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Morocco moves towards Islamic finance

January 23, 2014

The Moroccan cabinet approved a draft bill on Islamic finance on 16 January. Despite winning the backing of the Islamic Development Bank , Morocco's attempts to launch its first Sukuk last year foundered. This latest step does bring that prospect closer but still requires a final vote by the Parliament of Morocco later this year. The draft legislation allows for the creation of what it calls 'participatory' or 'participative' banks a similar categorisation to that of participation banks which is used in Turkey to denote Islamic finance institutions. Bloomberg reported Said Amaghdir, secretary general of the Moroccan Association of Participative Financiers , an Islamic finance business association as suggesting that total investment in Shari'ah-compliant products in Morocco reach $7 billion by 2018. Back in 2007, Morocco's Central Bank , Bank Al-Maghrib , gave the greenlight for Ijara, Murabaha and Musharaka products. However, take up has been limited. Among five countries surveyed by Gallup across North Africa , while Moroccans are the most likely to choose the Shari'ah-compliant loan (54 per cent) only around one per cent currently use Islamic banking services. Bank Al-Maghrib is in talks with Islamic scholars regarding the establishing of a central Shari'ah board but the new law puts the responsibility for ensuring Shari'ah compliance with Morocco's Supreme Council for Islamic Sciences . Under current regulations Islamic financial institutions may not operate in Morocco and such Shari'ah compliant products as are available are being offered by conventional banks. The draft bill stipulates that participatory banks must appoint a Shari'ah audit committee but, Reuters reported, does not limit Islamic finance activities to Islamic banks. Any credit institution or product, including small loan providers and savings and deposits funds, will be able to practice Islamic finance operations provided they acquire prior permission from the Central Bank .

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Source: CPI Financial

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