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Harmonising legality with morality in Islamic Banking and Finance was the focus of a lecture recently organised by the Forum for Islamic Education and Welfare for its members in Lagos. Uchechukwu Nnaike reports

It is often a challenge in financial transactions as morality is always being questioned particularly when the other party is tricked, cheated or shortchanged. Globally, this practice is not restricted to individuals, private organisations or even conglomerates alone, as it applies to countries. The bottom line is maximizing profit in a crooked way without putting others into consideration.

As a result of the global recession, new and alternative approaches to curbing and prevailing economic problems have begun to circulate among both the economists and the public. The Islamic financial system has emerged to become a possible solution to the mayhem. However, implementing Islamic banking and financial practices would require adopting their under-guiding Islamic legal and moral frameworks. Departing from these foundations of Islamic law could render the activities conducted under its name religiously unacceptable and perhaps philosophically problematic. Thus it is crucial to understand these foundations in order to consider the viability of incorporating the Islamic approach to finance into the mainstream practice more seriously.

Generally, how does the populace perceive the concept of morality and legality in Islamic banking and finance, which also extends to their day-to-day activities and career? Though formed in the 50s by some Arab Egyptian elites as a cooperative society, which later blossomed and extended to the west; the western view on morality is doing the right thing, while morality is legally backed in Islam which encourages people to do the right thing for a reward now and the life after.

To address the issues of legality with morality in Islamic banking and finance taking into cognizance its moral and legal burden backed by law and to educate its members particularly Moslem brethren and the implications of engaging in underhand dealings in the course of transactions, a breakfast lecture was put together by the Forum for Islamic Education and Welfare (FIEW) to celebrate its President, Amir Mobolaji Lawal, who turned 70 on October 1.

In a paper titled ‘Harmonising Legality and Morality in Islamic Banking and Finance, the guest lecturer and Head of Research Kulliyyah, (Faculty) of Islamic Revealed Knowledge and Human Sciences, International Islamic University, Malaysia, Prof. Luqman Zakariyah, critically examined the feasibility of harmonizing morality with legality in Islamic finance.

In doing so, he revealed what constitutes morality and legality in the Islamic legal theory, and critically examined the approaches of Muslim classical scholars in fusing the two elements together for the realization and actualization of the objectives of Sharīah. Zakariyah noted that while transacting business, there are certain areas that parties involved must put into consideration to avoid their morality being questioned. While ethics and morals are the core of Islamic law in general and also of rulings on commercial transactions, the speaker pointed out that the principles underlying the Islamic ethical system revolve around the unity of God.

While pursuing economic well-being is encouraged in Islamic law, engaging in dealings that involve prohibited substances such as alcohol, pork-related products and gambling is legally and morally forbidden. In addition to these instances, certain commercial behaviors or activities (such as ambiguous dealing) are also prohibited, owing to the Islamic moral value of not compounding financial problems on people or not exploiting the concept destitution and desperation to get out of a problem.

He added that Islamic moral standards and resulting approaches to finance and banking is thus a subject worth exploring, especially with regard to how they can gain acceptance within the western conventional economic system, as these two systems interact; however, challenges naturally arise. In recent times, scholars on the Islamic Finance Industry (IFI) have been calling for the integration of Islamic moral norms with legal theories in the industry. Among reasons for this call are unethical trends in product innovation and execution of the industry.

The don noted that with their keen observation and deep knowledge, scholars at various times have raised questions of the relationship between morality and legality and samples of Islamic finance products are evaluated to dig out their moral and legal dimensions. The observations of these scholars he stressed revolve around a professional’s pragmatic approach in the field of Islamic banking and finance.

He said a scholar once pointed out that the current practice of Islamic finance is that the legalistic forms of contracts are fulfilled but the substance and spirit are not. And for a clear understanding, three typologies of Islamic finance products in the market were identified such as Sharī‘ah-based products, Sharia’s-compliant products and pseudo-Islamic products.

Throwing light on the rules that guide the aforementioned typologies, the scholar stressed that Sharia-based products which fulfil both social and legal codes of law emphasise that one shouldn’t take bribe because it has consequences; don’t concede information to exploit your fellow human being while transacting business; and don’t sell the house of mortgage defaulters. Pseudo Islamic on the other hand forbids using tricks while doing business. “How can you harmonise all of these rules in business activities particularly by avoiding maximizing profits in a crooked way?” According to Zakariyah, the answer is simple, “by appealing to your conscience that in whatever you do there is a reward, bearing this in mind, you won’t trick, dribble or shortchange your fellow human being.”

While the purpose of embarking on a business venture is to make profit, what is then the moral implication of a mortgage defaulter as owners often take repossession of their properties or if a brethren borrows money and refused to pay back? According to the speaker, mortgage is a prevailing issue and at the same time it is a necessity. “Well, mortgage issue depends on how you structure it. And in case the occupant defaults, provided it is not a business avenue, you don’t need to give him/her a respite but to negotiate. Note: provided the mortgage in question is meant for residential,” he stressed.

“In most cases, if it is a bigger house you can sell it and get a smaller place for the occupant. It is a win-win situation as the owner gets his/her money back and at the same time the former occupant is not rendered homeless.”

Speaking on the take away from the lecture, the convener of the programme, Alhaji Rafiu Ebiti expressed delight that the speaker was able to throw more light on the topic because there is always confusion about what is moral and legal in Islamic banking.

“For instance, he gave a vivid example of mortgage that in case there is default, there shouldn’t be a quick repossession. That is, one should look at it as if he is helping the human kind. I think we have done a lot by bringing a lecturer all the way from Malaysia who is an expert on that. It is also an opportunity to celebrate Amir Mobolaji Lawal who has been a role model in Islamic tower.”

The Executive Secretary of the forum, Dr. Tajudeen Adebayo said he is happy that the forum has impacted the people since it started. “The forum has provided avenue to educate our members on issues that affect them in all facets of life. The second aspect is welfare of our members where the privileged through Zakat programme and other charities touch people’s lives. My take away is that I got what it obtains in Malaysia where morality has been legalised which makes it compelling that you don’t make it personal but legal whereby you don’t do things just because but it has become a way of life but backed by the legal system.”

For Dr. Fatai Kayode Lawal, the Managing Director, Sterling Assurance Nigeria Ltd, what the erudite scholar has done showed a clear demarcation between what is both legally and morally required in Islam and that there is a thin line between the two. “Those things that are morally required are not obligated or compulsory for Moslems but those who are legally required you can’t do anything about it. He now emphasized that when you are involved in financial transaction or any other transaction you should be conscious of fear of God and be fair to your fellow human beings.”

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