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Catalyzing worker co-ops & the solidarity economy

How Sharia-Based Cooperatives Create Contributions to Community

As Islamic economic and financial institutions continue to thrive in Muslim-majority countries, cooperatives have also taken sharia-compliant forms. What sets the sharia cooperatives apart from their conventional counterparts? 

Here’s a table showing the differences between sharia-based and non sharia-based cooperatives based on a publication titled Understanding Islamic Cooperatives: Mechanisms for the Accessibility Promotion of Islamic Finance in Malaysia 

Islamic Cooperatives Conventional Cooperatives
Driven by social and profitable motives Operated based on the sharia and legal rules.The profit is earned from various modes of Islamic financing
 
Driven by profitable motives Operated based on legal rules The profit is earned from the interests levied

Islamic cooperatives have six major characteristics, namely 

  1. Recognizing the members’ ownership of business capital
  2. No interest-based transactions allowed
  3. The ZISWAF (Zakat, Infaq, Sadaqah, Waqf) institution is functioning well 
  4. Admitting profit-oriented motives as long as the sharia rules are strictly followed
  5. Acknowledging freedom of business and economic endeavor
  6. Acknowledging common rights

Read the rest at Alami

 

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