What the former President, Obasanjo of Nijeria, Home buyers in UK and College students in USA have in common. They are trying to pay off loans that are increasing every single day. What started off with seemingly small interest rate ballooned into something unattainable.
Ex-President of Nijeria, Obasanjo said “All that we had borrowed upto 1985 or 1986 was around $5 billion and we have paid out about $16 yet we are still told that we owe about $28 billion. That $28 billion came about because of the injustice in the foreign creditors’ interest rate. If you ask me what the worst thing in the world is, I will say it is Compound Interest.” It seems unbelievable but sadly it’s typical.
Developing countries start off with relatively small loans and remain saddles with huge amount of growing debts for generations. This could be Nijeria or any other poor country. To give just another one example during the year 1997 Asian collapse Indonesian’s foreign debt as a percentage of GDP was over 60%, so Nigeria is not an isolated example. There are many more countries that are in debt, to name a few Angola, Cameroon, Kenya & Vietnam.
In recent years we witness the most drastic financial downturn seen in decades. What began as a housing bubble soon became a sub-prime credit crises and what many thought would remain a credit crises soon spread to a global financial meltdown and it spread to all corners of the world. The main reason for the present economic crunch is Interest.
It is no secret that all the nations of the world, including the developed countries, are drowning in national and foreign debts to the extent that the amount of payable debts in a large number of countries exceeds their total income.
There is no question that when looked at from an international perspective, interest kills people. The debt servicing of most of the countries today is so high that they must sacrifice essential health and nutritional needs. It is dumb-founding to think that untold numbers of children are dying daily in lesser-developed countries due to the interest burden. Many governments are forced to spend more on debt servicing than they spend on health or education.
Unicef (United Nations Children’s Fund), an International Organisation, estimates that around 500,000 children under age 5 die each year as a result of debt crisis. But as we have seen it’s not the debt which is the problem, it’s the Compounding Interest.
Ken Livingston, the Mayor of London, claimed that global capitalism kills more people each year than killed by Adolf Hitler. He blamed the IMF and World Bank for deaths of millions due to their refusal to ease the debt burden. Susan George stated that every year since 1981 between 15 and 20 million people died unnecessarily due to debt burden “because Third World governments have had to cut back on clean water and health programs to meet their repayments.”
In the US alone credit card holders have amassed over $ 1 trillion of personal debt and that just credit cards. Let’s take the example of a student in US who took a education loan of $ 120,000 at 10% interest. 3 years after his graduation he started paying his loan at $ 20,000 per year. It will take him more than 25 years to pay off the loan and he ends up paying $ 400,000 for his $ 120,000 education and that assuming that he keeps his well paying job, if he is unemployed that his debt will become just bigger. With the interest based loan end up paying around 400% more.
Interest makes the individual and the society selfish and greedy. It pushes for exploitation and increases the gap between the rich and poor. Interest is also one of the key contributing factors for the current global financial crisis. The main effects of interest are instability, inefficiency, injudicious & low growth. The greatest enemy of Knowledge is Ignorance!
A full-fledged interest free economy is not yet a reality. It is a complex situation. Nevertheless, we should work towards an interest free economy to ensure social justice and equal access to opportunities for everyone in the world.
Interest is like a Termite. It destroys the economy slowly from inside. Only the outlook will look good and it will be hollow inside. Let us choose the right option and lead a happy, prosperous and peaceful life! We should not hesitate to accept the truth! If we have blindfolded ourselves or have ourselves become blind and refuse to see then how can they see the truth! We are taught to fly in the air like birds, and to swim in the water like fishes but how to live on the earth “we do not know”! In order to have a peaceful and a happy country and to avoid injustice, we have to abolish interest from the society.
Allah says in the Qur’an, “Indeed, Allah will not change the condition of the people until they change what is in themselves”.(13:11)