Cranfield 13 July 2007 David Logan

Islam and Business:Conflict and Collaboration

2Islam and Business

Presentation structure

1. The Muslim world in the new global social system

2. Religion, ethics and business

3. Islam and business

4. The role of western business

Islam and corporate giving

3Islam and Business

The Muslim world is part of the new global social system

Governments 34%

For-profit 60%

Informal sectorNot-for-profit

6%

Approximate shares of US GDP in 2003

4Islam and Business

Religion, ethics and business

Religious teaching of all denominations, provides a basis for ethical

judgement on economic relations and business

Companies are the agents of the market

They have the choices about how they act

Their behaviour is critiqued at two levels As part of the free market system as a whole

Individual company practice in relation to its stakeholders

Voluntary charitable giving is very important in all religions but

especially so in Islam

5Islam and Business

Islam and business

In principle, Islam is totally accepting of business

Its role is defined in the Holy Koran and the Hadiths “ … but Allah

hath permitted trade and forbidden usury …” (Al-Baqurah 2:275)

The prophet urged “be involved in business as 9 out of 10 sources of

income lie in business” (Ihya)

Of good work The Prophet said “working with your hands and all

forms of buying and selling which is most legitimate and blessed”

(Sabiq and Sayyid)

This is in contrast to communism/ socialism which is strongly anti-capitalist

6Islam and Business

Islam and business

Conditions are set on business behaviour, it must not

Be greedy

Seek monopoly or manipulate the market

Exploit the poor

Trade in forbidden goods and services Alcohol / drugs / tobacco

Pornography / gambling

Deal in pork products

Engage in ‘usury’ (riba)

7Islam and Business

Islam and charity

Charitable giving is one of the five pillars of Islam

It binds the community together

‘Zakat’ tax is the means of re-distribution

2.5% of capital assets above a minimum – payable once a year

Usually collected by governments e.g Saudi Arabia

Nowadays left to individual believer

Vast majority of firms are family firms

The role of corporate giving as opposed to individual giving is

unclear and needs definition – 1% of profits is a minimum

8Islam and Business

The role of Western business

Western business can be seen as

Agents of ‘neo-colonialism’ continuing a western tradition of

imperialism in the Muslim world

Purveyors of un-Islamic goods and services

Dominant and monopolistic

Occupiers of cultural space

Exploiters – not good citizens

9Islam and Business

The role of western business

“The Europeans worked assiduously to enable the tide of this materialistic life with its corrupting traits and its murderous germs, to overwhelm all the Islamic lands to which their hands were outstretched … to flood the countries with their capital, their banks, and their companies; to take over the workings of the economic machinery as they wish; and to monopolise to the exclusion of the inhabitants, enormous profits and immense wealth.

… they imported their half-naked women into these regions, together with their liquours, their theatres, their dancehalls, their amusements, their stories, their newspapers, their novels, their whims, their silly games, and their vices …”

(Source: Hasan-al-Banna “Between Yesterday and Today” as quoted by Ruthvan)

10Islam and Business

The role of western business

Overall the Muslim world has significantly missed out on inward

investment and technology transfer Oil and gas – approximately 85% of medium-term reserves are in Muslim

countries

Consumer goods

Finance

Travel and tourism

Muslim countries need Jobs and economic growth

Technology transfer

11Islam and Business

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94 3

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83

51 2

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20

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60

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Middle East& N. Africa

Europe /Euroasia

Asia Pacific W. Africa South &CentralAmerica

NorthAmerica

20022020

% o

f glo

bal reserves

Share of global reserves based on current production rates

Source: Institute for the Analysis of Global Security

12Islam and Business

13Islam and Business

The role of western business

Business is part of the ‘conflict’

Business is also part of the solution e.g creating growth and jobs

MNCs and Muslim societies can collaborate

However The ‘corporate citizen’ is an under developed concept

Giving is seen as a personal responsibility

The social infrastructure is weak

Community involvement has a vital role to play

It needs to be handled with care

Oils need to lead – but don’t

The Corporate Citizenship Company

Ground Floor South

Cottons Centre

London Bridge City

London SE1 2QG

www.corporate-citizenship.co.uk