoting livelihood through micro finance.

If Muslims would not do the righteousness in accordance to Islamic teaching; and not arrange resources for poor enabling them get rid from sin like interest and unlawful earning, they may get punishment like the earlier communities (Jews) got.13 Thus it is required that Muslims should adopt financial model guided on teachings of Islam. Financially better off among Muslims (with spirit of Taiyibat) should establish Cash Waqf Funds as financial resource to alleviate poverty by way of improving livelihood of poor through means of participatory micro finance.

It is required that Islamic charity should be guided through spirits of Taiyibat and equipped with professional management to develop participatory mode of finance. Now Muslims should develop leaders like Hazrat Abu Bakr Siddiq who sacrificed his trade business and devoted for development of the community through welfare Governance . If we wish to see better representation of Islam around the world, we have to learn sacrificing our wealth and comforts with spirit of Taiyibat.

If Saudi Arabia and other member countries of QISMAT Countries take a lead in the way forward for Islamic Micro Finance, it is expected that social enterprises working for poverty alleviation around the world would extend all required support. But lead has to come from the Muslim only to improve representation of Islam around the world.  Unless Muslims self stood up to improve their own conditions and show that they as a community is capable to resolve the socio economic problems, they are not going to be Blessed as ruler of this world.


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