Morocco’s House of Advisors has approved law governing Sharia-compliant insurance, known as Takaful. This law is expected to give a much-needed boost to the country’s Islamic finance sector.
Experts in Islamic banking told Reuters that insurance companies would be able to launch Takaful once both parliament chambers approve the law.
Morocco, North Africa’s most advanced Islamic finance provider, has allowed five Islamic banks to offer Sharia-compliant banking services in the country since early 2017.
Islamic banks, known in Morocco as participation banks, prohibit interest and pure cash speculation.
Said Amaghdir, chairman of the Moroccan Association of Participative Finance Professionals, stated that the Takaful would revive Moroccan Islamic banks and grant them a general insurance mechanism.
Amaghdir added that Islamic banks had so far issued mortgages and unsecured car loans, known as Murabaha, with a total value of MAD 6 billion.
Amaghdir called on the Securities Ethics Council, which regulates the stock exchange, to manage Sharia-compliant investments via Takaful companies.
Amaghdir continued: “In Morocco, we need a higher authority for financial services to ensure better coordination between the different regulatory bodies, i.e. Bank Al-Maghrib, Social Insurance and Reserve Control Authority and the Securities Ethics Council, which will result in expediting operations.”