Morocco eyes first Islamic bank launch in 2013

Foreign Islamic banks will be allowed to take up to 49 percent of Morocco's first fully-fledged Islamic bank in 2013, as the country aims to become a regional financial hub, a government minister said on Monday.

The government will submit to parliament a draft bill with a set of regulations for the introduction of Islamic finance products in the country within the next few weeks, General Affairs and Governance minister, Najib Boulif, told Reuters.

"We expect parliament to approve the bill before the end of this year. The current plan is to allow a gradual introduction of Islamic banks to preserve the competitiveness of existing(conventional) banks," said Boulif.

The draft bill will be added as a chapter to the country's Banking Law, providing a set of regulations on all Islamic finance products which specialised lenders will be able to offer from Morocco, Boulif said.

It is the first time that the Moroccan government, led since December by the moderate Islamist Justice and Development Party (PJD) has detailed how it intends to develop Islamic finance in the country of 34 million.

Morocco does not allow fully-fledged Islamic institutions but started in 2010 allowing conventional banks to offer a limited set of Islamic financial services products although customers complain they are subject to higher fees than conventional banking products.

So far only AttijariWafa, the country's biggest bank which is indirectly controlled by a holding company owned by Morocco's ruling monarchy, offers four such services based on Murabaha financing but only for personal finance.

Immediately after parliament approves the law, Moroccan authorities will allow local banks and foreign Islamic banks to set up the first Morocco-based Islamic lender, Boulif said.

"Local banks will be allowed to take at least 51 percent of its capital and as much as 49 percent will go to foreign Islamic lenders. There is a very strong demand from abroad for such a project," said Boulif, himself a member of the PJD.

Traders in Casablanca cite Qatar's International Islamic Bank as one of the likeliest foreign Islamic banks to want a foothold in Morocco.

"We thought it is best to start with one Islamic finance institution as we wish to assess closely the experience to ensure its success. If it proves to be a success within six months, then nothing should stop us from authorising more Islamic lenders," added Boulif.

In allowing fully-fledged Islamic finance institutions to operate in Morocco, Rabat aims to overcome what has become a chronic shortage of liquidity, speed up economic growth and help its ambitions to develop a regional finance hub in Casablanca.

"Our economy is in desperate need for a push to help it jump to an economic growth pattern above the (annual) 4 percent we have had in recent years," said Boulif.

When in opposition PJD legislators had said the development of a fully-fledged Islamic finance system in Morocco would add 2 percentage points to annual GDP growth.

"Morocco is struggling with liquidity shortage that forces the central bank to inject between 30 and 35 billion dirhams each week (into the banking system). This shortage hurts the financing of investment and impacts lending growth," Boulif said.

Morocco is also working on a developing a regional financial hub known as the Casablanca Finance City with a view to winning business with other countries in the north and west of Africa.

"We are keen to capitalise on the stability we enjoy here to turn Morocco into a regional Islamic finance platform," Boulif said, adding however that Tunisia and Libya may also harbour similar ambitions.

"Good investment opportunities don't wait. I think we will have to work pretty quickly to enact the new law in 2012 and not squander a very good and rare opportunity," he said.

Read more: http://www.dailystar.com.lb/Business/Middle-East/2012/Mar-26/168021-morocco-eyes-first-islamic-bank-launch-in-2013.ashx#ixzz1qJCXUNnC 

(The Daily Star :: Lebanon News :: http://www.dailystar.com.lb) 

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. (ANSAmed).

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Morocco to promote Islamic finance

With an Islamist party in power, the future for sharia-compliant finance looks promising in Morocco. 

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.

© Magharebia.com 2012