Islamic Finance Development in Morocco
Islamic Financial Institution
(IB 1004)
Project Work
“Islamic Finance development: the Moroccan experience”
Student: FZ Habib Eddine
CIFP online 2013
1. Islamic Banking in North Africa
Compared to other Muslim regions North Africa is still undeveloped in terms of Islamic Finance Institutions. The largest Islamic Bank in the region is Faisal Islamic Bank of Egypt established in 1971 but it is still a small institution compared to other Banks in Middle East and Gulf Area, according to the table illustrated below. In other North African countries such as Tunisia, Mauritania and Algeria there is one Bank that has the monopoly of the market, the Al Baraka Bank. This, according to IDB, is not allowing product innovation and development. Al Baraka Bank is present also in Egypt. IDB table shows also that North African region is far away to be among the top ten countries in terms of Shari’a compliant assets. The African country (Egypt) with the highest percentage of bank assets compliant with Shari’a principles is number 12 and it has only 4.9% of total bank assets.
The numbers illustrated above demonstrate that the market size of the industry in this region is quite attractive, especially if we look at the number of population of this area and the percentage of Muslims is above 90% in each country.
According to the Islamic Development Bank the reason of Islamic Banking undevelopment in the area are mainly three: 1) The limited development of retail banking in general; 2) Lack of knowledge about Islamic Banking among potential customers; 3) The absence of support from the political authorities.
As our project work is focused on the Moroccan case, we will see how the political support played a decisive role in both developing and undeveloping Islamic Banking in the Kingdom.
2.1 IDB projects in Morocco
Despite being a minor contributor to its capital, Morocco is the largest single beneficiary of Islamic Development Bank
(IB 1004)
Project Work
“Islamic Finance development: the Moroccan experience”
Student: FZ Habib Eddine
CIFP online 2013
1. Islamic Banking in North Africa
Compared to other Muslim regions North Africa is still undeveloped in terms of Islamic Finance Institutions. The largest Islamic Bank in the region is Faisal Islamic Bank of Egypt established in 1971 but it is still a small institution compared to other Banks in Middle East and Gulf Area, according to the table illustrated below. In other North African countries such as Tunisia, Mauritania and Algeria there is one Bank that has the monopoly of the market, the Al Baraka Bank. This, according to IDB, is not allowing product innovation and development. Al Baraka Bank is present also in Egypt. IDB table shows also that North African region is far away to be among the top ten countries in terms of Shari’a compliant assets. The African country (Egypt) with the highest percentage of bank assets compliant with Shari’a principles is number 12 and it has only 4.9% of total bank assets.
The numbers illustrated above demonstrate that the market size of the industry in this region is quite attractive, especially if we look at the number of population of this area and the percentage of Muslims is above 90% in each country.
According to the Islamic Development Bank the reason of Islamic Banking undevelopment in the area are mainly three: 1) The limited development of retail banking in general; 2) Lack of knowledge about Islamic Banking among potential customers; 3) The absence of support from the political authorities.
As our project work is focused on the Moroccan case, we will see how the political support played a decisive role in both developing and undeveloping Islamic Banking in the Kingdom.
2.1 IDB projects in Morocco
Despite being a minor contributor to its capital, Morocco is the largest single beneficiary of Islamic Development Bank
Bibliography: * Islamic Development Bank (IDB), “Islamic Banking and Finance in North Africa, Past Development and Future Potential”, 2011.