Economy: Morocco, first Muslim banks soon

 

 

Morocco might soon create its first Islamic banks. The issue is indeed one of Benkirane government’s priorities: the Parliamentary group of PJD, the moderate Islamic party having won November’s elections, has already finished writing the draft bill to be presented at the Chamber of Deputies, drafted by a team of Party’s experts led by the General Affair and Governance Minister Mohamed Najiib Boulif. On the financial instruments’ market, the so-called “Islamic” instruments were already partially available, but the institutes managing them had never expressed their interest in the creation of specialized banks. However, PJD’s victory changed many things, since the model has proved to resist the crisis and showed a large potential for growth. The draft bill begins with classification of the general principles underlying products currently traded by banks, grouping them into halal (allowed) and haram (forbidden) by Sharia and specifies that lending must not be the source of profit. Imposing interests is therefore prohibited and lending is not considered a form of trading anymore: “Funding agreement with banks imply participation of the bank itself in both profits and losses”. Actually, Islamic banks do not merely propose financial brokering services as in traditional banking regimes; they play an active role in wealth generation, transformation and trade processes. The draft bill proceeds to determine which financing models are allowed. In general, they are “contracts compliant to Sharia regarding the use of funds aimed at generating profits”.

The institutes allowed to work within this system are grouped in three categories: Islamic banks, financial institutions similar to Islamic banks and Islamic financial institutions.

Today, any moral entity allowed to collect funds, manage and invest them according to the Islamic law might be labelled as Islamic bank. These institutes would be subject to Sharija, not to current laws regulating the credit institutions and similar bodies, except the provisions that are already compliant with the Sharia. This would not prevent Islamic financial institutes from entering today’s bank system: they would act under protection of Bank Al-Maghrib, the Moroccan Central Bank and by the National Council of Money and Savings, according to provisions of the Central bank, both as far as monitoring and prudential principles are concerned. The PJD project would also allow traditional banks to convert into Islamic banks, either totally or partially, creating branch offices, local cash desks or investment funds specialized in this kind of activity.

According to La Vie Eco, the total amount of funds currently circulating in the world’s Islamic finance is estimated at more than USD 1000 bln in 2011, that is, a growth by 50% over 2008 and by 21% over 2010. About one fourth of the world’s population is Muslim, so the system has significant potential for growth; experts estimate that Islamic finance might absorb between 40 and 50% of savings in this group.

http://www.ansamed.info/ansamed/en/news/sections/economics/2012/02/15/visualizza_new.html_98777833.html

Morocco to promote Islamic finance

The issue of Islamic finance has taken centre stage in Morocco after the Justice and Development Party’s (PJD) electoral triumph.

Supporters of sharia-compliant banking pin hopes on the new government to create the first Islamic bank in the kingdom.

The PJD has talked of promoting Islamic finance on a number of occasions. Just a few days after his appointment as prime minister, Abdelilah Benkirane received a visit from Sheikh Khalid Bin Thani Al Thani, president of the Qatar International Islamic Bank (QIIB), who set out plans for establishing an Islamic investment bank and insurance company in Morocco.

Bank Al-Maghrib Governor Abdellatif Jouahri said last month that Morocco was interested in Islamic finance and viewed the idea of creating Islamic banks as part of the new financial platform in Casablanca.

A chapter on finance to meet the demands of sharia law will be included in the new banking law, he said.Meanwhile, economic analysts are critical of Morocco’s delay in enforcing Islamic banking.

According to economist Slimi Noureddine, the political will to promote Islamic finance is lacking. He insisted that Morocco should take the matter in hand to benefit from Arab investment, particularly from the Gulf states.

According to Bank Al-Maghrib, the worldwide market in Islamic finance will double in 2015, with a predicted value of $2.8 trillion (2.19 trillion euros). In Morocco, transactions coming under the umbrella of Islamic finance barely accounted for 800 million dirhams (72 million euros) in the third quarter of last year, which is a drop of 100 million dirhams (9 million euros) from 2010.

Officials blame this reduction on the reluctance of Moroccan banks to set up institutions which specialise in alternative finance, Noureddine said. He added that the expenses of alternative products can also be prohibitive, in addition to the slow-down in the housing market in recent months.

The analyst commented that Morocco should draw inspiration from successful experiences in other countries, so that this sector can be developed to meet public aspirations.

The African Development Bank, he said, has just published a report on the current situation of Islamic finance in North Africa.

“The report underlines that Islamic banking services in these countries, including Morocco, are struggling to develop, and looks at their future prospects and the extent to which they could contribute to economic development,” Noureddine said.

According to PJD Assistant Secretary-General Lahcen Daoudi, there has been much talk about the theory of Islamic finance in Morocco, but now the time has come to explore this channel which could bring considerable amounts of capital into Morocco.

He added that the sector is calculated to be worth more than a trillion euros worldwide.”Morocco needs to bring in regulations dedicated to this sector to attract a large part of it,” Daoudi said.

http://www.zawya.com/story.cfm/sidZAWYA20120118051821/Morocco_to_promote_Islamic_finance