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Rabat – Despite supplying a little over 7% of overall housing loans in Morocco, Murabaha funding grew at an annual rate of 29% at the end of May, surpassing the average 3.3% growth within the same sector.
Murabaha funding offered over MAD 17 billion ($1.6 billion) in housing loans at the end of May, up from MAD 13 billion ($1.2 billion) compared to the same period last year, according to data from Morocco’s central bank, Bank Al-Maghrib (BAM).
Conforming to the principles of the Shariaa law, Islamic finance was first introduced to tap into the market of those who avoided conventional bank services due to religious reasons.
While it remains in its early stages of development, Murabaha financing has recorded the highest annual growth rates since its emergence in 2018, growing at a year-on-year rate of 75% between 2019 and 2020.
As of May 2022, Morocco’s Islamic banking sector holds five banks and three participative funding structures within conventional banks.
Morocco was the last Arab country to introduce the proper legislative framework that would allow for the creation of Islamic banking institutions.
The North African country only recently welcomed its first Takaful insurance institution, which functions in accordance with Shariaa law, in January 2022.
In the course of the same month, two Qatari financial institutions and an international insurance company announced a partnership with Moroccan banking group CIH to create an Islamic financing insurance provider under the name of Takaful insurance.
Despite the significant strides Morocco has made in stimulating the creation of an Islamic financing sector, it remains less robust than the Islamic financing industries of other Muslim countries.
Islamic financing is a highly competitive landscape with a total market cap of $2.2 trillion in 2021. Major Islamic banks are mainly clustered in the Middle East region.
Read Also: Islamic Financing on the Rise in Morocco
