By Maj Hussain, Director Halal Incorp
Islam & Finance: Entrepreneurship is a means to success and change. According to the Oxford dictionary the definition of entrepreneur is: “A person who sets up a business or businesses, taking on financial risks in the hope of profit”
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Therefore accordingly I believe an entrepreneur is any individual who can see an opportunity to create an avenue whereby an entity is created which has an overarching disposition to create profit which may come in the shape of selling good in order to generate profit or could incorporate the delivery of services for example. Human history is detailed in transactions between groups of people’s and entrepreneurship. This has normally come in the form of trading goods, items, commodities and luxuries as well as exchange which can be traced back to early civilisations. The entrepreneurial flair came to life particularly in the 19th century across Europe as the enlightment period and renaissance sparked the cultivation of the industrial revolution.
Many entrepreneurs set up factories and mills producing, selling and shipping cotton, wool, textiles and various items. Currently entrepreneurial trends in the west have included the emergence of Social Enterprise which is creating businesses which produce profit and distribute excess profit for the benefit of society and reinvest back into the business. The idea of business ethics and undertaking trade for the benefit of wider society can be traced back to Islamic principles in regards to business and assisting social/economical strands in society.
Islam & Finance: Entrepreneurship
Islam & Finance: Muslim Business Women & Female Entrepreneurs Are Leading The Way In Economical Development
Entrepreneurship citing the example of the blessed Prophet (PBUH) and his marriage to Khadija (RA) who was a market trader and business woman, indeed Islam has a long established relationship with commerce and business. One common misnomer is that Islam was spread by the sword. However of course this is not true often just a smokescreen to disguise Islamaphobic intent. In actuality it is a known factor that Indonesia has the largest Muslim population in the world. Muslim traders travelled across the seas and engaged local communities within these regions. The indigenous populations were able to observe the character, honesty and integrity of Muslim traders within markets and naturally began accepting the Islamic faith.
Hence Islamic business principles have always played an integral part in relaying the message of the faith. Economic entrepreneurship is an important factor with the advent of Social Enterprise (SE) entering the. The Social enterprise sector has in recent years developed and is increasing its market share. Many SE’s often recruit locally and provided added ethical business value by supporting local communities. It is extremely import to promote general entrepreneurship amongst communities to help improve life prospects particularly for unemployed youth and marginalised communities. A famous saying reads:
“you give people a fish and they can eat for a day, you can give people a fishing net and they can eat for a lifetime”.
Islam & Finance: Education and skills development training play a large part in helping individuals better understand local markets and become avenues for innovation and new wealth creation. Entrepreneurship is a key factor which can help boost local economies and drive social change consecutively.
Micro and Macro referring to the internal and external market. Within an internal context of the market it is important to consider the communities and people who make up the actual market. Investment in training, knowledge exchange drives innovation forward. International events and conferences are a contributing factor as people are able to travel and meet others where ideas are exchanged and knowledge developed hence promoting the expansion of innovation.
The perfect example of this would be the Muslims of Spain and the great Islamic history of Al Andulus. Micro consideration such as the individual, the family, education systems, and resources may come under this area. Macro considerations may look at wider stakeholders such as the political establishments, the law, social hierarchies, municipalities etc. All these aspects affect the economy and individuals within any given society. Bronfenbrenner’s (1979) work discusses the influence layers such as micro and macro have on society
Islam & Finance: Exploring Finance & Riba (Usury)
In regards to Islam providing an efficient and economic system based on justice, equilibrium and fairness there are a range of factors to be considered. The Islamic model of an economic society and system prohibits the use of interest/usury also known as Riba. The concept of lending money on interest has vast consequences on wider society and disturbs equilibrium drastically. The western based financial markets and banking sectors as well as eastern institutions that use Riba create further problems and indebt individuals, families and businesses. When lending money on interest an individual may take a loan out for £500 and through a time period may end up paying a vast amount higher than the original sum borrowed.
Islamic finance is based upon the principle that when you enter into business you must embrace risk. There is a possibility you may make a loss or a profit. The system of Riba excludes all risk factor allowing the lender to make a profit regardless of the environment, market or context. Therefore this ultimately does not allow wealth to circulate. When wealth distribution is prohibited this means that the hierarchy of wealth is maintained where the poor will stay at the bottom of the hierarchy and the wealthy will maintain their wealth. The system of paper money is also a factor to consider as it does not have intrinsic value comparably to gold for example which does and is at the mercy of inflation. Within Islam & finance the prohibition of Riba makes sound business sense in determining a market based upon ethical and just considerations.
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