Ummatics Colloquium | Islamic Social Finance: Meaning & Means
Our January colloquium highlighted the expertise of Dr. Monzer Kahf, a renowned scholar in Islamic economics and finance. Focusing on Islamic social finance, Dr. Kahf delineated its significance and avenues for realization.
Initiating the discourse, Dr. Kahf emphasized the inherent shortcomings of the current social financial system, underscored by a recent OXFAM report illustrating the escalation of global poverty and widening economic disparities. He attributed these issues to systemic flaws that, he argued, could be effectively mitigated through the implementation of an Islamic financial framework. This framework, according to Dr. Kahf, possesses the inherent capability to not only address but prevent such issues from reemerging.
Dr. Kahf’s presentation encompassed five primary topics: the definition and extent of for-profit finance within Islam, the critical roles of zakat, awqaf (endowments), and charity, the dynamics of market failures and their rectifications, strategies for wealth distribution prior to market engagement, and the principles of the Islamic fiscal system.
He posited that for-profit Islamic finance is paramount for fostering social financial health and stability, superseding the impacts of charity and sustained awqaf. This model, predicated on property ownership that generates value within the bounds of shared ethical commitments, facilitates value creation through sale, leasing, or partnership arrangements.
Contrasting with conventional interest-based banking—which merely acts as a financial intermediary between savers and borrowers—Islamic financial intermediation is portrayed as more equitable and holistic, engaging savers, consumers, and suppliers alike. This inclusivity not only fosters value generation but also ensures societal benefit by prioritizing developmental and ethically sound investments over mere debt restructuring, prevalent in contemporary banking practices.
Dr. Kahf also introduced the concept of “altruism through selfishness,” advocating for benevolence as a means to personal and communal prosperity. He articulated that engaging in zakat, while obligatory, serves the dual purpose of fulfilling individual and collective welfare, underpinning the notion that financial contributions are intrinsically moral investments.
He further argued that social contribution, deemed fard kifayah (communal obligation) within the Islamic tradition, is essential for the robust functioning of an Islamic economic system, which hinges on socio-economic solidarity.
Concluding his presentation, Dr. Kahf emphasized that the core elements of the Islamic fiscal system include a respect for private property and a taxation policy that is minimally invasive and aligned with Islamic tenets, elements which serve to reinforce the system’s foundational principles of equity and ethical governance.
Dr. Monzer Kahf, a distinguished scholar of Islamic economics and finance, will be elucidating the concept of Islamic social finance and the methods to implement it in today’s world. He has authored 35 books, published more than 75 articles, and contributed numerous conference and encyclopedia entries on Awqaf, Zakah, Islamic finance and banking, and other areas of Islamic economics. Dr. Kahf has served as a collaborating expert at the Islamic Fiqh Academy, an IMF Consultant on Islamic Finance, the Head of Research in IRTI-IDB, a Senior Research Economist, the Director of Finance in the Islamic Society of North America, among other roles. Currently, Dr. Kahf is a Professor of Islamic Finance & Economics at the Faculty of Economics and Management, Istanbul Sabahattin Zaim University, Turkey.
Date: Saturday, Jan 27, 2024, 11AM ET
Presenters: Dr. Monzer Kahf, Professor of Islamic Finance and Islamic Economics
Moderator: Dr. Usaama al-Azami
