A Realistic Approach to the Concept of IjÉrah (Leasing) In SharÊ‘ah and its Possible Role in the Development of Agricultural Sector in Pakistan – (Development of IjÉrah Based Model for Financing Agriculture)

Abstract

The role of farmers is indispensable for the accomplishment of various human needs. Among these, food is the most significant and crucial one for the survival of human society. But instead of this great importance, farming community always faces financial problems to fulfil their agricultural requirements, both for crop and non-crop activities. The Pakistani farmers face harsh economic realities. Avoiding interest at all costs, as advised in Islam, they do not want to secure any such financing facility whether formal or informal. Being a complete code of life, Islam suggests alternate ways through the application of various modes of Islamic finance. Among these IjÉrah (leasing) is one. The present work discusses the theoretical background of this mode, made available in the scholarly contribution of classical and contemporary Muslim jurists, followed by a viable model proposed for the provision of financing to the lower and middle class farmers. The empirical results make obvious that IjÉrah can be effectively used for the development of agricultural sector, particularly its sub-sector of local farming that exists in rural areas of the Country. However, the basic principles, rules and regulations of the transaction, envisaged by Islamic finance, need to be adhered to in order to achieve the intended and anticipated objectives.