In the name of Allah, the compassionate the merciful
As a writer on Islamic finance, many of my readers who are mostly account holders and are yet to be exposed to the fundamental working knowledge of Islamic banking and finance usually have this question for me; how can a financial system not charge riba (interest) and yet manage to make a profit? Well, the answer is that Islamic financial institutions not only make profits but can also withstand global economic shocks like that of the 2008-9 global financial crisis. In addition, Islamic financial institutions pay their workers well, pay all operational costs, and pay dividends to their shareholders. All Islamic financial institutions were able to stay afloat during the global financial crisis, the same cannot be said about international conventional financial institutions, especially those operating in the western countries.
Today we will talk about some shariah compliant investments in the global Islamic financial system, the first one is:
Islamic microfinance: This is one of the best tools for the fight against poverty in our poverty-stricken communities. Entrepreneurship skills are being suppressed due to a lack of startup capital. Investing in Islamic microfinance institutions can provide individuals and communities with access to financial services that comply with Islamic principles. These institutions offer loans, savings accounts, and other financial products that do not involve interest-based transactions, helping to support entrepreneurship and economic development in a socially responsible manner.
Sharia-compliant ETFs: Exchange-traded funds (ETFs) that adhere to Islamic principles can provide investors with a way to diversify their portfolios while also following Islamic guidelines. These ETFs may exclude companies involved in activities such as alcohol, gambling, and interest-based financing.
Sukuk: Islamic bonds, known as sukuk, offer investors the opportunity to participate in financing projects without paying or receiving interest. Sukuk are structured to provide a fixed return based on the profits generated from the underlying assets, making them an attractive investment option for those seeking to avoid interest-based transactions.
Islamic venture capital: Islamic venture capital funds provide investors with the opportunity to invest in startups and early-stage companies based on Islamic principles. These funds may focus on industries such as technology, healthcare, and renewable energy, offering investors the chance to support innovative businesses while adhering to Islamic guidelines.
Islamic real estate investment: Real estate investment opportunities in Islamic finance include investing in properties that comply with Islamic principles, such as avoiding interest-based financing and gambling-related activities. Islamic real estate investment trusts (REITs) and crowdfunding platforms can provide investors with access to a range of real estate opportunities while adhering to Sharia law.
In a nutshell, Islamic finance offers a unique set of investment opportunities that align with ethical and religious beliefs, providing investors with the chance to diversify their portfolios while supporting socially responsible businesses and projects. And Allah knows best! “Praise be to Allah in whose favour 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
https://www.facebook.om/Yahaya.iliasu.94
0506218343 / 0246873726