The upper house of Morocco’s parliament on Tuesday approved a law governing Sharia-compliant insurance, known as Takaful, which professionals expect to give a much-needed boost to Islamic finance in the country.
Insurance companies will be able to launch Takaful subsidiaries as soon as the law is published in the official bulletin after it was approved by the parliament’s upper and lower houses, Islamic banking professionals told Reuters.
Morocco, the most advanced country among its North African neighbours in developing Islamic finance, has allowed five Islamic banks and three windows to offer Sharia-compliant banking services in the country since early 2017.
Islamic banks, known in Morocco as participatory banks, avoid interest and pure monetary speculation.
“Takaful will equip Moroccan Islamic banks with a life and general insurance mechanism,” said Said Amaghdir, President of the Moroccan association for participatory finance professionals (AMFP).
“Islamic banks have so far issued uninsured real-estate and car loans, known as Mourabaha, for a total of 6 billion dirhams,” he said.
“But for Takaful insurers to thrive there is a need for access to capital markets,” Amaghdir said, urging bourse regulator (AMMC) to approve measures to facilitate Sharia-compliant investments by Takaful insurers.
“We need in Morocco a supreme financial services authority to ensure a better coordination between the different regulators: central bank, insurance regulator (ACAPS) and bourse regulator (AMMC) to speed up processes,” he said.