The introduction of Islamic banking through First Discount House (FDH) Bank in March this year, known locally as Salama Banking, is an exciting development for Malawi’s Muslim community and other non-Muslims. With its foundations in Sharia law, Salama Banking offers an ethical alternative to conventional banking by eliminating interest-based transactions that are discouraged by Shariah (Islamic Jurisdiction) and emphasizing social responsibility and justice. As Islamic finance gains momentum in Malawi, Muslims now have the opportunity to align their financial activities with their Imaan (faith), while also contributing to the country’s economic growth particularly those stipulated in the national agenda, Malawi 2063.

Islamic banking is grounded in key principles that aim to promote fairness and integrity in financial transactions. It is also an opportunity for non-Muslims to borrow on fair and equitable terms while avoiding the oppressive Riba (interest) system of the conventional banking. For instance, the prohibition of Riba (interest) reflects Islam’s opposition to exploitative practices that burden borrowers with debt. The Quran is explicit in its condemnation of interest: “Allah has permitted trade and forbidden usury” (Quran 2:275). This verse underscores the belief that money should be earned through legitimate trade and shared investments rather than through income derived from interest, which can exploit vulnerable borrowers.

Through Salama Banking, Malawians can access financing options that operate under profit-sharing or partnership models, such as Mudarabah (profit-sharing) and Musharakah (joint partnership). These arrangements ensure that both the bank and the client share in the success or risk of a business venture, thereby creating a fair and balanced system. By encouraging risk-sharing, Islamic banking supports the concept of justice, a core value highly emphasized in Islamic finance. As the Prophet Muhammad (peace be upon him) said, “Give the worker his wages before his sweat dries” (Ibn Majah), emphasizing the importance of fair and timely financial practices.

Salama Banking also presents significant opportunities for local entrepreneurs in Malawi. Small business owners can apply for Shariah-compliant financing to start or expand their businesses without fear of violating Islamic principles. This type of support encourages entrepreneurship and job creation, which are essential for the attainment of the upper-middle income economic status that Malawi strives to achieve. Islam teaches that seeking lawful sustenance (Rizq) is both a duty and a blessing. As the Prophet Muhammad (peace be upon him) said, “The best of earnings are those which a man earns with his own hands” (Ahmad).

Another crucial aspect of Salama Banking is its support for community welfare. Islamic finance emphasizes collective prosperity, encouraging people to contribute to society. Charitable practices like Zakat (obligatory almsgiving) and Sadaqah (voluntary charity) are integral to Islamic banking. Salama Banks, which FDH bank is the current sole proprietor in the country, can facilitate zakat collection and distribution, aiding those in need and supporting social welfare initiatives. The Quran emphasizes the role of charity: “And establish prayer and give Zakat, and whatever good you put forward for yourselves – you will find it with Allah” (Quran 2:110).

As Salama Banking continues to grow, it’s essential for Malawi community to embrace this system. By participating, they can ensure their finances align with Islamic ethics, support the local economy, and promote social justice.