Proliferation of Riba based Loans: Don’t be a product of Prophecy.

By | September 7, 2018

Going down memory lane it is obvious that riba based loans has been with us from time immemorial. In recent decades getting access to loan is only possible via the major banks and financial institutions, which in most cases offer loans to big corporations. Besides, for individuals, the processes are so tedious that not many could meet the conditions to access these riba based loans. Fast forward to recent times, the era of technology – Fintech, it’s now possible to access loans just right from the corner of your room without leaving your house, or even inside your car or at the office; in fact from anywhere, with the swipe of few fingers on your smartphone or clicks of few pages on your laptop before you blink an eye you will receive an alert that the loan you requested for is already in your bank account.

The entry barrier to access riba based loan are now so easy and it’s what every next-door startup company in the financial space is now venturing into. The stats are very alarming, for example, the peer-to-peer loan industry is expected to grow to 1 Trillion Dollars by 2025 from 9 Billion Dollars in 2014 (Source: Fin Tech in Nigeria: Understanding the value proposition by KPMG, November 2016, page 25). Driving this home one of Nigerian Fintech lending platform as at June 2018 had disbursed 1 Billion Naira in loan to about 100,000 users. The number of players in this industry is growing by the day at the last count we have over 30 online lending platforms in Nigeria that will provide you loans within 24 hours with no collateral and their interest rate range between 10%-30% and more with a tenor of 6 to 12 months.

Another twist is that these lending platforms are not just in the business of lending they are also collecting funds from individual as investment and they pay their investors a fixed return. This is another form of riba. The reality is that the same funds they collect for investment and pay the investor like 10% return on investment is the same funds that they loan out and collect up to 30% to 40% from the borrowers. One of the companies operating in this space got 12 million dollars seed funding in July 2018. In May 2018 another company got 1.2 Million dollars funding for expansion. This is a massive and thriving business that is receiving funding regularly from investors.

The reality of our current predicament is that this proliferation of riba based loans is something that has been foretold by the greatest man to set foot on the surface of the earth – Prophet Muhammed (SAW), yes he his and this can be backed up by empirical evidence which cannot be doubted. One of such evidence is the Holy Quran reveled to the seal of Prophet Muhammed (SAW). The Quran states clearly that “This is the book (Quran), in it is guidance for sure without doubt, to those who fear Allah”. (Quran 2:2). The Holy Quran, also declared thus: Verily you have in the Prophet of Allah(SAW) an excellent model, for him who fears Allah and the Last Day and who remembers Allah much” (Quran: 33:22).

This implies that whatever the Prophet says is a prophecy which will come to past because he did not say things from his own volition but from celestial inspiration from Allah. One of such prophecy of his, is proliferation of riba based loans. Abu Hurairah (RAA) reported: The Messenger of Allah, peace and blessings be upon him, said, “A time will come upon people when they will consume usury (riba).” They said to him, “Is that all of the people?” The Prophet said, “Whoever does not take from it will be afflicted by its dust.” (Source: Musnad Ahmad 10191).

The question is do we fold our arms and simply become a product of prophecy, the answer is no, hence we must create alternatives in the face of the very difficult task ahead. One of the most feasible alternatives is to create co-operative societies that will run on the principles of Islamic Finance, you can read more on how to achieve this in one of our write up: Co-operative society: An alternative to Riba. We also need to create Islamic Fintech companies that will serves as alternatives to the present day Fintech which will be devoid of riba in all ramification.

At Tijarah Hub we are well poised to assist in setting up alternatives to the present day financial system, based on our track records and understanding of the Islamic financial principles. For more details on this, please contact us via email:, send a message from our contact page or comment below and we shall be glad to assist you in the quest of getting riba off your financial transactions through the establishment of a viable alternatives (Islamic Fintech) thus ensuring that we don’t become a product of prophecy.

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