Currency in Islam By Mufti Faraz Adam and Mufti AbdulKadir

Ibn Taymiyyah (2005) states that the Sharī‘ah has not defined any specific condition or definition for currency and money, and has instead left it to the ‘urf (prevailing custom) and understanding of the people. Hence, the Hanafī jurists state that assets or commodities become currency by ta’āmul (common usage) and iṣṭilāḥ (social concurrence) (al-Kasani, 1986). Imam Ahmad also opined that currency can be identified by the agreement of the people (Ibn Qudamah, 1997). Muslim jurists state that currency is of two types: natural currency and customary currency. First, natural currency (thaman khilqī) refers to something originally created to serve as a medium of exchange. Gold and silver are examples of natural currency which are created to serve as a medium of exchange. Imam al-Ghazāli (2011) refers to gold and silver as natural currency which Allah, The Almighty, created for mankind to use as a standard and measure to price and valuate commodities. Second, customary currency (thaman ‘urfī) is something adopted by the people as a medium of exchange. Commodity money and fiat currencies are common customary forms of currency. The necessary juristic elements for a currency There are three elements required for any valid currency in Islam: māl (wealth), mutaqawwim (possess legal value) and thamaniyyah. Linguistically, māl in the Arabic language refers to anything which can be acquired and possessed; whether it is corporeal (‘ayn) or usufruct (manfa’ah); examples of this include gold, silver, animals, plants and the benefit derived from assets such as living in homes, driving vehicles, etc. (Wohidul Islam, 1999). Something which cannot be possessed cannot be considered as māl linguistically. For example, birds in the sky, fish in the water, trees in forests are not māl in terms of the Arabic language as they are not in any person’s possession (al-Zuhayli, 1985). According to the Hanafi jurists, māl is “what is normally desired and can be stored up for the time of need”. This definition denotes that the two key criteria for defining māl in the Hanafis’ view are “desirability” and “storability”.Although some Hanafi jurists have stated that māl must be a physical entity, Mufti Taqi Uthmani (2014) dispels this argument and states that the Qur’an and Sunnah have not explicitly defined māl, rather, Sharī‘ah has left it to the understanding of people. Furthermore, he argues that some furu’ (substantive laws) in the Hanafi school discuss intangibles as māl. He thereafter quotes the fatāwā of Hanafi jurists which consider electricity and gas as māl despite being intangible. Thus, intangibles can also be māl on condition that they are desirable and retrievable. Another requirement for māl itself to be exchangeable and tradeable is that it must be mutaqawwim (possess legal value) for transaction to be legally sound (ṣaḥīḥ). Mutaqawwim refers to an item or subject being lawful to use in Sharī‘ah. Thamaniyyah refers to something possessing currency-like features where it is considered as a medium of exchange, a unit of account and a store of value. Thus, if these characteristics are found in a decentralised system, there is nothing to prohibit such a system in Islam. These underpinning principles are the ideals for currency in Islam. The government and ruling authority would have been the most efficient and instrumental in achieving these ideals. Against this backdrop, it seems that classical scholars favoured a centralised system. However, the reality is that the Qur’an and Sunnah have not defined currency, instead, they have left it to the understanding of the people and custom of the people as mentioned by Imam Ibn Taymiyyah. This is a common feature for those aspects of law which are fluid, dynamic and adjustable. Considering that a centralised system is not necessary, Shaykh Abdullah al- Mani’ (1984) states, “Money is thus whatever is agreed to be such, whether by government authority or public practice”. Thus, currency can be determined by centralisation and decentralisation. If a decentralised system can provide benefits similar to that of a centralised system, a medium of exchange can become money through public practice and widespread acceptance.

Islamic Commerce and Finance in the Rise of the West by Prof. John M. Hobson. (Unstructured Quotations)

Eurocentric world history, as already noted, assumes that the rise of commerce was given its decisive thrust by the Europeans, most especially the Italians, after about 1000... What has been generally missed is that it was the East that not only lay at the other end but also played a crucial role in the rise of European trade. For the fact is that European trade was ultimately made possible only by the flow of Eastern goods, which entered Europe mainly via Italy... Because of the importance that Italy is accorded to the European commercial revolution a few points are noteworthy in order to reveal the role of Islam in all of this. In fact, as early as the late-eighth century Italy was linked into various sub-systems of the Afro-Eurasian economy, straddling Europe, Africa and Asia. Indeed, it was Italy’s direct entry point into this wider and lucrative economy that secured her destiny.....In short, while the Italians played a vitally important role in spreading commercialization throughout Christendom, they were not the great commercial pioneers portrayed by Eurocentrism. Indeed, the Italians were at all times dependent upon the terms and conditions laid down by Middle Eastern and North African Muslims... It is generally assumed that a whole series of financial institutions were pioneered by the Italians. The most important innovation we are told was the commenda (or collegantia), that the Italians allegedly invented around the eleventh century...Nevertheless, this should hardly be a revelation given that Mohammed himself had been a commenda merchant. Nor should it be altogether surprising that the Italians came to use this institution given that Italy was directly linked into the Islamic trading system... The Italians are also wrongly accredited with the discovery of a range of other financial institutions including the bill of exchange, credit institutions, insurance and banking. For the fact is that all these institutions were derived from either the Islamic Middle East, or the pre-Islamic Middle East, given that ‘many of the business techniques had been firmly established before the Qu’rān had codified them’. The Sumerians and Sassanids were using banks, bills of exchange and checks before the advent of Islam.... In addition, the Italians are usually attributed with the discovery of advanced accounting systems. But various Eastern accounting systems were also well developed, especially in the Middle East, India and most notably in China. Indeed some of these were probably as efficient as Weber’s celebrated Occidental double-entry method. It is true that the Pisan, Leonardo Fibonacci, living in Tunis, was an important figure within Europe who advanced the Italian accounting system. Yet, as I explain below, he was so only because he had learned of the Eastern knowledge while living in Tunis... Source: The Role of the Arab-Islamic World in the Rise of the West.

Zanzibar blue economy through Islamic Finance.

Blue economy is about sustainable use of sea, ports, coasts, other water bodies as well as related water resources including underwater for social economic development while preserving the environment. Zanzibar development vision 2050 regards the blue economy as priority area for the next 30 years, serving as an effective and sustainable means of improving livelihoods and transforming the Zanzibar economy. Zanzibar had prepared Blue Economy policy in 2020, of which the then Minister of Finance and Planning of Zanzibar Hon. Amb. Mohd R. Abdiwawa said " By 2030, given the implementation of Zanzibar Blue Economy policy, we expect Zanzibar to be the leading hub for the blue economy in the Western Indian Ocean region." According to Zanzibar policy, priority areas are; Fisheries and Aquaculture, Maritime trade and infrastructure, Energy, Tourism, Marine and Maritime governance. In each of these areas, there is a lot of funds that are needed in order to address the challenges in each area in order to contribute massively to the economy. One of key sources of funding that Zanzibar government need to resort to is using Islamic financial instruments. Islamic financial industry in Tanzania is at nascent stage of development. Despite of that, it has shown positive impact in enabling financial inclusion, MSME growth and contribution to the government revenue. However, URT and ZRG have yet to tap into financial resources that are available in Islamic banks and windows as well as from the Muslim local and international institutions and investors due to public official lack of awareness, status quo mentality as well as failure to think of the future. No doubt, Islamic finance is the future for people of Zanzibar social economic development agenda after having spent years under conventional financial system that has not delivered prosperity to Zanzibar people. No wonder, current CCM manifesto for Zanzibar promise use of Islamic financial mechanisms. Let us give few examples to illustrate how Islamic financial instruments can play huge role; First example, our fishermen lack capital to buy large boats and vessels as well as lack of modern cooling facilities to store fish. Being majority of Zanzibar fisherman are Muslims, they abhor interest based loans. Islamic microfinance and Islamic banks / windows, through profit and loss sharing arrangements, trade based or leasing arrangements can be of great value to required finance to meet fishermen needs. Another example is on lack of capacity and facilities of Malindi seaport to handle volume of arriving vessels which leads to a lot of time wastage and revenue leakages among others. The government can issue retail government Sukuk, that will enable common people to invest as little as Tzs 50,000/- to raise billions that are required either to build modern seaport, acquire new equipment's among others. Retail Sukuk shall enable Zanzibar people to finance directly their government on reasonable commercial terms rather than existing arrangement of government borrowing on interest basis from commercial banks at high commercial interest rates. The former arrangement brings income directly to people whereas the later is largely for the bankers and shareholders. Last example is on massive potential for renewable energy particularly through solar and wind among others that can be financed through multiple Islamic financial instruments such as Sukuk, syndicated financing through local and international players that will enable Zanzibar to be self-reliant on energy sources particularly renewable energy. Besides, Solar equipment's financed through Islamic financing arrangements can enable remote villagers and urban dwellers to get reliable source of energy, light and improve their livelihoods. Therefore, Islamic financial instruments has huge potential to finance Zanzibar blue economy agenda. To achieve this, government officials and other stakeholders must be open to learn and re-learn Islamic financial mechanisms, promote financial sector policies, laws and regulations that promote Islamic finance, attract and retain talent with Islamic finance qualifications, consult and involve Islamic financial practitioners locally and abroad to address several economic challenges facing the Isles. Insha Allah, with the clean intention, calculated actions under the visionary leadership of H.E. Dr. Hussein Mwinyi, the blue economy vision shall be realized. Do your part!