Exploratory study of Islamic Social Finance in Morocco

Abstract

Islamic Moral Economy emerged in the late 1960s aiming for the Islamic financial ecosystem to finance the real economy. Practical experiences exhibited double-digit growth of the financial performances of Islamic banking and financial institutions. However, the social purpose of these institutions was lacking. Indeed, one of the biggest critics of the modern Islamic Finance industry are its weaknesses in terms of social performances. Many researchers mourn the lack of an effective institutionalization of the Islamic principles mentioned in religious sources that could alleviate poverty; such as Zakat, Waqf and Qard Al Hassan. Institutionalized Islamic social models are deployed and presented as solutions to overcome the issue. As for that, several initiatives have been developed all around the Islamic world, using local and governmental initiatives alongside with other Islamic-based actions; in order to alleviate poverty and unemployment, and to encourage investments and entrepreneurship of a targeted population’s financial inclusion. In Morocco, although social Islamic finance does not exist under this denomination; several initiatives launched by the governmental institutions, the civil society and sometimes even by individual and informal actions are taking place. Most of these are backed by Islamic principles as it has been religiously, historically and culturally inherited in the Moroccan society.