Sorry State of Wealth Distribution in the Muslim World

The aspect of distribution of wealth must be important in Quran since on the very first page of the main text, chapter two verse three (2-3) there is a condition laid out for momin- Believers to follow, given as 

ينفِقون— “and (the believers) spend out of what We have provided for them”. This is also reaffirmed in verse 4-39 as a requirement. The word yunfiqoon and its derivatives appear in the book over seventy times, give or take one or two.

Generally yunfiqoon is translated as ‘spend’; but it does NOT make sense as to why the Book should put so much emphasis on ‘spending’ one’s wealth. Common sense tells us that one who has the means to do so will, and does spend it on oneself and the loved ones, often lavishly, extravagantly, ostentatiously and sometimes wastefully. But these are also forms of ‘spending’ of one’s wealth, and yet it is frowned upon in the Book, as for example in 7-31 and many other places. The word ‘spend’ therefore needs to be looked at closely.

Briefly this is elaborated and explained in verse 36-47;-

And when they are told “spend out of the bounties which God has provided you with,” the non-believers say “ shall we then feed those whom God, if He had wanted, He would have fed them Himself ?”

The condition seems to have a much broader implications than just ‘spend’. Also, so as not to dwell on the semantics—the “feeding” is not to be restricted to mean just quenching the fire in the bellies of the poor, by giving food and drink as a religious ritual.

In the general Muslim society and its religious rituals, these small acts of mercy are termed as ‘charity’. Yet the needy have a ‘Right (haqqahu)’ in the wealth of the wealthy 30-38, 70-24 as the Book says. This ‘Right’ therefore can only be established and guaranteed by the State — a central body to spread, distribute and circulate the wealth equitably amongst its citizens, as its social obligation and duty.

Salaat and Zakat are the two faces of the one coin in the Book, yet in 2-3 Zakaat is replaced with Nafq as a basis of the principle of distribution of wealth. Otherwise the combination of Salaat and Zakat remains, without mentioning the quantum figure for the later. One must conclude then that it must be in order to give the flexibility for the State to implement its fiscal policy as required. But our churches have taken upon themselves, to fix it at 2.5%, as divinely ordained! The good Book has alerted us of such falsehood in 2-79 etc saying –they write the books with their own hands and then say “haazaa min indillah”—this is from God”

Individual’s acts of charity, is very much encouraged in the Book; in a society where the State has abrogated its responsibility or is unable to look after its people, but with the condition that ‘the right hand should not know what the left hand is doing’; but more so it is emphasised that to ensure the ‘dignity ‘ of every human being 17-70, it is the collective responsibility of mankind – the agency being the States– to which, God who is the master of the universe 43-85, has in the broadest sense entrusted with all its resources to it 45-13; and therefore, the responsibility of fulfillment of national duties to manage and look after His creation.

In Muslim society ‘charity’ –giving to the needy and the receiver being in need of charity is compounding the felony as it is ‘demeaning’ to the receiver of their “human dignity” and elevates the giver –the so called ‘generous person’– to a higher strata—creating a class of  wealthy religious élites, which is not acceptable to Quran.

It is argued that if charity is a religious-must, then it should be necessary for the society to always maintain a deprived class of people in the community so that the wealthy can earn religious merit by their acts of mercy and the poor to remain poor to perform a holy duty set upon them. Some religions do operate on this principle. In the words of the poet Iqbal:-

Pدستِ  دولت  ٓافريں کو مزد  يوں ملتی رہی raise is always heaped on the rich-giving-palms

ہِلِِ ثروت جيسے ديتے ہيں غريبوں کو زکاتAs the opulent people give Zakat to the poor!

(Digressing a bit; a poster was put out by Amnesty International, showing a South American Bishop or Cardinal—proponent of ‘Liberation Theology’ saying that “when I fed the poor, they said I was a saint, but when I asked them why are they poor, they said I was ‘a communist’ ”! Muslim rulers should ponder this statement).

In the social emocratic countries, an unemployed person, for what ever genuine reason, if is incapacitated to work, receives an income from the State to maintain a minimum quality of life, and the receiver feels no stigma of having received a charity, as there is not a known individual who contributed towards it. The irony is that the Muslim religious brigades there brand these countries as Kafir, yet enjoying the handouts quite happily!

Whereas no Muslim State, including those officially called ‘Islamic State’, theocracies and some very wealthy ones at that, pass the test of Quranic system! Exception may be cited of Ghadafi’s regime where one is given to understand that every Libyan was provided with all the social benefits as in the West.

Is that not at least one of the many reasons why people from third world generally and many Muslim countries, some immensely rich in resources and religious too, flock to them and register themselves at the social service office on arrival—some times even the rich ones do too? Admittedly it is true of all third-world countries and all types of people, but that is no excuse for those calling themselves momin as they would want to be classified as believers.

Can the Quranic system of distribution and circulation of wealth be summarised in a nut shell out of so many verses on nafaq in the Book? It seems the following are the main ones:-

Fulfil the needs of the deserving needy, for It is their right, so that the humanity as whole develops and progresses with dignity.

Hording of wealth negates progress and development. Conversely circulating excess to need wealth judiciously and freely is essential to the development and progress of self and humanity as a whole.

The State is obliged to undertake the task of providing for the essentials of life and the individual is obliged to contribute towards it by payments of State Tax.

In a State governed on Quranic priciples—an Islamic State– there should never be any deprived class of people; to provide for the ‘religious’ rites of the rich to perform ‘holy’ rituals on the poor

In 1972/ 3(?) during a World Bank conference  in Nairobi, a Pakistani economist gave a private lecture where he said that just one Middle Eastern oil rich State could provide for the entire Muslim world’s budget per year! That was then and the position today is even better in terms of their immense oil wealth. One must assume that he was an expert.

So where is this Muslim world’s and Universal humankind’s wealth gone or is disappearing? Could the answer lie in the trillion dollars arms deals in the Muslim world? Ironically the deals are made with the very warmongers who have instigated the buyers to fight among themselves for decades, and often the buyers hire the same to put the noose round their necks, so to speak?

The natural resources of Muslim countries are considered as the private property and the country itself as their fiefdom of those who are in Power, which is often inherited or even usurped.

Obscene and extravagant display of wealth, on one hand and the abject poverty, illiteracy and backwardness of Muslim people on the whole, should make them hang their heads in shame if they are momin!

Yes, it must be admitted that some of these rich states and super rich people donate here and there  for the construction of Mosques, minarets and MADrasas too and occasionally a school or two, but with strings attached, such as for self promotion and propagation of their particular religious creed.

The world needs a new age financial system.

It has tried ‘greed is good’ philosophy of and failed number of times before too- ala a few GFCs.

It has tried central planning and the idealism of ‘one for all and all for one’ and failed. (China is straddling both sides of the fence today experimenting with ‘one country two systems’).

Absolute monarchy, oligarchy and theocracy where it exists have proved to be the bane if not the ruin of nations in financial terms.

Therefore a lay person should be allowed to ask; — Why not try the Quranic system; a universal system for mankind where greed is frowned upon, distribution and circulation of wealth is encouraged, feudal system and perpetual land ownership is forbidden and personal morality and good character is the basis of ‘modus operandi’ of governance. The bonus of it all is that it has nothing to do with any Religion, Church dogma and its professional piety-clad-elite class to administer it.

It is dangerous for a lay person, to tread in the mine field of social science.

Although it is considered as disciplines of science by academia and professionals yet, looking at the state of the world, it can not, by any stretch of imagination be accepted as scientific. The very poor standards of famous ‘ratting agencies’ and experts, for example giving triple ‘A’ rating for financial management for decades past to a bankrupt nation, which today owes the world fourteen and half trillion dollars, is a glaring example of the fallacy of it being science.!

This being a dry subject, a little light hearted dig at our situation may not go astray. Most of us have come across the comic list of 21 economic models of the world for example, Socialism is given as:- You have 2 cows. You give one to your neighbour.

However the list does not give the Middle Eastern (Arab) and Islamic (Quranic) models of distribution of wealth. Here is the Arab model:

You have two Camels

You hire an US army vet to artificially inseminate them.

The vet tells you they are both males.

You thank them for their uncanny ‘intelligence’.

In gratitude you buy their two ‘hummers’ for 30 billion dollars!

Then pay them some more and hire one more army vet to drive them around.

The Islamic model may be given as:

You have two cows.

You give one to your neighbour in exchange for his Bull.

Nature takes its course and both neighbours prosper.

21 Economic Models Explained With Cows


You have 2 cows.

You give one to your neighbour.


You have 2 cows.

The State takes both and gives you some milk.


You have 2 cows.

The State takes both and sells you some milk.


You have 2 cows.

The State takes both and shoots you.


You have 2 cows.

The State takes both, shoots one, milks the other, and then throws the milk away…


You have two cows.

You sell one and buy a bull.

Your herd multiplies, and the economy grows.

You sell them and retire on the income.


You have two giraffes.

The government requires you to take harmonica lessons


You have two cows.

You sell one, and force the other to produce the milk of four cows.

Later, you hire a consultant to analyze why the cow has dropped dead.


You have two cows.

You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.

The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.

The annual report says the company owns eight cows, with an option on one more.

You sell one cow to buy a new president of the United States , leaving you with nine cows.

No balance sheet provided with the release.

The public then buys your bull.


You have two cows.

You go on strike, organize a riot, and block the roads, because you want three cows.


You have two cows.

You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.

You then create a clever cow cartoon image called ‘Cowkimon’ and market it worldwide.


You have two cows.

You re-engineer them so they live for 100 years, eat once a month, and milk themselves.


You have two cows, but you don’t know where they are.

You decide to have lunch.


You have two cows.

You count them and learn you have five cows.

You count them again and learn you have 42 cows.

You count them again and learn you have 2 cows.

You stop counting cows and open another bottle of vodka.


You have 5000 cows. None of them belong to you.

You charge the owners for storing them.


You have two cows.

You have 300 people milking them.

You claim that you have full employment, and high bovine productivity.

You arrest the newsman who reported the real situation.


You have two cows.

You worship them.


You have two cows.

Both are mad.


Everyone thinks you have lots of cows.

You tell them that you have none.

No-one believes you, so they bomb the **** out of you and invade your country.

You still have no cows, but at least now you are part of Democracy….


You have two cows.

Business seems pretty good.

You close the office and go to the pub for a few beers to celebrate.


You have two cows.

The one on the left looks very attractive.


You have two cows.

You borrow against the cows from the Germans

You kill the cows and make souvlaki

You can’t pay the interest so the Germans lend you more money

You can’t pay the interest so the Germans lend you more money

You can’t pay the interest so the Germans lend you more money

You can’t pay the interest so the Germans lend you mor

Imperative of consensus building over proposed Islamic banking

I believe that, as Nigerians, we should welcome everyopportunity to broaden the base of popular participation in economic activities. Poverty has persisted in the country for so long because the economic space has excluded many disadvantaged groups like the Niger Delta.

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This is part of the explanation of the violence that has continued to blight our national life, to the extent that the very fabric of the nation is currently under serious threat.

On this score, the introduction of non-interest banking would appear to be a welcome addition to innovative efforts to bring otherwise marginalised populations into the mainstream of economic activity. However, every good thing always has its down side. It seems to me that the down side to the concept of Islamic banking is the religious colouration. Continue reading

Auto financing in Islamic Banking

Current Scenario: The automotive industry is primarily in the United States is well into a downward spiral, and no one has any idea what’s in this sector of Serbia. The same trend is also evident in other parts of the world, including Japan significantly. With the biggest names in the automotive world like General Motors, Toyota and GM Sun does not stop bleeding I think it’s someone for how long the venerable auto industry is able to take a stand against the elements of the market.

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Time Deals: For the consumer, but especially those looking for a good deal, has brought many opportunities to ask! This is perhaps the best time to get the iron can be taken to buy a car!And there are a number of financing options available to make this dreamcar will be parked in the garage to you!

Car Loan News

The Islamic option: In this article we take a look at the option of Islamic finance for the purchase of an auto financing for the purchase.Cars> in Islamic banking is done under the contract “murabaha”. In short, this is a cost plus profit contract. Continue reading

Dubai's Nakheel to issue sukuk by Aug 25 – chairman to paper

Aug 10 (Reuters) – Developer Nakheel, Dubai World’s property arm, will issue a $1.63 billion Islamic bond to trade creditors by August 25, its chairman was quoted as saying in a local newspaper reported on Wednesday.

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Ali Rashid Lootah also said Deutsche Bank would manage the process, which will take place over two to three months in the remarks to Arabic language daily al-Khaleej.

The developer, which ran a parallel $10.9 billion restructuring process to parent Dubai World, has offered trade creditors repayment of 40 percent cash and the remaining 60 percent in the form of an Islamic bond, or sukuk. Continue reading

Omatseye’s ignorance about protestant ethics, Islamic banking

It is unfortunate that Sam Omatseye could ignorantly posit that the spirit of capitalism came from Christians-evidence of lazy research and a drifting mind, which imagines poetic grandeur.

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Some even say that the early Christians inspired communism by sharing their worldly possessions. But a brief research of history will simply show that what is now referred to as capitalism  or profit making in business, and the concept of personal property have existed since time immemorial. It is true that the Protestants  (and perhaps most religions) abhors laziness and promotes hard work, a theme taken to heart by Calvinists.

But this is not tantamount to encouraging greed or excessive, usurious and cut-throat interest rates on loans, the likes of which the Central Bank of Nigeria, under Sanusi Lamido (who is not a Calvinist) approves. How about greatly lowering the current interest rates on loans to just a few points above the current minuscule interest rates on deposits in Nigeria? Continue reading

Sharia Boards in Islamic Banking and Finance: Opportunity for the youth and something India seems to have overlooked

India is all set to embrace Islamic Banking and Finance as reforming the current banking law to allow sharia compliant banking is on top of Finance Minister Pranav Mukherjee’s to-do list. Banking Laws Amendment Bill, 2010 proposes to bring about the necessary changes in Indian Banking Law to open doors for Islamic Banking and Finance in India – which has done extremely well even in non-Islamic countries like UK and Sri Lanka.

Apart from providing finance of their preference to one of the largest Muslim population in the world, it will enable Indian projects to receive finance from Middle East and other countries where lenders prefer Islamic finance to other conventional methods of financial transactions. However, is India ready to take on the opportunity?

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One of the key factor that will determine India’s success at Islamic finance is availability of trained personnel. For the youth in India, this brings fresh opportunity. Those who learn the intricacies of Islamic finance can look forward to meteoric growth as demand for experts will exceed supply right from the beginning. On the other hand, it will be a challenge before banks and financial institutions to find experts for various roles. One of the most difficult task may prove to be creation of a Sharia board which is required to govern and audit compliance of all the products and services with Islamic principles. Continue reading

What are the reasons India should legalize and encourage Islamic Banking and Finance?

Apart from all the ethical and theoretical reasons one may cite, the top three reasons are, according to me:

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  • It will enable India to bring in much needed investment from middle-eastern countries at very reasonable terms
  •   A large portion of the unbanked Muslim population will hopefully be successfully targeted by banks who focus on Islamic banking. Hopefully the RBI will manage to make the banks look into the banking and finance needs of small retail customers in India
  •  If what happened in non-Muslim countries like UK or Sri Lanka is any indication, this can flourish into a significant economy, which means creation of a lot of new jobs – most of them well paid skilled jobs

According to some sources, with 150 million Muslim population, and a rapidly growing economy despite economic slow-down everywhere else, India will be a hot destination for Islamic investments and finance companies. These sources say that the potential of the Indian market is no less than 1 trillion in Islamic banking and finance. Continue reading

Bank finance partner joints Latham and Watkins in Dubai

Latham & Watkins LLP is pleased to announce that Anthony Pallett will join the firm’s Dubai office as a partner in the Finance Department. Pallett is an English law-qualified attorney whose practice encompasses virtually all aspects of banking, with particular emphasis on Islamic finance, corporate finance, real estate finance, telecommunications finance and export credit agency finance.

“Anthony is one of the top banking lawyers currently practicing in the Middle East, and we are delighted to be welcoming him to the firm,” said Villiers Terblanche, Office Managing Partner of Latham & Watkins in Dubai.

“Anthony has developed strong relationships with the largest and most active banks in the region, particularly those based in the United Arab Emirates, and those relationships and Anthony’s legal skills will enhance Latham’s robust bank finance practice in the Middle East and globally. With more than 25 finance lawyers in the Middle East, including half a dozen finance partners, Latham has a deep bench of high quality finance lawyers to service the needs of the most sophisticated and demanding bank finance clients in the Middle East.”

Dominic Newcomb, Vice Chair of the firm’s Global Finance Department, added: “Anthony is an excellent technician who is very well regarded by the key financial institutions in the region.

His expertise in Shari’ah-compliant and syndicated financings, for example, complements the firm’s premier debt capital markets practice and related bank financing capabilities that are vital to clients across our global finance practice.”

Continue reading