ABDULMALIK YAHAYA

                        TABLE OF CONTENTS

Title page---------------------------------------------------i

Approval page----------------------------------------------ii



List of tables---------------------------------------------------vii

Table of contents----------------------------------------------viii


1.1   Background to the Study

1.2   Scope and Limitation

1.3   Significance of the Study

1.4   Statement of the research problem

1.5    Aim and Objectives of the Study

1.6   methodology

1.7   structure

1.8   Literature Review

   End Note


2.1 Defination of term -Riba

2.2 Understanding the prohibition of Riba

2.3 Types and Classification of Riba

2.4 Western Theories of Riba

2.5 Qur’an Hadith and Biblical Justification on the Prohibition of


End Note

3.1 Historical Background of Sokoto Central Market

3.2 Riba Practices on Business Activities in Sokoto Central Market

3.3 Contemporary practice of Riba in Nigeria

End Note

4.1 Values Inherent I Islamic Economics

4.2 Socio-Economic Evils Inherent in Riba

4.3 Impact of Interest (RIBA) on Sokoto State Populace

End Note



5.1 Summary

5.2 Conclusion

5.3 Recommendations

   Oral Informants


                              CHAPTER ONE



     The   institution   of    interest   riba   (interest)   has   been   a

controversial issue throughout history and continues to be so; this

is because in it is evil from which power to domineer others comes.

The question of riba is prominent in our society because it involves

exchange of goods and services which enhances stability among the

society. A man has a commodity and wants to trade it for what he

or she lacks is accepted in Islam but that which has been

forbidding by Allah is riba.

     Riba (interest) is the practice of lending money or good at an

exorbitant interest rate specifically at a higher interest than is

allowed by law. The term riba literally means (addition) or an

increase over and above the original sides or amount it also refers

to the practice lending money for a prefixed rate of return of

interest. Historically, in the pre-Islamic period, capital owners used

to lend money having no legal concern for the purpose for which it

was lent or the manner in which it was used but remained

contractually assured of gain irrespective of any loses which the

borrower may have suffered in consequence of this transaction.1

     Islam caters for both mundane and spiritual aspects of human

life and the glorious Qur’an have stricture against that which is

prohibited in the sight of Allah, injustice to fellow human beings

and even animals being one of them. Thus riba refers to the

practice in excess of the amount due from the debtor which was

prevalent amongst the Arabs in the pre-Islamic period.2 under the

Islamic law (shariah), interest is defined to represent the excess

(i.e.) premium that must be paid by the borrower to the lender along

with the principal amount as a condition for the loan or an

extension of its maturity3. With this Islam totally prohibits usury

and considers it unjust because it is detrimental to societal unity

and economic stability. Islamic law has placed emphasis on the

approach to commercial transaction based on values of justice,

equity, fairness and evenly distribution of resources. In the world of

commerce these values takes the form of prohibition of riba

(interest), that is transactions involving excessive gain or profit at

the expense of another, uncertain insurance contracts and business

involving gambling, alcohol, consumption of pork, pornography and

many more.4

     Islamic law has traditionally sought to achieve fairness and

certainty in contractual obligations by requiring precise definitions,

providing clear terms and conditions and equalizing the roles of

contracting parties. Allah says in the Glorious Qur’an:

            “And Allah has made business transaction
            permissible and forbidden riba” (Q2: 275).

Thus riba is viewed as exploitation of those in weaker bargaining

position,   permitting   unjustified   profit   and   enrichment   and

encouraging speculative or risky transactions.5 it is perhaps      not

surprising that the sunnah prescribed strict rules regulating

partnership, leases, currency exchange and speculative trading

prohibitions against transactions that are uncertain which are

viewed as similar to gambling and the prohibition of insurance

contracts since they too are viewed as involving future events that

are not known to man except Allah alone. Islamic commercial law

contains some provisions that are generally unfamiliar to lawyers in

other legal systems and that are designed to protect contracting

parties. For example, even after a contract is legally concluded, it

remains subject to rescission or cancellation in the event that the

latent defects unknown to the buyer at the time of purchase arise.

Although western contract laws binds parties to long term contracts

unless unforeseeable circumstance render performance impossible.

Islamic law releases parties if they simply become dissatisfied with

the contract thus relieving both parties of the burden thereby not

allowing one party to commit injustice against the other.


     The research majorly covers the scope of some aspects of riba

practice by Muslims in Nigeria though is restricted to a particular

portion of Sokoto state which is the central market.

     Similarly the limitations connected in the conduct of this

project was particularly due to the time factor as the researcher had

to rally round to ascertain things and more so was engaged with

mid-semester examinations and concentration on final year lectures

and examinations.


     The research work is carried out in other to understand the

meaning of riba, check the excesses in the conduct of practices of

unlawful matters as regards Muslims in carrying out business

transactions. It’s of another important significance because it

guards Muslims in their conduct day to day commercial activities

through the strictures of the glorious Qur’an and sunnah and the

preceding   consequence     of   any     defaulter.   Another   important

significance is that it aids to reduce oppression amongst people and

helps sanctify the environment through purity of thought and

equality of rights in brotherhood.


     It is finite natural that people should deal among themselves

to satisfy their daily needs. While so dealing they enter into different

transactions which involves exchange of good for goods or goods for

money. In the contemporary world of ours today, humans wants are

insatiable and the quest to acquire wealth by all means becomes

undoubtedly untamed therefore human greed overrides the better

part of them and thus they contract illegal transactions in other to

satisfy their wants;-here riba (interest) comes whereby the one to

whom money is borrowed has to pay interest on the principal item

which is prohibited in the glorious Qur’an. Thus the greed resulting

to riba needs to be totally curbed or reduced to its barest minimal

resulting in a free interest economy.


        1. Is the concept of riba misunderstood?

        2. What are the factors that account for the prohibition of

          riba in Islam?

        3. In what ways has banking institutions contributed to the

          widespread of riba practice?

        4. What measures should be taking in eradicating riba?


     The general objective of the course as an integral part of the

B.A Islamic studies is to provide Muslims with the basic knowledge

of the growth and development of Islamic economics or transactions

amongst Muslims and values inherent in this system, it would also

expose Muslims to the evils inherent in riba based system of

transactions and thus they would be able to identify the following:

  1. Identify the strictures, injunctions and consequences of the

     practice of riba.

  2. To enlighten them more on the virtues in carrying out

     transactions in conformity with the dictates of the Qur’an an


  3. To throw more light on the difference between islamic

     commercial law as opposed to interest and the conventional

     one as a proponent of interest (riba).

  4. To shed more light on the socio-economic evils inherent in the

     practice of riba.


     The descriptive survey type was used in the conduct of this

research work. This type of survey method elicited information from

respondents on matters relating to riba. Both primary and

secondary data were utilized, secondary data was obtained from

relevant documents and it provides background information of riba

and other related issues. Primary data on the other hand constitute

of the bulk inputs used on the empirical analysis of the study. It is

obtained through interview to confirm respondent’s knowledge,

practices and views on riba.


     The project is divided into five chapters, chapter one is the

introductory chapter which gives an insight on the background,

scope, aims and objectives of the research topic. Chapter two deals

with the analytical and synhetical survey of riba, its classifications,

theories and justification for its prohibitions, it also gives an

elaborate theory of interest. Chapter three of this research work

gives a general background, activities and riba practices of the place

in which the research work is been carried out. Chapter four is an

assessment of the values inherent in Islamic economics, it also

gives an evaluation of the effects of riba which connotes the socio-

economic ills of riba based economy and transactions. Chapter five

which is the concluding chapter gives a general summary of the

research work and recommendation.


     Islam is more than just a religion of rituals and worship, it

permeates all affairs of its adherents. Many verses of the Qur’an as

well as the sayings of Prophet Muhammad (S.A.W) contain

injunctions on commercial activities the resultant effect of which

trading becomes imperative. Muslims have no option than to use

the medium of trade, banking etc to facilitate and enhance their

business activities.6

     Following are material reviews relevant to the research area.

     Mika’il (1989, pp 48-54), examined the theory of interest from

the perspective of conventional economic thinking and from an

Islamic view point. He also analyses the philosophy Islam total

prohibition of interest in business dealings- Mika’il examines the

implications of such prohibitions for optimum economic welfare.7

     Iqbal (1946, pp 35-66) sought to explain the concept of usury

and analyzed the prohibition of usury as stated by imam Razi in his

book titled “Mafatihul Ghaib”. Iqbal also explained the difference

and ideologies of western and Islamic theories of interest, Qur’anic

and ahadith of the Prophet (S.A.W) as well as the analogous

reasoning were quoted concerning the illegality of interest.8

     Mahmoud (1989) outlined the focal point of the economic

principles in Islam he vividly explain the principles of “istikhalf”,

law of depreciation.9 etc.

     Adebayo (2010) expounded the position of riba in Islam, its

classes- riba al-nasa’I and riba al-fadl, he further elaborated on the

socio-economic evils inherent in riba based economics system and

thus stated that it compromised the state of the economy; he

further elaborated more on the contemporary issues as regard riba

in Nigeria, most prevalent of them being the conventional banking

system;- he further stated that they are grossly based on riba and

are unfit places for Muslims to conduct transactions.10

     Ibrahim (2003, pp 106-124) sought to give a comparative

analysis of conventional and Islamic banking and economics in

Sulaiman and Galadanci (eds), Islamic banking and finance: general

frame work and case studies.11

     Monzer (2006), gave an analysis of the success of Islamic

economics and values inherent in its system.12

     Abdul-Rahman (2003), expounded on the stand of riba in

Islam, its Qur’anic and fiqhu meanings, legal injunctions. He also

sought to expose the refusal of some Islamic bodies to accept

external forces who attempted to justify interest or separate it from

riba using Qur’anic and sunnatic perspectives.13

     Paramole (2000), described riba as an unlawful means of

wealth acquisition and distribution in Islam, he termed it as

misappropriation of ones property and considers it hazardous to the

principle of social equity an justice.14

     Bello (2003), stated emphatically the biblical injunctions on

the prohibition of interest (riba), he also gave an overview of

commercial regulatory framework in Islamic economics .15

     Orisanko (2009) discussed extensively on the practices of riba

in contemporary Nigeria, particularly as regard banking services-

loans and interest rates.16


1.   Irfan   Ulhaq,    Economic      Doctrines   of   Islam,   international

     institute of islamic thought, Herndon, 1996, Pp.117-119.

2.   Muhammad         A.   Mannan,    Islamic    Economic:     Theory   and

     Practice, Cambridge, the islamic academy, london, 1986, P.118.

3.   Aminu Salihu Mika’il, Ethics and Business Performance,

     M.S.S.N, Nigeria, 1989, P.53.

4.   Aminu Salihu Mika’il, Op Cit, Pp. 48-54.

5.   Ashraf kashmiri Bazar, Law Guiding Business Transactions in

     Islam, Lahore, Pakistan, 1946, Pp.35-66.

6.   Adebayo Rafiu, Islamic Banking, Islamic Publication Limited,

     Ilorin, 2011, P.15.

7.   Aminu Salihu Mika’il, Op Cit, pp.22-30.

8.   Anwar Iqbal, Islam and the Theory of Interest, Islamic Research

     Institute, Pakistan, 2006, pp.43-56.

9.   Mahmoud Abu-Saud, Towards Islamic Economics in the

     Islamization of Disciplines, International institute of islamic

     thought, herndron, Pp. 273-292.

10. Adebayo R.I, The Motivating Factor for the Viability of Islamic

    Banking and Finance, Vol.27, No.2, Pp.93-109.

11. Ibrahim Rakiya, Islamic Banking and Conventional Banking: A

    Comparative Study in Sulaiman S and Galadanci B.S. (eds),

    Islamic Banking and Finance: General framework and case

    studies, IIIT, Kano. Pp. 106-124.

12. Monzer Khaf, Islamic Banking and Finance: Fundamentals and

    Contemporary Issues, Islamic Research Training Institute,

    Jeddah, Pp. 121-167.

13. Abdul-Rahman Yousri Ahmed, The Prohibition of Riba in Islam:

    its economic rationale and implications, IIIT. Kano, Pp. 4-30.

14. Paramole K.O, Riba (usury): An unlawful means of wealth

    acquisition and distribution in islam in Al-Hadaarah, LASU,

    Vol.5, No.3, Pp. 67-82.

15. Bello A.F, Devine Banking In Nigeria: The Qur’an, Biblical

    Injunctions; An overview and regulatory framework in S.

    Sulayman and B.S Galadanci (eds), IIIT Publication, Nigeria, Pp.


16. Orisankoko A.S, An Appraisal of Unethical Practice in the

    Contemporary Nigeria, University of Ilorin, Ilorin Nigeria, Pp.15.

                         CHAPTER TWO


     Literally riba means increase, addition, expansion or growth. It

is to be noted however that not every increase or growth is

prohibited in Islam, the basis of the prohibition is related to the

manner through which an addition is gained therefore, it was the

task of the prophet (PBUH) to explain how riba could take place in

commercial matters because otherwise the Qur’anic injunctions

that were that were previously quoted would be meaningless as the

explanation of riba was never provided in the Qur’an. Most books or

articles simply defined riba as the premium that must be paid by

the borrower to the lender along with the principal amount as a

condition for the loan or for the extension of its maturity. Finally

popular is an attempt to define riba as an excessive rate of premium

imposed on the borrower in loan transaction. The above attempts

are not totally wrong but they lack the precise definition of riba, a

fact that might likely mislead readers to infer something which is

baseless from Islamic law perspective. For example one may induce

that riba is only limited or confined to loan transaction i.e. money

which is exchanged for money for an extra counter value or

consideration. Likewise, one may infer from the qualification of “an

excessive rate that a fair or a reasonable increase rate of premium

or additional payment may be deemed lawful because it is not


     The right approach is to however, look at the source from

which riba originated as riba was widely practiced in the time of the

prophet (PBUH). The explanatory reports of the prophet (PBUH) will

be   of   paramount     importance     and   relevance.   The   most

comprehensive report on this matter is the hadith of the prophet

(S.A.W) reported on the authority of Ubaidah b. Al-Samit, that is

          “gold for gold, silver for silver, wheat for
          wheat, barley for barley, dates for dates
          and salt, like for like, equal to equal and
          hand to hand, if the commodities differ,
          then you may sell as you wish provided
          that the exchange is hand to hand.”

This hadith offers a very precise and accurate definition of riba that

is easy to understand and appreciate. The above hadith introduces

two elements which from Islamic perspective qualify to constitute

the ilah i.e. cause or reason of a ruling. These two elements are gap

or deferment in the time of exchange and different counter values in

the exchange of two similar ribawi items. Put it differently, these

two elements are time factor as well as quantity factor.2

     The explanation of the above theory is as follows. The Islamic

law defines riba in two perspectives that are riba by virtue of

deferment in time of exchange known as riba al-nasi’ah and riba by

virtue of excess in terms of quantity of one of the counter values,

known as riba al-fadl. If gold is exchanged for gold, then the

exchange must comply with these two factors, namely it must be of

spot exchange and of equal quantity. Should the exchange lack the

first element, it amounts to riba al-nai’ah. However, if it lacks the

second element, it falls under the category of riba al-fadl. Should

the above transaction be lacking those two elements, then both riba

al-nasi’ah and riba al-fadl would be jointly applicable.

     Therefore the most comprehensive definition is that of Nabil

Salih, he notes that riba in its shariah context can be defined as

generally agreed as an unlawful gain derived from the quantitative

inequality of the counter values in any transaction purporting to

affect the exchange of two or more species which belong to the same

genus and are governed by the same legal cause. Differed

completion of the exchange by such species, or even species which

belong to different genera but are governed by the same ilah (legal

cause) is also riba whether or not the deferment is accompanied by

an increase in any one of the exchange counter values. We may add

that riba also includes both inequality of the counter values and

deferment in exchange together as in the case of modern riba. In

modern time, loan is lent out for an extra repayment to be settled

sometime in the future, thus it involves both quantity and time



     The question of the rationale of the prohibition of riba is a very

delicate and complicated topic as people are already accustomed to

the practice of riba. Furthermore, no one can easily and simply

deny the remarkable contribution of riba based banking system to

the development of our modern society. Development can not be

achieved as it has been widely propagated without the role of

financial intermediaries i.e. banks. On the other hand, banking

institutions have been solely established on the principle and

doctrine of riba, namely paying interest to depositors and charging

interest on borrowers. The banks profit are mainly attributed to the

difference between interest expended (paid) to depositors and

interest earned (received) from borrowers.

     It is in the light of the damaging effect of riba, Allah Almighty

has already warned the people to avoid practicing riba because the

opposite attitude has been described by Allah as declaring war

against Allah and his messenger. Obviously the outcome and

aftermath of this phenomenon would be unimaginable and beyond


     Before we proceed to discuss the rationale behind the

prohibition of riba, it is interesting to understand the philosophy of

Islamic law with regard to the criterion of considering a particular

practice lawful or otherwise. Al-Shatibi, a great Muslim jurist has

observed through induction process that the status of prohibition

given to a particular does not necessarily imply that the said

practice is void of any good and meaningful elements that are

beneficial to mankind. Likewise, what is permitted or made

obligatory in the eyes of the religion does not necessarily suggest

that the permitted or obligatory practice is free from any bad things

that might be harmful to mankind. However the ultimate criterion

is the degree of each of good and bad elements embodied in a

particular practice. Should the good elements supersede and

overwhelm the bad elements, the practice of qualified as permitted

or obligatory as the case may be. The reverse phenomenon would

render the practice to be deemed as either disliked or forbidden as

the case may be. An excellent example could be found in one of the

Qur’anic verses pertaining to the prohibition of wine drinking i.e. at

an early stage of its prohibition. The verses (Al-Baqarah: 219) reads

to that effect.

           “They ask you concerning wine and
           gambling. Say: in them are a great sin and
           some benefit but the sin is greater than
           the benefit”.
The wine was ultimately prohibited although the wine up to modern

time might have contained some benefits for people as normally

discussed in the discipline of modern medicine. At this point, one

may have a valid reason to question the logic of this philosophy

upheld by Islamic law. However it is sufficient to note one

interesting response given by Al-Shatibi himself. He emphasized on

the fact that people are created by Allah Almighty to be tested

whether they are obedient to Him or otherwise. The meaning of this

test can not be achieved if all the practices are either good or bad

completely because people would be naturally inclined to observe

what is good and to avoid what is bad.4 In other words, as there is

no conflict of desire and inclination, one can not be tested.

However, once a practice contains both good and bad elements, one

can now be tested whether to follow what is already prescribed

upon oneself or what is more appealing to one’s whims and desire

and therefore rejecting the divine order. This fact is relevant to all

prescriptions in Islamic law irrespective of whether they are of

prohibitive or obligatory in nature.

     As for interest, it contains both bad and good elements

otherwise nobody would be willing to practice riba. Obviously, it is

gives an advantage to people with surplus of money to receive the

premium on their money lent out to people faced with deficit of

money. In a more specific financial analysis, interest has been

deemed as the most powerful factor in the process of flow of fund. It

lubricates financial intermediation in the process of flow of fund. It

is the interest rate that attracts and encourages financially surplus

units to hold their excess funds in the form of financial

instruments. Therefore the interest rate is the primary incentive

that encourages savings with financial institutions.

     It is against this backdrop that we shall now present the

islamic perspective on why riba is prohibited once and for all. Allah

Almighty has commanded the riba receivers upon their repentance,

to take back the principal and to do away with the interest or

additional charges on the principal. By so doing, neither they inflict

injustice on riba payers nor riba payers being oppressed. This is the

very essence of (Al-Baqarah: 279) that is:

                “But if you repent, you can have your
                principal. Neither should you commit
                injustice nor should you be subjected
                to it”.
Therefore the central theme and rationale of the prohibition of riba

is injustice.


     Classifications and types of riba could be inferred from the

hadith reported on the authority of Ubaidah b. Al-Samith that is

“gold for gold, silver for silver, wheat for wheat, barley for barley,

dates for dates, and salt for salt- like for like, equal for equal, hand

to hand, if the commodities differ, then you may sell as you wish,

provided that the exchange is hand to hand”. In this hadith the

prophet    (PBUH)    has    indirectly   classified   riba   into   two

classifications. The first riba is known as riba al-fadl i.e. riba by

excess, and this has been represented by the prophetic wording of

“sawaan bi sawain” that is like for like, equal for equal. This type of

riba is alternatively or interchangeably known as riba al-buyu (riba

in barter trading) and riba al- sunnah respectively. There are two

questions that arise from this hadith. The first is about why only six

commodities have been specified; and the second is why exactly the

same reciprocal payment is required. Of the six commodities

specified in the hadith about riba al-fadl, two unmistakably

represents commodity money whereas the other four represent

staple food items. The scholars have agreed that all commodities

that are used as money i.e. acts as medium of exchange store and

measure of value are to be treated as ribawi or usurious items.

Therefore they must be treated on the basis of equal to equal and

hand to hand when they are exchanged for each other. As for the

last four items, the scholars have disagreed on the legal cause

underlying these commodities. Briefly, the Shafi’is maintains that

the last four items are usurious items because they are edible.

Unlike the Shafi’is , the Hanafi’s contend that the legal cause is the

equality of these articles as being saleable by measurement of

weight or capacity. Yet another view belongs to the Malikis suggest

that the legal cause is the fact that those items are main food and

preservable. By applying analogy, the coverage of usurious items

will be extended to cover other items that share the common legal

cause according to respective schools of law.

     The second question that is more interesting is the logic of the

requirement of equal to equal in exchange of two similar ribawi

counter values. On the surface it appears hard to understand why

anyone would want to exchange a given quantity of gold or silver or

any other commodity against its own counterpart and that too will

be transacted on spot basis. What is essentially being required is

justice and fair play in spot transactions involving barter trading.

Anything that is received an extra by one of the two parties to the

transaction is riba al-fadl i.e. all excess in barter trading over what

is justified by the counter value. To ensure justice, the Prophet

(PBUH) even discouraged barter transactions and asked that a

commodity meant for an exchange of the same commodity to be

exchanged first against cash and the proceeds be used later to buy

the needed commodity. This is because in a barter transaction the

equivalents may be established only approximately thus leading to

some injustice to one or the other party.

     The second classification refers to the riba al-nasi’ah. The term

nasi’ah comes from the root nasa’a which means to postpone, defer

or wait. It is also known as riba al-Qur’an respectively. It might be

for this reason that many scholars have wrongfully defined riba al-

nasi’ah as fixing in advance of a positive return on a loan as a

reward for waiting or postponement of repayment time. Riba al-

nasi’ah does not necessarily involve any additional payment in lieu

with the postponement of repayment of loan. This in fact, refers to a

case which comprises of both riba al-fadl arising from extra

payment and riba al-nasi’ah caused by deferment given to borrower

to repay the loan. Riba al-nasi’ah takes place when the exchange of

two similar ribawi items is effected not simultaneously even for

equal counter value. E.g. 1kg of wheat for 1kg of wheat but not

simultaneously transferred.5


Throughout     the   past    history    of   mankind,   prophets   and

philosophers have unanimously condemned the institution of

interest and declared it unjust. All the famous religions of the world

have condemned and forbidden it. Western scholars such as Plato,

Aristotle, the two Castos, Cicero, Seneca and Plautus etc were

strongly against the institution of interest. They believe in the

doctrine of the unproductivity of money that led to the conclusion

that interest was unjust.6

     However, some western scholars argue that capital is a factor

of production and like any other factor it service. They consider

productivity as an inherent property of capital renders production

services for which the owner must be paid, and that payment is

interest. The following are different views held by theorists.


     The most formidable treatment of the theory of interest has

been given by Austrian economist Bohn-Wawerk. He explains the

rationale of interest from the concept of technical superiority of

present over future as well as time value of money. Because an

average person prefers present over future and if he is required to

forego the present comfort or use of his funds, he is entitled to have

remuneration known as interest.7 In this case time is treated as a

type of commodity which has a price.


     This is based on monetary incentives and reward for

abstinence on savings. Although in the practical life today, we do

not see any abstinence on the part of those who provide bulk of the

capital or funds. Perhaps, this can be possible in a very primitive

society where the government may force people to save thus

causing an abstinence or the sacrifice on the part of those who save

(depositor) providing for the abstinence or the sacrifice in the form

of an interest payment.8


     The third reason for charging interest relates liquidity. The

lender of money sacrifices his liquidity and must be duly

compensated for this which comes in the form of interest paid to

him by the borrower.9



     The Glorious Qur’an stands as the basic primary source of law

followed by the hadith of Rasullillah (S.A.W), it also a notable factor

that the previous scriptures revealed to various Prophets also

strictures against usurious transactions. The following are the

provisions of these divine scriptures beginning with the glorious


          “Those who eat riba (usury) will not stand
          on the day of resurrection except like the
          standing of a person beaten by shaitan
          (Satan) leading him to insanity. That is
          because they say; trading is like riba
          whereas Allah has permitted trading and
          forbidden riba. So whoever receives and
          admonition from his Lord and stops eating
          riba shall not be punished for the past, his
          case is for Allah to judge; but whoever

          returns to riba, such are the dwellers of
          the fire, they will abide therein”. (Al-
          Baqarah: 276).

          “Allah will destroy riba and will give
          increase for sadaqat (deeds of charity,
          alms) and Allah likes not the disbelievers,
          sinners” (Al-Baqarah: 276).

          “O you who believe! Be afraid of Allah and
          give up what remains (due to you from
          riba from now onward), if you are really
          believers” (Al-Baqarah: 278).

          “And if you do not, take notice of war from
          Allah and his messenger but if you repent,
          then you have your principal (without
          interest), wrong not and you shall not be
          wronged” (Al-Baqarah: 279).10

The hadith provisions are as follows:

          “Jabir reported: “the apostle of Allah
          cursed the one who accepted usury, the
          one who paid it, the one who recorded it
          and two witnesses to it; saying that they
          are all alike”.
It has come down from Abu Hurairah may Allah be pleased with

him that the Prophet (S.A.W) said:

          “On the night of elevation, I passed by a
          people whoose stomachs resembled
          houses full of snakes from which snakes
          could be seen coming out. I inquired who
          they were. Jabir said: these are devourers
          of usury”.
Yet in another hadith of the Prophet Muhammad (S.A.W), Abdullah

bin Hanzala, narrated that the messenger of Allah said:

          “A dirham which a man knowingly
          receives in usury is more serious (a sin)
          than thirty six acts of adultery”.
Then the Nobel Prophet (S.A.W), on his last pilgrimage and in his

last address said:

          “Every form of interest (riba) is cancelled; capital indeed is
          yours which you shall have, wrong not and you shall not
          be wronged. Allah has given His injunctions that interest
          is totally forbidden. I first start with the amount of interest
          which people owe to Abbas and declare it cancelled. He
          then on behalf of his uncle ‘Abbas, cancelled the total
          amount due on his loan capital from his debtors”.
The biblical provisions are as follows:

          Deuteronomy 23, verse 19: “you shall not
          charge your interest to your brother,
          interest on money or food or anything that
          is lent out o interest”.

          Ezekiel 18, verse 8: “if he has not exacted
          usury nor taken increase but has
          withdrawn his hand from iniquity and

           executed true judgment between man and

           Verse 13: “if he has executed usury or
           taken increase, shall he then live? He
           shall not live! If he has done any of the
           abominations, he shall surely die; his
           blood shall be upon him”.

           Verse 17: “who has withdrawn his hand
           from the poor and not receive usury or
           increase, but he has executed my
           judgments and walk in my statues, he
           shall not die for the iniquity of his father;
           he shall surely live”.

           Luke 6, verse 34: “and if you lend to those
           from whom you hope to receive back, what
           credit is that to you? For even sinners lend
           to sinners to receive as much back”.

           Psalm 15, verse 5: “he who dare not put
           out his money at usury, nor does he take a
           bribe against the innocent, he who does
           these things shall never be moved”.11
From the above chapters and verses of the Qur’an, hadith, and the

bible, it is discernable that the common ground shared is the

prohibition of usury (riba), therefore they all strictures against it as

it is unjustifiable.


 1. Sa’adu Alanamu, Islamic Banking: Theory and practice ,

      Abnour international, Ilorin, 2003, p.21.

 2. Mohammed Daud Bakar, Riba and Islamic Banking and

      Finance, international islamic university, malaysia, 2010, pp.


 3. Afzal –ur –Rahman, Op Cit, p. 72.

 4. Ibid, p.73.

 5. Ibid, p.74.

 6.    Ibid, p.125.

 7.    Ibid.

 8.    Sa’adu Alanamu, Op Cit, p. 24.

 9.    Ibid, pp.24-25.

 10. Al-Hilali M.T, the noble Qur’an (translation), Dar-us-Salam

       publications, Riyadh Saudi Arabia.

 11. Bible, King James Version.

                     CHAPTER THREE


     The new Sokoto central market is situated at the western part

of Sokoto metropolis, it covers a total area of 0.5 kilometers which

is equivalent to 500,000 square kilometers.1

     The old city of Sokoto consist of seven historical gates namely

Kofar Kade, Kofar Dundaye, Kofar Taraniya, Kofar Kware, Kofar

Marke, Kofar Atiku and Kofar Aliyu Jedo. The market is also called

Gandu market, it inherited thae name from the land or farm called

Gandu Sarki (sultan farm) owned and donated by the late sultan

Alhaji Sir Abubakar 3.2

     The Sokoto central market which was established or located to

the west between Kofar Karde and Kofar Aliyu Jedo was established

mainly to avoid previous experiences on frequent fire outbreaks in

the old market. The incident of 16th January 1972 when the Sokoto

central market went on fire resulting to loss of lives and properties

worth millions of naira, the sad episode brought devastating

economic setbacks on the innocent citizens of Sokoto state. Barely

two years later when the victims of this fire outbreak were

beginning to recover from their losses, another fire outbreak of no

less magnitude struck again on the 6th of June 1974 at the same

place with similar serious consequences.

     This was the time when the government felt it really expedient

to find a lasting solution to the problem of these seemingly

reoccurring fire incidents and at the same time to present its

citizens a suitable forum for social and economic interactions. In a

move to implement this decision, the government immediately made

available the sum of N14 million as loan to SUDU for this project

and directed the agency to seek additional loans from commercial

banks. This was done in other to ensure that the project suffer no

financial setbacks. The project therefore had its capital from the

following   financial   institutions    N14   million   from   the   state

government as grant, N10 million from the government as loan, N6

million naira loan from First Bank of Nigeria, N4 million naira loan

from Bank of the North, N2 million naira from United Bank for

Africa, giving a total sum of N36 million naira.

     The state government wasted no time in awarding the contract

to Messr Kneppers, a German company for the construction of the

new Sokoto central market.

     Although building commenced in 1978, the foundation was

laid down on 19th August 1979 and was commissioned by the

committee chairman but then in his capacity as a president and

commander- in- chief of the armed forces of the federal republic of

Nigeria Alhaji Shehu Usman Shagari.3

     The market covers an area of 24 hecters of land; it has four

major gates, namely, the main gate by the south named after Shehu

Shagari, Abdun Zagi gate to the east, Gawo gate to the north and

Shehu Kamba gate to the west. There are also several mini gates

later provided in other to give room to the influx of people into the

market from various angles. The market initially contained 5585

shops before the fire disaster that occurred on the 13th of April 2006

but during the process of reconstruction of the market, 1028

additional shops were added to 5855 shops that were already

available in the market making a total of 6613 shops. These shops

or stalls were in blocks serially arranged. They were numbered from

letter A to T and each letter representing a particular set of traders.

For example line D is for plastic sellers, line H for textile materials,

K for electronics etc.

     The market also consists of an administrative arrangement

and houses other social amenities and a sixteen kilometer road



     Sokoto central market is divided into different sections each

section or area is allocated to certain categories of items of trade.

The shops were numbered from letters A to T and each letter

representing a particular set of trades. The first line which is line A

is allocated to a particular set of traders called ‘yan koli’ in Hausa;

their items of trade include jewelries. Line B is allocated to shoes

and leather accessories while line C is for articles of varieties etc.

most of the traders found on line D deals with plastic materials.

Line E covers provisions while line F covers textile materials. Others

include electronics, household items, meat sellers and food items

which are found on line P.

     The mode of transacting business in the market is purely

Hausa and English to an extent. While business activities are

conducted on daily basis.



     In our contemporary world were commercial transaction is a

necessary for fair distribution of goods and services, Sokoto state is

no doubt left out in the commercial exchange of services and goods

as this is the major occupation of its inhabitants aside farming.

     Sokoto central market houses several business owners and as

such their primary motive is to come to trade with the aim of

making profit. For most of its inhabitants, profit motive is the sole

aim of commencing any business.

     Mallam Aliyu Yaro who is a dealer in wheat, rice, beans,

majorly grains says that there are times he gives out his goods to

borrowers on credit for a certain period of time in return of the

principal amount in cash worth of the goods given with an interest

rate charged for the deferment period. That this is the way he and

his family survive and also a means of expanding his business and

sending his children to school. When confronted on the issues of

the strictures against riba, he aggressively withdrew from answering

further questions and concluded it was not riba.5

     Alhaji Sani Mai’yadi who sells textile materials concluded he

buy textile materials from Kano at the rate of N3500 naira although

they vary in prices, bringing it to Sokoto, he sells for more

depending on the quality of the materials and considering transport

fares which are all included in the costing. This is interest doubled.6

     Mallam Ibrahim who is also a dealer on grains particularly

beans and rice says that his business nearly collapsed when he was

due to repay a loan he borrowed in form of goods and was unable to

regain the principal amount on the good, therefore he had to

distribute his goods for sale in which they were under priced in

other to repay the loan together with the interest.7

     Another man who is presently a tailor said he was formerly a

trader in jewelry and grains but couldn’t cope with the excessive

rate of interest charged on borrowing goods from large scale

retailers therefore he had to swap line of business were he needn’t

borrow a dime or goods to sell, hence business would be strictly

between him and his customers.8

     Amongst the buyers interviewed at the market place, all of

them were of the view that they are aware or had little knowledge on

the prohibition of riba but can’t do anything to change the situation

as they are in the weaker position of bargaining, thus the gross

misconduct is widely entertained.

     In summary, riba is in existence in the economic or

commercial transaction in Sokoto central market. The most affected

areas of trade are on grains, etc. but however it is to note that while

most of the traders lack awareness on the Qur’anic strictures

against riba some of them compromise and have conducted their

transaction in accordance to the injunctions of the glorious Qur’an,

although there are still some elements or traces of riba practices in

the market which have left some in disarray.


     The most contemporary or common aspect of riba in our

modern society is the conventional practice of riba in our banking

system as it is the sole or major instruments through which

individuals sought to engage in commercial or financial transaction.

The conventional banking system has no basis in Islam as it is

grossly based on riba the resultant effect of the controversial

institutionalization of Islamic banking in Nigeria.

     Conventional banking system has its roots in Nigeria since

early this century, by now it has captured most of the markets both

in deposit and in financing side, it covers all types of loan, trade,

financing, over draft, share financing and so forth. As for deposit, it

has peculiar accounts of savings accounts, current account as well

as fixed deposit. Although the number of banking services is many,

they all operate on one simple mechanism that is interest based.

The entire activities is to advance loan to qualified customers to

satisfy their financial needs whether to purchase a house, car or

import goods and the likes. The bankers are credit analyst experts

and their task is simply to ascertain the financial ability of the

customers to repay the principal plus the stipulated interest. The

documentation drafted by the banks is then tailored made to suit

the loan advancement and perhaps the security as collateral.

Therefore conventional banking system in Nigeria is overtly based

on riba although several attempts to institutionalize Islamic

banking have been made which has proved abortive.


 1. Oral interview with Mallam Yahayya Wurno, deputy market

   manager, Sokoto central market, aged 56 years.

 2. Oral interview with Alhaji Hamza Dukamje, revenue collector,

   Sokoto central market, aged 68 years.

 3. Muhammed Hassan Maiyam, the history of Sokoto central

   market from its inception to present day, C.O.E, Sokoto, 1983,

   pp. 24-38.

 4. Alanamu A.S, islamic banking: benefits, problems, and

   prospects in Nigeria, alore, ilorin, 2007, pp.107-121.

 5. Mallam Aliyu Yaro, trader, Sokoto central market, aged 56


 6. Alhaji Sani Mai’yadi, trader, Sokoto central market, aged 48


 7. Mallam Ibrahim, tailor, Sokoto central market, aged 62 years.

 8. The respondent I have interviewed asked me to quote him not

   (name withheld).

                    CHAPTER FOUR


       According to Islam, there are five basic values of humanity,

which are supposed to be protected every time. Depending on

circumstances to build up harmony and universal peace, these

basic values must be preserved at the lowest level or the barest

minimum for an acceptable level of living these basic values

includes the ability to perform moral responsibilities, protection of

live, securing food and shelter, education, the right to earn a living


       In other to achieve the optimally, Islam sets forth some

indispensable norms or means for its followers to use as

fundamental guides. As the ‘ad-deen’ or way of life, Islam offers

mankind a law applicable for all times, provided these elementary

principles are internalized in our daily dealings with others, be it

personal or official reasons.

        i.   JUSTICE:- No society can survive for long if this basic

             precondition is not met, without justice there would be

       no security, impartiality and fairness in our dealings help

       us remain focused towards our objectives without getting

       deeply caught with petty squabbles. The biggest benefit of

       justice is that it not just provides security to individuals

       but businesses as will and reflects in all facets of our

       social dealings.

 ii.   EQUALITY:- It may be considered a subject of justice and

       it refers to eliminating all social prejudices in other to

       promote complete fairness and regard everyone with

       mutual respect and given them an equal opportunity.

iii.   BROTHERHOOD:- Peaceful coexistence and tolerance

       towards others regardless of belief and ideologies.

iv.    BENEVOLENCE         AND     EMPHATHY:-    We    know    that

       selfishness   and   greed    can   be   detrimental    to   a

       community’s social order. For a fair and sustainable

       economic system, it is essential that we contribute

       equally to the society. The modern economic models are

       suggestive of that too that wealth concentrated in one

       hand leads to negative results and inflation within an


The economic system prescribed in Islam is unique since it differs

fundamentally from man made laws and systems in defining

economic problems. In general an economic system is referred to

the   structure   of    production,   allocation   of economic    inputs,

distribution of economic outputs and consumption of goods and

services in an economy. It is a set of institutions and their social

relations. Alternatively, it is a set of principles by which problems of

economics are addressed.2

      The Islamic economics system aims to achieve five objectives

in general;

  a) Provisions of basic needs: the state is entrusted to guarantee a

      smooth supply of all basic necessities of life all the citizens via

      regulation or enforcement.

  b) Fairness     and    equitable    distribution:   Islam   discourages

      concentration of wealth in few hands and ensures                 it

      circulation among all sections of the society. Allah says

           “That which Allah giveth as spoil unto his
           messenger from the people of the
           township, it is      for Allah and his
           messenger and for the near of kin and the
           orphans, needy and the wayfarer, that it

       becomes not a commodity between the rich
       among you” (Q 59: 7).

c) Promotion of brotherhood and unity: in a truly Islamic society,

  there exist an antagonist classes of have and have not’s which

  are set against each other. Despite the existence of inequalities

  of wealth, the Islamic society is not divided into conflicting

  classes due to differences in social ranks.

       “it is not righteous that ye turn your faces
       away to the east and west, but righteous
       is he who believe in Allah and the last day
       and the Angels and the scriptures and the
       prophets; and gives his wealth for the love
       of Him, to kin-folk, orphans, needy,
       wayfarer and those who ask and to set
       slaves free and to observe proper worship
       and payment of Zakat” (Q2: 177).

d) The achievement of moral and material development views

  growth and development as two sides of a coin and considers

  the needs of tangible and intangible resources as equally

  important. The socio-economic progress of a person is usually

  in aspects of life and has spillover effects. Good conducts are

  believed to be contagious and in totality.

e) Elimination of exploitation: any form of activity meant to take

  advantages of another either physically or mentally some

       effective measures adopted by Islam are the prohibition of riba

       based lending.


   From a legal perspective of Islamic commercial law, riba is

deemed as wrongful appropriation of others property. The basis of

this ruling is taken from the theory of transfer of property in Islamic

commercial law. It has been observed that a property be it cash or

capital, tangible asset, services and the like that belong to one party

cannot be transferred to another except following one of the

contracts below:

 i.    Property earned by one party as a result of the combination of

       one’s individual creative labour and entrepreneurship or

       natural resources or capital as the case may be. This could be

       partly seen in various forms of partnership in Islamic law.

ii.    Property whose title has been transferred by its owner as a

       result of bilateral exchange such as in contracts exchange e.g.

       sale, debt settlement by contra transaction (Muqasah) etc.

iii.   Property whose title has been transferred by its owner by

       virtue of remittance of rights of others in the owner’s property

      such as in the case of rebate granted for early settlement of

      any financial obligation (Ibra) etc.

iv.   Property whose title has been transferred by virtue of donation

      and grants by the owner or donor such as in the contract of

      gratuity e.g. gift (hibah), endowment (wakaf), will (wasiyyat)


v.    Property transferred from one hand to another following the

      law of inheritance.

This theory of transfer of property in Islamic law provides no room

for lending activities based on interest because interest is an

income claimed outside the legitimate framework of the Islamic

theory of transfer of property from one hand to another. Therefore

income yield or earned from riba activities is non-halal because

Islamic law does not approve the mechanism of earning this


      Generally riba is forbidden because of the harmful effects that

result from it as follow:


 1. Keeping money idle and unproductive and swelling the ranks

   of the poor and hinders the flow economic saving and

   formation of capital.

 2. Discourages the amount of investment.

 3. Riba creates deficit of capital.

 4. Diverts investments in speculative sectors.

 5. Riba is against the efficient distribution of capital.

 6. It causes inflation.

 7. Induces destruction of wealth.

 8. Constitute a major factor of unemployment.4


 1. Among these are cutting ties, creating hostility between the

   rich and the poor, spreading corruption, moral decay and

   promiscuity caused by need.

 2. Increment in the exploitation of labor.

 3. Creates monopolistic opportunity for the capitalist.

 4. Imposes unnecessary burdens at organizational levels.

  5. Concentrates wealth I the hands of few and reduce number of


On the state level, countries are weakened, their resources fall

under the control of others, they end up following the desires of

their enemy and they are robbed of their natural wealth which

compounds their problems the more.5


     Having examined the socio-economic effects of riba, it is to

note that these has undoubtedly contributed in no small measure

to the underdevelopment of the state as it contributed to the plague

of poverty in the state.

     For   those   who     have   entertained   the   act   of   usurious

transactions, it has left them in hardship and to an extent has

caused loss of live and properties as well. Some debtors in the area

have encountered losses and were unable to repay even the

principal, let alone the interest. The gross misconduct of this

practice has generally led to the exploitation of the poor and

destitute and also results in moral decay among the youths and

promiscuity among the females caused by certain needs. Generally

it has concentrated wealth in the hand of few whose sole aim is the

expansion of wealth at the expense of the poor thereby creating a

wide gap between the rich and the poor from which hostility arises.


 1. Dr. Muhammed Daud Bakar, riba and Islamic banking and

   finance, international Islamic university, Malaysia.

 2. commerce/values/effects.

 3. Ibid, p. 79.

 4. Ibid, pp. 82-91.

 5. Ibid, p. 128.

                       CHAPTER FIVE


  The concept of riba which refers to all forms of usurious

transaction, that is transaction that require interest on differed

payment and the likes, have been utterly prohibited in the

glorious Qur’an and those who engage in it are said to be inviting

the wrath of Allah (SWT).

  Islam is more than just a religion of ritual, which permeates all

affairs of its adherents. Many verses of the Qur’an as well as the

sayings of the prophet Muhammad (S.A.W) contain injunctions

on commercial and economic activities the result being why

exchange service becomes imperative for Allah has permitted

trade and forbidden riba.

  Sokoto central market serves as the nerve centre of goods

exchange and trade services, therefore it is undoubtedly true that

riba has taken form or is existence in the their activities which

has brought losses and hostility between traders at the market

place and have induced the exploitation of the end consumers.


      The reason why Islam prohibits all forms of riba from all forms

  of transaction is Islam whishes to establish an economic system

  where all forms of exploitation and injustice are eliminated. Islam

  wishes to establish justice between the financier and the

  entrepreneur. It has been mentioned that prohibition of interest

  in an economy and replacing it with profit-sharing system will

  increase the level of savings and investment able to combat

  unemployment and inflation simultaneously since interest rate

  will no more enter into the profit calculation in the investment.

  The Islamic economic system is profitable and productive than

  the conventional one were wealth is concentrated in the hand of

  few. The consequences of the prohibition of interest are, among

  others, to promote the distributive justice, economic growth and

  stability, encourage innovation and profitability and allocation of

  resources efficiently.


      At this stage it is relevant to note that every system is

  influenced by its own worldview which in turn is based on a set

of implicit and explicit assumptions about topical issues as the

case of riba and the nature and purpose of life. However Islam

which has been perfected by Allah (SWT) have prohibited riba,

thus it is the general duty of Muslims to conduct their day to day

activities, transactions in accordance to the dictates of the

glorious Qur’an and on state levels, there should be institutions

guiding aspects of trade and banking activities such as interest

or price regulatory committee and a stiff penalty be awarded to

any defaulter thereafter in conformity with the dictates of the



 1. Mallam Yahayya Wurno, (56years), Deputy Market manager,

   Sokoto central market, 5th of October 2012.

 2. Alhaji Hamza Dukamaje, (68years), Revenue collector, Sokoto

   central market, 5th of October, 2012.


Orisankoko A.S (2009), “An Appraisal of Unethical practices in the

          Contemporary Nigeria banks system vis-à-vis recourse to

          Islamic panacea”. A conference paper presented at the

          1st international conference on Islamic banking and

          economics reform, jointly organized by the department of

          Islamic law, university of Ilorin, Nigeria, and IRTI of the

          international development bank Jeddah, October 6th -8th


Manzoor Ali (1992), ‘Islamic Banking and Finance in Theory and

          Practice’, in centers of Islamic economics; Jeddah, IDB,

          Islamic research and training institute.

Paramole K.O (1999), ‘Mudarabah: A lawful business transaction

          in Islam’ in the Muslim world league journal, Saudi

          Arabia, vol.24, no.4.

Paramole K.O (2000), ‘Riba (usury): An unlawful means of wealth

          Acquisition and distribution in Islam’, in Al-Hadaarah,

          LASU, vol.5, no.3.

R.I. Adebayo (2010), ‘The motivating Factor for the Viability of

         Islamic Banking in Nigeria’, being a paper presented at

         the international conference on Islamic banking and

         finance, held at crescent university, Abeokuta, between

         19th and 22nd march 2010.

Bello A.S (2009), ‘Devine Banking in Nigeria’ The Qur’an and

         Biblical   injunction,    an   overview   and   regulatory

         framework in Islamic banking and finance; in S.

         Sulayman and B.S Galadanci (eds), IIIT publication,

         Nigeria office Kano.

Afzal-ur-Rahman (1976), ‘Economic Doctrines of Islam’, vol.3,

          Lahore, Islamic publication limited.

Usman A. (2004), ‘B.A Project: Hoarding and Inflation in Islam’,

          Sokoto, department of Islamic studies, UDU. Sokoto.

irfan Ulhaq (2010), ‘Economic Doctrines of Islam’, Herndon

          international institute of Islamic thought.

Muhammad A.M (1989), ‘Islamic Economics: Theory and Practice,

          London, Cambridge the islamic academy.

INTERNET, international standard bible encyclopedia Accesed on the 2nd, October, 2012.


The Noble Qur’an, (translated by) Al-Hilali M.T, Dar-us-Salam

publications, Riyadh Saudi Arabia.

Bible, King James Version.


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