Riba-free Pakistan: The only way to ensure a financially prosperous future

A new ministry and Islamic finance think-tanks should be established to review the situation and device a strategy for future

There is a marked difference between when a person is asleep or pretending to be asleep. Similarly there is difference between a nation that is asleep or pretending to be asleep. If well rehearsed in pretending antics, possibility is that no one could tell the dissimilarity. Pakistan was created in the name of Islam and the poet Iqbal played a key part in awakening the feelings of Muslim nationhood mainly through poetry.

He attempted to awaken the feelings of Islamic nationalism. But, the problem lies in the question whether we rose up as nation or were it a mere sleeping-transition from being the slaves of one diminishing super power i.e. Great Britain to another consolidating super power, the United States of America.

Nothing can be done about the circumstances surrounding the inception of Pakistan and key questions such as, who failed and how and which leaders proved indecisive is a controversial debate. But what still matters is how Pakistan has evolved as a nation.

Since, the proposed Islamic path is nowhere in sight, why did we sacrifice thousands of lives for the creation of this state? If Pakistan was to transform itself into a complex and confused state with so much western influence, why did we opt for a separate nation?

Iqbal also introduced the notion of Khudi. He was determined to awake the Muslim Ummah, inspiring them through examples from glorious past to empower the Muslim individual. But, soon after, the newly born Islamic republic of Pakistan embraced American slavery. If Pakistan had truly established Islamic Shariah, most importantly in the context of financial dealings, a rather different and more prosperous Pakistan would have emerged.

Money matters, we all want money. Human beings of today are completely reliant on money coupled with the hike in consumerism which has led us to materialism and the need for excess wealth.

The newly born Pakistan had an acute shortage of funds but the daunting task of building a nation from scratch. Pakistan opted to rely on interest-based-loans to finance its key operations from the very start. This was not the start an Islamic republic may have wanted in an ideal scenario. In Quran, Allah (SWT) says:

“O, you who believe! Fear God and give up what remains of your demand for usury, if y0u are indeed believers, if you do it not, take notice of war from Allah and his apostle (Prophet).” (Al-Baqarah 278-280)

It is evident from the above verses that those who fail to comply by this condition, and do not halt any kind of involvement in Riba, must face the battle against Allah and his Prophet.

Since, according to Hazrat Jabir:

"The Prophet (PBUH) cursed the receiver and the payer of interest, the one who records it and the two witnesses to the transaction and said: "They are all alike [in guilt]." (Muslim, Tirmidhi and Musnad Ahmad)

In a literal sense, Pakistan as a nation has been in a continuous state of war against the teachings of Allah (SWT) and his Prophet (PBUH). Those involved in banking and financial sector face the wrath of Allah explicitly. On the other hand, the sums we the public pay through indirect taxes despite knowing that they are used to make huge interest payments, questions our own position on this matter as well. We end up becoming a part of this Riba-ridden system implicitly. 

Despite having numerous political parties, some with huge religious clouts, none of them actively seek to dismantle the on-going system even though they possess the power to pressurize the system to transition from the capitalistic interest-based-finance to the Riba-free Islamic economic system.

Though they try to convince the public of their wish for this much needed change what’s missing is the action to force the change. We have seen recently, a huge anti-corruption campaign run by opposition parties for the betterment of the country but, did anyone run a campaign to make the country Riba-free?

No doubt that capitalism in its various shapes and forms has brought both good and bad returns at times. In the presence of this system, mankind has seen immense revolution and progress throughout the pages of history, but there have been some significant downfalls such as the recent Great recession of 2006-07 and many other preceding financial disasters which have questioned the sustainability and consistency of the system more than ever.

Pakistan runs under the same system, and in a highly globalized, intertwined and integrated world, escape appears impossible. Much like the western economies, the middle-class has been wiped out in Pakistan and the more extreme classes have established themselves. Growing inequality, wide spread unemployment, and crucially increasing crime rates in the country highlight that the system has failed and the future is as bleak as the present unless, the economic Islamic revolution occurs.

We must understand that money, banking and finance are a fundamental part of capitalism. But, when money generation is controversial through high powered money mechanism or monetary base, the system will always run out of money and unnatural methods will never be able to smoothen economic crises. Riba is central to this flawed system and interest-based-finance to poor nations or countries is bound to fail both.

There is no economic justice under capitalism. Current situation depicts that inequality continues to soar in Pakistan and particularly in EU, US and around the world. Though the system is beneficial for elite capitalists, but overall it damages the country and masses collectively. One can’t favor a system which favors a handful at the cost of masses, in a nutshell; it brings more bad than good to society. The reasoning is analogous to the impermissibility of drinking alcohol in Islam.

Allah (SWT) says in Quran that there are some benefits associated with consumption of alcohol for medical and health reasons, but its overall impact is negative on human life. In the same way, in gambling, all benefits go to the single winner at the cost of the loser, which makes it haram too. In the same way, consumption of Riba has more bad in it than good. Shariah does not allow for benefits of few people at the cost of masses.

Some respite has been given to the Muslim world with the advent of Islamic banking but it has a long way to go to bring a true and defining mechanism which truly reflects the implementation of rules of Islamic economic system. The presence of a handful of Islamic banks in Pakistan which gives them monopolistic powers and without effective check and balance and fatwa of Islamic scholars cannot be taken as absolutely true and binding as long as they stay on payroll of the same banks. The conflict of interest questions their position and wider decisions. 

Allah says in the Quran, “And never will the Jews or the Christians approve of you until you follow their ways” (Al-Baqarah-120). The acceptance shown by the international banking community for Islamic financial products shows in light of above verse that current Islamic banking is yet to reach the ideal level where it has no resemblance to existing interest-based-financial system.

The most important question going forward is how to deal with this mess, if we are to avert the wrath of Allah (SWT).

There is no need for an abrupt or out-rightly quick transformation; rather a slow approach should be adopted to change the system. As the revelation to abolish Riba was revealed 5-years before Hijrah, and final revelations came in 9 years after Hijrah, our system too will require substantial time and an effective strategy to change. I would suggest that a new ministry and Islamic finance think-tanks should be established to review the situation & device a strategy for future.

As I argued in previous article, if Pakistan is to change its fortunes, it must be started sooner than later, Pakistan should establish Islamic economic research centers & equip them with state of the art facilities to encourage new generation economists to introduce new models which could outclass the fallacy & delusions of models built by Western economists.

We must shun interest-base-financing and create products based on comparative advantage to ensure efficient use of resources endowed by Allah (SWT). Self-reliance is key, if we are to beat world economies. We must believe that Allah’s revelations are forever binding on us and this is the only way which could bring prosperity and much needed stability in Pakistan.

Waqas Shabbir is a Derby Business School graduate in Finance, currently working as a freelance writer having interest in South Asian and European economics. He previously worked as a study advisor at University of Derby

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