ISLAMIC FINANCE LESSONS FROM HIJRAH.

There is no doubt whatsoever that the migration (Hijrah) of Prophet Muhammad (peace be upon him) to Madinah was the crucial event, which established the Islamic civilization. It marked the transition from teaching Tawheed (oneness of Allah) to teaching rules related to Islamic life as whole and running an Islamic economy in particular.

Muslim historians have documented the economic situations of Mecca and Medina. One of the economic feature is that interest was prevalent in Mecca and predominant in Medina. Quraish were involved in Riba and Jews of Madina benefitted most from it. One historian said; "The wealth of Medina was almost entirely concentrated in the hands of the Jews. The Arabs (now the Ansar) lived in poverty and perennial want. One reason why they were chronically poor was the high rates of interest they had to pay to the Jews on their loans." No wonder Qur'anic verses on Riba revealed in Madina condemning Jews severely and prohibited Muslim from engaging in Riba transactions. This prohibition provided solid grounds on elimination of Riba in the economy of Medina in days that followed.

In this article, my aim is to draw specific lessons that are related to Islamic Finance from the migration process itself rather than what was attained after the migration related to Islamic economics and finance as a whole. These lessons are;

1.Wadiah deposit and related rulings. It is well known that the Prophet (peace be upon him) was trustworthy before and after he received the message. Many people used to keep their valuables with him and he (peace be upon him) would keep them until required by owners. He (peace be upon him) never used them and always owners will receive in the same way they had given. More important, when migration was near, he (peace be upon him) ensured each valuable had a name of its owner and asked his brother in law, Sayyidna Ali (may Allah be pleased with him) to return them to individual owner after he had migrated.

This noble actions teaches us, first; we should treat other people valuable with due care. Islamic banks have fiduciary responsibility to manage deposits under their watch as per agreements and ensure these deposits return to the owners whenever needed or to the next of kin in case the owner is dead according to respective country’s laws. At personal level, we might have debts or valuables of others, we must write a will (Wasiyya) stipulating their owners and inform a member of the family to pay the debts or return the valuables when we die. In short, we have a duty to prudentially manage assets of others and a duty to return to their owners whenever we think we cannot fulfill our mandate.

2. Takaful or Protection Planning. The journey to Madina was pre-planned not on the logistics aspects per se but on the protection needs of the key person. The Prophet (peace be upon him) before migrating, he invited people of Madina (later known as Ansar) to Islam and met six people from Madina in what is referred as first Aqaba pledge, followed with second Aqaba pledge. Among the items pledged was to protect and defend him (peace be upon him) as they would do to protect their spouses and children. This become social protection given to Prophet (peace be upon him) and those who followed him to Madina against enemies of Islam and Muslims.

With this in mind, we learn that our life requires some form of protection against risks such as illness, loss of employment, fire, accidents or business losses which makes Takaful (Islamic form of Insurance) critical means to protecting families and our livelihood. Takaful companies have sacred responsibility of offering takaful covers that are suitable, affordable and sustainable to protect takaful participants and their businesses. At personal level, protection planning is critical and should not be ignored either you are a high net worth individuals (HNIs) or else on risks such as illness, accident and death, mortgage risks and business risks i.e. family and general takaful. As a key person in a family or important shareholder or crucial partner in a business, chances are that your dependants or business might suffer high financial costs in case of illness, disability or death. In short, we must assess areas we need protection or takaful cover and have it. In other words, let’s tighten our camel and put our trust in Allah!

Finally, Hijrah has a lot of other lessons on a moral-social, political and economic aspects. It is upon us to dedicate some time to read and ponder on the significance of this historical event that not only changed the way Muslim practiced their religion but changed the World into a better place.