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Educational Disclaimer: This site is for education only. We do not give investment advice. Shares are volatile — prices go up and down and you may lose money. Always do your own research and speak to a professional adviser.

Halal Screening: How It Works

Business Activity Screens

7 min read Includes quiz · 1 questions

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Educational Disclaimer

This lesson is for education only. We do not give investment advice. Shares are volatile — prices go up and down and you may lose money. Always do your own research and speak to a licensed professional adviser.

Stage 1: What does the company actually do?

The first question in halal stock screening is simple: Is the core business halal?

Under AAOIFI Shariah Standard No. 21 and most halal screening methodologies, the following business activities cause automatic exclusion:

🍺 Alcohol production, distribution, or retail
🐷 Pork products (processing, distribution, retail)
🎰 Gambling and gaming (casinos, sports betting, lottery)
🏦 Conventional banking and insurance (interest-based financial services)
🔞 Pornography and adult entertainment
💣 Weapons manufacturing (especially for non-defensive use)
🚬 Tobacco

💡 On the NGX, this immediately rules out most conventional banks (First Bank, Zenith, GTBank, etc.), insurance companies, and any beverage companies with significant alcohol lines.

What about mixed businesses?

Some companies have a primary halal business but earn a small percentage of revenue from non-halal activities (e.g., a supermarket that sells a small amount of alcohol). Most screening methodologies allow a 5% tolerance for non-core haram revenue, but require purification — donating that proportion of dividend income to charity.

⚠️ The 5% rule is a scholarly concession for minority incidental exposure, not a loophole for companies whose core business is haram. Always check the Shariah board's rationale.

Knowledge Check

Quick Check: Business Screens

1 question · Retryable · Earn points

Question 1 / 1 +15 pts

A telecom company (like MTN or Airtel) earns 0.5% of revenue from SMS gateway services used by a betting company. Under typical halal screening, this company would most likely:

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