Principles and Applications of
Islamic Finance
continued from page 23
uct (in this case, whether the person
paying will receive anything or not),
buying a raffle ticket would not be
permissible.
An example of uncertainty in price
are floating prices in which the final
price is tied to an index or currency
rate. Having a floating price in the
sale of a product would also not be
permissible due to uncertainty.
Question from previous issue
Ahmad wants to buy a 2021 Honda
Civic from his friend Asim’s Honda
dealership. The vehicle costs $
20,000. The dealership also has a
partnership with Honda Finance to
help provide financing for customers.
Honda Finance has a deal of 0%
APR (no interest) but charges a flat $
2,000.00 service fee for providing the
financing. In total, Ahmad would pay
22,000 dollars over 5 years with no
interest charges. Would such financing
be permissible?
Answer: Such a transaction would not
be permissible. The reasoning for this
is that the Honda dealership is owned
by Asim. The financing is through a
third-party (Honda Finance). In this
scenario, Ahmad would be paying a
third-party financer a “fee” for the
credit provided. Since any stipulation
in addition to the principal loan
constitutes interest, such a fee would
be considered such and would be
impermissible.
Test Your Understanding
Fatima has an online bracelet business.
She does not want to deal with
inventory, so she signs up for Fulfillment
by Amazon. In doing so, Fatima
has her bracelet supplier individually
pack the bracelets and ship them
directly to the Amazon warehouse.
From there Amazon will deal with
the shipping any time a customer
places an order. In this entire process,
Fatima never physically receives or
even sees any of the bracelets. Is such
a business model permissible?
Answer: Find out in the next issue of
al-Madinah magazine.
1 Fat-h al-Bari, 1/125
2 Sharah al-Nawawi of Muslim, 1/160
3 Vassiliev, Alexel. (2000). The History of
Saudi Arabia, (p. 25)
4 Hell, Joseph. (1926), The Arab Civilization,
(p. 10)
5 24Warren, K. (2020, March 09). https://
www.businessinsider.com/mohammedbin
salman-saudi-prince-net-worth-yachtprivate
jet-lifestyle-2019-5?op=1
6 Hall, C. A., & Ramírez-Pascualli, C. A.
(2013). The first half of the age of oil an
exploration of the work of Colin Campbell
and Jean Laherrere (p. 6).
7 https://whgbetc.com/petro-products.pdf
8 Epstein, L., Jaco, C., & Iwersen-Niemann, J.
(n.d.). The Complete Idiot’s Guide to The
Politics of Oil. (p. 28)
9 ibid. (p. 28)
Transformation of the Arabian
Peninsula (part 2)
continued from page 24
gadgetry that simplify your life, and
6000 other items that we see, use daily,
and cannot live without to function
a modern, comfortable lifestyle. You
may download a partial list of 6000
items of daily use that are made from
oil.7
Let us not forget that since oil
controls the global economy, it also
harnesses the power to shape our
foreign policy and effect our national
security, as it has and is proven
through the numerous discussions
and books written on the symbiosis
between the global economy and oil.
It has also unfortunately fueled many
of the wars of the 21st century. Lita
Epstein writes, “In the 21st century,
oil remains the most important
commodity in the world. Without oil,
industrial and technological society as
we know it would not exist. Unfortunately,
it is also responsible for death,
war, political turmoil, and environmental
damage.”8 She goes on to say,
“Despite advances in computer and
other “high” technology, oil remains
the spine of modern life. Petroleum
products power jets, cars, ships, and
trucks, and are used to manufacture
everything from furniture and telephones
to computers and highways.
Oil drives the modern industrial
economy and will continue to do so
for the foreseeable future, so exploring
for oil, pumping oil, transporting
oil, and using oil, form the basis of
many international political arrangements.”
9 If oil runs out as peak oil
experts have already forecasted, the
modern era will become the post-oil
era and its effects will be, to say the
least, catastrophic. No one can say for
sure if we will be thrown 150 years
back into the preindustrial era, but either
way, mankind will suffer a global
economic meltdown, which illustrates
how fragile we and our man-made
systems are and how much we always
have and will depend on our Creator
for everything.
In any case, the goat-shepherd prophesy
is about an unexpected transformation
in the Arabian Peninsula that
quickly upended the ancient Arab
way of life, but more so an insightful
reference to the evolution of the
modern, industrial world, and its
fragile nature.
30 September – October 2021 | AL-MADINAH