Rabat - Morocco’s reinsurance company Societe Centrale de Reassurance (SCR), a subsidiary of the state-owned investment group Caisse de Depot et de Gestion (CDG), has announced its plan to launch a new insurance venture in Morocco.

Conforming to the principles of Islamic financing, the new SCR subsidiary will offer reinsurance product offerings in accordance with Sharia law, contributing to the consolidation of Morocco’s young Islamic financing ecosystem.

Islamic financing, also known as participative financing, is fairly new in the North African country. SCR is only the second insurance company to emerge within Morocco’s Islamic financing sector.

Morocco’s first Takaful financing institution, Takafulia Assurance, debuted last month. Despite being young and underdeveloped, Morocco’s Islamic financing sector was the fastest-growing banking subsector, according to data from Bank Al-Maghrib (BAM), Morocco’s central bank.

The growth trend is especially noticeable in terms of Islamic financing for housing loans, growing at an annual rate of 32%, according to BAM data.

Known as “Murabaha” funding, Islamic funding is an interest-free financing system. Participative banks first debuted in Morocco in 2018, less than a year after gaining BAM approval.

As of February 2022, Morocco’s Islamic financing landscape is home to five Islamic banks: Bank Assafa, Umnia Bank, Al Akhdar Bank, Bank Al Yousr, and Bank al Tamweelwa Al Inma.

Morocco also holds three participative funding structures -- Dar Al Amane, Arreda, and Najma -- that specialize in mobilizing resources to serve customers’ needs in compliance with Sharia law.

The sector’s growth rate was especially impressive between 2019 and 2020, with a 75% increase in value, according to BAM.

In addition to the growing demand for Murabaha funding for housing loans, customer deposits within Islamic banks have also seen a significant increase since 2018, going from MAD 1.4 billion ($154,349 million) in 2018 to MAD 2.3 billion ($253,573 million) at the end of 2019.

Islamic financing is a competitive sub-banking sector valued at $2.2 trillion in 2021, with major Islamic financing institutions clustered in the Middle East region.

moroccoworldnews