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 Business › Re: Sharia Compliant, Solution To World Problems; Economy As A Case Study by alausa94(op): 9:36pm On Jul 02, 2019 |
These names may sound new to you, but as we explain them in our training modules, they’re much like conventional equity, trade, and lease-based instruments already familiar to most bankers. Islamic finance, after all, permits legitimate profit. We’re not asking that everything be changed. Just the harmful parts, and eliminating interest would be the first step. In all of these cases the bank could not have charged more than the initial financing premium. So if the Islamic bank was owed $5 billion, that could never turn into $44 billion or even $6 billion. The debt would have to be fixed. Throughout our training modules we’ll show you how these and other Islamic finance products operate. Let's take another example of how Islamic finance is different from conventional finance. This time let's make it a little bit more relevant to our day-to-day lives. Nick The Homebuyer Nick has lost his job, his house, and all the money he had spent paying off his mortgage. The property bubble that triggered the global financial meltdown could not have happened if the properties had been financed Islamically. Why? Because a conventional bank merely lends out cash. Legally, it can keep lending this cash over and over. Well above its actual cash reserves. An Islamic bank, on the other hand, has to take direct ownership of an actual asset. Whether for a longer period in a lease or partnership, or a shorter period in a sale or trade, Islamic finance always limits the institution to an actual asset. The next time anyone wonders whether Islamic banking is just dressed up conventional banking, ask them to show you a single major consumer bank that co-owns actual properties with their customers. Of course, there’s no excuse for Islamic banks that are Islamic in name only. But if the transaction complies with internationally recognized standards like AAOIFI, for instance, then there’s no reason for it to have the many side effects associated with interest-based banking. To provide just one example of how Islamic banks get directly involved in asset purchases, let’s look at how a Diminishing Musharakah works. The word Musharakah refers to a partnership in Islamic finance. And it’s called a Diminishing Musharakah because the banks equity keeps decreasing throughout the tenure of the financing, while the client’s ownership keeps increasing through a series of equity purchases. Eventually, the client becomes the sole owner. |
| Business › Re: Sharia Compliant, Solution To World Problems; Economy As A Case Study by alausa94(op): 9:34pm On Jul 02, 2019 |
Let's try 30%. That still gives us a very high number. Table 2: $5 billion growing at 30% It turns out that to grow $5 billion into $44 billion takes an interest rate of only 15.6%. Now on the face of it around 15% doesn't sound exorbitant. It doesn't seem unfair, and technically it isn't even illegal according to international law. In fact, we personally know of banks that charge high-risk credits upwards of 30% interest rates. But every day numerous countries find themselves in the same predicament as Nigeria. UNICEF estimates that over half a million children under the age of five die each year around the world as a result of the debt crisis. But as we’ve seen, it’s not the debt that’s the problem. It’s the compounding interest. Now how would Islamic finance handle things differently? Using the $5 billion example, Islamic banks could provide $5 billion of financing for infrastructure, literacy, healthcare, or sanitation programs, to name a few. • An Islamic bank could have arranged for the $4 billion construction of a natural gas pipeline and delivered it to Nigeria for $5 billion using an Istisna. • Or taken an equity stake in a highway project and shared in profits and losses using Musharakah or Mudarabah. • Or purchased commodities and sold them at a premium using a Murabaha. • Or structured a project financing using an Ijarah Sukuk. |
| Business › Re: Sharia Compliant, Solution To World Problems; Economy As A Case Study by alausa94(op): 9:33pm On Jul 02, 2019 |
Debt-Laden Country: Nigeria We begin by quoting President Obasanjo who said these words after the G8 summit in Okinawa in 2000: "All that we had borrowed up to 1985 or 1986 was around $5 billion and we have paid about $16 billion yet we are still being told that we owe about $28 billion. That $28 billion came about because of the injustice in the foreign creditors' interest rates. If you ask me what is the worst thing in the world, I will say it is compound interest." It seems unbelievable but, sadly, it’s typical. Developing countries start off with relatively small loans and remain saddled with huge amounts of growing debt for generations. And remember, this could be Nigeria, or any other poor country. To give just one other example, during the years leading up to the 1997 Asian collapse, Indonesia’s foreign debt as a percentage of GDP was over 60%. So Nigeria is certainly not an isolated example. There are countless more. How did borrowing just $5 billion end up in having to pay $44 billion in total? Let's open up a spreadsheet and find out. For the sake of simplicity we’ll just grow $5 billion into $44 billion between 1985 and 2000 and see what interest rate we get. It must've been a very high interest rate to get to $44 billion in such a short period of time. So let’s start off with 40% per annum. No that's not right. Table 1: $5 billion growing at 40% Year Debt 1985 5,000,000,000 1986 7,000,000,000 1987 9,800,000,000 - - 1997 283,469,561,876 1998 396,857,386,627 1999 555,600,341,278 2000 777,840,477,789 |
| Business › Re: Sharia Compliant, Solution To World Problems; Economy As A Case Study by alausa94(op): 9:31pm On Jul 02, 2019 |
WHY ISLAMIC FINANCE? What do President Obasanjo of Nigeria, Nick the UK homebuyer, and Faisal the American college student all have in common? They’re all trying to pay off loans that seem to increase every single day. What started off with a seemingly small interest rate ballooned into something completely unattainable. We’ll look at each of their examples a little later. First, let’s answer the big question on everyone’s mind: How is Islamic finance different from conventional finance? It looks the same. The result is often the same. What’s the difference? Well, the best way to find out is with a simple, real-world comparison. Let’s take $10,000, for instance. And let's compare what a conventional bank can do with this $10,000 and what an Islamic bank can do. First, the conventional bank. The conventional bank finds a credit worthy customer and lends at 5% interest. The bank is not particularly concerned about what happens to this money other than that it gets repaid. The customer, on the other hand, has already found a borrower willing to pay 7%. This borrower runs a small credit co-op for students and lends at 10%. One of these students is enterprising enough to lend to his unemployed brother at 15%. Who has just discovered the power of compounding interest and now lends to street vendors at 25%. We could go on. But you get the idea. As we speak, there are poor people paying upwards of 40%...per month! Now obviously we can’t blame conventional banks for everything that happens after they’ve made the initial loan. But we can blame the power of compounded interest.” Interest, and the fact that you don’t need actual cash to lend money means that the original $10,000 could keep passing hands until we pump out over $100,000 of artificial wealth. Artificial is right. How much actual cash is there? Only $10,000. With interest, we managed to turn $10,000 into much more. Now what happens if the street vendors go out of business? Or the unemployed brother doesn’t find his job? Or the credit co-op goes bankrupt? That’s right. Loans don’t get repaid. And if enough people can’t repay their loans, lenders get into all sorts of trouble. This vicious cycle sets off a domino effect of defaults. And imagine that instead of a $10,000 personal loan, it’s a million dollar business loan, or a billion dollar World Bank loan. Compounding interest grows so fast that borrowers are often unable to repay. People, economies, and the environment pay the price as we grow more desperate to meet rising debts. So are we surprised when billions of dollars vanish into thin air? Let’s take the example of the Islamic bank. With this $10,000 the Islamic bank only invests in actual assets and services. It might buy machinery, lease out a car, or invest in a small business. But, throughout, the transaction is always tied to a real asset or service. And this is the central point: we can’t simply “compound” assets and services like we can compound interest-based loans. An asset or service can only have one buyer and one seller at any given time. Interest, on the other hand, allows cash to circulate and grow into enormous sums. That’s the difference between Islamic finance and conventional finance: the difference between buying and selling something real and borrowing and lending something fleeting. In recent years we’ve witnessed the most dramatic global financial downturn seen in decades. What began as a housing bubble soon became a sub-prime credit crisis. And what many thought would remain a credit crisis soon spread into a global financial meltdown. It devastated every corner of the world. And while these events affected most of us negatively, there was one silver lining: people finally gave a serious look at alternative forms of finance. And many people stopped believing that interest could solve all problems. Understanding what caused these events serves as our starting point for understanding Islamic finance, and how it differs from conventional finance. What conventional finance enables is the ability to sell money when there is no money. To sell assets before there are any underlying assets. And to allow debts to grow unchecked while borrowers become more desperate. Interest creates an artificial money supply that isn’t backed by real assets. The result? Increased inflation, heightened volatility, richer rich, and poorer poor. Let’s look at 3 practical examples that show just how Islamic finance is different from, and better than, conventional finance. And while Islamic finance parts ways with conventional finance on more than just being interest-free, we’ll focus on interest in this talk. We’ll look at 3 people in 3 very different, real-world situations: the first is the leader of a developing country: President Obasanjo of Nigeria; the second is Nick, a homebuyer in the UK, and the third is Faisal, an American college student. |
| Business › Re: Sharia Compliant, Solution To World Problems; Economy As A Case Study by alausa94(op): 3:29pm On Apr 29, 2019 |
I recently downloaded your Handbook of Islamic Finance and I have just begun to read it. I am so pleased that my eyes have had the chance to read some of the words within it. I have for many decades been part of the Western finance system and over the years I have become more and more aware of the greed and corruption that exists within it. For many years I have thought of the damage this greed and corruption has done to the lives of millions of innocent people. Now I have started to educate myself on the fundamentals of Islamic finance and am quite excited to one day become part of the Islamic finance system that places the good of many above the greed and self interests of a few as Western finance has proven to do. I firmly believe that if the Western banking system had been operating under the ethical guidelines of Islamic finance, then there would never have been a global financial crisis. I am not a religious person, but I strongly believe in ethical outcomes, as my dear and now departed uncle Bert said to me not long before he died — "Whatever you do in life William — just do good, just do good." I believe I have now discovered a path that would have made my uncle Bert proud. Once again, thank you for allowing me to read Ethica's Handbook. William Lancaster Melbourne, Australia |
| Business › Re: Sharia Compliant, Solution To World Problems; Economy As A Case Study by alausa94(op): 10:18am On Apr 20, 2019 |
Capitalism is failing us all. Could Islamic economics be the answer? ǀ View COMMENTS 18/04/2019 By Muhammed Yesilhark Billionaire Ray Dalio, manager of the world's largest hedge fund Bridgewater, recently shocked the world when he announced that "capitalism is failing" and that a "revolution" is coming. There is no denying that global inequality is at unsustainable levels, and that interest-based economies are no longer fit for purpose (in many countries interest rates are too low to incentivise saving at all). I believe that Islamic economics, with its 2.5% zakat wealth tax (and much lower taxes in other areas) might give us a clue on how to eliminate the worst social inequality. And with a prohibition of abusive high-interest businesses and the incentivisation away from interest-based savings accounts, it can reinvigorate the global economy. These are not just Islamic economic concepts; these are universalist traditional Abrahamic ethics, and a common sense way for us all to enjoy a truly free market. Dalio’s statements matter, not only because of how strongly worded they are but also because of how topical they are in today’s news climate. They are significant because of who Dalio is, that is to say probably the most successful hedge fund manager in the world. One of my colleagues commented last week that this was the equivalent of the Pope declaring that Catholicism is failing. Dalio’s words are perhaps more shocking because they violate one of the most sacred unwritten rules of the global rich: you’re not allowed to criticise capitalism if you have benefited hugely from it. Protest - or even displeasure - with the system is a luxury only the poor can afford. It’s normal to see cleaners, or even Uber drivers, angry at inequality. It is less normal to see the world’s wealthiest publicly stating that the order to which they owe their success is “not providing the American Dream.” The “no protest for the rich” rule has led billionaires to channel their sense of responsibility, frustration or even guilt into philanthropy. This means that we seldom have the wealthy discuss these issues, let alone the root causes from which these problems arise. Those root causes go deeper than many of us realise and addressing them will mean re-examining not only our economics, but our politics and values. Most of us want a societal order where there isn’t a huge vacuum between the classes. Unfortunately, this gap keeps widening as “casino capitalism” and high interest consumer products entrench divisions. To create societies where there is mutual respect and compassion, we need an environment of reconciliation between the elites and the masses. The only way to achieve this is through a wealth tax such as the payment of zakat - one of the pillars of Islam - and an effective tool in addressing our current issues. But first, to reform a failing capitalism, we need to fix two things: taxation and the interest rate system. Taxation is easier (and far less left field) to critique since there is an emerging consensus that the global tax system simply no longer works. Through a combination of tax avoidance schemes, tax havens and even relatively innocent methods like transfer pricing, high net worth individuals and their corporations have very little (if any) tax to pay on their wealth. In the absence of effective wealth taxes, governments have no choice but to enforce taxes that perhaps unfairly target the poor, like sales tax and inheritance tax. The injustice of some of these taxes further normalises tax avoidance and polarises society even more. Critiquing the interest rate system is more controversial. Most people feel that possessing money has some inherent value that should be recognised in a zero (or almost zero) risk way. But with negative interest rates spreading around in the developed world, interest rates are so low in many countries that they simply do not fulfil their purpose of incentivising consumers to save any longer. In short, as Deutsche Bank’s Jim Reid titled his research report last year, we might be witnessing “The Start of the End of Fiat Money.” Therefore, our current fiat-based monetary system might require a rethink. After all, in the grand scheme of global economic history, it can still be considered an experiment as the vast majority of human history was based on gold and silver-backed sound money. Current proponents of digital currencies (such as so-called Bitcoin maximalists) are proposing a new form of supra-national sound money based on maths - quasi-“digital gold” for the globalised world. Islamic economics, on the other hand, can give us clues to solve both these issues. Zakat, or Islamic alms, is a simple, transparent annual wealth tax of 2.5%. Let’s only consider tax havens, where estimated wealth of $10 trillion is held around the world. That means if zakat was paid on these funds (perhaps as some kind of amnesty agreement), there would be $250 billion per year flowing into the world’s poorest areas and worthiest causes. At the same time, other taxes could be reduced or eliminated. In return for the wealth tax, Islamic economics suggests almost zero tax in every other area, including inheritance. Solving the interest problem will be more gradual and will require a rethink of the monetary system we currently live in, as I previously mentioned. I can’t see a sudden global ban on interest but governments (particularly those with low interest rates) could incentivise other forms of investment, increasing regulation around abusive high interest products and businesses to start with. Some of these might seem very drastic but once we strip away the Arabic terminology, concepts like zakat can return our economies to the common sense-based, transparent and equitable set up that the architects of modern capitalism envisaged. When the richest guy in the room is telling you the game is rigged, it’s time to change the rules. 1 Like |
| Business › Re: Sharia Compliant, Solution To World Problems; Economy As A Case Study by alausa94(op): 8:09am On Jan 09, 2017 |
Islamic finance has emerged as an effective tool for financing development worldwide, including in non-Muslim countries. Major financial markets are discovering solid evidence that Islamic finance has already been mainstreamed within the global financial system – and that it has the potential to help address the challenges of ending extreme poverty and boosting shared prosperity. |
| Education › Re: Annual Xfire Nairaland Undergraduate Quiz Competition (scholarship) - Maiden Ed. by alausa94(m): 5:36am On Jan 05, 2017 |
alausahabib@gmail.com
Obafemi Awolowo University
Management and Accounting
200 Level |
| Christianity Etc › A Man Walks From Paris To Makkah For His Umrah by alausa94(op): 3:24pm On Oct 02, 2016 |
A Spaniard who had vowed to walk from France to Makkah to perform Umrah has left Kuwait and entered Saudi Arabia. Ishaq has reportedly walked for more than 9,000 kilometres since he left the French capital Paris, the start of his journey, about five months and a half ago. He said that he expected to arrive in Makkah within 50 days based on scientific calculations, Kuwaiti daily Al Rai reported on Sunday. Ishaq said that the main challenges he had encountered were related to crossing the high mountains. The report did not specify which countries he passed through on his journey. At one time, he had to face a snow storm and he had to hide inside his small tent. The weather was so cold that he could not feel his hands or feet. Ishaq budgeted 5,000 Euros for his trip (approximately 10 Euros a day) for his trip. He reportedly refused to take money from people he encountered on his journey. In August, a Chinese Muslim arrived in Makkah after pedaling more than 8.500 kilometres from his home in Xinjiang, in northwest China, to perform Haj. In 2014, a group of Malaysians rode their bicycles from Kuala Lumpur to Madinah in western Saudi Arabia. The 12 men left from the Malaysian capital and made their way on eight motorbikes and a small van across 12 countries with stops in 53 cities. The group said the two-month ride was mostly smooth and that the only serious problems they encountered were at the borders of the countries they crossed. m.gulfnews.com/news/gulf/saudi-arabia/man-walks-from-paris-to-makkah-to-perform-umrah-1.1905491 |
| Business › Re: Sharia Compliant, Solution To World Problems; Economy As A Case Study by alausa94(op): 11:11am On Apr 27, 2016 |
Abuklaw:salam alaekum ya akhi. How are u doing over there |
| Business › Sharia Compliant, Solution To World Problems; Economy As A Case Study by alausa94(op): 10:04am On Apr 27, 2016 |
Islamic finance central to Malaysia's ongoing economic growth ECONOMICS 04 Nov 2015 By ALEX MALLEY FCPA Sharia compliant finance, a sector with global assets in excess of US$2 trillion, is at something of a cross roads. While the concept of banking and finance activities that are consistent with the principles of sharia may be relatively obscure to many in Australia, that’s far from the case in Malaysia which is one of the undisputed Islamic finance superpowers. Despite Malaysia‘s ambitious plans to achieve this leadership and impressive successes, including an average of 12 per cent annual growth over the last five years, the current challenges are real. Low oil and commodity prices are squeezing available capital and globally, total issuance of Islamic bonds or sukuk has dropped by around 40 per cent. Malaysia’s central bank, the single largest issuer, has shifted away from selling its own sukuk, and while US$74.9 billion worth of sukuk were issued from Malaysia last year, only US$ 13.5 billion came from corporate issuers. The challenge of attracting more private sector participation, to fill the void from state-linked entities stepping back, remains. In the ethical sukuk market this year, the sovereign wealth fund Khazanah sold 100 million ringgit of Sustainable and Responsible Investments (SRI) sukuk, but that’s the only action we’ve seen. "The challenge of attracting more private sector participation, to fill the void from state-linked entities stepping back, remains." Standard & Poor’s recently predicated single, rather than double digit growth for the years ahead. There’s also increased competition from nations which don’t have majority Muslim populations, such as the United Kingdom and South Africa. Within this challenging framework, the Government has moved to reinvigorate the Islamic capital market to ensure Malaysia stays at the forefront of innovation in Islamic finance. While the Budget, handed down last week by Prime Minister and Finance Minister Datuk Seri Najib Razak, focused on boosting domestic economic strength with a commendable emphasis on innovation and green technology, it also featured a number of incentives designed to boost support for ethical Islamic bonds and home loans. There is to be a tax deduction on issuance costs of SRI sukuk, while sharia-compliant loan instruments will be given a 20 percent stamp duty exemption when used to finance home purchases. The Prime Minister also hinted at more initiatives to come to fully realise the potential of the Islamic economy. The evidence is that he’s keen to ensure Malaysia maintains its competitive edge over other financial centres including the United Arab Emirates, Bahrain and even London. And when you consider that Malaysia already has a well- established ecosystem in place to support Islamic finance, from the legislative base through to governances and reporting arrangements, it is clear that the platform for future growth is strong. This point was reinforced at the recent Global Islamic Economy Summit in Dubai, with estimates from Professor Datuk Rifaat Ahmed Abdel Karim of the International Islamic Liquidity Management Corporation that the sector remains on pace to reach US$3.25 trillion by 2020. "It is clear that the platform for future growth is strong." It may surprise some but Australia too has aspirations as a financial hub, and additional Islamic finance options could be a key element of the Australian offering. Products which observe principles such as bans on interest payments and monetary speculation would contribute to increased competition in the wholesale and retail banking sectors. Australia’s Muslim population is just under 500,000 or 2.2 per cent of the population. It’s small but actually exceeds the combined Muslim population of Hong Kong and Japan. And while certainly not mainstream, Australia does have a track record in Islamic finance. The Australia and New Zealand Banking Group (ANZ), an AmBank partner, has been involved in Islamic finance since the early 1980s. Australians can even undertake an Islamic finance course at La Trobe University in Victoria, with fees via a compliant no interest loan scheme. That said, despite an attempt by the Board of Taxation to drive regulatory reforms to support sharia complaint financial products, we understand there are just three Australian organisations offering sharia compliant finance products to the local retail sector. When we see the energy and commitment being applied to the Islamic finance sector in Malaysia, and more broadly in Indonesia and elsewhere, I can’t help but feel Australia’s modest uptake is something of a missed opportunity. So too is the potential for enhanced business, finance and cultural linkages in key Asia Pacific and middle eastern markets that would come with a deeper engagement in sharia complaint finance. Alex Malley is chief executive of CPA Australia. This article originally appeared on New Straits Times. 1 Like 1 Share |
| Education › Re: Read Essay of NISD third edition best debaters :::(First Stage) by alausa94(m): 9:31pm On Jan 06, 2016 |
luxanne: alausa94:congratulation to my able pal ABUKLAW. Wishing u more accolade 1 Like 1 Share |
| Education › Re: Read Essay of NISD third edition best debaters :::(First Stage) by alausa94(m): 6:44am On Jan 04, 2016 |
luxanne: alausa94: |
| Education › Re: OAU Management Postpones Resumption For 2014/2015 Academic Session by alausa94(m): 10:19pm On Apr 29, 2015 |
Babafaros:nawa 4 dis Oau o. Dey stil postpone resumptn when most skul are on d way 2 finish ist semester |
| Politics › Re: Top 10 Worst Dictators In Africa's History! Photo by alausa94(m): 9:40pm On Apr 23, 2015 |
chekasforchekas:why gaddafi? Why mugabe? What ve they done wrong? Is it anybody that is against the white is bad? 1 Like |
| Career › Re: ICAN November Diet 2014 (new Syllabus) by alausa94(m): 6:13pm On Dec 16, 2014 |
hi queen, pls can u send relevant material 4 next year ICAN exam 2 my email @ alausahabib@gmail.com |
| Education › Re: OAU 2014/2015 FRESHERS (newly Admitted Students) Meet Here by alausa94(m): 11:09am On Dec 16, 2014 |
who knows d detail amount 2 be paid by freshers |
| Education › Re: OAU 2014/2015 FRESHERS (newly Admitted Students) Meet Here by alausa94(m): 11:07am On Dec 16, 2014 |
am Alausa. I rep accountancy |
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