In the name of Allah, the compassionate the merciful
The unemployment situation in Ghana today is conspicuous. Many politicians and opinion leaders are now worried about the unemployment situation and its associated security dangers. And as the saying goes “Idle hands are the devil’s playground”. This is so much that we have what we now callthe ‘Unemployed University Graduate Association’. The Ghana National Labor Commission estimates their number to be a staggering unemployed figure of 700,000. This is where we can take advantage of Islamic financial tools to unwrite this unpalatable situation.
Musharakah can be defined as a business where two or more people combine their capital or labor or creditworthiness, having similar rights and liabilities, to share the profits or a yield or appreciation in value and to share the loss, if any, according to their proportionate ownership to a business or investment project. In a musharakah partnership, all partners share in the profits and losses of the enterprise based on their agreed-upon terms. This type of partnership involves a shared investment, as well as shared risk, and the partners typically have an active role in the management and decision-making of the business. Musharakah is based on the principles of profit and loss sharing, as opposed to fixed interest-based financing. This is a Shariah-compliantform of partnership commonly used in Islamic finance to facilitate business activities by creating employment and stimulating economic activity.
The legality of Musharakah partnership is proved by the texts of the Holy Qur’an and Sunnah and the consensus of the Islamic jurists. Holy Qur’an, chapter 4: 12 and chapter 38: 24, and the saheeh hadeeth of the holy Prophet, may the peace and blessings of Allah be upon him, in which he says: “So long as the two partners remain honest to each other, I am the third”, attest that musharakah contract is a legally accepted and shariah compliant.
Some of the benefits Musharakah can offer the country apart from employment are as follows:
Economic growth: Musharakah partnerships can stimulate economic growth by bringing together different resources, expertise, and capital to develop new businesses and projects. This can create employment opportunities and generate income, contributing to overall economic development.
Risk sharing: By pooling resources and sharing risks, musharakah partnerships can help reduce the financial burden on individual participants. This can encourage investment in higher-risk projects that have the potential to yield higher returns, leading to increased economic activity.
Capital formation: Musharakah partnerships can help mobilize and raise capital for businesses and projects by allowing multiple parties to contribute funds. This can facilitate the development and expansion of businesses, infrastructure, and other economic ventures.
Innovation and entrepreneurship: Musharakah partnerships can support innovation and entrepreneurship by providing opportunities for individuals and entities to collaborate and capitalize on new ideas. This can lead to the development of new products, services, and technologies that can drive economic growth.
Wealth distribution: Musharakah partnerships can help distribute wealth more equitably by enabling a broader range of participants to benefit from the returns on investment. This can contribute to a more inclusive and balanced economic system.
Financial inclusion: Musharakah partnerships can promote financial inclusion by providing access to participation in economic activities for individuals and entities that may not have access to traditional financial services or mechanisms. This can help expand economic opportunities for underserved populations.
In a nutshell, this very important financial tool can be utilized by the country to create employment by providing funding for entrepreneurs and small businesses which can in turn generate job opportunities. By identifying potential entrepreneurs or small businesses, the government of Ghana can provide funding through musharakah partnerships. Using musharakah to fund and support entrepreneurs, job creation can be stimulated, ultimately benefiting the local economy and the massive unemployed youth. And Allah knows best! Praise be to God in whose favor good deeds are accomplished” (ibn Majah 3803)
YAHAYA ILIASU MUSTAPHA
The writer is an Islamic Banking and Finance patron and advocate in Ghana and beyond.
Email: yahaya0246873726@gmail.com
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