بسم الله الرحمان الرحيم
The world has continued to move from one economic crisis to another. Different names have been employed by economists to define the economic problem a country in particular or the world at large is facing at a particular time. The most popular of the names in this century is perhaps the 2008 global economic melt down.
Nigeria as a country has also witnessed series of economic distress so much so much that at a time in the past salt was a scarce and expensive commodity. The economic recession as we have it now in the country has its root in some inequities perpetrated by some individuals who have failed to recognize the purpose of life.
The solutions to this predicament have, however, been suggested by experienced economists of local and international reputation who, in their views, propounded so many artificial theories, forgetting that the problem could be resolved only if we go back to the basis. The basis is nothing but the Qur’an and the Sunnah.
This write-up seeks to examine the causes of economic recession in the country and equally proffers lasting solutions to them in accordance with the dictates of God, the Almighty.
A recession is a general downturn in an economy. A period of low economic activities. It is characterized with high level of unemployment, insecurity, inflation and low GDP.
CAUSES OF ECONOMIC RECESSION
Low GDP and over reliance on foreign goods.
According to so many economists, the current economic dismay of Nigeria owes its origin in the inability of the country to facilitate innovative enterprises. Nigeria virtually imports everything she needs and has failed to be an exporter of her locally-manfactured goods. Crude oil, which serves as the main source of the country’s income, is even imported from the country that does the refining. This lack of drive for encouraging creativity has made Nigeria rely so much on foreign goods, which of course devalues her currency.
Another problem which ensued from this is “inferiority complex”. Nigerians who are well to do prefer imported goods to the “made in Nigeria” ones. Some local investors have adopted the style of branding their goods “MADE IN CHINA”, “MADE IN ITALY”, “MADE IN FRANCE” etc so as to attract customers. So, the local investors have not in any way been encouraged, rather they have been treated with contempt.
High interest rate:
This is another cause of economic recession as it reduces the amount of available capital for investment. Intended investors put into consideration the availability of a suitable market for their product and are also apprehensive of the high rate they are to pay to the capitalists.
Nigeria’s economic profile:
It is believed that Nigeria’s economy has not witnessed a general downturn the same manner it is doing now. According to Kemi Adeosun, the Finance Minister, the inflation rate shrank at 17.1%, the GDP had contracted by 2.06%, the economy by 0.36%.
As at the second quarter of 2016, the oil price has crashed to less than $50 per barrel, Nigeria’s production output has tumbled over 400,000 barrels due to militancy activities in Niger Delta. The exchange rate is 1 dollar for 510 naira, as at the time of writing this piece. Between the second quarter of 2016 and now, more than 1,158,700 persons have become unemployed.
THE WORLD ECONOMIC SYSTEMS
The various economic systems have crashed in ancient and recent times. A critical analysis of these manmade systems will reveal their voidness of sustainability and genuineness.
Capital is rewarded in capitalism with interest. Interest is employed as the central motive force to amass capital. So, the capital is given for investment which enjoys interest, the interest is then reinvested.
Here, the state monopolizes capital and hence, no incentive of interest to cycle and recycle capital into a productive mechanism. The absence of interest in the scientific socialism economy does not prove its worthiness. The sense of responsibility itself is sufficient a driving force to put in efforts to multiply capital. This is lost since the capital used is not owned by the individuals
Islam as the only sustaining unadulterated true religion has furnished us with a system that checks the defects in both capitalism and socialism and maintains a middle position, which puts into consideration the interest of the masses.
Capitalism thrives on interest which makes wealth to be concentrated in the hand of few individuals, makes the rich richer and the poor poorer. Idle capital has a room in this system and wealth is accumulated by the capitalists. Islam, on the other hand checks this “idle capital” and imposes a tax known as “Zakat” on it. The Zakat is paid on the idle capital not the one in current use. The interest enjoyed by the capitalist is frowned at by Islam as it does not favour the average citizens but focus on enriching the rich one.
Socialism encourages laziness and discourages dignity of labour since the capital is not owned by the individuals. Islam preaches hard work and allows private ownership of wealth but conditioned with prudence, charity, accountability and transparency.
Islamic economic system
Islam solves the economic problems by first emphasizing that the dominion of every wealth belongs to God. So, when a man knows that whatever he acquires of the worldly materials is not for him, rather, it’s a trust, and then he tends to seek for wealth through lawful means and spend it in accordance with the dictates of the Ultimate Owner. The Holy Qur’an repeatedly reminds thus:
“to Allah belongs the kingdom of the heavens and the earth, and Allah has power over all things”(Ch 3 vs 190).
“Have they a share in the kingdom? Then who they not give men even so much as the little hallow in the back of the date stone”(Ch 4 vs 54).
“Allah has favoured some of you above others in worldly gifts. But those more favoured will not restore any part of their worldly gifts to those under their control, so that they may be equal sharers in them. Will they then deny the favour of Allah”(Ch 16 vs 72).
“Verily, your wealth and your children are a trial, but with Allah is an immense reward”(CH 64 vs 16).
Prohibition of interest
Islam prohibits usury and interest due to their inherent evils. The negative effect of these two cannot be overemphasized. The absence of interest in the Islamic economic system neither gave rise to high level of inflation nor did the prices spiral up beyond control. At least, the history has no evidence of such. Mirza Tahir Ahmad (R.A), the fourth successor of the Promised Messiah and Mahdi, in his book titled “Islam’s response to contemporary issues” remarks:
‘’ The government of China under Mao Tse Tsung’s era made many experiments with the economy. Some faltered. Some produced excellent results. But during the entire reign of Mao Tse Tsung, interest was not allowed to play any part, either domestically or internationally. Yet, throughout this period, there was no prominent increase in inflation. In fact, when ultimately the overall production level increased, prices began to register a fall’’.
‘’As compared to this, in the state of Israel, perhaps the world’s most capitalist country, the rate of inflation has been amongst the fastest recorded anywhere else in the world, except, of course, in Latin American countries and the post-war exceptional phenomenon of inflation in Europe, particularly in Germany. But then both were not normal days. Other things being equal, the role of interest in any economy cannot be described as anything other than inflationary’’.
Allah, the Almighty delivered to mankind a powerful warning 1500 years ago regarding the consequence of interest based economy. Allah says: “those who devour interest stand like one whom satan has smitten with insanity. That is so because they keep saying: The business of buying and selling is also like lending money on interest: whereas Allah has made buying and selling lawful and has made the taking of interest unlawful. Remember, therefore, that he who desists because of the admonition that has come to him from the Lord, may retain what he has retained in the past; and his affair is committed to Allah. But those who revert to the practice, they are the inmates of the fire, therein shall they abide. Allah will wipe out interest and foster charity. And Allah loves not confirmed disbelievers and arch-sinners. Surely, those who believe and act righteously and observe prayer and pay Zakat, shall have their reward with their lord. No fear shall come on them nor shall they grieve. O ye who believe! Fear Allah and relinquish what remains of interest, if you are believers. But if you do not do it, then beware of war from Allah and His messenger; and if you repent, then you shall have your original sums; thus you shall not wrong, nor shall you be wronged. And if any debtor be in straitened circumstances, then grant him respite till a time of ease. And that you remit charity shall be better for you, if only you knew’’( Ch 2 vs 276-281)
Obviously, the words “but if you do not do it, then beware of war from Allah and His messenger” define the cause of our economic crisis. What we are going through is definitely Allah’s wrath for we have forsaken His teachings and our hearts are aversed to the Divine guidance. It is quite fascinating to discern the effects of interest and usury on our economy. Former president of Nigeria, Olusegun Obasanjo, once remarked, “Nigeria borrowed $5 billion from western creditors in 1978, since then, we have paid back $16 billion. It may also surprise you to know that we still owe $31 billion: this is largely due to compound interest and interest rate fluctuation”.
One might go crazy if one starts to fathom to what extent the $11 billion extra paid will boost the country’s economy. The high level of unemployment, power fluctuation, and poor infrastructure can all be tackled to a very large extent with this money.
Prohibition of lavish spending
Countries have not devised any method to check the spending habit of their citizens. In fact, the focus of most government is on how a member of a society earns his livelihood, then taxation is imposed on the income of the individual. Having done that, most countries interfere not in the financial affairs of the individuals.
Islam as a religion which touches every sphere of human endeavor regulates the spending habit of a Muslim. Holy Qur’an 17,27-28 declares:
“Give thou to the kinsman his due, and to the poor, and the wayfarer, and squander not thy wealth extravagantly. Verily, the extravagant are brothers of Satan, and Satan is ungrateful to his lord”.
Despite the current economic condition of the country, club houses, night clubs, bars are still populated by Nigerians. Thousands of naira is spent daily on alcohol and fornication. Nigerians spend too much on ceremonies, parties and other cultural practices. I once attended a wedding ceremony and I heard the Bride’s father telling his friend he paid #2.5 million to secure the event hall. Allah defines his true servant as those who are neither niggardly nor spend extravagantly (Q 25: 68). So, any nation that desires a sustainable economy must instill in her citizen the spirit of a simple life style.
BASIC NEEDS AND ZAKAT
Materialism in its ultimate form breeds selfishness and callousness and veils man sensibilities to the sufferings of others. This is the reason why Islam has imposed a tax known as Zakat on an idle capital. The tax is used to cater for the basic needs of the poor. Every citizen, according to the Qur’anic teaching, is entitled to four basic needs. The Holy Qur’an declares. “It is provided for thee (Adam) that thou wilt not hunger there in, nor wilt thou be naked. And that thou wilt not thirst therein, nor wilt thou be exposed to the sun (ch 20 vs 119-120).
Thus, the minimum rights established by Islam are: food, clothing, water and shelter. The money realized from Zakat would be employed in providing these basic needs for the poor and needy. The imposition of Zakat discourages hoarding of wealth, a notable characteristic of a capitalist economy.
In short, Zakat has played a great role in maintaining the economic equilibrium of the Muslim communities.
In a bid to solve the world economic problems, several approaches have been adopted to effect a positive change, but till now, Islamic teachings are yet to be implemented. The gist of the Islamic economic system as highlighted above was adopted by Umar bn Abdul Azeez during his caliphate and for the first time in the history of Islam, no individual was worthy of being a recipient of Zakat because everyone could feed himself and his family.
The government has a role to play in ensuring a good economy. Allah-The Almighty refers to Himself as ‘’AL KHALIQ’’ which means ‘’The Creator’’ in the Holy Qur’an. This implies that every government must be innovative, creative and reward creativity. A lot of money should be spent on researches and proper monitoring should be effected. It is my prayers that may Allah direct the hearts of our government and the entire citizens to their responsibilities in ensuring a sustainable economy for our dear country.
ABDURROFEEQ OLUWATOSIN ALAKA