Jibril Mohamed Ahmed, Founder and CEO , Sahan Investment GroupAs millions of Muslims across Ethiopia gather this Friday for the sacred congregational prayer, it is time we turn our attention—not just to the spiritual, but to the ethical. Specifically, to those institutions that bear the name of Islam but risk betraying its values: Islamic banks.
Islamic banking in Ethiopia has grown rapidly in recent years. With Sharia-compliant institutions offering alternatives to conventional interest-based models, many Muslims have embraced these banks with deep hope. They see them not only as financial partners but as moral institutions—guardians of Islamic ethics in business.
But hope alone is not enough. Branding something “Islamic” does not make it just. And too many Islamic banks in Ethiopia today are failing to live up to the principles they claim to follow.
Take Musharakah, for instance—a profit-and-loss sharing partnership rooted in mutual risk and reward. In theory, both the bank and the customer share the outcome. But in practice, customers often shoulder the risk alone, while banks demand guaranteed returns. That is not partnership. That is exploitation cloaked in Islamic vocabulary.
Or consider Mudarabah, where the bank provides capital and the client manages the project. Islamic law demands trust, transparency, and a fair distribution of profit. But many banks operate without clear accountability, creating power imbalances that contradict the very spirit of this contract.
And then there is riba—usury—which the Qur’an explicitly forbids. While Islamic banks officially denounce it, some create complex structures that mimic conventional interest systems under different names. This is not innovation. It is evasion.
Allah says clearly in the Qur’an:
“Indeed, Allah commands you to render trusts to whom they are due and when you judge between people, to judge with justice.”
— Surah An-Nisa (4:58)
This verse isn’t just about judges in court. It’s about every institution that holds a trust—especially financial ones.
Islamic banking must be more than a commercial model. It must be a moral commitment. If these banks truly operate in the name of Islam, then they must embody its values: fairness, transparency, shared responsibility, and above all, justice.
If they fail to do so, then they should stop claiming the name. Because to profit from the people’s trust while violating the principles of the faith is not just bad business—it’s a betrayal.
This Friday, let every sermon, every supplication, and every soul seeking Allah’s mercy also demand integrity. Let Islamic banks remember: the community is watching, but more importantly—Allah is.
Islamic banking must not only sound Islamic. It must be Islamic.
