Ijara is a leasing arrangement that provides a Shariah-compliant alternative to conventional hire-purchase and finance leases.
The Ijara Structure
In Ijara, the NIB bank purchases an asset and leases it to the client. The client pays regular lease installments (ujra) to use the asset. The bank retains ownership and responsibility for major maintenance throughout the lease period.
Types of Ijara
1. Simple Ijara (Operating Lease)
The bank leases an asset to the client for a defined period. At the end of the period, the asset is returned to the bank. Used for equipment where the client doesn't want to own the asset long-term.
2. Ijara wa Iqtina (Finance Lease / Hire Purchase)
Similar to conventional hire-purchase. At the end of the lease, the client acquires ownership of the asset through a separate gift or purchase arrangement. This is the most common form used for vehicles and property.
3. Diminishing Musharaka (for Property)
The bank and client jointly own a property. The client pays rent on the bank's share and gradually buys out the bank's equity. Eventually, the client owns 100% of the property. This is the primary NIB home financing product in Ghana.
Ijara for SMEs in Ghana
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