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    Islamic Financing on the Rise in Morocco

    Islamic financing for housing in Morocco rose by 52.7% in September, recording an all-time high value of MAD 14.950 million ($1.648 million).

    02 Nov 2021

    Rabat - Participative or Islamic banking is a growing sub-sector within the Moroccan banking system, according to recent data compiled by Bank Al-Maghrib, Morocco’s central bank.

    Islamic financing for housing loans in Morocco amounted to MAD 14.950 million ($ 1.648 million) in September of 2021, marking an increase of 52.7% from the same time last year, according to a document published by Bank Al-Maghrib.

    The document, titled “Key Monetary Statistics Indicators for September 2021,” details the overall performance of the banking sector in Morocco.

    It shows that the robust performance of Islamic financing is especially significant in housing loans, with a 32.0% increase from December 2020.

    The “Murabaha” funding, officially known as “participative” funding, is an interest-free financing system.

    Participative banks debuted in Morocco in 2018, less than a year after the approval of Bank Al-Maghrib. As of 2021, Morocco has five participative banks: Bank Assafa, Umnia Bank, Al Akhdar Bank, Bank Al Yousr, and Bank al Tamweelwa Al Inma.

    The country also authorizes three participative structures within conventional banks to mobilize resources to serve customers’ needs by providing products in compliance with Sharia law: Dar Al Amane, Arreda, Najma.

    According to Bank Al-Maghrib, “Murabaha” funding recorded an annual growth rate of 75% between 2019 and 2020.

    Regarding customer deposits, participative banks continued on an upward trajectory since their debut in 2018, increasing from MAD 1.4 billion ($154,349 million) in 2018 to MAD 2.3 billion ($253,573 million) at the end of 2019.

    Bank Assafa, the only 100% Moroccan-owned participative bank, currently holds the largest share of deposits set at MAD 1 billion ($110.249 million), approximately 38% of the participative banking sector.

    Participative banking in Morocco operates in accordance with Sharia law. A central committee in the High Council of Ulema oversees the compliance of products and services provided by participative banks with Sharia law.

    Morocco was the last Arab country to introduce Murabaha funding. According to experts, the participative banking sector in Morocco is young and underdeveloped due in part to the lack of participative insurance institutions.

    By the end of 2019, the global Islamic banking market was estimated at $2.5 billion. Such high figures mean Morocco has a long way to travel before its participative banks can operate in the highly competitive worldwide Islamic financing market.

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