The social safety net in Islamic economy
Friday, 14 May 2010
Hafizul Islam Mian
Sadaqah/Donations: Sadaqa is the one of the voluntary economic instrument. No limit and eligibility criteria are required for performing contributions to the needy. It can be diverted, apart from the eight heads mentioned for the distribution of zakat, to any needy and it will strengthen the economic implications emerged by zakat. If Zakat and other compulsory charities fail to satisfy the needs of the poor, the state can motivate the rich to donate voluntarily and generously to help eradicate poverty and want.
Verses of the Qur'an: "Spend your wealth for the cause of Allah, and be not cast by your own hands to ruin; and do good. Lo! Allah loveth the beneficent." -(2:195).
"And they ask thee what they ought to spend. Say: That which is superfluous. Thus Allah maketh plain to you (His) revelations that haply ye may reflect."-(2:219).
Qard-al-Hasan: It is an arrangement of interest free loans for unproductive purposes or for the needy to meet the expenses like hospital expenses, home expenses and education expenses etc which do not make any earnings. So it is not able to charge any material benefit, like profit share, from qard-al-hasan. These are provided as the part of kindness to human beings. In an Islamic economy individuals and institutions like Islamic banks will offer this type of loans expecting the reward of Allah. Availability of qard-al-hasan reduces the financial burdens like interest of deprived.
Islam prefers a loan as a form of social service by the rich to help the poor. Islam does not recognize any loan with interest for the benefit of the debtor. M. Umer Chapra, an authority on Islamic economics, has given the definition of qard al hasan as: "Qard-al-hasan is a loan which is returned at the end of the agreed period without any interest or share in the profit or loss of the business." The receiver of qard-al-hasan is only required to repay the original amount of the loan.
Economic objectives of qard-al-hasan are: 1) The mobilization of wealth among all people in the society; 2) To strengthen the national economy;
3) To facilitate the poor to create new jobs market and business ventures by using their merits, skills and expertise; 4) Ultimately it can remove social and economical discrimination from the society.
Some verses in favour of qard-al-hasan are: "He who will give Allah qard-al-hasan, which Allah will double into his credit and multiply many times."-(2:245).
"Establish regular prayer and give regular charity and give Allah qard-al-hasan."-(73:20).
Goodly Loan to Allah: It is grace of Allah, the Almighty God that any expense incurred by a person in His path on charity or alms to the poor is regarded by Him as goodly loan to Him and He undertakes to repay it manifold. The rich are inspired to give loan to God in the form of helping the poor people and to earn many times big rewards for this. The verses of the Qur'an pertaining to this subject are:
"Who is it that will lend unto Allah a goodly loan, so that He may cause it increase manifold? Allah straiteneth and enlargeth. Unto Him ye will return." - (2:245).
"If ye lend unto Allah a goodly loan, He will double it for you and will forgive you, for Allah is Responsive, Clement." - (64:17).
According to Abdullah Yusuf Ali: "Spending in the cause of God is called metaphorically "a beautiful loan". It is excellent in many ways: (1) it shows a beautiful spirit of self-denial; (2) in other loans there may be a doubt as to the safety of your capital or any return thereon: here you give to the Lord of All in Whose hands are the keys of want or plenty: giving, you may have manifold blessings, and withholding, you may even lose what you have. If we remember that our goal is God, can we turn away from His cause?
According to another scholar: "Good loan" is that which is lent without any idea of personal gain or interest but is given with the sole intention to please Allah. Allah in His bounty credits the wealth thus spent in His Way as a loan to Himself. He promises that He will not only return the actual debt but increase it manifold, provided that it is a goodly loan in the real sense and is lent merely to please Him and for the sake of those objects He approves."
Corporate social responsibility (CSR): Corporate social responsibility among the people is a further important safeguard towards a just distribution of wealth and combating destitution and poverty in the Muslim community. From Islamic education, Islamic sentiments are developed for a Muslim to feel responsible for his brother. On no account should he bask in pleasures of life and luxuries while his brothers suffer from the severe pains, bitter hunger, and unsatisfied needs. Prophet (SM) himself distributed the wealth of his wife Khadija (R) towards performing the Reciprocal (corporate) social responsibility. Abu Bakr (R) and Osman (R) also performed the same by distributing their wealth towards alleviating poverty of the poor.
Waqf (Endowment): Waqf (endowment) is regular source of revenue which is earmarked and dedicated fund of Muslim for supporting charitable and welfare activities for the poor. Waqf, in the language of Shariah, means the dedication of the corpus of property to Almighty God. The property thus transfers from the dedicator (waqif) to the ownership of Allah but its benefit is dedicated to the poor, sick, travellers, or any other noble cause recognised by Islam. Thus the institution of waqf helps elimination of poverty, misery, disease, illiteracy and in this way promotes the cause of equitable distribution of wealth.
Ganima (war booty) and Fay: Ganima is the property Muslims seize from the enemy. Four fifth of the ganima is divided among the fighting army and one fifth (khums) of the entire ganima move to state fund, which is earmarked for the special beneficiaries mentioned in Quran. Fay is the property receives from the enemy without actual fighting. This source of state revenue is generalized for the common good of the entire population, specially poor and public welfare.
Kharaj (Land-Tax): Land-Tax, a source of revenue of state, is the levy imposed on land produce. This is actually the rent for the use of value of agricultural land. The rate of kharaj and method of collection can be declared by state from time to time. Considering the poor condition of distressed people the Islamic state allots government land to them without kharaj to reduce their poverty.
State ownership on uncultivated land: Any economic instrument that hinders productivity is harmful to economic prosperity. According to Islamic Shariah, if a land remains uncultivated for three consecutive years it requires a change in ownership of that land from current owner to other who is ready to cultivate the land and produce. Prophet (pbuh) said the original rights of ownership in land are with Allah and the Prophet and then with you afterwards. But he who revives any dead land acquires the right of ownership to it and there would be no kharaj on small piece of land. In this way poor people are helped by distributing uncultivated or government land to alleviate their poverty.
Combined ownership of natural resources: Individual ownership of natural resources like fire, water, pasture and salt are restricted by the Islamic Shariah. People have combined ownership in these natural resources which should be accessible to anyone. This rule allows anyone to use the benefit derived from the natural goods and ensure that nobody is away from the natural goods which are easy to get to without any hard work. List of natural goods, in addition to mentioned goods, can be extended into more goods in time to time. Prophet (pbuh) said people are joint owners in water, pasture and fire. There are other sources of revenues like property of deceased with no legal heir, lost and found with no claimants. Considering distressed condition the poor people the Islamic state allots water, pasture and salt area to them without imposing any tax to reduce their poverty.
The writer is a Director of Islami Bank Bangladesh Limited
Sadaqah/Donations: Sadaqa is the one of the voluntary economic instrument. No limit and eligibility criteria are required for performing contributions to the needy. It can be diverted, apart from the eight heads mentioned for the distribution of zakat, to any needy and it will strengthen the economic implications emerged by zakat. If Zakat and other compulsory charities fail to satisfy the needs of the poor, the state can motivate the rich to donate voluntarily and generously to help eradicate poverty and want.
Verses of the Qur'an: "Spend your wealth for the cause of Allah, and be not cast by your own hands to ruin; and do good. Lo! Allah loveth the beneficent." -(2:195).
"And they ask thee what they ought to spend. Say: That which is superfluous. Thus Allah maketh plain to you (His) revelations that haply ye may reflect."-(2:219).
Qard-al-Hasan: It is an arrangement of interest free loans for unproductive purposes or for the needy to meet the expenses like hospital expenses, home expenses and education expenses etc which do not make any earnings. So it is not able to charge any material benefit, like profit share, from qard-al-hasan. These are provided as the part of kindness to human beings. In an Islamic economy individuals and institutions like Islamic banks will offer this type of loans expecting the reward of Allah. Availability of qard-al-hasan reduces the financial burdens like interest of deprived.
Islam prefers a loan as a form of social service by the rich to help the poor. Islam does not recognize any loan with interest for the benefit of the debtor. M. Umer Chapra, an authority on Islamic economics, has given the definition of qard al hasan as: "Qard-al-hasan is a loan which is returned at the end of the agreed period without any interest or share in the profit or loss of the business." The receiver of qard-al-hasan is only required to repay the original amount of the loan.
Economic objectives of qard-al-hasan are: 1) The mobilization of wealth among all people in the society; 2) To strengthen the national economy;
3) To facilitate the poor to create new jobs market and business ventures by using their merits, skills and expertise; 4) Ultimately it can remove social and economical discrimination from the society.
Some verses in favour of qard-al-hasan are: "He who will give Allah qard-al-hasan, which Allah will double into his credit and multiply many times."-(2:245).
"Establish regular prayer and give regular charity and give Allah qard-al-hasan."-(73:20).
Goodly Loan to Allah: It is grace of Allah, the Almighty God that any expense incurred by a person in His path on charity or alms to the poor is regarded by Him as goodly loan to Him and He undertakes to repay it manifold. The rich are inspired to give loan to God in the form of helping the poor people and to earn many times big rewards for this. The verses of the Qur'an pertaining to this subject are:
"Who is it that will lend unto Allah a goodly loan, so that He may cause it increase manifold? Allah straiteneth and enlargeth. Unto Him ye will return." - (2:245).
"If ye lend unto Allah a goodly loan, He will double it for you and will forgive you, for Allah is Responsive, Clement." - (64:17).
According to Abdullah Yusuf Ali: "Spending in the cause of God is called metaphorically "a beautiful loan". It is excellent in many ways: (1) it shows a beautiful spirit of self-denial; (2) in other loans there may be a doubt as to the safety of your capital or any return thereon: here you give to the Lord of All in Whose hands are the keys of want or plenty: giving, you may have manifold blessings, and withholding, you may even lose what you have. If we remember that our goal is God, can we turn away from His cause?
According to another scholar: "Good loan" is that which is lent without any idea of personal gain or interest but is given with the sole intention to please Allah. Allah in His bounty credits the wealth thus spent in His Way as a loan to Himself. He promises that He will not only return the actual debt but increase it manifold, provided that it is a goodly loan in the real sense and is lent merely to please Him and for the sake of those objects He approves."
Corporate social responsibility (CSR): Corporate social responsibility among the people is a further important safeguard towards a just distribution of wealth and combating destitution and poverty in the Muslim community. From Islamic education, Islamic sentiments are developed for a Muslim to feel responsible for his brother. On no account should he bask in pleasures of life and luxuries while his brothers suffer from the severe pains, bitter hunger, and unsatisfied needs. Prophet (SM) himself distributed the wealth of his wife Khadija (R) towards performing the Reciprocal (corporate) social responsibility. Abu Bakr (R) and Osman (R) also performed the same by distributing their wealth towards alleviating poverty of the poor.
Waqf (Endowment): Waqf (endowment) is regular source of revenue which is earmarked and dedicated fund of Muslim for supporting charitable and welfare activities for the poor. Waqf, in the language of Shariah, means the dedication of the corpus of property to Almighty God. The property thus transfers from the dedicator (waqif) to the ownership of Allah but its benefit is dedicated to the poor, sick, travellers, or any other noble cause recognised by Islam. Thus the institution of waqf helps elimination of poverty, misery, disease, illiteracy and in this way promotes the cause of equitable distribution of wealth.
Ganima (war booty) and Fay: Ganima is the property Muslims seize from the enemy. Four fifth of the ganima is divided among the fighting army and one fifth (khums) of the entire ganima move to state fund, which is earmarked for the special beneficiaries mentioned in Quran. Fay is the property receives from the enemy without actual fighting. This source of state revenue is generalized for the common good of the entire population, specially poor and public welfare.
Kharaj (Land-Tax): Land-Tax, a source of revenue of state, is the levy imposed on land produce. This is actually the rent for the use of value of agricultural land. The rate of kharaj and method of collection can be declared by state from time to time. Considering the poor condition of distressed people the Islamic state allots government land to them without kharaj to reduce their poverty.
State ownership on uncultivated land: Any economic instrument that hinders productivity is harmful to economic prosperity. According to Islamic Shariah, if a land remains uncultivated for three consecutive years it requires a change in ownership of that land from current owner to other who is ready to cultivate the land and produce. Prophet (pbuh) said the original rights of ownership in land are with Allah and the Prophet and then with you afterwards. But he who revives any dead land acquires the right of ownership to it and there would be no kharaj on small piece of land. In this way poor people are helped by distributing uncultivated or government land to alleviate their poverty.
Combined ownership of natural resources: Individual ownership of natural resources like fire, water, pasture and salt are restricted by the Islamic Shariah. People have combined ownership in these natural resources which should be accessible to anyone. This rule allows anyone to use the benefit derived from the natural goods and ensure that nobody is away from the natural goods which are easy to get to without any hard work. List of natural goods, in addition to mentioned goods, can be extended into more goods in time to time. Prophet (pbuh) said people are joint owners in water, pasture and fire. There are other sources of revenues like property of deceased with no legal heir, lost and found with no claimants. Considering distressed condition the poor people the Islamic state allots water, pasture and salt area to them without imposing any tax to reduce their poverty.
The writer is a Director of Islami Bank Bangladesh Limited