Ahmed Alhassab Omer Alhassab
Shari’a Debate over the Concept of the Interest Rate:
Dilemma of the Theory and Policy in the Sudan
Ahmed Alhassab Omer Alhassab
The problem is related to the abolition of the interest rate from the banking system in the Sudan following the declaration of the controversial September Shari’a laws in 1983. Although, Islamic banking in Sudan refers back to the year 1976 when it was first put in to action by establishing Faisal Islamic Bank, yet, the year 1983 was the benchmark between the conventional banking system and the Islamic banking. Since that year the banking system has shifted completely from the conventional to the Islamic banking.
The move from conventional to Islamic banking was carried out immediately, the economic arena was not well prepared, either theoretically or practically, to receive such a radical change. Accordingly, many problems regarding the internal and external economic activities have appeared, most of them are attributed to the abolition of the interest rate from the banking system. These problems, forced the concerned authorities to revise the theory in order to find a way to deal with them. However, this option could only be done on the grounds of violating the main principles of the theory itself. Therefore, a dilemma between the theory and policy has been created and became the issue under concern of this study.
Three methods of research were employed to investigate this problem:
- The questionnaire method: to obtain aggregate data of statistical nature from the 60-stakeholders under concerned of the study (jurist, academician economist, experts economist, businessmen, farmers and handicraftsmen).
- The unstructured interview methods: to obtain data of qualitative nature from the 60-stakeholders, that can not be obtained by questionnaire.
- The group interview method: to collect more information on the study topics from two non-included stakeholders. The purpose is to formulate informed opinions and to clarify and verify information obtained from the unstructured interview.
In order to obtain the study data, two different types of sampling were used in accordance with the differences among the population of the stakeholders.
Among jurists, academician economists and expert economists purposive sampling was used to cover them all. The result was 30 interviewees.
With the other three groups a systemic random sampling was adopted. In case of handicraftsmen, the trade unions list of each category was used to choose every 15th person. While a systemic random sampling of two rounds were used to choose firstly, every 10th person up to 10 persons and then from which two were chosen. The result was 30 interviewees.
The preliminary outcomes of the field work can be seen in the following points:
- Advancement of loans and mobilization of savings for cash money without interest rate is the real challenge facing the Islamic banks operations.
- Arrangements of profit-loss sharing, besides, deferred payments are incapable of providing an answer to the substitution of interest rate.
- The logic behind the profit margin embodied in the deferred payments in the Islamic banks is the same logic behind charging interest rate.
- The need for cash money is widely shaping the relation between banks and the stakeholders with cheating, deliberate default of payment and a series of unethical behaviour.
- Banks are banks, whenever and whatsoever they are, mediating institution for generating profit. The can not advance money for free.
- Handling similar financial relations with international interest-based institutions is unavoidable.
The way forward is, to analyze the data deeply, for the final outcomes and to consult secondary data sources to write, the whole thesis before the end of the programme.