Glossary Of Islamic Economic Terms

Riba, Musharikah, Muzara’ah: what do all of these words mean? They are simply Islamic economic terms you may come across when trying to do business Islamically or reading up on this subject.

Al-Ajr

Refers to commission, fees or wages charged for services.

Al-fard al-kifa’i

Socially obligatory duties.  Literally, a collective duty of Muslims, the discharge of which by some of them absolves the rest of its performance, such as funeral prayers.  Technically it covers such functions which the community fails to or cannot perform and hence are taken over by the state, such as the provision of utilities, building of roads, bridges and canals etc.

Al-Hisbah

This is a system of state inspection to ensure fair practices in markets. The term is also used in a more general sense to include checking minor crimes on streets.

Amana/Amanah

In trust

Al-wadia

Resale of goods with a discount on the original stated cost.

Al-wakala

Absolute power of attorney

Al-Rahn Al

An arrangement whereby a valuable asset is places as a collateral for a debt. The collateral may be disposed off in the event of a default.

Al-wadiah

Safe keeping

Ata

Simply refers to a donation or a grant.

Awkaf/Awqaf

A religious foundation set up for the benefit of the poor. This is plural of the word Waqf (see below). It refers to property that has been transferred to a charity or a trust on a voluntary and permanent basis. The purpose is so that its usfruct may benefit other people.