Islamic Economics Institute

Wednesday Academic Dialogue

Islamic Micro Finance In The Light of
Divine Social Frame Work

 Osman Aurakzai
Head of Research & Development Centre,
Bank Al Jazira, Jeddah, KSA

Wednesday 05 February, 2014 (05 Rabi’ II, 1435H)


The paper discusses the socio economic framework as laid down in the original sources.

The First Section of the research paper answers the basic question about Why Allah (SWT) in the divine revelations has described the concept of ownership of assets and natural resources?  The analysis of different views of the Islamic Economists who have discussed this concept in their books is analyzed to demonstrate that we have not been able to fully create awareness of this concept in Islamic countries in particular and the west in general. The paper argues that if we are fully aware of this concept of real ultimate ownership then the amount of insatiability we have in our hearts and minds to increase our assets at a socio economic cost will decrease.

The Second Section explores the differences between the divine hierarchy of needs and the Maslow’s hierarchy of needs to highlight and determine; what is intellectually a desired socio economic aim as presented in the divine revelations?  The paper also makes a brief comparison of the haves and have-nots in the Islamic society and the natural law of disparity between rich and poor that should logically exist; so that the economic activity and the need for each type of trade and service can be provided to fulfil the entire needs of the society. However, the current extreme level of disparity between rich and poor highlighted by the fact that 3 Billion people are living below the poverty line (i.e. earning less than a dollar a day) is alarming but the solution in the divine revelations is establishment of Charity. The paper highlights failure of Muslims to distribute compulsory charity Zakah that is mentioned 32 times and Sadaqah for expiation of sins that is mentioned 73 times in the Quran. The Sunnah of the Prophet is to voluntarily give charity of whatever is in excess. 

The Third Section exclusively discusses micro financing case study under the Corporate Social Responsibility (CSR) as implemented in some Banks and Financial Institutions in the Kingdom of Saudi Arabia. The paper concludes that as per the divine guidance Qard Al Hasna stressed six times in the Quran must be used as a tool by individuals and institutions for Micro Financing in the case of Socially Responsible Investments and Social Engineering (i.e. resolving social problems).


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Last Update 4/7/2014 11:52:21 AM