A Sharī‘Ah assessment of al-Qarḍ al-Ḥasan (Ethical Loan)‎ and its impact in al-Hayat relief foundation, Ogun state, Nigeria

Abstract EN

Inaccessibility to ethical loans is considered one of the impediments to improving socio-economic conditions of Muslims in Nigeria.

Consequently, Muslims are hindered economically to grow due to lack of adequate funds to invest.

Thus, Al-Hayat Relief Foundation offered an alternative lending platform for Muslims.

This paper, therefore, addressed the administration of interest-free loans in the Foundation in the light of the principles of the Sharī‘ah (Islamic Law), while also critiquing the impact of such loans in order to analyse Islam’s contributions to the socio-economic growth of the informal sector of Ogun State, Nigeria.

Using content analysis, the paper collected data primarily from interviews.

Findings revealed that the administration of ethical loans in the Foundation conformed, largely, to Sharī‘ah.

Observed impacts included promotion of financial inclusion, sustainable economic empowerment of Muslim households, creation of employment opportunities, deepening and strengthening of the informal sector through provision of funds and promotion of micro-entrepreneurship.

The paper concluded that the Foundation has created an enabling platform for funds’ provision using the principle of ta‘āwun (cooperation).

It, therefore, recommended that the organisation needs to strengthen its institutional measures in the administration of ethical loan in order to reduce high rate of defaults among its members.