Morocco’s image as an Islamic banking promised land seems to have taken a hit following the publication of two consecutive surveys showing that a sizeable number of Moroccans do not know much about the industry, or worse, are skeptical toward it respecting Islamic values — studies that leave Moroccan market players with mixed feelings. MARC ROUSSOT has the story.
Pushing the door of an Islamic bank’s branch, a customer approaches a client advisor asking for more details on Islamic banking, including how it works and differs from conventional banking. ‘Is it really Halal? Is it truly Shariah compliant?’, the customer asks during the conversation.
This scene has happened many times in Morocco over the past few months following the launch of the industry in July last year, shares Youssef Baghdadi, the managing director of Bank Assafa. “There is always a doubt for Moroccans but when you take the time to explain, people understand,” he says.
According to a recent eyebrow-raising study, out of the 1,000 Moroccans nationwide surveyed by market research firm Sunergia, only 18% of the population answered ‘yes’ to the question ‘Do you believe that financing provided by Islamic banks are Halal?’ and about four Moroccans out of 10 said ‘no’. Sunergia claims that these results can be projected on the entire Kingdom’s population.
Explaining such a high level of distrust is not an easy task but there are a few reasons, including the way Islamic banks have been set up and how the industry is structured in the Kingdom.
“Many people believe that when a conventional bank operates an Islamic subsidiary or an Islamic window, the products cannot be truly Shariah compliant because the parent company is a conventional bank,” Youssef says highlighting that the Higher Council of Ulamas, which delivers the greenlight on the Shariah compliance of products, is also not well known and is regarded by some as quite lax.
While the survey says little about Moroccans’ trust in the national Shariah board, it shouts out how deep their lack of knowledge is toward Islamic banking. In total, 22% of the population did not know if Islamic banks’ offerings are Shariah compliant and 15% did not want to answer the question. In a nutshell, 37% of the population seemed to be in the dark.
Ignorance is also often the source of misconceptions. Some understand interest-free as profit-free and some others perceive Islamic finance as an industry focusing on reducing poverty and helping the poor, explain market players.
“Among the people that do not believe in the industry, you have a share of people that have this opinion because they do not know what Islamic finance really is about; you also have a share of people that have been misled,” states Mohamed Maarouf, the managing director of BTI Bank.
Social media may be playing a role in spreading wrong concepts and ideas among the people. About 172,000 persons are following a Facebook group called “The national campaign requesting the establishment of a real Islamic bank in Morocco”.
In comparison, the Facebook pages of Bank Assafa and BTI Bank have about 50,000 and 76,000 followers respectively. Among all Facebook pages managed by Islamic banks in Morocco, only Umnia Bank has more followers with 175,000 people.
IFN has contacted the administrator of the group to understand his distrust in Morocco’s operating Islamic banks but has yet to receive an answer.
Questioning the question
Prior to the launch of Islamic banking in the Kingdom, many had predicted tremendous success for the industry. According to a study conducted by Islamic Finance Advisory and Assurance Services in 2012 and published in 2014, more than 98% of Moroccans expressed their interest in Islamic banking with 78.8% being ‘very interested’.
The results of this study was taken with a pinch of salt as they were deemed too good to be true by many market players who are now skeptical of the new Sunergia survey.
“The categories represented exist in society but I have some misgivings on the proportions,” Mohamed says. Contacted by IFN, Riad Mawlawi, in charge of digital and business development at market research firm Sunergia, affirms that there is a 3% error rate.
In turn, Youssef discusses the timing. “I think it was too early to conduct such [a] survey. If you produce it in four to five years, then it will be interesting for us. This is the reason why I am not alarmed by the results. The demand is increasing and people are coming to us to open accounts. Yet we certainly have to spend more time educating people,” admits Youssef.
Bank Assafa has posted about 20 videos on its YouTube channel to explain how Islamic products work. The bank is also organizing Facebook Live sessions once every two weeks to popularize Islamic finance. Focusing lesser on social media, BTI Bank hired seasoned front desk employees with a sensibility for Islamic finance to familiarize inquisitive customers with the industry and explain its fundamentals.