PALGRAVE STUDIES IN ISLAMIC BANKING, FINANCE, AND ECONOMICS ISLAMIC FINANCE AND AFRICA’S ECONOMIC RESURGENCE Promoting Diverse and Localized Investment Muhammad Al Bashir Muhammad Al Amine Palgrave Studies in Islamic Banking, Finance, and Economics Series Editors Zamir Iqbal World Bank Potomac , USA Jahangir Sultan Bentley University Boston , Massachusetts, USA Mehmet Asutay School of Government and International Aff airs Durham University Durham , United Kingdom The aim of this series is to explore the various disciplines and sub- disciplines of Islamic banking, fi nance and economics through the lens of theoretical, practical, and empirical research. Monographs and edited col- lections in this series will focus on key developmentsin the Islamic fi nan- cial industry as well as relevant contributions made tomoral economy, innovations in instruments, regulatory and supervisory issues, risk man- agement, insurance, and asset management. The scope of these books will set this series apart from the competition by offering in-depth critical analyses of conceptual, institutional, operational, and instrumental aspects of this emerging fi eld. This series is expected to attract focused theoretical studies, in-depth surveys of current practices, trends, and standards, and cutting- edge empirical research. More information about this series at h ttp://www.springer.com/series/14618 Muhammad Al Bashir M uhammad Al Amine Islamic Finance and Africa’s Economic Resurgence Promoting Diverse and Localized Investment Muhammad Al Bashir Muhammad Al Amine Bank Alkhair Busaiteen-Muharraq, Bahrain Palgrave Studies in Islamic Banking, Finance, and Economics ISBN 978-3-319-28834-5 ISBN 978-3-319-28835-2 (eBook) DOI 10.1007/978-3-319-28835-2 Library of Congress Control Number: 2016940808 © The Editor(s) (if applicable) and The Author(s) 2 016 The author(s) has/have asserted their right(s) to be identifi ed as the author(s) of this work in accordance with the Copyright, Designs and Patents Act 1988. This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifi cally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfi lms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specifi c statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the pub- lisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Printed on acid-free paper This Palgrave Macmillan imprint is published by Springer Nature The registered company is Nature America Inc. New York G A T LOSSARY OF RABIC ERMS Bay Sale on credit (Le., a sale in which goods are delivered ‘Bithaman immediately but payment is deferred Ajil or bay’ mu’ajjal bay’ al-dayn S ale of debt. According to a large majority of Muslim scholars, debt cannot be sold for money except at its face value, but it can be sold for goods and services Fatawā P lural of f atwa. Religious verdicts by a Muslim Scholar or a resolution by a number of scholars or organization. Gharar L iterally, it means deception, danger, risk and uncertainty. Technically it means exposing oneself to excessive risk and danger in a business transaction as a result of uncertainty about the price, the quality and the quantity of the counter-value, the date of delivery, the ability of either the buyer or the seller to fulfi l his commitment, or ambiguity in the terms of the deal, thus exposing either of the two parties to unnecessary risks. Hadith S ayings, deeds and endorsements of the Prophet Muhammad (peace be upon him) narrated by his Companions Haram T hings or activities prohibited by the Shariah Ijārah L easing. The sale of usufruct of an asset. The lessor retains the ownership of the asset with all the rights and the responsibilities that go with ownership. v vi GLOSSARY OF ARABIC TERMS Istisna A contract whereby a manufacturer (contractor) agrees to produce (build) and deliver a well-described good at a given price on a given date in the future payment of the consideration can be at the beginning of the transaction, by installment or at the end. Maysir T echnically, gambling or any game of chance. Mudarabah A contract between two parties, capital owner(s) or fi nanciers (called r abb al-mal ) and an investment manager (called m udarib ). Profi t is distributed between the two parties in accordance with the ratio agreed upon at the time of the contract. Financial loss is borne only by the fi nancier(s). The entrepreneur’s loss lies in not getting any reward for his services. Murābaḥah S ale at a specifi ed profi t margin. The term, however, is now used to refer to a sale agreement whereby the seller purchases the goods desired by the buyer and sells them at an agreed marked-up price, the payment being settled within an agreed time frame, either in installments or in a lump sum. The seller bears the risk for the goods until they have been delivered to the buyer. Mushārakah Partnership. A musharakah contract is similar to a mudarabah contract, the difference being that in the former both partners participate in the management and the provision of capital, and share in the profi t and loss. Profi ts are distributed between the partners in accordance with the ratios initially set, whereas loss is distributed in proportion to each one’ share in the capital. Ribā Literally, it means increase or addition or growth. Technically it generally refers to the ‘premium’ that must be paid by the borrower to the lender along with the principal amount as a condition for the loan or an extension in its maturity. This is also called riba al-nasia. Interest as commonly known today is a form of riba. Another form of riba is riba al-fadl pertaining to trade contracts. It refers to exchange of different quantities (but different qualities) of the same commodity. Such exchange is prohibited in particular commodities defi ned in the Shariah Salam A sale in which payment is made in advance by the buyer and the delivery of the goods is deferred by the seller GLOSSARY OF ARABIC TERMS vii Sharī‘ah Refers to the corpus of Islamic law based on Divine guidance as given by the Quran and the Sunnah and embodies all aspects of Islamic faith. Sukūk C ertifi cates of equal value representing undivided shares in ownership of tangible assets, usufructs and services (in the ownership of) the assets of particular projects or special investment activity Takāful It is the Islamic alternative to insurance. It is based on the commitment of the participants to make donations for the sake of their own interest. The participants, therefore, protect their group by payment of contributions that constitute the resources of the insurance fund, and assign the management of that fund to a committee of policyholders, or to a joint stock company that possesses the license of practicing insurance business. In the latter case, the company assumes this job on the basis of a remunerated wakala (agency) contract. In addition to managing the insurance operations, the committee of policyholders or the company also assumes the responsibility of investing the assets of the fund through mudaraba or investment agency Wakalah A gency contract whereby one person appoints another to perform a specifi c task on his behalf, usually against a fi xed fee. The agent is liable as a result of negligence and misconduct. Waqf A ppropriation or tying up a property in perpetuity for specifi c purposes. No property rights can be exercised over the corpus. Only the usufruct is applied towards the objectives (usually charitable) of the waqf Zakah L iterally means blessing, purifi cation, increase and cultivation of good deeds. It is one of the pillars of Islam. Technically it is an obligation in respect of funds paid for a specifi ed type of purpose and for specifi ed categories. It is an individual duty if the criteria for making it obligatory are satisfi ed. The government has the authority and responsibility to collect it and distribute it to the prescribed categories of people. The government may also authorize shareholders to pay it personally if it is satisfi ed that they will do so. A CKNOWLEDGEMENTS All praise to Allah (s.w.t) the most Gracious and most Merciful, by whose grace and blessing this work has been completed. I would like to take this opportunity while relying on the instruction of the Prophet to the effect that “whoever does not thank people does not thank Allah” to express my thanks and gratitude to those who have contributed in one way or another through their advice, criticism, and support in strengthening the qual- ity of this work. Special thanks and appreciation are due to Sister Isabel Mary Zahra Rehman for her valuable help and assistance in editing an early draft of this book and to her husband Brother Aziz Rehman Sheikh. Similar thanks and gratitude are due to Brother Dr Zamir Iqbal, Brother Dr Abdul Kabir Hassan, Brother Shafi q Flynn, Brother Dr Mohammed Burhan Arbouna, Brother Dr Ahmad Arrifai, Brother Kamal Abdelkarim Hassan, Brother Mohamed Ikram Thowfeek, Brother Naeem Thowfeek, Brother Imad Ali, Brother Akram Traboulsi, and Sister Kifah Rashid. May Allah rewards them all for their help and assistance. However, any short- coming or mistake remains the author’s own responsibility. Finally, I express my sincere indebtedness and gratitude to my family for their support, patience, perseverance, and encouragement, particularly my wife and children. ix
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