Academic Proceeding

In view of the heightened interest in Islamic Finance (IF) of some of the countries in the Middle East, in particular Morocco, which is currently initiating the promulgation of new laws on IF, it is thought to be timely to present in this paper the model of Cooperative Finance (CF) based on the system of mutual investment that is in line with Shariah. It is hoped that this model can be considered for integration within the new Moroccan legal framework. This approach provides alternatives to banking credit or financing that are in strict compliance with the legal Islamic Finance principles. Moreover it encourages solidarity within civil society or between groups of people demonstrating generosity because of the employment of the philosophy that is essentially based on cooperative principle. Of course, implementing economic structures to embrace the efforts of people with Islamic ethics and sensitivity to finance goods and services based on the cooperative spirit is a real challenge in IF. However, models relying on CF solutions have been implemented, in small scales, for nearly 25 years worldwide (Ansar-UK, Lariba-USA, Qurtuba Canada, etc.). It would make sense to integrate and develop such solutions in a significant industrial scale in Morocco. The purpose of this paper is to articulate the experience of ANSAR-UK as one of intermediate or transient solution before the implementation of monetary policy along the principles of Islamic finance. Specifically, we will present two types of financial products used by AFG structure: (i) Interest free credit facility (Qard Hasan) and (ii) Mutual housing finance model which can be studied for implementation in Morocco. The challenge is to bring out the principles of mutual aid and solidarity which lies at the heart of the IF system that meets with the requirements of the existing Moroccan legal and legislative system. Like ANSAR-UK, we hope this model can be extended to other products such as financing educational products, SMEs, SMIs, business services, etc. based on ethical principles and sharing of profits and losses at a certain level of risk.