Economic Preeminence Does not Require or Depend on Riba

As for the second and third parts of Ibrahim’s statement, “There can be no economic preeminence without financial institutions, and no financial institutions without Interest (Riba)”, they are utterly false. There are many Texts in the Quran, some of which we have already mentioned, that contradict Ibrahim’s false statement. Further, the established Islamic economic practices since the time of the Prophet, salla allahu `alaihi wa-sallam, until the present time when banks are widely established, affirm the falsehood of this statement. Muslim economy has always been strong during most of the past fourteen centuries, without relying on banks and certainly without relying on Riba. During this long period of time, the Muslims increased their wealth and had their business transactions duly organized [and fulfilled] for them. In addition, and throughout this time period, many Muslims were able to amass great wealth using the permissible Islamic financial dealings.

Allah gave victory to early Muslim generations over their enemies, until Muslims and the Islamic State became masters of the world, for many centuries. During these glorious centuries, Muslims used to refer to what Allah has revealed for judgment in their rule over Allah’s slaves. They did not have any need for banks or usury. Rather, if one says that usury and banks were and still are the true causes behind many problems and divisions amongst Muslims and behind the weakness in Muslim economies, the hatred that spread between them and the shattering of the Islamic unity, one will surely be saying the truth. This is because usury causes hatred and enmity between people, eradicates Allah’s blessings and warrants His punishment, just as Allah said, [2:276],

 يَمْحَقُ اللَّهُ الرِّبَا وَيُرْبِي الصَّدَقَاتِ وَاللَّهُ لاَ يُحِــبُّ كُلَّ كَفَّارٍ أَثِيمٍ 

what translated means, {Allah will destroy Riba (usury) and will give increase for Sadaqat (deeds of charity, alms, etc.)}[2:276].
Furthermore, we must state here that because of Riba, debts keep on accumulating and multiplying, leading the indebted individuals and nations to suffer from rising unemployment and recessions1. In such conditions, those who have capital prefer to lend their money in return for high interest returns, instead of investing in beneficial projects, such as building factories, construction projects, and so forth.

On the other hand, the various business transactions that Allah has allowed will surely benefit the Muslim Ummah, and mankind on the whole, and will ensure an increase both in wealth and piety for them. Also, what Allah legislates and allows will certainly provide work for the unemployed and help for the poor, so that they acquire an honorable means of livelihood. Hence, the entire community will benefit from the absence of Riba and from begging others for help and indulging in the impermissible means of amassing wealth.

Allah allowed Muslims to establish companies, factories and various productive institutions that benefit the people by producing weapons, clothes, furniture, and so forth. Also, Allah allowed Muslims to participate in agricultural production, which in turn benefits all Muslims, especially the needy among them.

As compared to all these beneficial methods of economic activity that Allah permitted for Muslims, Riba harms and works against healthy economies and public interest, often causing severe economic disasters, as all those who have a sound mind would concur. Muslims must never forget that relying on usury as a legitimate business transaction eradicates Allah’s blessings, results in being dictated to by the enemies (Kafir debtor nations) and brings Allah’s wrath. We ask Allah to save Muslims from such an evil fate and to bestow on them good sense, correct guidance and firmness on the Path of the Truth.

By: Shaikh: Abdul ‘Aziz ibn Abdullah ibn Baz