Apparently, it is a matter of pleasure that global volume of Islamic finance industry has crossed $1.3tn approximately, which is, definitely, providing the best and compatible sources of finance with interest free modes. According to a careful estimate, there are more than 2000 Islamic Financial Institutions offering Islamic Banking, Islamic Insurance (Takaful), Islamic Funds, Mudaraba, Islamic Bonds (sukuk), Islamic Microfinance and some other institutions actively providing Islamic financial services on different modes in adherence of Shari’a principles of Islamic Finance. If we look into the market share of above mentioned institutions, we get shocked and depressed for a while with the fact that Islamic Banking and Finance has been nearly confined to the rich people and as per the ideology of capitalism, the profit urge has captured the Islamic Financial Industry and discriminated against the underprivileged, leaving them deprived of Islamic financial services. In view of these facts, it should be said that commercialism has captured Islamic finance institutions in such a way that business with and financing to the poor have slipped from their agenda.
A big question mark on the Islamic finance industry
Tuesday ,10 September 2013
According to the facts and figures (March-2013) by Consultative Group to Assist the Poor (CGAP), (an associated institution to the World Bank), the global volume of Islamic Microfinance has reached at USD 800 million with serving about 1.3 million beneficiaries. While as per the latest research (July-2013) conducted by AlHuda Centre of Excellence in Islamic Microfinance, the global volume of Islamic Microfinance has reached at $1bn. The total number of Islamic microfinance institutions is more than 300, operating around the globe while the share of Islamic Microfinance is less than 1% from the overall volume of $ 1.3tn of Islamic Finance Industry, which, itself, is a big question mark on Islamic finance industry and proving its misfortune. These stated facts and figures give rise to different question such as: is social segmentation between poor and rich 1:99%? Does Islamic finance have financial resources only for the rich? Not for the poor? Is Islamic Finance an option only for a particular segment of society? Is it a just system of Islam? The answers to all these questions are negative and even awful.
As per the analysis of Islamic finance in light of Islamic teachings we get into the Islamic ideology of finance, which aims at justice, cooperation, welfare of the poor and financially deprived people of society with its best principles. Islam is a name of revolution starting from the poor and ending at the same. If we look at comparative study of different religions regarding their viewpoint of poverty, then we find that poverty alleviation is not only the social responsibility in Islam rather a religious obligation as well. Zakat, charity, Sadqa, Fitr, Usher and Qarz-e-Hasan etc are amongst the key religious responsibilities of Muslims, whereas it is a social responsibility in other religions rather than a religious one which recognised as branded name of “Corporate Social Responsibility” (CSR), and they doing good work for poverty alleviation and social development in the whole world, but unfortunately, Islamic financial industry have ignored its social or religious responsibilities.
If we look at world poverty, we get surprising facts and figures. 46% of total world poverty exists in Muslim world while Muslim population in the world is 26%. The United Nations has marked 26 out of 57 member countries of OIC as the least developed countries. Current statistical information highlights that poverty in the Muslim World is increasing day by day, which is, as per the serious observation, caused by no or limited response of poor people to microfinance facilities because of interest; no or limited Islamic Micro Financing facilities provided by Islamic financial institutions; and minimal attention and interest of international donor agencies (UNDP, World Bank, IFC) towards Islamic microfinance which, in return, is throwing the Muslim world into an era of poverty.
As per the praiseworthy analysis of economics experts of modern age (Mr Tariq Ullah and Mr Ubaid Ullah 2008), 650 million Muslims in the world are living below the poverty line, with less than $2 per day income. Meanwhile, Islamic Microfinance services only attempted to get 1.3 million Muslims out of poverty out of 650 million, whereas remaining 649 million Muslim, living in poverty, are still looking forward to any financial assistance through Islamic means. The Islamic finance industry is facing a lot of criticism in different aspects of its implementation; the acceptability of Islamic finance, objections from Sharia scholars, and conflicts in Sharia related issues are among the main challenges to Islamic Finance Industry. But the objection of neglecting the poor is very critical, since if not resolved, it can damage and bring a perpetual loss to the Islamic banking and finance industry.
The optimal results for the economic prosperity of Islamic Finance can be ensured if Islamic Microfinance Institutions established by the Islamic Finance Industry. However, Islamic microfinance can be energised by utilising the available charity amount of Islamic Banking and Finance industry, which is worth millions of dollars. Inter alia Zakat, Sadqaat, Waqf, other Islamic Microfinance products, e.g Murabaha, Musharaka, Salam and Istisna etc, can be used prolifically for poverty reduction and social development.
Our Sharia scholars are also responsible for insisting and pursuing the Islamic financial institutions to execute and promote Islamic microfinance. Otherwise there is a definite chance of truth to the rumours that Islamic banking and finance services are only for the rich, thereby making the discrimination of “Have and Have Not” and ensuring its ultimate benefits only to the rich.