MURĀBAḤAH PRODUCT AS AN ALTERNATIVE TO RIBĀ (USURY) IN THE ISLAMIC COOPERATIVE (IC)

Abstract

This study evaluates the concept of murābaḥah as a workable option to usury 
transaction in the Islamic Co-operative Societies (ICS) considering its adverse
effects to the individual, economy and society at large within the general 
framework of Islamic financial precepts and doctrines. The research work 
focuses on the needs of Islamic Cooperative Societies (ICSs) to have profound 
influence on the welfare of its members, providing a service of critical 
interventions in areas of basic survival needs without indulging in ribā. The 
methodology adopted in the study is scriptural in the sense that Qur’an and 
authentic Sunnah (prophetic tradition) formed the legislative basis of the 
study, also contextualizing the topic to everyday situation, written works of 
renowned Islamic scholars are widely consulted and reviewed. It is hopeful 
that this studywill present murābaḥahas a viable alternative to the precarious 
effect of ribāto the generality of the Muslims and non-Muslims. Conclusively 
the study reveals that ICSs and their members can enjoy a lot of financial 
opportunities without involving in interest dealings and murābaḥahis a doable 
option for ICSs and other non-Islamic cooperatives at large, in the financial 
market, while recommending more efforts for the practice of murābaḥah in 
financing contracts by ICSs and urging conventional financial institutions and 
governments atall levels to adopt and formulate financial policies using 
Islamic financial principles, especially murābaḥah product.