Selling Goats At the Bank?

Selling Goats At The Bank?

The Islamic finance industry has been expanding at an enormous speed. The consultancy and accounting firm, Ernst & Young, has estimated that Islamic banking assets grow at an annual rate of 17.6% between 2009 and 2013 and will grow by an average of 19.7% a year to 2018. The growth is not confined to Muslim countries but it is a global rising trend in Europe and the UK in particular. Everyone is clamouring for the pie, with contenders like London, Dubai and Kuala Lumpur competing to become the global Islamic financial hub.

With all the attention that the Islamic finance industry has received, you would think some breakthrough has been made in the financial industry. Unfortunately the products offered by Islamic financial institutions are similar to that of conventional banks.  Islamic contracts are made to suit conventional instruments and Islamic terms are given to the products.  Customers are required to pay more because there are more contracts to be signed for the Islamic financial products, which makes it more expensive.

Islamic financial institutions must take a bold step to differentiate themselves from the conventional banks in order to really embrace Islamic finance as prescribed by Shariah. They must engage in real businesses that can generate profit.

 It is my dream, that one day I can step into an Islamic bank to invest in for example goats. I walk to the “Suq Al Maez” ‘(The Goat Market) counter and buy a goat. The teller then checks the commodity market price for goats and gives me the market price of the goat for the day. I pay the amount and am given the token number of my goat which is updated into my account book.

Meanwhile, at the goat farm, my goat is identified with my token number and tagged using Radio Frequency Identification (RFID) system. The goat is fitted with a RFID ear tag with all information about me and the token number. This system allows tracking of my goat real time.  The goat that I purchased is a one year old doe and is ready to breed. The breeding is done at the farm and after 145 to 150 days, my goat gives birth to two kids (goats can give birth to multiple kids). The newborn kids are tagged with corresponding numbers. This information is immediately fed into the RFID system which updates the number of goats I own. Now I have three goats within 5 months. My initial goat will be able to breed again within 1 year and will continue to do so for the next 12 years of its breeding life. I need to wait one year before my kids can breed. Then I have an option to sell my goats at market price or claim it for personal use (aqiqah or qurban).

There can be spin-off businesses like selling of goat’s milk, cheese, halal frozen goat meat and leather. It is clearly halalan toyyiban, as the whole process follows the Shariah principles, from the financing till the end product. If run well, it can be a very lucrative enterprise. The best part is profit and loss is very clear, if one of my goats died due to an illness then I have to accept it as a loss and if my goat gives birth to three kids instead of one then it is an added bonus.

Of course the idea requires a lot of thought before it can be introduced into the market but it is doable. This model can be replicated with other animals as well. Islamic financial institutions can make a difference in the economy. By investing in the real sector in this case animal farming, it also provides food security which is becoming a growing concern of many countries.  It also provides opportunities for investors to invest in tangible products instead of stocks which are vulnerable to market changes.

Nevertheless, this is a dream and I hope that it can materialize in the near future if not in my lifetime.