Improving the SMEs Access to Trade Finance
DRAFT
in the OIC Member States
22
Figure 5: Islamic Trade Finance Murabaha Structure
Source: Trade & Forfaiting Review, 2013
The opportunities for mutual learning are brought sharply into focus when consideration is
given to certain fundamental tenets of Islamic Finance, contrasting those with the underlying
causes of the recent global financial crisis:
“Speculative transactions are deemed to involve a type of unjust increase prohibited by
the Quran. The underlying motivation is to ensure a fair correspondence between the
expected benefits and obtained benefits of both parties to a contract. All activities that
contain elements of uncertainty, such as commercial transactions in which there is
uncertainty about an asset or its price, are covered by the prohibition of gharar
(uncertainty) and maysir (gambling) stipulated in the Quran. Because an element of
uncertainty can be found in almost all commercial transactions, it is excessive gharar
that is prohibited. For example, excessive gharar can be identified in the case of
insurance contracts. Futures, forwards and other derivatives also fall under gharar, as
there is no certainty that the object of the sale will exist at the time the trade has to be
executed. These instruments are also subject to the prohibition on maysir, which
condemns the speculative exploitation of legal uncertainty in order to draw an
unjustified (because it is unfair) advantage. In addition, speculation (maysir) is seen as
diverting resources from productive activities.”
Source: Islamic Finance in Europe, ECB, 2013
1.4.
Transactional View of Trade Finance
As illustrated, trade finance involves several core elements to its value proposition, and the
numerous instruments of trade finance can combine features and solutions across one or more
Murabaha Structure