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South Africa’s First Islamic Finance Conference: Some Reflections -Mawlana Dr. MAE (Ashraf) Dockrat

July 20, 2019


South Africa’s First Islamic Finance Conference: Some Reflections

by Mawlana Dr MAE (Ashraf) Dockrat (Pretoria)

Volume 7 (2019), Number 11 (July 2019)

Al Baraka Bank’s press release of the 21 June 2019 led with the headline “Industry Experts Gather at South Africa’s First Islamic Finance Conference.”

The IFN (Islamic Finance News) South Africa Forum was held at Cape Town’s Marriott Hotel Crystal Towers on Monday 24 June 2019 and brought together industry players, decision-makers and regulators to deliberate on “Shariah Finance” in South African and to explore “opportunities the country has to offer”. Delegates, according to the press release, discussed “the biggest market trends and debate hard-hitting topics and challenges facing Islamic Finance in South Africa.”

“The IFN Forum South Africa 2019, the first-of-its-kind for the country, is the last stop on the IFN African Roadshow which commenced on 18 June and included similar events in Kenya and Nigeria.”

Islamic Finance was touted as a viable alternative to traditional banking models for the benefit of Governments, the business sector and investors. Presenters tackled subjects such as the Fourth Industrial Revolution and the role of “Islamic financial institutions”.

The Conference had the blessings of the Banking Association of South Africa, was led by the keynote address by BASA Managing Director, Cas Coovadia. The big- wigs of “Islamic Finance” and executive who peddle their wares under the guise of “Islamic Finance and Shariah-compliant banking” were attracted to the event like bees to the nectar. Muftis and Ulama who serve on multiple “Shariah-compliance Boards” gave the event their blessings.

“As South Africa’s only fully-fledged Islamic Bank, it was critical that Al Baraka Bank played a leading role at this historic event. Al Baraka Bank will participate in several key panel discussions that debate issues influencing Islamic finance, banking and investment in Southern Africa and beyond, including a critical debate on the role of Islamic finance in the future development and achievement of the UN Sustainable Development Goals in Southern Africa,” explains Al Baraka Bank’s Chief Executive, Mr Shabir Chohan.

In his press release Chohan states: “South Africa is increasingly being recognised as a prominent player in the global Islamic Finance industry and it is encouraging to note that since 2010, our legislation has been continually tailored to better facilitate Shariah-compliant financial transactions and better accommodate the industry. The Islamic Finance industry has a vital role to play in working with Government to grow and improve the South African economy, well into the future”.

“Islamic Finance” is an ulceration of “Islamic Trade” and has no place in Shari’ah or the vision of the Islamic economic system. The Banking Council welcomes the ulama and experts who will design ever more conflated instruments that support their usurious capitalist masters.

Fundamentally Islamic finance is just another banking product, where competing banks vie with each other to lock in surplus Muslim capital. The entire discourse on “Islamic” finance is about semantics rather than substance. We understand banking in itself to be a usurious institution serving a greater end than just mere financing or as a depository. Secondly the mechanics of the money system as it exists currently is itself usurious since it represents intangibility at every level of what would qualify a medium of exchange as money.

What the discourse further ignores is a study of natural trading principles as a measure of wealth creation and how this functioned within the Islamic ethos and beyond. Trade was generated by a social compact, the mechanics of which was embodied in numerous forms of partnership and rental contracts. However the mechanics was part of a greater engineering project, the project being equity and not profit. For equity is a greater guarantor of wealth creation than profit. The logic of profit as the sole arbiter of trade leads to wealth retention (hoarding) and a decrease in the velocity of transactions (monopoly). Banking serves the interests of the latter two forms. However the form of the social compact within the Islamic ethos can be found in the guilds, the markets and the laws that governed them legislatively as well as behaviourally.

The criminality inherent in the current discourse is firstly the need to prefix the word “Islam” to the concept of banking. To prefix Islam to uncharacteristic institutions or ideals such as banking, democracy etc. would make it a misnomer. Secondly the entire nature of how money is loaned or borrowed cannot be substantiated within the principles of Islamic trading or partnership contracts as the requirement for transparency is absent. By this we mean the investors are composed of anonymous depositors. The bank is owned anonymously. The borrower remains an anonymous entity to the investors. The nature of the borrower’s transaction is not known by the investor. The exact profit or loss accrued as a result of the borrower’s transaction is not known by the investor is guaranteed a fixed return for his investment, and so forth. Finally, those involved in the discourse of “Islamic” Banking have no understanding of the historicity of the evolution of banking. Furthermore, they have no clue of the epistemology of either how usurious finance came into being and for what purpose. Nor do they have any idea of the epistemology of Islamic trading principles in its existential form. Even if they do know all of this, they choose to ignore it and adulterate it to suit their immediate usurious end. This therefore makes them true criminals.

It is telling that at the South African Conference, in spite of the global economic slump, there were no presentations on Islamic economics and the viability of the Islamic system to redress the ills of humanity. Clearly macro-economics is not on the agenda because the status co suits the participants.

True Muslim scholars are able to see the farce for what it is: A stop-plug that has now become the real thing. Packaged as “Islamic Finance”, it is about “financing” and it is the profits that accrue from this venture that is king. “Islamic Banks” and commercial banks who have smelled the sweet nectar have all taken ownership of traditional fiqhi instruments of the production of wealth such as mudarabah and musharakah (profit-sharing and partnerships) and have made it so complicated that the ordinary farmer has no access to the flowers. None of the institutions want the “client” to be the real investor and take no real risk.

Participants were clearly impressed by the fact that for the first time all the major players were around one table. There was clearly enough nectar to go around. With their sticky hands no one can really make a viable contribution to the implementation of the Islamic economic system as a viable alternative at the service of mankind.

18 July 2019

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