pre-islamic arabia:poetry,tribal rivalry and heroism 23additional payment based on the amount borrowed and the total
period covered, including the additional deferred payment period
(El-Ashker, 1987). The deferral may carry a financial penalty, which
can be referred to as an increase. To increase means in Arabic
‘yarbu’, the noun of which is ‘Ribà’, which corresponds to the noun
increase in English. The total amount paid by the borrower would
be the principle, the capital, which is in Arabic ‘r"as al-Màl’ and the
increase. The Qur"àn is emphatic in prohibiting the increase, Ribà,
and warns those who charge Ribà of war from God stating that
they “shall rise up before God like men whom Satan has demented
by his torch”, and to reply to any claim that might be made that
the increase in money from lending is like trade, God has a similar
warning because, “they claim that Ribàis like trading, but God has
permitted trading and has forbidden Ribà”, (Qur"àn 2:275). And to
the counterargument that Ribà, the increase, may be allowed pro-
viding it is not excessive, the Qur"ànic verse is unequivocally clear,
“if you repent you have the right to only your capital, ru"aùs amwa-
likum, (the plural of capital)”, (Qur"àn 2:275). In other words there
is no differentiation between interest and usury, all interest is usury.
Therefore, while partnership, with its various forms was permitted
and survived the coming of Islam, lending at interest was categori-
cally forbidden.
Insurance became known to the Arab traders through the need
to minimise the risk encountered in the trade (Rahman, 1979). The
caravans would pass through dangerous territories and likely hostile
lands and the possibility of loss of assets as well as lives through haz-
ardous conditions or intended hostile action of plunder by others
could not be ruled out. A form of loss financing risk management
through collective, or mutual, insurance existed whereby the losers
were compensated either wholly or partially from a collective fund
organised prior the trade. A story is told that when Prophet
Muœammad was engaged in one of the trade journeys before the
coming of Islam, a trade caravan was lost in the desert which lead
to the members of the contributory insurance fund paying compen-
sation to cover the loss of merchandise, horses and camels to the
survivors as well as to the heirs of those who did not survive (ibid.).
The insurance fund would remain in operation for the caravan
period beyond which it would be either terminated or renewed for
another trade journey. If renewed it would take the form of an open-
ended fund where new members may be permitted to join and