Rabat – The Arab Monetary Fund (AMF) has described Morocco’s Islamic banking experience as “perfect and distinguished,” pointing to authorities’ efforts to accommodate the sector.
In its report about the Islamic financial industry in the Maghreb, AMF indicated that Morocco’s Islamic financing operates within the framework of existing legislation, in addition to the new, distinct laws for Islamic banks and insurance companies.
As part of the Credit Institutions law, the Ministry of Justice allocated a whole portal for Participatory Banks. Article 54 of said law stipulates that customer financing and investment deposits must not lead to the collection or payment of interest or both at once.
According to the AMF report, Morocco’s decision makers have been largely successful in ensuring that the country’s Islamic Banking experience is compatible with the Islamic Sharia regulations and does not only take a nominal form. All of the application field proceedings in Morocco’s Credit Institutions law emerge from Morocco’s Supreme Scientific Council, which is the country’s highest Fatwa body.
Fatwa is a legal advice given by a specialist in Islamic law that has not been covered in the legal texts of Islam.
With the launch of five Islamic banks in 2017, Morocco’s central bank, Bank Al Maghrib, approved Sharia-compliant banking and services.
So far, Morocco’s legislation has provided all the necessary laws and references to develop Islamic Banking in Morocco, stressed AMF. The report notes, however, that genuine commitment from the banks and companies is the one element that is still missing to ensure the success of the sector.
In 2018, Morocco’s Attijariwafa Bank Group bought Kuwait’s Path Solutions’ “iMAL” Islamic banking software to run Bank Assafa, the group’s Islamic, or “participative,” subsidiary.
The software provides Sharia-based technologies for Islamic financial services to provide the bank’s clients with interest-free financial services in accordance with Islamic principles.
In 2019, Fitch Ratings found that Morocco’s attempt to establish an Islamic financial infrastructure is still faced with various challenges.
Among these is the persistent lack of sufficient funding. The lack of capital and liquidity can hinder both financial growth. As a result, it becomes harder for and the trust- the new Islamic Banking actors to gain the trust or confidence of customers.