By Er. Izhar Khan

Religion is thought to influence economic performance at the individual, group, and national level. Islam is a religion of peace which today governs the life of 1.6 billion Muslims around the world. Islam gives the principles to lead life in all areas to Muslims in particular and Non-Muslims in general. Quran states that Allah created human being to worship him and as his representative on earth.

The belief in the divine revelation is fundamental and obeying Allah’s command is duty of every Muslim. The Allah not only commands Muslims to perform religious duty but also once free from it should spread on the earth to seek from his bounty (Quran 62:10). Islam wants Muslims to take economic activities in large way which will benefit them as well as others. Prophet Muhammad صلى الله عليه وسلم preferred trade as best means of earning the sustenance and also encouraged the Muslims to do trade. The people of Mecca including the first four caliphs of Islam were traders. They were skilled traders and merchants who use to trade with Syria, Yemen, Ethiopia and Iraq. Later Trade was one of the best ways for Muslims to take the Message of Islam to rest of the world through Silk Route. It is believed that Message of Islam reached to China, Malaysia, and Indonesia through ancient Silk route trade.

However people of Mecca in while trading did not differentiate between lawful and unlawful, good and bad, harmful. Quran established the principles of trade for Muslims and said that O people, eat from the earth’s products all that is lawful and good, and do not follow the steps of Satan( Quran 2:168).  Dealing in Riba (i.e. interest) was common among the people and did not consider it unlawful or Haram. Quran narrates their saying like this: they say, Trade is just like usury; whereas Allah permitted trading and forbidden Riba (Quran 2:275).

Allah has equated the dealing in Riba to War with Allah and his Messenger; And if you do not (give up Riba), then be informed of a war [against you] from Allah and His Messenger (Quran 2:279). Prophet Muhammad صلى الله عليه وسلم cursed the receiver and the payer of interest, the one who records it and the two witnesses to the transaction and said: “They are all alike [in sin]. (Muslim, Tirmidhi)

One would wonder why Islam criticises those dealing in Riba and gives strict warning in case of Non obedience. Nejatullah siddiqui one of the prominent Islamic Economist of our time says that Islam has prohibited Interest because it is unfair (Zulm).The word Riba in Arabic language means is “ to excess” or “ increase”. Let us take an example Why Interest is considered to be unfair;

For Example people A in need of money say $10 approaches person B for loan who has money. The person B lends to person A with condition that in return he will pay back $15. Here there will be an increase of $5 to principal amount but this increase of $5 is unjust because A is taking undue advantage of B’s condition. Therefore Allah says that He will destroy any unjust increase but will increase charity.

Riba creates many problems like;

1. Unequal distribution of wealth in society
2. Destroys the social and Economic system of the country
3. Causes Global debt Crisis

Today whole world is embroiled in financial crisis. And the world is divided between rich and poor, Developed and underdeveloped, progressive and Non progressive society. Behind all this Interest is one of the major factors behind all these. Today as per the World Bank report the GDP ($577.4 billion) of 40 Heavily Indebted Poor Countries is less than the wealth ($586.7 billion) of the world’s 11 richest people combined. World Bank reports that in 2005, 43% of the world population had income less than US$1.25/day.

Interest has destroyed many country one of which is Nigeria let us see what president Obasanjo of Nigeria said in, G8 Summit Okinawa , 2000;

“All that we had borrowed up to 1985 or 1986 was around $5 billion and we have paid about $16 billion yet we are still being told that we owe about $28 billion. That $28 billion came about because of the injustice in the foreign creditors’ interest rates. If you ask me what the worst thing in the world is, I will say it is compound interest.”

African nation’s service to debts has not left them with money to spend on their children health. According to UNICEF, 22,000 children die each day due to poverty and poor sanitation. It even pushes many into sex slavery According to CNN report, Debt is the major cause of child prostitution in Cambodia. By Debt I mean loan with interest. To our surprise according to UK’s famous newspaper independent the Britain is still repaying debt worth £2billion from the World War I.

Islam provides the economic system which is based on equality and justice. It has capability to fulfil the modern day economic dream of full employment, stability, economic growth, and improving efficiency, and equity. It has the system of zakat which is the remedy to eradicate poverty consider if  just the top ten richest people in the world paid zakat – a mere 2.5% of their wealth – it would amount to a staggering £7.7 billion! The power of that money in tackling poverty would be huge.

Er. Izhar Khan: Msc student in the world Renowned University, University of Glasgow United Kingdom