WHICH MOTIVE SPARKED PROVISION OF ISLAMIC FINANCIAL SERVICES?

I had this question in mind for the last two days "Which motive sparked the beginning of Islamic financial services; sharia compliant motive, the social-economic development motive or profit motive or a mix of some of these three?"

Before I attempt to share my thoughts on the above question, I would like to explain in short why this question is important. Islamic financial services have been evolving over time, good enough most of its development phases is recorded. As a practitioner, I am concerned when I observe signals of disconnect between above mentioned three motives. Though, there are many who strive to balance the three despite being a challenging task, there are others who don't seem to understand how this economic project of having Islamic financial services started and the motive behind those who sacrificed for it in the face of many challenges to see it happen.
If we don't attempt to answer that question in the light of Islamic finance history and higher objectives of the religion of Islam, one likely risk Islamic financial services shall face is: executive who understands the motive behind Islamic financial services shall keep on decreasing than they are now and we shall have increasing number of executives who seem not to
care to know, and if they know, to act accordingly.

Social-economic development motive.

In search for the answer to the question, I had to recollect my thoughts from the time of Prof. Ahmed Naggar, the founder of modern day Islamic banking and his German financers to Prince Mohammad bin Faisal Al Saud and others in 1960's. With six years of studying Islamic finance from Bachelors to Masters degree, I am much convinced that social economic development of the masses was at the center of the sacrifices and efforts made by Prof.Ahmed Naggar, which can be summed up as : the sincere desire to uplift economic and social conditions of many farmers at Mit Ghamr sparked the establishment of Islamic banking project in Egypt. To achieve this motive in an Islamic society of Egypt, the question of how is as important as the desire to improve the conditions of the people to achieve social-economic development.

As Muslim economist, Prof. Naggar did not confine himself in mainstream economic thinking of pricing loans/capital with interest because this is not going to work with farmers, wont achieve the higher motive at hand but more importantly it will be a project that disconnect from the social-economic values of the Egyptians. This later aspect is what is missing in many financial inclusion initiatives around the Muslim world as well as in societies where Muslim are expected to be part of the initiative-they are technically left out the moment 'Interest' is part of the initiatives except a few.

Sharia compliance motive.

Logically, Sharia compliance motive is not an option in this particular situation but is the technical input that pave the way on what is to be done to achieve the first motive. Sharia compliance was not the prime motive of his financers, the Germany nationals but rather the social-economic development of the masses. The position Sharia compliance occupied in this case, is exactly what the word Sharia linguistically mean ' the way to a watering place'. It can be stated then that social economic development of the masses is an important condition but sharia compliance is an essential condition for achieving the motive in a manner that pleases Almighty but conscious minds 'social economic values' of the Egyptian farmers. The case for establishment of Tabung Hajj in Malaysia and Islamic Development Bank is another ideal examples to support this thesis.

Profit making motive

Since the desire to achieve social economic development of the masses is in most cases the ambition of any government, when that government is not up to that task due to political reasons and perceived political incompatibility with Sharia compliance as a way to achieve it, private sector or individuals took the challenge. Among them is the prominent and wealthy Prince Mohammed Al Faisal Al Saud who joined hands with Prof Ahmed Naggar to establish Faisal Islamic Bank in Sudan and Egypt in 1977. However,before him is H.E Saeed Mohammad Al Lootah founded Dubai Islamic Bank in 1975. The role of private individuals since then towards the development of Islamic financial services industry has played greater role and shaped governments to accept and play government role in levelling the playing field for the success of Islamic financial industry or business.

As in any business, profit motive is a driving force to invest. I call this a 'new born' in Islamic Finance history, though is the current prevailing motive that shape the minds of most investors and so the executives of Islamic Financial business today. If left unchecked, very soon Islamic Financial industry shall be facing the negative publicity that we currently keep on reading on the behaviors of Wall Street Bankers. So we must check and keep in control/balance the profit motive of investors and executives, because once the super-desire for profit making control the very decision of the organization, with unmatched checks and balances, it may leads to another 'new born' Islamic financial sychopaths who are after consecutive profit making at any cost be-social economic development of the mass or Sharia compliance.

Finally, let us never forget how this project-Islamic Financial services industry- started and the motive behind it;social-economic development for the masses regardless of faith, guided and cherished by Sharia values and principles to deliver stakeholders value. Islamic Financial Institutions and those entrusted to make decisions have an obligations toward sticking to the motive, put in place checks and balances to control and mitigate risks of the 'new born' from taking charge at the expense of important and essential conditions for the very existence of Islamic Financial Services.

I believe, once we keep this understanding deep down our hearts and minds, put in place checks and balances, we shall truly have Islamic Financial institutions in spirit, form and substance.

Wabillahi Tawfiq.