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ISLAMIC MEDICAL EDUCATION RESOURCES 04

28.3 INVESTMENTS

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28.3.1 INVESTMENT IN PROPERTY

Partnership, sharikat, is in general allowed. People can jointly own and use articles such as food. They can buy property such as a house jointly and sell it later for profit. The partner in a joint property has the right of pre-emption, shuf'at and must be informed before any sale of the joint property is done.

 

28.3.2 INVESTMENT IN TRADE

Business partnerships, musharakat, can take several forms: pooling of capital, sharikat al amwaal; pooling of human resources, sharikat al abdaan; pooling of goodwill or contacts, sharikat al wujuuh, or any combination of the above. Murabahat is pooling of capital that is invested. The partners agree to a fixed proportion of profits or losses. It is illegal to fix a certain amount as the profit due to a partner because that would constitute riba.  Mudharabat involves pooling of capital and human resources and is co-operation between the owner of capital, the worker and the manager. Mudharabat can be by merchandise and not money. There is a pre-fixed proportion of sharing losses and profits. In case of loss, outstanding liabilities are deducted from the remaining capital and the worker just suffers loss of time.

 

28.3.3 INVESTMENT IN AGRICULTURE

The owner of the land may work it himself. He can use hired labour who are paid wages and have no share in the produce. The landowner may let a farmer cultivate unused land for free or in return for a fixed rental, ijaarat al aradh. The farmer is entitled to all the produce of the land. The Law allows sharecropping, muzara'at. The landowner and the farmer agree to share the produce according to agreed formula. The formula must state a proportion of the produce. It is haraam to fix each partner's share by weight. The landowner may contribute agricultural inputs like seeds and fertilizers. Sharecropping was agreed between the prophet and the Yahuud at Khaybar. Mukhabarat, a form of gambling that is letting a farmer use land in return for the produce of a delineated portion of the land, is forbidden because it will be a source of dispute when the delineated plot does not produce well.

 

28.3.4 DEPOSITS & TRUSTS, wadii'at

The trustee does not pay if the trust is destroyed accidentally. He pays for depreciation due to his use of the property. The concept of wadii'at has been employed in modern Islamic banking schemes.

  

28.3.5 INSURANCE

Insurance can take two forms: proprietary or mutual. The proprietary form is the un-Islamic form found in non-Muslim society. It is insuring a risk that is a type of gambling and involves cheating because any member who pulls out or fails to keep up the premium payments automatically loses all contrinbutions made over many years. In mutual insurance, the members are insurers and insured at the same time. It is a natural extension of the mutual support, takaful, that is found in the Muslim community. Thus Islamically-sanctioned insurance is a joint investment. Funds contributed as premiums are invested in mudharabat ventures. Each member has two accounts: a personal account and an account in which are placed funds used for pay-outs to the families of those who die early. Islamic financial institutions have developed an Islamically-acceptable insurance scheme called takaful.

(c) Professor Omar Hasan Kasule Sr. 2004