Islamic Fund Management
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Regarding Shariah review and audit, a Shariah compliance function has been instituted at the
level of each financial institution - to ensure that Shariah standards issued by the CSO comply
with and procedures and operations in consonance with the guidelines of the CSO. This
function works like an internal review process that provides oversight on Shariah compliance.
However, the issue of external audit has yet to be addressed by the CSO and the regulators.
They have yet to decide whether external audits will be conducted by external audit firms or
other parties.
Infrastructure Institutions
Morocco has different regulators for the banking, insurance and capital markets:
 Banking: Bank Al Maghrib
 Insurance: Autorité de Contrôle des Assurances et de la Prévoyance Sociale (ACAPS)
 Capital markets: Autorité Marocaine du Marché des Capitaux (AMMC)
 Tax and Financial policies: Ministry of Economy and Finance
Each regulator is in charge of its respective Islamic finance segment of the industry. The
regulators have been working closely with market players to address their needs and meet
international best practices in the development of Islamic finance. Similar expectations prevail
for the development of the Islamic fund management industry.
Tax Framework
The tax framework has been amended to accommodate Islamic finance operations in Morocco,
including double taxation that arises under murabahah, registration tax for real-estate
transactions, and tax changes for sukuk to set a level playing field. The principle adopted is to
ensure neutrality between conventional and Islamic products.
Demand Side
Investor base: Market surveys have indicated that a large segment of the 99% Muslim-
majority population of Morocco is interested in living their faith through access to Shariah-
compliant finance. The offer of Shariah-compliant funds will give an opportunity to retail
investors to receive attractive returns while benefiting from professional management of their
funds. Based on the performance of the Shariah-compliant fund offered by Wafa Gestion, the
prospects for competitive returns on Shariah-compliant funds appear positive. An attractive
return of 6%-7% is even expected to be generated by prospective REITs. Shariah funds will
also represent an alternative investment avenue for those who have previously been over-
dependant on bank deposits. The investor base for Islamic funds will also constitute
institutional investors, especially the newly developed participative banking institutions as
well as prospective takaful operators and institutional sukuk holders. The majority of
investors in conventional funds are institutional (above 90% as per AMMC annual report
2016) and it may be the same scenario with Islamic funds. Furthermore, as the Islamic finance
market develops over time, Islamic UCITS can draw the interest of international investors from
regional countries and also Europe.
SMEs: SMEs play a significant role in Morocco. They account for about 95% of the country’s
operating businesses, contribute 30% to GDP and 48% to employment (Thomson Reuters,