This page is intended to promote the promotion of Qirad investments amongst Muslims.
The Prophet, may the peace and blessings of Allah be upon him, sanctioned qirad investments which exclude any usurious third party: by it the investor (rabb al-mal) makes over a certain sum of money (in gold or silver) to an ‘agent’ (al-’amil). The agent uses these funds to trade and pays back the capital plus a previously-agreed percentage of the profits to the investor when the goods bought with the funds have been sold. The increased return on the initial investment is equitable as it is a loan which incurs risk for both parties: if the agent makes a loss (on the investment and on his time and work) the investor will also make a loss.
An example of how qirad works
(a) An investor will give an agent £12,000
(b) They agree that all profits should be shared equally (50:50)
(c) The agent then puts in time and effort to acquire goods with the cash
(d) The agent sells the goods for a total of £16,000
(e) The agent gives the £16,000 to the Investor
(f) The Investor takes his original £12,000 and splits the remaining profit with the Agent
(g) Both the Agent and Investor make £2,000 profit each.
In the event of a loss in the above example (eg, only receiving £10,000 for the goods) then the Investor would get the full £10,000 and thus lose £2,000 and the Agent would lose his time, energy and reputation.
If we are to follow the sunnah correctly then investment may only be in gold or silver (preferably Dinars & Dirhams). With the now widespread minting and distribution of Islamic Gold Dinars (IGD) and Islamic Silver Dirhams (ISD) in a number of country this not only becomes possible but desirable.
The investment should be quoted and given in gold and preferably Islamic Gold Dinars (IGD). Through Ayn Gold and many other agencies connected to the World Islamic Mint this can now relatively easily be facilitated.
If you would like to become a qirad Investor or if you have a business/trading opportunity that you are seking investors for then feel free to contact Jahaangir Harris on or Hajj Amal Douglas to discuss the matter further (Skype: dmccosultancy)