Participation Banking Industry In Morocco

COUNTRY PANORAMA 05.03.2021, 02:22 17.03.2021, 15:09
Participation Banking Industry In Morocco

Since 2012, financial authorities and the government have focused more on the business model rather than on products and turned to a comprehensive finance system.

According to the Global Islamic Finance Report 2019, Morocco ranked 19th on a global scale. This paper examines the sector in Morocco from historical, legal, Shari’ah and financial perspectives.


Finance authorities in Morocco published a document in 2007 to define the principles of Murabaha, Ijarah and Musharakah, also called alternative finance products. The document that was published by the regulatory authorities focused on financial products, and excluded deposit products and Sharia provision requirements. In 2010, the Government introduced amendments to neutrality between conventional and alternative products. Nevertheless, due to the absence of a clear Shari’ah governance system, the low geographical coverage, the high cost of financing and the absence of any Islamic financial literacy initiatives, it didn’t achieve much success.


Since 2012, they have focused more on the business model rather than on products and created legal regulations in this respect:

  1. The Law no. 103-12 related to Credit institutions including sectoral regulations related to participative banks (2014)
  2. The royal decree related to the creating a Central Advisory board in the Higher Council of Ulama (2015)
  3. The laws no. 59-13 and 87-18 related to the insurance sector including sectoral regulations for the Takaful sector.
  4. The finance bills of 2019 and 2016 to ensure tax neutrality between Islamic financing and conventional financing
  5. The law no. 33-06 related to securitization including sectoral regulations for Sukuk issuances.


The Higher Council of Ulama was appointed as the Central Advisory Board for the whole participative finance industry in Morocco. In 2017, the Higher Council of Ulama issued the Shari’ah standards for five participation products (Musharakah, Mudharabah, Murabaha, Salam & Ijara), and Islamic windows.


Since 2017, the participation finance industry in Morocco achieved the following:

  1. The licenses granted to 8 players in the participation banking sector
  2. The adherence of participation banks and windows to the payment system
  3. The first sovereign Sukuk issuance with a total amount of 1 billion MAD (100 million USD) for a 5-year maturity
  4. The Central Guarantee fund launches its Shari’ah compliant window to facilitate the access to financing granted by participation banks to individuals and businesses
  5. The initiation of a Shari’ah-compliant stock market index (still ongoing)

Nevertheless, the industry is still facing a couple of constraints that can be summarized as follows:

  1. The product development process takes more time than expected due to the multiplicity of stakeholders.
  2. The break-even that is still not attained by most of the participation banks and windows. Therefore, to ensure the sustainability and continuity of these institutions, the breakeven is a top priority.
  3. Not granting takaful licenses create a risk for the activities of participation banks and windows. The financing demand exceeding the funds collected leads to a liquidity problem. Therefore, capital markets need to be implemented to raise the necessary funds for growth.

Co-CEO at Al Maali Group Dr. Ahmed Tahırı Joutı

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