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EDITORIAL

Maqasid: Bringing Islamic Finance and Banking Back to Life

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The fundamental concerns, real-world challenges, and consequences of traditional economics, banking, and finance have become more visible in modern times.

The banking and financial sectors, together with other corporate actors, are continuing the actions that have contributed to Earth’s imbalanced situation. The widespread discussion on sustainable development goals (SDGs), also known as environmental, social, and governance objectives, demonstrates attempts to prevent them (ESG) and Shariah-compliant checks.

For centuries, macro-economists, micro-economists, wealth and asset managers, and the corporate world have sought profit and utility maximization, marginal cost and benefit analysis, Pareto efficiency, and continuous path convergence measurements, and these efforts have generally pushed humanity to the brink of extinction. Natural calamities, such as wildfires, soil erosion, earthquakes, floods, and typhoons, seldom go unreported.

Another alternative is Islamic Economics (IE), which may be the only one to deliver answers based on strong and comprehensive foundations from trustworthy Islamic sources. Epistemological integration is a critical instrument for putting this choice into practice. Approaches for epistemological integration that integrate textual and real-time sources assist training and learning. These techniques can change our minds and impact how individuals view the world.

Consumption and production can be managed if we modify our perspective to the consumption of items we genuinely need, require less, or don’t need. The Shariah notion of Maqasid (objectives) is a major factor in the necessity hierarchy. There are three degrees of necessities in this hierarchy: Daruriyyat (essential), Hajiyyat (intermediate), and Tahsiniyyat (luxurious).

Most people can make earnings with the first two categories while aspiring to the third. The economic world has molded us to chase non-essential desires while ignoring fundamental requirements. Spending one’s income on any need is a legal privilege, but the long-term consequences of such thinking have pushed humanity to the brink of extinction. Such consumer demand is no longer sustainable in terms of supply.

The world evolves as people’s viewpoints shift. Adjusting our perspective on the world may assist with many of our current problems. This perspective is reflected in our usage of resources to create and consume them. We know that consumption is a critical component of any economic system. It displays supply and determines demand levels.

SDGs and ESGs

SDGs and ESGs, on the other hand, are sustainably reachable via a better epistemological knowledge of economic activity, and referring to the Maqasid helps us manage our needs and desires more efficiently. It will govern our consumption, but it will also synchronize supply levels. Questions to consider when we go more into epistemological economic thinking and the Maqasid methodological world include “Do I truly need this item? If so, for what?” to “Will I truly utilize it or dispose of it soon after getting it?” and “Do I influence anyone’s life by disposing of stuff so rapidly and recklessly?” among other questions.

These are simple questions that any customer may ask themselves to see if their purchasing habits are sensible and sound. This will also correct the rational or good supply level. As a result, consumers will become more conscious of their activities, such as the disposal of plastics, gadgets, and clothing, which impact the degree to which specific SDGs or ESGs are met. The supply side, or producers, stay on track, satisfy customer demand, and consider ways to improve their experience. This method of economic reasoning is epistemic in that it feels how goods were provided to the customer and how the consumer uses and disposes of them.

Consumer impression is shaped more completely when they are aware of the source of a product and its usage, and their actions are rooted on solid grounds. All of their acts are carried out more responsibly. Thus, Maqasid may be considered highly normative and anchored in sources of knowledge, such as contributing to environmental preservation, resource usage, product/thing sharing through responsible disposal, and living within one’s means and real requirements without sacrificing one’s quality of life. When consuming or providing a product, the consumer becomes active in an economy by questioning its purpose and intent. When we have a reasonable goal or mission that characterizes living, we can connect with our environment’s reality (Haqiqah). Life gets more honest.

The Maqasid-based epistemological approach in an economy has the potential to shape not only individuals but also industries of finance and banking services in such a systematic and genuine way as to reveal the true teachings, vision, and mission of what the Islamic banking and finance (IBF) industry aspires to achieve. As a result, it is time for stakeholders and shareholders, all of whom are consumers, to rethink their consumption patterns and use and dispose of their possessions responsibly to contribute to the global goals of the SDGs and ESGs. This also makes the Maqasid useful. Furthermore, IBF institutions can universalize their economic activity by appealing to customers all over the globe who are still unaware that IBF is not only for Muslims.

The world now has the opportunity to comprehend IBF via its epistemological foundation and comprehensive Maqasid gateway, where innovation and creativity drive change. Contemplation along these lines allows the IBF to reclaim its reputation as the engine of an Islamic economy or alternative economic system in which contemporary movements for greater data analytics and artificial intelligence are integral, as well as the fuel for greater empirical testing and refinement about sound philosophical foundations derived from Islamic sources of knowledge.

The assessed approach to economic understanding and the reformation of the IBF business based on real-time data demonstrate multidisciplinarity. Maqasid employs an integrative epistemological basis to identify and articulate the greater aim of consumption and production. Combining the two encourages convergence along a long-term development path toward increasing Shariah compliance levels. Higher levels of Shariah compliance equal elevated levels of ESGs and SDGs, which are proportional to a viable environmental solution.

What MAQASID Do For Individuals?

The improvement of everyone’s lives and the avoidance of future tragedies are made possible by slowing human activity on the planet under Maqasid’s good epistemological leadership. This ensures the well-being of many individuals whose lives are in danger today. Resources to assist persons suffering from preventable disasters might be utilized to improve their quality of life. These represent entirely new income sources and industry services. As a result, stakeholders and shareholders must implement the demonstrated economic justification or face the consequences.

Practitioners, especially academics and corporate leaders, should use a detailed analytical framework in which philosophical foundations are critical to determining action objectives (Maqasid). Training, seminars, and workshops regarding such foundations in academia and business may facilitate the exchange of ideas among specialists in texts and situations. This would compel practitioners to reconsider their existing engagement patterns and completely redesign confined, imitated limited, and incoherent programs. The provision of social services serves as the consumer base for all of us. Hence the major emphasis of practitioners’ orientation should be on social needs.

Changing social circumstances will result in the continuance of recent experiences we hear about daily if regulators maintain a watch on the wide variety of activities that such economic reasoning stimulates; a data-driven economy may be, by higher purposes and objectives (Maqasid), established on sound philosophical underpinnings. Such economic activity would have a significant and appreciated global impact. Even if a new economic era is only getting started, new viewpoints are critical to maintaining the validity of the reinvented approach to economic growth, the formation of banking and finance, and other corporate world players.


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EDITORIAL

Celebrating a Decade of Resilience and Impact: Our Journey in Fostering Islamic Economics in Africa

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On the 13th of December, 2023, the Africa Islamic Economic Foundation (AFRIEF), clocked ten years as an organization. Surviving as an organization in itself speaks volumes about our strength, resilience, determination, and adaptability. Despite facing various challenges, we have remained steadfast in our commitment to promoting Islamic economic principles and sharing news and developments in the Islamic economy.

Against all odds, we have continued to actively engage with the Islamic economy community, fostering connections, promoting dialogue, and contributing to the intellectual growth of the field. This accomplishment is a testament to our vision, perseverance, and commitment to its mission.

Over the past decade, we have successfully established a presence and created a platform for dialogue across the continent. Through conferences, seminars, and workshops, we have brought together scholars, experts, and stakeholders from various African countries to exchange ideas, share experiences, and promote a better understanding of Islamic economic principles.

We have been instrumental in advancing research and scholarship in the field of Islamic economics. Through rigorous academic studies and publications, we have contributed to the body of knowledge surrounding Islamic economics, addressing both the theoretical and practical aspects. These research publications have not only enhanced understanding but also provided valuable insights for policymakers and practitioners.

Last November, we held a virtual and impersonal Summits on Islamic finance and healthcare financing in Abuja, Nigeria. These summits are not only innovative and noteworthy achievements but demonstrate our commitment to exploring new avenues within Islamic economics to addressing critical sectors, such as finance and healthcare. What is more, these summits serve as a testament to our forward-thinking approach and commitment to driving positive change in crucial sectors. Through such innovative initiatives, we have established ourselves as key players in promoting Islamic economics, influencing policy discussions, and contributing to the sustainable development of Africa

The publication of the news website and the weekly e-newsletter, “Focus on the Islamic Economy,” is another testament to our dedication to disseminating valuable information to Islamic economy intellectuals and professionals worldwide. Through quality and unbiased journalism we have been able to establish a platform for knowledge-sharing and keeping the community updated, thus becoming a trusted source of insights, trends, and advancements in the field.

Recognizing the importance of education, we have prioritized capacity building initiatives like training programs, workshops, and online courses, and empowered individuals with the knowledge and skills necessary to navigate the intersection of Islamic principles and economic practices. This has resulted in a growing pool of professionals equipped to contribute to the development of Africa’s Islamic economic sector.

We have also played a vital role in fostering entrepreneurship and economic development within Africa, through our flagship initiatives, Innovate Africa Program (IAP) and the Halal Business Transformation Program (HBTP). This support for innovative business ideas and providing access to funding, mentorship, and networks, is nurturing a thriving ecosystem of Islamic-inspired entrepreneurs and ventures in the Continent. These initiatives have not only contributed to economic growth but also emphasized ethical business practices aligned with Islamic values.

As we celebrate our  tenth year anniversary, it is an opportune moment to reflect on the remarkable journey of survival and the positive impact we have made in the Islamic economics landscape in Africa and beyond. May the coming years bring even greater achievements and continued success to the Africa Islamic Economic Foundation.


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EDITORIAL

COP OUT

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The world’s leaders are not coming to save us. That was the message in brilliant technicolor from the 28th COP meeting that concluded in Dubai about a fortnight ago.

Yes, COP28 was a catastrophic failure, but that failure is not down to the individual frailties of the negotiators present. It was preordained. COP can’t work while the global balance of forces remain as they are.

With no mechanism to force the rich countries of the North to pay to support the South to both adapt to climate change and for the loss and damage they suffer from climate breakdown, targets for finance and technology transfers will never be met. That’s why the global commitment to raise $100 billion per year for climate finance is pushed back every year and the much touted Loss and Damage fund, which is projected to need over $200 billion per year by 2030, has amassed only $700 million in commitments – not even hard cash. The US pledged just $17 million to the fund. Compare that with the $14 billion of weaponry for Israel to pursue its campaign of murder and destruction in Gaza.

$100 billion dollars sounds like a lot of money – and it would be for Southern states adapting to the worst impacts of climate breakdown – but it is just around one tenth of one percent of global economic output. But COP’s biggest structural flaw isn’t even the stingy hypocrisy of the Global North. It’s the overweening power of Big Oil in the global system.

This dominance was on full display in Dubai, giving satire its second death after Henry Kissinger’s Nobel Prize. The conference was presided over by the CEO of an oil company and was lousy with fossil fuel lobbyists, whose number quadrupled to 2,400, making them the largest delegation by far.

So it should come as no shock that COP28, like all previous COPs before it failed to agree on the need to phase out fossil fuels and to set a deadline for doing so. Instead, the final document suggests that states may – with no obligations – “draw down” fossil fuel production. The demands from over 120 countries to completely eliminate new fossil fuel production were ignored.

Climate breakdown cannot be averted without addressing the first order issue: fossil fuels power our global system. That has to change. Increasing investment in cleaner energy sources alone won’t do the job. COP28 agreed on tripling renewable energy capacity by 2030, but, as we’ve seen with the policies of Joe Biden, President of the world’s biggest oil producer, expanding clean energy investment is compatible with expanding fossil fuel investment.

Investment in fossil fuels continues to soar because it is profitable and we live under capitalism. As we have seen in the past two years, rising prices have meant bumper profits and therefore increased investment in fossil fuels. While rising interest rates puts downward pressure on renewables investment, which is much more capital intensive at the front end.

The world system as it is won’t save us, but rather condemns us to live on a planet that becomes less and less hospitable to human life as we know it. 2023 has been a year of catastrophic extreme weather, from monster heatwaves in Europe to a flooding emergency in Libya and a continental inferno in Canada. January to October was 1.43 degrees above pre-industrial average. Next year will be worse, breaking new records as El Niño accelerates global heating to above 1.5°C, a threshold that risks setting off a cascade of irreversible tipping points.

Next year’s COP 29 will be held in another oil-producing state with no interest in ending fossil fuels, Azerbaijan. This is the dilemma: humanity is trapped in an overheating train helmed by fossil capitalists structurally obliged to fan the flames. Our task is to unite and organise the social forces that can seize the engine room and pull the emergency brake. No more cop-outs.


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EDITORIAL

Tribute to Prof Dr. Syed Khalid Rashid

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We dedicate this week’s editorial to celebrate the life and legacy of our brother and friend, Prof Dr. Syed Khalid Rashid, a renowned academic and expert in Islamic law, who passed away on December 15, leaving behind a remarkable legacy of scholarship and contributions to the field of waqf development.

With a heavy heart, we bid farewell to a true visionary, scholar, and mentor. Prof Rashid was a beacon of knowledge, dedicating his life to the pursuit of learning and the sharing of wisdom. His passion for education was unparalleled, inspiring countless students to embrace their curiosity and immerse themselves in the pursuit of knowledge. His contributions to his field were immense, leaving an indelible impact on the academic community.

Professor Rashid was a prolific writer and researcher, authoring several books and articles on Islamic law and Waqf. His most notable works include “Waqf (Laws and Administration)” and “Muslim Law,” which are considered essential references for scholars and practitioners in the field.

Professor Rashid’s work on waqf is particularly significant in light of the growing importance of waqf as a tool for social and economic development in Muslim societies. waqf has been used to fund a wide range of projects, including mosques, schools, hospitals, and other charitable institutions. Professor Rashid’s scholarship has helped to provide a sound legal framework for the establishment and administration of waqf, ensuring that these charitable endowments are used effectively and in accordance with Islamic law.

In addition to his academic contributions, Professor Rashid also played an active role in waqf development through his involvement in various waqf organizations and initiatives. He served as a member of the board of directors of several waqf foundations and was a frequent speaker at conferences and workshops on waqf. It is significant to mention that the Africa Islamic Economic Foundation (AFRIEF) missed him debuting our monthly colloquium.

Through his groundbreaking research, Prof Rashid opened new avenues of understanding, pushing the boundaries of knowledge and fostering innovation. Beyond his professional accomplishments, Prof Rashid touched the lives of those around him with his kindness, compassion, and unwavering support. Most of us, including his students and colleagues would remember him as a mentor who nurtured our potential and encouraged us to reach for the stars.

Prof Rashid’s legacy lives on through the countless minds he shaped, the research he conducted, and the knowledge he imparted. He was a pillar of wisdom and a true inspiration to all who had the privilege to learn from him.

Today, as we bid farewell to Prof Sayed Khalid Rashid, let us not mourn his loss, but instead celebrate the incredible life he lived. May his memory serve as a constant reminder to embrace knowledge, nurture curiosity, and always strive for excellence.  Prof Syed Khalid Rashid, though you have passed on to the glorious life of eternity, your contributions to knowledge will forever be cherished, and your light will continue to guide future generations. May Allah SWT grant him Aljannat ul Firdaus.


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