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DISCLAIMER
This work is a product of the staff of the Islamic Research and Training
Institute (IRTI) with external contributions. The findings, interpretations, and
conclusions expressed in this work do not necessarily reflect the views of
IRTI or IsDB, or IsDB Board of Executive Directors. IRTI does not guarantee
the accuracy of the data included in this work. Content of this report is
intended to provide general information only and as such should not be
considered as legal or professional advice.
TABLE OF
CONTENTS
FOREWORD ........................................................................................1
ACKNOWLEDGEMENT.................................................................................3
2.1.3. Unemployment.............................................................................. 20
2.1.4. Inflation......................................................................................... 22
I
2.2.2. Estimation of potential resources from Zakāh.............................. 28
3.2 Libya..................................................................................................42
II
3.3.3.2 Supporting Infrastructure............................................................ 54
III
3.6.2 Tunisian Association of Zakāh Sciences, Tunisia..................................... 74
IV
4.3.2.1 Institutional Structure................................................................. 97
V
4.5.6 Strategic Analysis and Recommendations............................................. 121
VI
5.4.2 Microfinance Regulatory & Policy Framework........................................ 149
5.2.3.1 Qar� �asan Pinancing Program and YESP (YES-Tu) ................ 163
VII
FOREWORD
Islamic finance has steadily evolved over the last
several decades with the spotlight shifting from
Islamic commercial banking, insurance, investment
funds and financial markets to Islamic social
finance. However, the focus has often remained on
the former, the for-profit segments of the Islamic
economy. Studies and estimates for the Islamic
financial services sector have traditionally excluded
the Islamic social, philanthropy-driven and not-
for-profit segments and focused on Islamic banks
accounting for nearly 80 percent of global Islamic
financial industry assets. The other components
under focus include: sukuk (15 percent), Islamic
IRTI launched the investment funds (4 percent) and Islamic insurance
maiden issue of (1 percent). A steady double-digit growth in these
ISFR in February sectors has also resulted in Islamic finance
2014. Globally, it maturing as a discipline, with a proliferation in the
was the first ever number of teaching and research programs across
publication to use the globe focusing on Islamic commercial banking,
the term “Islamic Islamic funds, sukuk, Islamic capital markets and
takaful.
social finance” to
describe the Islamic The Islamic Research and Training Institute (IRTI)
philanthropy- of the Islamic Development Bank Group, however,
based and not-for- noted quite early that there has been a gross
profit sector. The imbalance in resources committed to research
report, focusing on and documentation relating to the Islamic social,
philanthropy-based and not-for-profit sector. There
the zakāh, awqāf
were not many initiatives around to strengthen and
and microfinance mainstream this component of the Islamic financial
institutions in South services sector. The concern about this imbalance
and South-East Asia led IRTI to embark on a multi-year project that
brought to the fore resulted in publication of the annual Islamic Social
some interesting Finance Reports (ISFR). IRTI launched the maiden
facts. issue of ISFR in February 2014. Globally, it was the
first ever publication to use the term “Islamic social
finance” to describe the Islamic philanthropy-based
and not-for-profit sector. The report, focusing on
the zakāh, awqāf and microfinance institutions in
South and South-East Asia brought to the fore some
interesting facts. A small upward push in zakāh and
1
waqf mobilization in many countries could generate enough funds to meet the resources
gap for poverty eradication. Such resource raising was also a clear possibility because
countries that were proactive in reforming their respective Islamic social finance sectors
were also the ones with steady double-digit growth rates in the flow of social funds.
Soon, IRTI’s pioneering efforts in underlining the significance of Islamic social finance led
to a number of forums, seminars and conferences being organized around the theme.
In a meeting of the Governors of Central Banks and Monetary Authorities of the OIC
Member States, in Surabaya, Indonesia on 6 November 2014, the OIC Secretary General
called for the rejuvenation of Islamic social finance (i.e. zakāh and waqf) for the purpose
of mobilizing adequate resources to address the problems of financial exclusion, poverty
and unemployment among the vulnerable groups of population in OIC Member Countries.
Based on the deliberations, the meeting adopted its Final Communique containing a set of
recommendations to further increase intra-OIC cooperation in this domain.
The second issue of ISFR released in March 2015 contributed further to bridging the
information gap relating to the sector. It focused on zakāh, awqāf and not-for-profit
microfinance sectors in selected countries in Sub-Saharan countries, such as, Sudan,
Nigeria, Kenya, Tanzania, Uganda, Mauritius, and South Africa. And in October 2017, the
third issue of ISFR was released. This issue of the report analyzed the Islamic social
finance sector in the Russian Federation, Kazakhstan, Kyrgyzstan, Tajikistan, Bosnia and
Herzegovina, and Macedonia.
IRTI, as part of its flagship research and publications program, has dedicated significant
resources to publication in the field of Islamic social finance. Since inception, IRTI has
produced as many as 26 books and monographs and 30 policy/working papers relating to
zakāh, awqāf and Islamic microfinance in multiple languages.
Indeed, due to the pioneering efforts of IRTI, Islamic social finance is now firmly etched
as the new paradigm that reflects the objective and spirit of Islam, perhaps far better than
the for-profit financial institutions and markets. To this end, IRTI embarked on producing
the annual Islamic Social Finance Reports. The present Report focuses on the north-west
African countries of Algeria, Libya, Mauritania, Morocco, and Tunisia.
The Report was prepared by a team comprising of researchers from IRTI led by Dr.
Mohammed Obaidullah with support from regional experts who have painstakingly collected
and analyzed data pertaining to the sector. They used a variety of means including personal
visits and focus group discussions involving key stakeholders in the sector. Let me take this
opportunity to congratulate the team for producing an excellent piece of work. At the same
time, let me also invite you to share your feedback on how to further enhance its value to the
research community.
Dr. Sami Al-Suwailem
Acting Director General, IRTI
2
ACKNOWLEDGEMENT
This issue of the Islamic Social Finance Report
focuses on the north-west Africa. This is in
continuation of the earlier issues focusing on
countries in South and South East Asia, Sub-
Saharan Africa, Russian federation and selected
countries in the Central Asia and the Balkan region.
The Report has benefited from the comments
of and presentations by several scholars and
representatives of Islamic organizations from
the region under focus. Most of them actively
participated in the preparatory events for the study.
One such event is worth mentioning. IRTI organized
The Report has benefited a preparatory workshop in Tunis inviting over two
dozen scholars and professionals from the region
from the comments
who discussed the findings of the Report in detail.
of and presentations
by several scholars A team of researchers from IRTI supported by
and representatives of external experts from the region under focus
Islamic organizations jointly contributed to this study on the Islamic
from the region under social finance sector. Dr Nasim Shah Shirazi,
Professor at the College of Islamic Studies, Hamad
focus. Most of them
bin Khalif University deserves special mention
actively participated for authoring Chapter 2 of this report on the
in the preparatory economic fundamentals of the region under focus.
events for the study. The team of external experts was led by Mazen
One such event is Dakhli and comprised of Adel Enpaya, Mounir Tlili,
worth mentioning. Habib Lacheb, Ali Said, Aymen Doghri, Younes
IRTI organized a Boubechtoula, Hichem Boukharrouba, Monsef
preparatory workshop Bentaibi, Adil Zarfi, Yasser Bentaibi, Zakaria Kharchaf
and Mohamed Cheikh Abdallahi. The contribution
in Tunis inviting over
of the Tunisian Association for the Zakāh Sciences
two dozen scholars and is also humbly acknowledged. Finally, I would like
professionals from the to acknowledge the support of the Islamic Financial
region who discussed Sector Department of the IsDB in co-organizing
the findings of the the Validation Workshop which contributed to the
Report in detail. updating of the data in significant measure.
3
4
EXECUTIVE
01 SUMMARY
The Islamic social finance sector broadly
comprises of the traditional Islamic
institutions based on philanthropy e.g.
zakāh, �adaqah and awqāf; those based
on cooperation e.g. qar� and kafālah; and
the contemporary Islamic microfinance
institutions that aim at making a dent in
poverty. This issue of the Islamic Social
Finance Report (ISFR) presents the trends,
challenges and prospects for the various
segments of the Islamic social finance
sector in north-west African countries,
namely Algeria, Libya, Mauritania, Morocco
and Tunisia.
5
Islamic Social Finance Report 2020
6
Executive Summary
7
Islamic Social Finance Report 2020
• T
here is grave need for proper • T
he institution of waqf in the
coordination and communication Maghreb has a rich and long history
between the Zakāh Fund and spanning many centuries. Over the
other state institutions, such ages, it has played an active role
as the social security fund, in the cultural construction of the
ministry of social affairs and the society through its contributions
wealth distribution fund, to avoid to the social, economic, political
duplication in payment of financial and even environmental sectors. It
aid to beneficiaries. This also has contributed to the provision of
underscores the need for a unified stable resources to provide public
and commonly-shared database services and social institutions
between the Zakāh Fund and the with the necessary tools to meet
aforementioned institutions. Zakāh the needs of the communities. It
funds are also not well-integrated has helped reduce stratification
among members of society, through
1 The eight categories of zakah beneficiaries are
material and moral support for the
speficied by the Holy Quran (see Chapter 9 Verse 60)
fragile classes of society.
8
Executive Summary
• N
otwithstanding its benevolent • T
he existence of a dedicated
role in the society, the institution law alone cannot ensure its
has witnessed major ups and effective implementation. This
downs, often due to political can only be achieved by setting
factors. Waqf came to the Maghreb up a strong institutional support
countries with Islamic conquest. structure with high administrative
Initially in the form of religious competencies to deal with waqf in
awqāf (e.g. mosques), it soon terms of identification, codification,
became a dominant sector of the registration of waqf assets and
economy making provision of reviewing the regulations governing
social and public goods. With a the use thereof. A good institutional
hostile colonial rule, however, most structure for waqf presumes the
of the awqāf assets were lost. In existence of a strong, independent
the post-independence era, some and professional apex organization.
of the lost awqāf were salvaged Unfortunately, most Maghreb
and recovered. A process of countries are characterized by the
rejuvenation of the awqāf has begun absence of adequate supporting
with identifying and documenting infrastructure for awqāf sector.
such properties that have been The apex regulatory body for waqf
lost since the colonial era should should be dedicated to waqf and
be expedited with the involvement waqf alone. For example, in Algeria,
of experts in the field of surveying. the Directorate of Waqf is merged
In the province of Tripoli alone a with Hajj, and this implies neglecting
systematic attempt to enumerate the administrative aspects of the
and record the waqf assets was waqf during periods of preparation
undertaken. The first attempt of for hajj. Therefore, the Algerian
reclassification identified about Awqāf Department should be
11,000 real estate, 6,000 mosques, removed from the administrative
and more than a thousand schools constraints attached to the Ministry
of Qur’ān memorization. of Religious Affairs. Awqāf and
should be given full autonomy by
• W
aqf assets have been lost not establishing the National Awqāf
only due to politically hostile forces, Office. Similarly, in Libya, the
but also due to plain and simple GAAIA is a religious institution
human greed and avarice. The legal whose role is limited to following
and regulatory system of waqf up and supervising mosques and
must therefore be strengthened in schools. It is characterized by
order to provide greater protection mismanagement of waqf assets
for waqf properties. In Libya for and the use of traditional systems
example, legal texts provide waqf in asset evaluation, which make
assets with special protection it difficult to control and detect
compared to private and public deviations and bad practices.
funds. There is need for a dedicated This agency needs to transform
waqf law that is able to preserve itself for development of the waqf
existing awqāf assets and recover
lost awqāf assets.
9
Islamic Social Finance Report 2020
• T
he awqāf assets that have been
preserved well are characterized by
low income generating possibilities.
Often, the concerns about preservation
have pre-empted any possibility of
development of the property and
enhancement of its earnings potential.
It is a delayed but rational realization
among many scholars and observers
that awqāf assets can serve their
purpose only when they are well-
maintained and developed. An undue
concern about preservation may result
in such assets becoming obsolete over
10
Executive Summary
11
Islamic Social Finance Report 2020
12
Executive Summary
The following are the major findings in same time, the existing law on
relation to the Islamic microfinance sector. microfinance allowed the MFIs
to include Islamic microfinance
• I slamic microfinance essentially products in their portfolio. In
involves a marriage between contrast, the existing law in Tunisia
tools and models of conventional is observed to be too rigid and not
microfinance with the norms of flexible enough to fit the specific
Islamic finance. The need for regional or sectorial needs. It needs
Islamic microfinance was acutely major reforms to be able to ensure
felt as conventional microfinance transparent and clear execution of
had a low acceptance among poor contracts. In a country like Algeria,
Muslims in the Maghreb as well as on the other hand, a financial
in the rest of the world. The poor system for granting microfinance is
Muslims were seen to “self-exclude” simply non-existent. MF providers
themselves from the conventional are supposed to be linked with
riba-based microfinance due to a public banks that do not pay
conflict with their basic beliefs. sufficient attention to microfinance
Market surveys revealed that a because they focus their expertise
strong and popular demand exists on other activities.
for Sharī‘ah-compliant microfinance
in most of the Maghreb countries. • T
he strong support by policy
makers to microfinance is seen as
• C
onventional microfinance in a tool to alleviate poverty matched
some countries, such as Morocco by initiatives at the meso level too.
and Mauritania, provided a strong For example, the introduction of
background, and a network Islamic microfinance in Morocco
of microfinance institutions benefited from the availability of
functioning under the supervision consultancy firms with considerable
of the central bank (not as informal experience and readiness to work
associations or cooperatives), on this sector. Some Moroccan
a carefully configured enabling firms had already worked for
regulatory and policy framework. In years on developing Management
such countries, it was not difficult Information Systems to closely
to initiate Islamic microfinance assist MFIs in achieving their goals.
with modifications in the products Switching to Islamic microfinance
to make them Sharī‘ah-compliant. was an easy proposition for them.
The existence of a dedicated
law for microfinance and Islamic • W
hile the Morocco experience
finance paved the way for the birth underlined the strengths of Islamic
of Islamic microfinance sector. In replications of conventional
Morocco, for example, the opening microfinance models and products,
of participative banks opened vast there were major weaknesses
opportunities for Islamic MFIs too. Much of the weaknesses with
as windows of the banks. At the perpetuation of indebtedness or a
13
Islamic Social Finance Report 2020
14
REGION
02 UNDER FOCUS
This report covers five north-west African 2005-18. Mauritania has the lowest total
countries, namely Algeria, Libya, Mauritania, population (4.54 million) and the highest
Morocco, and Tunisia. All these countries average annual population growth rate
are Muslim-majority countries. The Muslim (2.9 percent) among the countries under
population varies from 96.6 percent to study during the same period. Morocco
about 100 percent in these countries. is the second most populous country
(35.22 million) and recorded the lowest
Among the countries under focus, Algeria population growth (1.19 percent) in 2018
is the largest country by size and by among the selected countries of the region.
population. Its population reached 42.58 Tunisia is the smallest country in size but,
million in 2018, with an average annual with 11.66 million people, the country is
growth rate of 1.97 percent during 2005- more populous than Libya and Mauritania.
18. The estimated population of Libya Tunisia’s population has been increasing at
was 6.51 million in 2018, with an average average annual rate of 1.08 percent during
annual growth rate of 1.2 percent during 2005-2018 (Table 2.1).
Source: International Monetary Fund, World Economic Outlook Database, April 2019
*https://www.cia.gov/library/publications/the-world-factbook/
15
Islamic Social Finance Report 2020
Figure 2.1: GNI per capita, Atlas method, 2018 (current US$)
8000
6300
6000
4060
4000 3000 3500
2000 1100
0
Algeria Libya Mauritania Morocco Tunisia
Tunisia 3446.6
Morocco 3237.9
Mauritania 1218.6
Libya 7235.0
Algeria 4278.9
16
Region Under Focus
5.57
6
4.83
4.5 4.04
3.01 2.92
3
1.5
0
Algeria Libya Mauritania Morocco Tunisia
Source: WB, WDI, 2017. Note: For Libya growth rate is for the period 2005-10.
in 2000 to about US$ 75 billion in 2010, but growing positively from 2000 to 2005,
it slid to US$ 50.28 billion in 2018 (Table 2). where its annual growth rate was the
During 2005-2018, the economy of Libya highest (7.2 percent ) in 2003 followed by
17
Islamic Social Finance Report 2020
(5.91 percent ) in 2005. In the subsequent in 2006. However, the GDP growth rate
years, it never touched the figure of 4 has been declining onward and reached a
percent, and the growth rate remained very negative figure of -1.04 percent in 2009.
low. It recorded the lowest annual growth The economy of Mauritania again gained
of 1.6 percent in 2017. momentum from 2010 onward, where
GDP grew an average annual rate of about
Even before the civil war in Libya, the 5 percent during 2010-14. The following
economy was experiencing a fluctuating years witnessed low growth rates and
growth rate during the last decade. The reached 3.6 percent in 2018. Morocco was
country experienced a meager -1.76 growing, on average, around 4 percent per
percent annual growth rate in 2001 year during the last one and a half decade,
compared to 13.02 percent in 2003. The except for the year 2016, when it registered
economy showed a promising growth rate a growth rate of 1.10 percent. However,
onward, but it suffered during the financial growth rate again picked up and reached
crisis, where its annual growth rate dropped about 3 percent in 2018.
to -0.79 percent in 2009. The country has
been facing a significant economic loss Similarly, Tunisia experienced good
due to the civil war, and consequently, the progress of about 4.5 percent annually
annual growth rate dropped to about -62.08 during 2001-2007. It was not affected
percent in 2011(Figure 2.4). However, much by the financial crisis as it registered
after gaining a considerable jump in its an average annual growth rate of more
annual growth (123.1 percent) in 2012, its than 3 percent during 2008-2010. However,
growth slid to negative numbers during after that period, the country was severely
the subsequent years and picked up again affected and recorded a growth rate of
to about 27 percent and 7.84 percent in about -2 percent in 2011. Subsequently, the
2017 and 2018 respectively. Mauritania economy picked up, but the growth rate
maintained a respectable high growth rate remained below 2.0 percent per annum in
during 2003-2006, with about 19 percent recent years (Figure 2.4).
150.00
100.00
50.00
0.00
-50.00
-100.00
2000 2005 2010 2015 2018
18
Region Under Focus
Table 2.3: Value Addition by Agriculture, Industry and Services sectors in 2017
(% of GDP)
19
Islamic Social Finance Report 2020
Figure 2.5: Value addition by Agriculture, Industry and Services Sector, 2017
(% of GDP)
70.0
60.31
60.0
49.96
50.0 45.62
37.24 36.87
40.0
20.0
12.27 12.38
9.54
10.0
00.0
Algeria Mauritania Morocco Tunisia
20
Region Under Focus
Tunisia 14.62
Morocco 10.1
Mauritania 10.71
Libya 17.95
Algeria 14.92
0 2 4 6 8 10 12 14 16 18 20
Source: WB, WDI, 2019.
Figure 2.7: Unemployment, youth total (% of total labor force ages 15-24)
(modeled ILO estimate), 2018.
Tunisia
Mauritania
Algeria 15.99
21
Islamic Social Finance Report 2020
2000. Morocco was successful in reducing percent during 2000-2003 and declined
unemployment gradually, which reached subsequently to around 10 percent. Libya
around 9 percent in 2018 from about is a unique case where unemployment
14 percent in 2000. The unemployment remained almost around 18 percent during
in Mauritania remained around 12 2000-18(Figure 2.8).
40.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
2000 2005 2010 2015 2018
22
Region Under Focus
Tunisia 4.59
Morocco 1.61
Mauritania 4.8
Libya 9.99
Algeria 4.46
0 2 4 6 8 10
Source: International Monetary Fund, World Economic Outlook Database, April 2019
30
25
20
15
10
5
0
2005 2010 2015 2018
23
Islamic Social Finance Report 2020
the GNS. The GNS has been showing a of Tunisia and Morocco, the average annual
declining trend from 2008 onward. The TI was slightly higher than average annual
investment, which is more than 25 percent GNS during the same period. However,
of the GDP, is considered a healthy sign for Tunisia TI per annum was less than the
the sustainable growth of the economy. required level of investment for sustainable
Mauritania has been investing, on average, development of the economy. However, the
about 39 percent of GDP per annum TI jumped up to about 33 percent in 2018,
compared to about 23.51 percent of GNS while the GNS further declined to 8.93
during the same time. The gap between TI percent in the same year (Figure 2.11B).
and GNS is significantly high. In the case
Table 2.4: Total Investment (TI) and Gross National Savings (GNS)
percentage of GDP
Figure 2.11A: Total Investment (TI) and Gross National Savings (GNS) percentage
of GDP
80
60
40
20
0
2000 2005 2010 2015 2018
24
Region Under Focus
Figure 2.11B: Total Investment (TI) and Gross National Savings (GNS) percentage
of GDP
80
60
40
20
0
2000 2005 2010 2015 2018
2000 2004 2005 2006 2008 2010 2011 2013 2014 2015
Algeria .. .. .. .. .. .. 27.6 .. .. ..
25
Islamic Social Finance Report 2020
2000 2004 2005 2006 2007 2008 2010 2011 2013 2014 2015
.. .. .. .. .. .. .. 0.5 .. .. ..
Algeria .. .. .. .. .. .. .. 3.9 .. .. ..
.. .. .. .. .. .. .. 5.5 .. .. ..
51 46.7 .. .. .. 42 .. .. .. 31 ..
6.3 .. .. 3.1 .. .. .. .. 1 .. ..
Note:
1. Poverty headcount ratio at $1.90 a day (2011 PPP) (% of the population).
2. Poverty headcount ratio at $3.20 a day (2011 PPP) (% of the population).
3. Poverty headcount ratio at national poverty lines (% of the population)
26
Region Under Focus
27
Islamic Social Finance Report 2020
28
Region Under Focus
table, which could range between about 2 The potential resources that can be
percent of GDP to about 4 percent of GDP. generated under three different scenarios
Algeria can generate an amount of revenue (Table 2.8) are more than the resources
of 1.78 percent of GDP under Z1, 3.81 needed to fill the poverty gap (Table 2.7).
percent of GDP under Z2, and 4.30 percent Thus, all the countries under study can pull
of GDP under Z3. Similarly, other countries up the underserved people from poverty,
in the table show that on average they can provided that social finance is implemented
collect about the same amount under three and managed correctly.
different scenarios.
References
29
Islamic Social Finance Report 2020
30
03 ZAKĀH
3.1. ALGERIA1 3.1.2. REGULATORY & POLICY
FRAMEWORK2
3.1.1. OVERVIEW OF THE SECTOR
The Algerian Fund of Zakāh serves also as
Like several other Arab and Islamic a charitable foundation aimed at achieving
countries, Algeria has adopted the Zakāh solidarity in society. The process of
Fund as an official body collecting zakāh. organizing and disbursing zakāh is a task
The Zakāh Fund is a religious social pertaining to the Ministry of Religious Affairs
institution operating under the supervision and Awqāf in line with the Article II of the
of the Ministry of Religious Affairs and constitution that states that “Islam is the
Awqāf. The ministry guarantees legal religion of the state.” The notion of zakāh is in
coverage, according to the law handling the following legal pronouncements:
the mosque institution under Executive
Decree No. 91-82 of 1991. The Zakāh Fund • Executive Decree No. 89-99 of 23 Dhul-
Qa’da 1409H corresponding to June 27,
collects zakāh through its branches located
1989 for the powers of the Minister of
in various states of the country, and then
Religious Affairs, especially Articles 10
distributes it to its legitimate beneficiaries
and 14 thereof.
through the same branches. The
experiment started in 2003 with two pilot • E
xecutive Decree No. 91-81 of 7
mandates, Blida and Sidi Bel Abbes states. Ramadan 1411H corresponding to March
23, 1991, which includes the construction
Two accounts of the mosque institution
of the mosque, its organization,
were opened at the state level in the form
administration and determination of its
of money orders to receive zakāh and
function, especially Article 22 thereof.
sadaqa funds. In 2004, this process was
generalized to all the states of the country • E
xecutive Decree No. 91-82 of 07
by opening postal accounts at the level of Ramadan 1411H corresponding to
March 23, 1991, which includes the
each state, which is affiliated to the Zakāh
establishment of the mosque institution,
Fund, through which the fund receives and
especially Article (d) of Article 5 thereof
disburses money through remittances only.
• E
xecutive Decree No. 91-82 of 25 Rabie
1 “Financing the Local Development from an Al Awal 1421H corresponding to 28 June
Islamic Perspective: The contribution of the funds of 2000, which includes the organization of
zakāh & Waqf”, Wasila Essebti, PhD Thesis, University of the central administration in the Ministry
Mohamed Khidhr University, Biskra, Algeria
of Religious Affairs and Awqāf.
2 Ibid
31
Islamic Social Finance Report 2020
32
ZAKĀH
* T
he Board of Directors (shall and qualified beneficiaries, ensuring
meet under the chairmanship homogeneity of work and ensuring
of the Minister or his the accuracy of the distribution
representative) process
* S
ecretary General with four • Dispute resolution
directors
• Communication task
Province or State Committee for Zakāh
Fund: The Basic Committee of the Zakāh Fund:
33
Islamic Social Finance Report 2020
* C
all to perform zakāh duty, which • 50% for the poor and needy
is the third pillar of Islam, and its
revival in the hearts of Muslims • 1
2.5% for salaries of officials and
and in their transactions operational expenditure of the
Zakāh Fund
* Collect donations and aid
• 3
7.5% for investment and Qar�
* D
isburse zakāh funds to the �asan
Sharī‘ah authorities
If the collected zakāh funds are less than
* R
aise awareness and inform DZD 5 million:
individuals and competent
authorities on methods of • 87.5% for the poor and needy
collecting and distributing zakāh,
• 1
2.5% for the salaries of officials
through various media such as
and operational expenditure of the
radio, television and the internet.
Zakāh Fund
3.1.3. ZAKĀH COLLECTION & The last item may be distributed as follows:
DISBURSEMENT 4 • 6
% is allocated to run the basic
committees in the districts
The work of the Algerian Zakāh Fund is
divided into two main parts: • 4
.5% is allocated to run the province
committees
Zakāh Collection:
• 2
% is allocated to the National
It is done through postal accounts opened Committee of Zakāh.6
at each province of the country. The Imam
can be a mediator between people who Within the broad categories as above,
give zakāh and this current postal account specific allocations are determined by
if he gives these people receipts for the mosque commissions. Widows with their
received amounts, or signs with the Masjid’s children come first, followed by divorced
committee on minutes indicating the amount women with children. Each family’s share is
collected in the Masjid (upon which it will be defined according to the importance of the
obligatory on his part to deposit the same collected money in its region.
in the postal account)5 . The zakāh should
Development of Zakāh outcome
be given to mosque commissions or put in
zakāh boxes that are in each mosque office. Zakāh outcome fulfilled the Fund and
The money must not be kept in the mosque has seen considerable development. The
and the Imams should count it and transfer it following table shows the growth in the
to the current account of the Zakāh Fund. volume of Zakāh Funds over a 14-year
period. 7
Zakāh Disbursement:
6 Naoual Ben Amara and Larbi Atia, Toward the
If the collected zakāh funds are greater than
Adoption of a Governance Model in Zakah Foundations:
DZD 5 million: The Case of the Algerian zakāh Fund, p: 113, International
Journal of Business and Management Review, Vol.4, No.2,
4 Ibid
pp.104-118, March 2016
5 Bertima & Abdeli, 2014:7
7 IBID p :113
34
ZAKĀH
Table: Statistics of Collected Zakāh in Algeria from 2003 to 2016 (in million DZD)
35
Islamic Social Finance Report 2020
36
ZAKĀH
Regarding allocation of zakāh funds, the The projects financed by the Fund are
Algerian Zakāh Fund raised a slogan that subject to specific conditions which were
says, “We don’t give it to him to remain poor identified due to specificity of the Fund’s
but to become a muzakki”. Therefore, the transactions especially for projects of
Ministry of Religious Affairs and Awqāf social and economic interest, craft projects,
allocated a portion of zakāh funds to construction, service projects, nurseries,
investment, which constitute 37.5 percent productive and agricultural projects, usually
of the total proceeds of zakāh. The Ministry with Qar� �asan financing. It is the most
of Religious Affairs and Awqāf signed an widely used mechanism to finance projects
agreement with Al Baraka Bank of Algeria to help the poor, and it is often used to
to be a technical agent in the field of ensure the continuity of simple investment
investing zakāh funds. activities, and to keep jobs associated with
those activities.
Table: Statistics of Collected Zakāh in Algeria from 2003 to 2016 (in million DZD)
2003 138
Source: Official website of the Algerian Ministry of Religious Affairs and Awqāf.
37
Islamic Social Finance Report 2020
• M
ini projects financing: This repays the loan in different ways,
financing covers housewives, depending on the parties involved in
handicapped people who are able the funding process:
to work, as well as unemployed
youth. The National Commission * I f the parties of the funding
of Zakāh Fund defines a limit for process are the bank and
this type of financing, and the Bank the financed poor, exemption
will directly pay the supplier (no from repayment of six months
relation between the supplier and is granted, after which the
the beneficiary). beneficiary starts to repay the
loan installments depending on
• S
upporting projects secured at the the contract.
Loan Guarantee Fund: These loans
materialize through an agreement * I n case of third party, the National
between the Fund and the Ministry Agency for Conducting Mini
of Religious Affairs and Awqāf, in Loans, the financed repays 70%
consultation with the Al Baraka of the good loan, benefits from
Bank of Algeria which is a member the exemption for one year, then
of the Loan Guarantee Fund of small repays depending on the contract.
and medium-sized enterprises. After repayment of the bank loan,
the financed starts to repay the
• H
elping enterprises in debt that Agency’s loan, with 3 years of
are capable of recovery: The Bank exemption.
determines a list of the beneficiaries
of this type of financing by 3.1.3.1. TRANSPARENCY, ACCOUNTABILITY &
identifying their needs, to what GOOD GOVERNANCE 8
extent they are recoverable and how
Governance of zakāh foundations in Algeria
to pay those debts. The assistance
has become very significant in the light
includes only the principal, but not
of current developments. The governance
the interests paid to banks.
meachism should apply the principles
• C
reation of companies between and basics of governance to improve the
the Fund of Zakāh Investment and performance of zakāh projects, and develop
Al Baraka Bank of Algeria: These the methods of supervision and control to
projects are implemented through strengthen credibility in zakāh foundations’
an agreement between the Al activities. The governance system for zakāh
Baraka Bank of Algeria and the foundations may involve the following:
Ministry of Religious Affairs and
• Assist zakāh foundations to
Awqāf. The Bank determines the
implement their tasks with efficiency
size and quality of the projects to
while achieving economic and
be implemented. The unemployed
legitimate (according to Sharī‘ah)
capable of working will benefit from
requirements for investing zakāh
these projects. After approval by
resources;
the Zakāh Fund and Al Baraka Bank
8 “Financing the Local Development from an Islamic
of Algeria, the financing is granted Perspective: The Contribution of the Funds of zakāh &
to the beneficiary. The beneficiary Waqf”, Wasila Essebti, PhD Thesis, University of Mohamed
Khidhr University, Biskra, Algeria
38
ZAKĀH
• S
eparate powers and conflicting • R
ealistic monitoring and evaluation
positions to ensure clear of performance of projects funded
mechanisms are implemented by zakāh foundations;
for assuming responsibility and
accountability when collecting and • I dentification of the tasks and
distributing zakāh; responsibilities of the administrative
and organizational structure in
• E
nsure an unbiased opinion by zakāh foundations;
Sharī‘ah control bodies in zakāh
foundations relating to their • P
roviding necessary and relevant
transactions; and information to facilitate prudent
investment of zakāh resources; and
• C
omplete the institutional and
• D
esignation of committees to
Sharī‘ah framework of zakāh
foundations. follow up the performance of zakāh
projects.
Two groups of determinants can be defined
depending on the proper application The rules of governance in activating the
of governance principles for zakāh Algerian Fund of Zakāh play a fundamental
foundations: role in achieving economic efficiency in
the investment of zakāh funds. The Fund’s
• E
xternal determinants: they include management must provide the necessary
laws regulating the economic information for the different parties in time
activity of the state, including the to gain their trust. This will contribute to
operation of zakāh foundations increase in resources and exploiting the
resources in a way that allows to achieve
• I nternal determinants: they include social justice and contribute to economic
internal laws and regulations development. Thus, the system of
within zakāh foundations. They are governance plays a major role in improving
the way of decision-making and the performance of the Algerian Zakāh
the allocation of responsibilities Fund.
and powers between the parties
concerned with the application of To sum up, governance aims to achieve
governance, which reduces conflicts individual and societal interests which
between the interests of these are rooted in the Islamic Sharī‘ah.
parties. Commitment to rational governance
system will lead to the development of
The prerequisites for the good application the Fund, overcome problems, increase its
of governance principles for zakāh competitiveness, and achieve its financing
foundations: and Sharī‘ah objectives. It will lead to
• E
stablishment of legal and efficient information-sharing, and effective
legislative framework to regulate overall control to assess performance and
the administrative performance of enhance confidence in zakāh projects.9
zakāh foundations;
9 ibid 115
39
Islamic Social Finance Report 2020
40
ZAKĀH
Recommendations
• We propose some measures
to activate the organization
of zakāh, some of which may
require a choice between
alternatives, as follows:
• S
tudy the components of the
Algerian economy for better
allocation of zakāh.
• P
romote zakāh at important
religious and national events.
• B
uild awareness about enhanced
role of zakāh.
• P
romote scientific research in the
field of zakāh.
41
Islamic Social Finance Report 2020
42
ZAKĀH
Fund’s funds. This staff tries to establish a necessary information from zakāh payers
database in order to work according to the and its beneficiaries. It also tries to know
principle of transparency and disclosure, as their views regarding the performance
well as by publishing data and information of Zakāh Fund. Finally, specialists from
in special reports that are easy for the the Audit Bureau are hired to evaluate the
public to understand. In addition, it performance of Zakāh Fund, and to monitor
relies on a special questionnaire to get any deviations.
44
ZAKĀH
Source: Periodic reports of Libyan Zakāh Fund for the years 2010-2016. The average exchange rate of the Libyan
Dinar is 1.301 $
30,000,000
3.2.2.2 SUPPORTING INFRASTRUCTURE 1
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
2015 2014 2013 2012 2011 2010
2016
Expenditure Collection
Chart 1 shows the collection and It increased from 1,185,372 LYD (9.6%)
disbursement of the zakāh funds during the in 2013 to 1,409,535 LYD (6.8%) in 2014.
period 2010-2016. It indicates the success But despite the increase, it decreased
of the Fund following the communication as a percentage of total by 0.1%. Zakāh
campaigns regarding the collection of distributed for Ibn Al-Sabeel rose slightly
zakāh and disbursement to the rightful from 300,147 LYD (2.4%) in 2013 to 310,807
beneficiaries. LYD (1.5%) in 2014, but as a percentage of
total decreased by 0.9%. The share of the
Libyan law prescribes the following staff working on collecting Zakāh fund,
allocation rule for zakāh.
Table 3: Distribution of Zakāh for the eight categories according to Libyan law
Category Percentage
Fuqara 55
Amilin Alayha 10
Muallafat Al-Qulub 10
Gharimun 10
Fi Sabilillah 10
Ibn Al-Sabil 5
Table 3 compares zakāh funds disbursed increased from 1,113,639 LYD (9%) in 2013
to the beneficiaries during 2013-2014. The to 1,130,162 LYD (5.5%)15 in 2014, but as
share of the poor and needy people was a percentage of total decreased by 3.5%.
the largest proportion of the zakāh funds. It The Fund did not spend any money for
increased by 4.5% in 2014, from 9,797,489 Muallafat Al-Qulub and for Fi Sabilillah in
LYD (79%) of the total Zakāh funds to 2013, while in 2014 it disbursed 11,500 LYD
17,233,514 LYD (83.5%). This is followed and 543,165 LYD for the two categories
by the money spent on the Gharimun respectively.
(Debtors), people that have debts because
of the rising cost of living, treatment 15 The average exchange rate of the Libyan dinar is
1.301 $
expenses or purchase of basic needs.
46
ZAKĀH
Table 3: Distribution of Zakāh for the eight categories according to Libyan law
Source: Periodic reports of Libyan Zakāh Fund for the years 2010-2016.
Chart 2 supports the above table, and In summary, no zakāh funds have been
shows zakāh funds disbursed during the spent on the following categories:
year of 2014, indicating that most of these Muallafat Al-Qulub and Fi-Sabilillah. This
funds were spent on the poor and needy is because issuing a fatwa by Sharī‘ah
people, according to the regulations on the committees is quite complicated (i.e. the
disbursement of zakāh funds in the Libyan process of issuing a fatwa regarding zakāh
law. distributions is problematic), especially in
the current situation in Libya.
20,000,000
Poor & Needy
18,000,000
Debtors 16,000,000
14,000,000
Ben Sabeel
12,000,000
Staff 10,000,000
8,000,000
Maollafat Qulobhm 6,000,000
4,000,000
Sabeel Allah 2,000,000
0
2014 2013
47
Islamic Social Finance Report 2020
48
ZAKĀH
• Z
akāh Fund seriously tries to • T
he Zakāh Fund’s lack of
establish a database containing full disclosure and complete
Zakāh payers and beneficiaries. transparency when it comes to the
amounts collected and disbursed
• R
eviving the obligation of Zakāh
and the actual Fund’s contribution to
for public, and accepting zakāh
improving the recipients conditions
and charity and spending them for
beneficiaries with confidence in Opportunities
accordance with the provisions of
Islamic law. • T
he legislation of Zakāh funds
investment is crucial for the Libyan
Weaknesses Zakāh Fund.
• L
ibyan Zakāh Fund records financial • C
alling for replacing Zakāh with the
surplus at the end of the financial tax.
year for several reasons, the most
important of which is that the rates • T
here is a proposal to amend Law
of Zakāh distributions are defined in No. 49/2012 on the establishment
Libyan law, and cannot be violated. of the Zakāh Fund by making it a
This is not helpful to the economic financially and legally independent
and living conditions of the people. entity, and not affiliated with the
GAAIA, and giving it broader powers
• L
ack of coordination and to carry out its duties and functions.
communication between the Zakāh In addition, the Zakāh Fund remains
49
Islamic Social Finance Report 2020
50
ZAKĀH
• S
ome of the departments of the • A
mendments and modernization of
Zakāh Fund and its branches depend the laws and regulations of the Zakāh
on manual classification and manual Fund should be undertaken.
registration, which affects the
• I t is recommended to establish a
performance of the Zakāh Fund and its
Maghreb regional zakāh organization
functions, the Zakāh Fund must rely on
that brings together Arab Maghreb
computer automation as a key factor
countries to supervise the
for development of Zakāh work.
coordination of business between the
• I t can be said that the Zakāh Fund zakāh funds and the exchange of aid
in Libya works alone in collecting and expertise.
money and disbursing it to its
• T
he different zakāh funds need more
beneficiaries, without cooperation of
communication with one another, and
other institutions, so it is necessary
one of the most important things that
to find partnerships with charities,
makes this communication strong and
non-governmental and governmental
smooth is the presence of clear and
institutions to stimulate this sector.
highly efficient standards that evaluate
• T
here is redundancy in the collection zakāh institution’s work.
of funds in Libya, which appears in the
• W
e recommend finding accurate
tax authority in Libya and Libyan Zakāh
standards to evaluate all zakāh
Fund. There are appeals to match
business (administration, Sharī‘ah,
them and unify their efforts.
legal, financial, accounting, economic,
• M
ore attention must be given to technical, communication, charitable
studies, researches and discussions projects, etc.)
to find a Fatwa for the investment of
• This would bring the Zakāh Funds
zakāh funds, in order to try to reduce
closer together and ensure a level-
playing field for them all.
51
52
Islamic Social Finance Report 2020
52
ZAKĀH
• T
here is a need to improve the The Committee also noted the need to
payment of zakāh among many high facilitate overcoming all obstacles that may
net-worth individuals. prevent the collection of zakāh. Among these
obstacles:
On the limits of the state’s intervention in
zakāh matters: • A
civilizational barrier, related to the
absence of the concept of an Islamic
The method of the intervention of the state state
should take the form of supervision, thus
• A
psychological and social barrier,
providing flexible methods of collection
related to the non-responsiveness of
and disbursement to the expected zakāh
the muzakkis to the method of zakāh
authority and opening the way for Muzakkis
collection.
to be aware of the way their zakāh is spent.
The Committee also recommended a gradual
The Committee concluded that the increase in zakāh collection as follows:
following institutional actions are
necessary: • T
he zakāh authority should initially
limit the collection to 50%, leaving the
• T
he enactment of a law regulating rest to the muzakki to distribute by
the collection and disbursement of himself.
zakāh.
• S
tarting with the registered
• T
he establishment of an institutions.
independent institution to deal with
the collection and disbursement of The Committee also recommended to:
zakāh. • B
enefit from existing institutions and
• T
o provide the institution with structures (Awqāf National Institution,
the necessary means to carry Association of Mauritanian Scholars
out its mission, which requires League, Committee of Mosques and
independence and protection, Madrasas19 ).
through: • T
he state shall bear the costs of the
establishment and management
* G
iving it the appropriate legal
of the authority during the first two
form
years.
* P
roviding it with the appropriate
• T
he work of the authority shall be
human capital through
concentrated during the first two
◊ E
stablishment of a legislative years in the city of Nouakchott and
council comprising of all other major cities, if possible, after
types of stakeholders which a simplified regional office will
◊ Establishment of an executive be opened at the level of the internal
body with the necessary regions.
executives to manage it However, these recommendations, which
(different specialties) were accompanied by the preparation of a
* Providing it with the necessary draft law that specifies the methods of zakāh
equipment and means
19 Traditional Islamic Schools
53
Islamic Social Finance Report 2020
3.3.4 TRANSPARENCY, • T
he process faces roadblocks
ACCOUNTABILITY & GOOD created by officials trained in
Western countries and vested
GOVERNANCE interests.
Although the zakāh collection and • G
overnment seems to be under fear
distribution are not institutionally organized, of creating additional tax burden on
Mauritanian people usually give importance citizens.
to disbursing it to one of the deserving
categories. Therefore, they may disburse it
by themselves or give it to a reliable person
with proven honesty to do it on their behalf. Recommendations
• T
he speedy enactment of a law
3.3.5 STRATEGIC ANALYSIS & regulating the collection and
RECOMMENDATIONS disbursement of zakāh
• T
he establishment of an
Strengths
independent institution to deal with
• T
he existence of a draft law that the collection and disbursement of
specifies the methods of collecting zakāh
and disbursing zakāh,
Weaknesses
• T
here is no special law that
encourages the payment of zakāh in
Mauritania.
54
ZAKĀH
55
Islamic Social Finance Report 2020
to 2.3 billion USD. The potential of zakāh collect and distribute zakāh in accordance
distribution is between 0.81 and 1.94 of with the Supreme Committee’s program.
GDP, and ranges from 0.8 to 2.1 billion USD.
It is noteworthy that besides the official
efforts to organize zakāh, there were other
3.4.2 REGULATORY & POLICY Moroccan efforts to institutionalize zakāh,
FRAMEWORK especially the efforts of the “Moroccan
Association for Studies and Research
Several questions have been raised in in Zakāh”, which was established in
Morocco about the reasons for the non- 1994. The association has undertaken
activation of the Zakāh Fund since 1980, several initiatives to urge and encourage
despite its inclusion in the Finance Law, decision makers to institutionalize zakāh
and especially after the speech of King in Morocco, like the letter that was sent
�asan II in 1998 when he announced to the Moroccan Government (1998-
the state’s supervision on reviving and 2002), in which the association called
organizing zakāh. In the same year, a for activating the Zakāh Fund, which was
committee composed of representatives of initially included in the Financial Law
the legislative and executive bodies, some since 1980. A proposal21 was submitted
Sharī‘ah scholars of the Kingdom, as well
reflecting its perception about how to
as some experts in public finance, prepared
implement and organize zakāh in Morocco.
a project about how to organize zakāh in
The cornerstones of this proposal are: (A)
Morocco. However, there was no further
Organizing the collection and distribution of
action in this regard.
zakāh by establishing independent regional
This project includes the initial conception funds with public interest status, and a
of the structure of the zakāh institution, central fund for planning and coordinating
which will supervise the collection and without any direct interference of the state;
distribution of zakāh. The main elements (B) Adopting the principle of the optional
adopted in determining the institutional payment of zakāh and the encouragement
framework for zakāh are to make this of this option; (c) Establishing a Sharī‘ah
institution under the direct supervision of Supervisory Board. This proposal also
the King, emphasizing the role of zakāh as includes the launch of a comprehensive
the third pillar of Islam and its importance awareness program in the country about
in achieving solidarity and compassion zakāh, its provisions and purposes, and
among the people, and ensuring the the creation of a database of zakāh
flexibility in structuring the institution to beneficiaries.
enhance citizens’ confidence.
The Moroccan Association for Studies
The project proposed the establishment of and Research in Zakāh also seized the
a “Supreme National Committee for Zakāh” opportunity of the National Taxation
headed by the King, which shall work on a Conference in 2013 about Tax Reform to
program that includes specific objectives present a memorandum to the Ministry
within the strategy presented to the King. of Economy and Finance summarizing
It also proposed the establishment of
21 The proposal was published in 7th and 8th edition
regional committees for zakāh that will of the Journal of Zakāh Issues in 2002.
56
ZAKĀH
its vision of how to combine zakāh and integrate, in the list of deductible
taxes in Morocco and its proposal for a charges from the taxable base, the
new outlook to give zakāh a privileged zakāh paid to other categories of
position within the public finance and tax beneficiaries other than the Zakāh
system in Morocco. In this memorandum, Special Fund,
the Association clearly adopted the idea of
revising the tax system in a new model that • R
evise and complete the article 10
is different from the models that call for to indicate the categories of zakāh
the application of new taxes, such as the beneficiaries eligible for this tax
tax on wealth, capital tax, inheritance tax deduction.
and social solidarity tax, that completely • E
nsuring the tax neutrality to avoid
disregard the zakāh obligation, which is any additional tax pressure.
a pillar of Islam and an important part of
the authentic Moroccan civilization and • O
pening the door to donations to
the cornerstone of Islamic economy. In ensure the collection of charity
this context, the Association presented funds.
several proposals that would achieve a
On the other hand, it should be noted that
smooth integration of zakāh in the tax
Morocco has a legal framework since
system in Morocco. The last memorandum
1958 for the associations of public and
was presented to the National Taxation
charitable interest status, which operate
Conference about Tax Reform that was
in the social and humanitarian sectors,
held in Rabat in May 2019. The proposals
and thus can benefit from the zakāh
include the following recommendations:
funds besides donations. This framework
• T
he introduction of an optional provides a broad potential for associations
zakāh system by adding some items to fund their programs and projects.
concerning the integration of Zakāh
In this regard, public funds originating from
regulations within the framework of
the public sector can be distinguished from
General Tax Code.
other funds, whether they are from self-
• A
dopt the necessary regulations for financing, contributions from individuals,
the activation of the “Zakāh Special from private sector, from foreign or public
Fund” provided for by the finance charity petitions that was regulated by a
act since 1980. law act in 1971. The purpose of the Act
is to facilitate the associations’ access
• T
he coexistence between the tax to funds and property through various
and zakāh systems. campaigns aimed and addressed to the
• T
he right to benefit from the public.
deduction from the tax for the
The Prime Minister’s publication on the
amount paid to the “Zakāh Special
partnership between the government
Fund”.
and Associations, issued in 2003, is also
• R
evise and complete the article 10 considered one of the most important
of the General Tax Code in order to references of the institutional framework
57
Islamic Social Finance Report 2020
58
ZAKĀH
59
Islamic Social Finance Report 2020
Moroccan Association for Studies and The Association also believes that the
Research in Zakāh, in one of its previous social investment approach should be
proposals on the priorities of distribution of adopted for zakāh beneficiaries based on
zakāh, advised for the allocation of 3/8 of the economic empowerment of the poor
zakāh collected for the poor and needy, 3/8 which is considered as an essential source
to help the unemployed and encourage self- of wealth. This is in addition to zakāh
employment, 1/8 for zakāh workers and support for Islamic microfinance activities
1/8 for literacy promotion. These priorities by providing zakāh resources to the
may be modified or other priorities may institutions offering Islamic microfinance
be added due to a greater effort in zakāh activities and services, and zakāh funds
distribution to enhance the production in the form of poor portfolios, as well as
and to increase the national wealth and the distribution of zakāh in the operational
development. fields in order to give this duty the proper
developmental character.
In November 2014, a memorandum to
the Economic, Social and Environmental
Council about the contribution of zakāh
3.4.4 TRANSPARENCY,
on the distribution of wealth in Morocco, ACCOUNTABILITY &
advised that the support of the poor GOVERNANCE
should be reconsidered by allocating direct
support from zakāh funds in a manner that The criteria for accountability and
reduces the gap between the community transparency can be derived from the
classes. Accordingly, financial allocations contents of the aforementioned proposals.
should be allocated through the zakāh It emphasizes separation between
mechanism, which is specific and direct to the general and zakāh budget, so that
these categories. the zakāh institution is financially and
administratively independent, subject
Regarding the proposed projects for the to financial and Shari’a supervision,
distribution of zakāh, the association annual monitoring, good governance,
has a clear vision of the use of the zakāh accountability mechanisms and reports on
mechanism based on two main axes: direct financial and administrative achievements.
support for the poor and the destitute,
and on the other hand, the integration of In this context, it is proposed that
the unemployed who are able to work in the institution must be subject to the
income generating projects and programs, supervision of the Supreme Council of
in human and social development. Accounts and the General Inspectorate of
Finance, and the publication inspection
The Association considers that it is report to establish the trust in zakāh
necessary to identify the needs of all institution.
the participants in accordance with the
criteria of priority and regional, social and
economic environment, rural or urban, and 3.4.5 STRATEGIC ANALYSIS &
to determine them as per the program RECOMMENDATIONS
achievement and the extent of social
disability. In this segment, we outline some of the
strengths, weaknesses, opportunities and
60
ZAKĀH
• T
he announcement on several • A
bsence of privilege in the existing
occasions the intention of the state tax system, such as deduction of
to organize zakāh. the amount of zakāh from the tax
base.
• R
eference to the Zakāh Fund in the
Finance Law. • T
he weakness of economic and
social impact of voluntary and
• H
igh level of community awareness individual payment of zakāh.
on the importance of zakāh.
• Z
akāh is not institutionalized in
Weaknesses covering the needs of the poor that
the state is also unable to cover
• A
bsence of formal or systematic
especially in the main social sectors
organization of zakāh.
such as health and social welfare.
• T
he fluctuation of political views
• L
ack of national campaigns to
about whether to proceed or delay
collect donations from zakāh funds
61
Islamic Social Finance Report 2020
• A
bsence of university programs for • P
ossibility of supplying the zakāh
the preparation of highly-qualified institutions with a preferential tax
specialists in the field of zakāh. framework through tax exemptions
for all its actions and operations
Opportunities nationally or locally, like waqf.
• T
he existence of formal and civil • G
reat interest in research and
perceptions to organize zakāh. seminars in the field of zakāh
• T
he existence of many community • E
xistence of great interest among
needs that the state budget is a wide range of economic actors
unable to meet, and zakāh can to perform their zakāh duties
contribute to cover them. institutionally.
• L
aunching the activity of Threats
participatory banks and Islamic
finance in Morocco • F
ear of using zakāh funds in other
means than its legitimate use.
• T
he possibility of expanding the
competencies of the Sharī‘ah • F
ear of creating an additional
Committee for participatory finance tax burden on citizens in case of
to cover the field of zakāh mandatory application of zakāh.
• T
he possibility of expanding the • F
ear of using the information
powers of the Supreme Council authorized in zakāh as a basis for
of Accounts and/or the Supreme tax audits.
Council for Financial Control of
general Waqf to include also the • F
ear of applying zakāh to groups of
financial control of zakāh. society without others or applying
them to other activities and
• T
he possibility of collecting exemptions.
donations from zakāh funds in the
context of seeking public charity. • A
bsence of university programs for
the preparation and rehabilitation
• T
he existence of allocation of of highly competent frameworks
important financial resources to the specialized in the field of zakāh.
social sectors within the general
62
ZAKĀH
Recommendations
• T
he enactment of a national zakāh • S
tart to collect zakāh from
policy that affirms the status given institutions and companies.
by the state to the application • S
haring of information regarding
of this pillar to the benefit of the the top payers and the lists of
country and its citizens. beneficiaries of the distribution of
• E
xemption of some sectors at the zakāh to increase the confidence
beginning of the application of of the citizens.
zakāh in the framework of gradual • F
ocusing on the distribution
application. of zakāh on the operational
• S
tarting the application with areas that will spread the spirit
categories that will give impetus of initiative and work for the
to the success of the zakāh beneficiaries.
institutions such as participatory • A
llocation of consumption zakāh
banks, telephone companies, high to the poor who are unable to
value-added productive sectors work.
and institutions that benefit from
great privileges by the force of law • C
hoose the most important
or the nature of the market. religious and national events and
the best methods to promote the
• A
pply the 80/20 rule on the issue collection of zakāh.
of the mandatory rule and the
issue of priority sectors in the • I ntensification of awareness
performance of zakāh and thus activities to make zakāh a
apply the 20% premium. distinguished community affair.
• S
tarting with the obligatory • P
romotion of the scientific
application of zakāh on a person research in the field of zakāh.
who has a zakāh “Nisab” of more
• F
ollow up on the progress by the
than ten times the zakāh, and the
Supreme Scientific Council in
rest is applied gradually thereafter.
Morocco, and give more attention
• S
tudy the components of the to the various zakāh issues.
Moroccan economic system to
allow accurate estimation of the
zakāh.
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Islamic Social Finance Report 2020
64
ZAKĀH
done by many of these associations, and It was asked for its chapters to be shortened,
donors are assured to have their money and some amendments were made to it
spent in legitimate ways. so that the Constituent Assembly could
discuss and ratify it. It was condensed into 3
As part of the institutionalization of this chapters (the first in the creation, the second
sector and other sectors of Islamic finance, in the resources of zakāh funds, the third in
a National Committee for the Development the Sharī‘ah Supervision Committee). For the
of the Legislative Framework for Islamic same purpose, an order for administrative
Finance was established by the Ministry of and financial management was prepared,
Finance in 2012. It was tasked with forming including 30 chapters in 2 sections. And
seven subcommittees (Islamic Contracts to this date, this is still on the National
Committee, Standards Committee, Islamic Assembly’s agenda.
Banking Committee, Islamic Funds
Committee, Awqāf Committee, Zakāh • A
second Ministerial council was
Committee) in order to prepare projects of conducted for the same purpose
interest in Islamic finance. The Ministry of on 2 May 2014, after which the
Religious Affairs has the task of preparing government spokesman called upon
the Awqāf and Zakāh projects. the National Constituent Assembly to
speed up the discussions regarding
A first committee was formed for the the creation and ratification of the
purpose of issuing a draft law that would Tunisian Zakāh House law.
create a new institution for collecting
and distributing Zakāh. The Ministry then 3.5.2.1 INSTITUTIONAL STRUCTURE28
decided to change its composition, since
it did not show any signs of progress and In 1989, the state issued a fund for zakāh
form a new committee to submit a draft pertaining to the Tunisian Social Solidarity
law to create a “Zakāh House” after 8 Union29. In its second chapter, the Principal
sessions. Law describes the main function of this
fund, which is to “collect zakāh resources
• T
he first Ministerial council was in a special fund, to be disbursed according
conducted on 1 March 2013 to to religious teachings.” It also states that its
consider this project (32 points in budget is independent and that its accounts
4 sections and a memorandum of are separate from income and disbursement
reasons): from social solidarity accounts. It is also
to be administered by a national body
The establishment of a public composed of 11 members and by the
institution supervised by the Ministry of President of the Supreme Islamic Council.
Religious Affairs of a non-administrative Its management will be done in accordance
nature with a legal status and financially with Islamic teachings and in consultation
independent. with the Supreme Islamic Council regarding
matters of religious character.
* Administrative organization.
28 “Zakāh Guid , Republic of Tunisia, Prime Ministry,
* Financial Management. The Higher Islamic Council.
29 A consortium of charities under the supervision of
* Sharī‘ah Supervisory Board. the Ministry of Social Affairs
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Islamic Social Finance Report 2020
Zakāh Fund
Income of the Expense of the
Banks & CCP Old Balance Extra Balance
month Month
BEST BANK 75,724,453 75,724,453
CASH 0 0
66
ZAKĀH
67
Islamic Social Finance Report 2020
Opportunities Recommendations
• T
he existence of an Islamic financial • B
uild a working group (which can
system (Islamic banks, Takaful emerge from active civil actors
insurance companies, Islamic in the field) to communicate the
investment funds). cause to various parties and
develop a vision leading to a
• R
equests from parts of civil society to gradual access to the desired
develop the sector. situation.
• T
he relative success of the two • E
ncourage the political will to
neighboring countries, Libya and advance the cause and reassure
Algeria, and some other Islamic the concerned parties.
countries.
• D
evelop mechanisms of
• D
eepening social inequality and the coordination with the Ministry of
state’s need for additional financial Social Affairs and social benefit
resources programs to reduce the burden
• T
he trend towards establishing zakāh on the state budget (can be used
institutions and encouragement here from the ID program).
from civil society is in line with the
• E
stablishing a legal framework
global trend towards encouraging
regulating the zakāh sector.
non-governmental organizations and
the private sector to play a role in • A
mend the tax legal framework to
community development. encourage the payment of zakāh
by deducting the amount paid
• T
here is a general international trend from the amount of taxes.
towards mobilizing financial resources
from local communities. • F
ocus on the distribution of zakāh
in a way that enriches the need of
Threats the liquidators, and in a way, that
helps the beneficiaries to create
• The negative impact of some media.
their projects.
• P
olitical disputes over everything
• D
evelop an information plan to
related to religious affairs.
introduce the sector and raise
• L
ack of sufficient political will to awareness of the importance and
advance the sector. positive effects of paying zakāh.
• G
overnment fear of creating additional
tax burden on citizens.
• F
ear of people in power controlling this
sector and disbursing its funds in ways
other than legitimate ones.
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Islamic Social Finance Report 2020
72
ZAKĀH
• D
ar al Iftaa to which the fund refers • B
enefit from previous experiences
when required. locally and internationally.
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Islamic Social Finance Report 2020
74
ZAKĀH
75
Islamic Social Finance Report 2020
• C
ounting and calculating zakāh for Contribution to Knowledge
individuals and institutions.
The Association contributes to increasing
• A
nswering all legal and accounting knowledge in the field of Zakāh through:
questions related to zakāh in
particular, and the Islamic economy • S
upervising the training of 1,000
in general. university professors and students
from the bachelor and master’s
• C
onducting research and studies degree students in economics and
related to the objectives of the Islamic finance in Zakāh Accounting
association. in the faculty of Economics and
Management in Sfax, and Zaytouna
• A
ssisting universities and all
University and the Higher Institute
scientific bodies related to zakāh in
of Technological Studies in Rades.
particular, and the Islamic economy
in general. • O
rganizing national and
international forums and seminars.
• T
raining students specialized in
The association organized the
Islamic finance.
previous four sessions of Sfax
Governance International Conference on Islamic
Finance in cooperation with the
• C
ompliance with decree No. 88 of Faculty of Economic Sciences and
2011 dated 24 September 2011 Management of Sfax, Zaytouna
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ZAKĀH
• T
he publication of “Sanabel”, the • T
he association will soon issue its
first is written every three months second book under the title “Zakāh
in 3,000 copies, of which 10 were of Agricultural Activities”. It will be
issued, and the second is electronic dedicated to educating farmers
and it was monthly distributed to and helping them to calculate their
more than 20,000 e-mail addresses. zakāh.
• O
rganizing training courses • ‘ Hello Zakāh’ mechanism:
according to an agreement with the Putting voice distributor on the
Ministry of Religious Affairs to train number 53.600.100 to answer all
preachers and imams. 2,150 imams questions related to jurisprudence
and preachers attended the 2016 and accounting for callers by 4
and 2017 sessions. legal accountants’ experts. The
association receives hundreds of
• O
rganizing awareness sessions calls each month from Tunisia,
in the field of Zakāh for various Algeria and Libya.
professional sectors and scientific
groups. The total beneficiaries • C
reation of the Facebook page
for the year 2012 to the end of “Tunisian Association of Zakāh
April 2017 was more than 6,000 Sciences” that has 64,000 followers.
beneficiaries.
• C
reation of the association’s
• F
urnishing the Zakāh Mail program, website
which was broadcast weekly by
Zitouna Radio Channel for the Holy Contribution to Poverty Alleviation
Qur’ān from January 2017 to the
end of Ramadan during the same The contribution of the association is to
year. fight poverty by calculating the zakāh of
hundreds of companies whose zakāh
• A
weekly live broadcast on the exceeds 200,000 USD annually and urging
Facebook page of the association them to spend their zakāh to start projects
about Zakāh. Various professional for unemployed graduates and for the poor.
activities throughout the summer of
2016.
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Islamic Social Finance Report 2020
Challenges • L
ack of awareness on the role of
zakāh and the culture of zakāh as
• C
onvince the government a cornerstone of the economic
and the Assembly of People’s system.
Representatives to accept the
law related to the Tunisian Zakāh • P
olitical rejection from several
Foundation. political parties in Tunisia.
• B
ad legacy related to the way • B
eing accused of political affiliation
Tunisian people deal with the to parties of a religious nature.
National Solidarity Fund 26-26.
• D
ifficulty in dealing with expenses,
• T
he lack of expertise in the with no contribution of the state to
jurisprudence of zakāh and its pay administrative expenses and
accounting due to the absence equipment.
of teaching zakāh accounting in
Tunisia for more than 50 years • R
estrictions on many charities that
and the absence of any scientific collect and distribute zakāh funds,
reference on how to calculate and prosecution of defaulters
zakāh. among them by the government
under the Supreme Decree of the
year 1922.
78
04 AWQĀF
Al-Khairat, the awqāf institution of Bayt al-
4.1 ALGERIA 1 2 Maal, and the awqāf institution of people of
Andalusia.
4.1.1 OVERVIEW OF THE SECTOR
During the colonial period, the French
The institution of waqf has been in administration through its decrees and
existence in Algeria since the arrival of the successive decisions and laws regarding
Islamic conquest of the Maghreb in the the waqf, undermined the foundation of the
Seventh Century. However, it has witnessed waqf system and destroyed its features,
major ups and downs at different points contradicting what was noted in the article
in time in history. The Ottoman period in 5 of the Treaty of 1830 on handing over of
Algeria (before 1830) was characterized the city of Algiers, which recommended the
by the development of awqāf and their preservation of the assets of the awqāf.
spread throughout the country, from the The colonial forces worked to destroy
late 15th Century until the beginning the structure of the awqāf. Many of the
of the 19th Century. The expansion Algerian awqāf were lost during this dark
continued until waqf accounted for a period of its history, which made the search
large proportion of the urban agricultural for these properties and reallocation of
property. During this period, economic what stood for it almost impossible without
and social awqāf expanded to include real the efforts of the Algerian state in the
estate and agricultural lands, in addition to legislative and financial fields. International
many shops, hotels, bread ovens, oases, efforts have also helped to recover many
waterways, tanks, lime kilns, and many of them in the period from the mid-nineties
other estates, farms, orchards and parks. to the present (funded by the Islamic
The awqāf sector comprised several Development Bank).
charitable organizations with a religious
character, had a legal personality and a The initial period after independence
special administrative status. Examples was not very encouraging for the awqāf
include the awqāf institution of the two sector. In contrast, the period from the
Holy Mosques, the awqāf institution of the end of the eighties to the beginning of the
Algerian Great Mosque, the Awqāf Subul nineties, observed a strengthening of the
legal status of the awqāf, albeit at a slow
1 Data delivered by the Ministry of Religious
Affaires & Waqf
pace. The beginning of the 21st Century
2 “Financing the Local Development from an witnessed further legislation in the field of
Islamic Perspective: The contribution of the funds of awqāf and investment.
Zakāh & Waqf”, Wasila Essebti, PhD Thesis, University of
Mohamed Khidhr University, Biskra, Algeria
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Islamic Social Finance Report 2020
80
AWQĀF
• M
emorandum No. 01/96 dated
property from nationalized waqf and those 03/07/1996 specified for how to
encroached upon by private by individuals pay the waqf rent.
and institutions was seriously taken up.
The Awqāf became a self-contained • M
emorandum No. 03/96 of
Directorate after the issuance of Executive 17/07/1996 containing financial
Decree 94/490 of 21 Rajab 1415. reporting (according to standard
forms) and dates of dispatch.
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Islamic Social Finance Report 2020
• M
inisterial Circular No. 56 of The law also gives the authority
05/08/1996, addressed to the in charge of awqāf the right to
governors and principals, which conclude contracts.
includes the subject of expanding
the circle of interest in waqf 4.1.2.1 INSTITUTIONAL STRUCTURE &
property. SUPPORTING INFRASTRUCTURE
• M
emorandum No. 01/97 dated The Department of Awqāf in Algeria
05/01/97 containing organizational is not an independent administration.
directives for the management This is evidenced by Executive Decree
of awqāf, especially regarding No. 146/2000. Article 3 of this Decree
the rationalization of the waqf states that the Directorate Awqāf and
financiers, the relationship of the Hajj includes sub-directorates for
waqf path to the tenant and the dispute resolution, investment, and of
documents to be provided in the Hajj and Umrah. It was observed that
waqf files. each sub-directorate had a group of
offices whose staff was usually below
• M
emorandum No. 02/97 dated the required level. The sub-directorate
19/07/1997, which includes the for research on waqf properties and
need to care for the development disputes includes office of research and
and valuation of property waqf. registration of waqf properties, office of
technical studies and cooperation and
• E
xecutive Decree No. 98/381
office of disputes. However, the sub-
of 01/12/1998 sets forth the
directorate of awqāf property investment
conditions for the management,
includes office of investment and
protection and the means of
development of waqf properties, office
managing the waqf property. It
of the management of resources and
contains five chapters - general
expenditures of property waqf and office
provisions, status, management
of waqf property maintenance.
of waqf properties, renting waqf
properties, financial provisions, Awqāf Committee
and the final provisions. This
decree gave an administrative and A focus on the central administration
organizational boost to the awqāf of the Awqāf in Algeria shows that it
department in Algeria. is not an independent administration,
but a branch of a larger administration,
• L
aw No. 01-07 of 22 May 2001
mentioned earlier as the Awqāf
amended and complied with Law
Committee. This committee consists of:
No. 91/10 of 27 April 1991. It
contained a series of amendments, • Director of Awqāf
most notably the details of the
investment and development of • Sub-Director of Awqāf Investment
waqf property. The Department of
Awqāf is entrusted with the tasks to • I n charge of legal and legislative
invest and develop waqf according studies
to the formulas specified in the law.
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AWQĀF
• D
irector of Guidance and Religious or less than ideal rent
Rites
• S
upervise the preparation of
• Director of Media Department a model book of conditions
for the rental of waqf property
• Director of Islamic Culture or its adoption in the light of
jurisprudence of awqāf and
• A
representative of the interests of regulations
state property
• E
xamine cases of renewal of
• A
representative of the Ministry of
extraordinary leases
Agriculture and Fisheries
• P
ropose after the study, the
• A
representative of the Ministry of
priorities of the regular expenditure
Justice
of the available waqf funds and the
• A
representative of the Supreme emergency spending
Islamic Council.
Central Awqāf Fund
The powers entrusted to this committee
The centralization in the management of
include the management, investment
the awqāf in Algeria led to the creation
and protection of the waqf properties, in
of the Central Fund for Awqāf, which was
particular to:
established based on a joint ministerial
• E
xamine cases of settling the status decision between the Ministry of Finance
of public and private awqāf, where and the Ministry of Religious Affairs No.
appropriate, and prepare standard 31 dated 2 March 1999. The resources
records on a case-by-case basis and revenues collected are deposited in
this Fund, after deducting the authorized
• S
tudy or adopt standard documents expenses.
for the work of waqf agents
4.1.3. CREATION, PRESERVATION
• O
versee the preparation of the & DEVELOPMENT
working manual of the waqf
supervisor, or adopt his proposal, The waqf administration in Algeria was
and the necessary documentation subjected to a series of changes through
the various laws and decrees that were
• E
xamine cases of termination of aimed at preserving and developing
the functions of the head of the them. However, all these laws could
waqf property, and adopt standard not make them a modern and effective
documents for each case administration in carrying out their tasks.
• S
tudy the standard documents The number of awqāf properties was
relating to rental of waqf property 10,615 in 2016 increasing marginally from
and approve by auction, conciliation 10,401 in 2015.
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Islamic Social Finance Report 2020
Number of Awqāf
1,798 75 132 1,692 3,697
Properties
• T
he existence of institutional
4.1.4 TRANSPARENCY, structure for waqf.
ACCOUNTABILITY & GOOD
Weaknesses
GOVERNANCE
• L
ack of manpower and material
The vastness of the Algerian land and the resources to assist Waqf
central character of the administration of department in carrying out its tasks
awqāf in Algeria made it extremely difficult and to ensure serious follow-up.
to manage waqf property efficiently and
ensure the principles of transparency and • T
he weakness of the laws governing
good governance. the awqāf in Algeria.
• A
bsence of adequate supporting
Article 23 of the law No. 90/25 highlights
infrastructure for awqāf sector.
the importance of the waqf and the
independence of its administrative and • T
he merger of Directorate of Waqf
financial management. with Hajj means neglecting the
administrative aspects of the waqf
The issue of the law of awqāf under the
during periods of preparation for
number 91/10 issued on 27/04/1991,
hajj.
which approved the protection and
management and administration to the • A
bsence of effective accounting
authority entrusted with the awqāf, marked and financial supervision for waqf
the beginning of the independence of the activities.
laws of awqāf in Algeria in terms of various
provisions related to it and management. Opportunities
RECOMMENDATIONS • L
ack of confidence among the
public as the desire of waqf
Strengths founders is not always achieved.
• Waqf has a long history in Algeria. • L
ack of sufficient awareness of
• T
he existence of many legal texts the sanctity of awqāf among some
and regulation on the waqf sector. actors.
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AWQĀF
• A
total of 4,621 real estate awqāf • W
aqf investments need to be
have been identified that need urgent enhanced in partnership with
development. professionals well-versed in the art
and science of investments.
• A
large number of property disputes
relating to awqāf are a real challenge • C
reation of Waqf Funds and the
for the justice system that must be financialization of waqf should
addressed. Records show that over throw up new and innovative
600 cases have been settled in favour financial instruments, strengthening
of awqāf and about 400 cases remain the capital market, providing
to be resolved. alternative tools for raising
resources for development of awqāf
• N
ew awqāf related investments as well as for meeting the social
should be tackled as part of a and developmental goals.
long-term strategy that requires
a specialized management team • T
he legal and regulatory system
and a high degree of experience of waqf must be strengthened in
in monitoring and managing these order to provide greater protection
projects. for waqf properties, through the
Directorate of Organization and
• T
here is urgent need for an apex Disputes, which manages the issues
independent institution, such as the of endowment before the judiciary,
National Awqāf Office in Algeria, that and introduces laws and regulations
would be in a position to mobilize that preserve waqf properties.
required human and financial
resources for efficient management • D
evelopment of international
and development of awqāf. cooperation in the field of awqāf,
through programs and activities
• A
vailability of specialized talent in of the Directorate of Cooperation
awqāf management remains a major and External Relations would act
constraint that must be addressed as a catalyst for rejuvenating the
with a sense of urgency. global as well as the Algerian awqāf
• I dentifying, retrieving and sectors.
documenting properties that have • F
inally, it is proposed that the
been lost since the colonial era, Algerian Awqāf Department must
through the Research Directorate and be removed from the administrative
the Waqf Property Survey, should be constraints attached to the Ministry
expedited with the involvement of of Religious Affairs and Awqāf
experts in the field of surveying. and be given full autonomy by
• I t is important to recreate a culture establishing the National Awqāf
that promotes waqf as an important Office.
socio-economic institution through
the media by the Directorate of
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Islamic Social Finance Report 2020
4.2 LIBYA
4.2.1 OVERVIEW OF THE SECTOR 3
Historically, Libyans have always showed
great interest in the institution of waqf
as one of the most important charity
activities. This is because Libyans culturally
are used to giving donations from their
assets, real estate and lands for the sake of
public utility, and because most of them are
deeply religious. The supervisory authority
of waqf affairs in Libya is the General
Authority for Awqāf and Islamic Affairs
(GAAIA), which is responsible for managing
and supervising all waqf assets. Since
the Islamic conquest until the beginning
of the Ottoman era, awqāf in Libya were
governed by the rulings of judges and
scholars, derived from the Holy Qur’ān and
the Sunnah. The administrative and legal
organization underwent changes since the
Ottoman period (1551-1911), through the
Italian occupation (1911, 1947-1951), then
during the reign of Qaddafi (1969-2011),
and finally after the events of 17 February
(2011).
Until the year 2012, the number of
Table 4 shows the geographical distribution awqāf assets in the western region was
of the awqāf assets, where they were approximately 11,000 real estate properties
split into services: including shops and (agricultural and pastoral lands, service
administrative offices, housing, and and commercial buildings), 6,000 mosques,
agricultural land. The table shows that and cemeteries and schools of Qur’ān
waqf assets are concentrated in large cities memorization. Some of these assets have
such as Tripoli, Misurata, Western Mountain huge areas suitable for building residential
and Zliten, followed by other cities such and tourist cities and others could fit
as Benghazi, Green Mountain, Zawia, to be administrative and commercial
Derna and Jaffara. The weakness of this complexes that have high market values. In
classification is that it presents the assets addition, the value of the financial assets
in number of units and not in size. of the GAAIA, according to the preliminary
statistics of 2014, is half a billion Libyan
3 Mustafa Al-Sadiq Tabla, former Director General
of the General Authority for Awqaf and Zakat Affairs in
Dinars, part of which represents cash
Libya, an interview on 05/06/2017 at banks and the rest is loans to public
institutions as rentals or compensations.
86
AWQĀF
W. Mountain
G. Mountain
Ghadames
Benghazi
Misurata
W. Coast
Ijdabiah
Jaffara
Butnan
Megeb
Nalout
Marge
Wahat
Tripoli
Sabha
Zawia
Derna
Zliten
Kufra
City
Sirt
Lands 1170 0 0 1 0 30 266 393 289 235 4 984 0 2 39 353 387 1426 627 838
Total 1529 26 27 10 31 689 336 591 464 339 17 1006 26 7 156 505 422 3240 696 970
Source: Presentation of Mustafa Al-Sadiq Tabala, Badruddin Al-Toumi, Kick-off Workshop of the Islamic Social
Finance Report in Maghreb Countries, in Tunis on 15/09/1438H - 10/06/2017
Service
Housing
Lands
Charts 3 shows that approximately 64% of It is worth noting that there are property
the assets are agricultural lands (as noted investments also (Table 5) for the GAAIA
above, the unit of measurement is the in the cites of Tripoli and Misurata, with a
number of lands and not its area), followed total value of 26.95 million Libyan dinars,
by businesses and shops units accounting generating an annual return of 1.74 million
for about 25% of total assets. Finally, the Libyan dinars.
housing units account for around 12% of
the GAAIA assets. Table 5 shows the value of the property
investments, monthly and annual returns,
and the tenor for the invested capital.
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Islamic Social Finance Report 2020
Source: Presentation of Mustafa Al-Sadiq Tabala, Badruddin Al-Toumi, Kick-off Workshop of the Islamic Social
Finance Report in Maghreb Countries, in Tunis on 15/09/1438H - 10/06/2017
Source: Presentation of Mustafa Al-Sadiq Tabala, Badruddin Al-Toumi, Kick-off Workshop of the Islamic Social
Finance Report in Maghreb Countries, in Tunis on 15/09/1438H - 10/06/2017
88
AWQĀF
Table 6 summarizes the feasibility study while leasing out the awqāf property. The
for the awqāf assets investment. The rental prices were determined by a decision
total investment value of 26.95 million of the GAAIA, according to the nature
Libyan dinars with a total operating cost and classification of assets (commercial,
of 0.54 million Libyan dinars. Net returns residential, agricultural), and depending
during the period of the project is 60.05 on the regions. However, these prices
million Libyan dinars with an annual yield were not in line with the market prices and
of 4.5% approximately. far from the real rental prices which led
to decrease in the annual revenues. It is
4.2.2 REGULATORY & POLICY worth mentioning that the annual revenues
collected during the previous years did not
FRAMEWORK exceed 5 million Libyan dinars, except for
what is leased to the government.
One key characteristic of the awqāf
system in Libya is duality. Its rules The challenges facing the Libyan awqāf
are derived from both the rules of sector may be summed up as following:
Sharī‘ah and the texts of the law. The
administration of rules and regulation • D
ecrease of rental income of waqf
are shared between civil donors and the assets compared to private sector
official institutions. Its litigations are owned assets.
submitted to the legal and civil courts. • S
ome waqf users of assets benefited
This organization structure is dictated from them without contracts.
in the Article 32 of the Waqf Law No.
124/1972 which states that the GAAIA • S
ome waqf users (individuals or
is responsible for the management of official institutions) did not pay their
awqāf. rentals.
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Islamic Social Finance Report 2020
Adminstration of waqf
Classification
Planning and Revenue and Enumerate
Studies Unit Collection Unit Unit
90
AWQĀF
• A
ny ruling of the court regarding • S
harī‘ah Supervisory: It is carried
regulating and controlling a waqf asset out through specialized scholars’
is a proof of waqf authenticity and the committees that provide the Shari’ah
said asset is protected. provisions from the Holy Qur’ān and
• N
o action may be taken to replace waqf Sunnah under the Imam Malik doctrine
assets, change its features, modify • J
udicial supervision: It is carried out
its conditions, borrow it or dispose of through the Libyan judiciary based on
it without the prior permission of the Libyan laws and legislation (Law No.
competent court. (Articles 2, 14, 38, 124/1971) regulating the waqf and
43) zakāh affairs. The disputes between
• T
he court only has the right to the GAAIA and other legal entities is
appoint waqf managers, question, settled in Libyan courts.
take disciplinary actions (such as
• A
udit and Administrative office:
dismissal) against them and the
Pursuant to Law No. 124/2013 and its
complaints brought against them
amendments, the GAAIA must annually
must be addressed to it. (Article 41)
submit an annual report to the Audit
• J
udicial authorities may prosecute Bureau in order to ascertain the validity
employees of the GAAIA, as well as of its financial transactions, and their
waqf managers, in the event of any compliance to the local financial and
criminal, civil or disciplinary liability. administrative regulations, especially
• E
ach waqf manager must submit given that it benefits from public
annually to the GAAIA a statement budgetary allocations.
of accounts supported by relevant 4 Mustafa Al-Sadiq Tabala, Badruddin Al-Toumi,
documents on all assets under his/her Islamic Social Microfinance for Small and Medium
management. (Article 40) Enterprises, Workshop in Tunis on 10/06/2017
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and detect deviations and bad Libyan society has been driving
practices. people to support and practice waqf
• T
he staff of GAAIA lack adequate after facilitating it through new and
professional experience. There is innovative structures for investment
a serious shortage of specialized of endowments such as waqf funds,
expertise in the management of shares, and bonds.
waqf assets.
Threats
• T
he present regulatory framework
involving GAAIA needs a serious Political and economic instability, a
revisit. It lacks the characteristics of chaotic security situation, in addition to
proactive and enabling framework. the permeation of administrative and
• S
ome signs of financial and financial corruption, have all affected
administrative corruption in GAAIA, negatively the work of the GAAIA in Libya.
which negatively affected its A large scale non-compliance regarding
performance and weakened the the flow of benefits from waqf assets to
people’s trust. intended beneficiaries and encroachment
of waqf land and real estate constitute
Opportunities
major threats to the institution of waqf. In
The waqf sector can contribute significantly addition, the administrative instability of
to the provision of public goods in Libya. the GAAIA and the administrative conflict
This can only be achieved by setting up a at the higher levels within it, are not only
strong institution with high administrative impacting negatively the work of the staff
competencies to deal with waqf in terms of only, but also awqāf sector in general. The
identification, codification, registration of following points summarize the threats the
waqf assets and reviewing the regulations GAAIA faces:
governing the use thereof. It is also • S
ome of the recommendations and
possible to upgrade this institution through actions are based on inconsistent
the following: provisions which would blur the
• T
he institution must benefit from the features of the waqf.
conclusions and recommendations • M
ultiplicity of supervisory bodies,
from conferences, seminars for example, the intervention of the
and academic studies that were judiciary in the operations of the
prepared for the GAAIA on the GAAIA in terms of waqf assets and
importance of waqf, its role and its expenditures and clinging to the
approaches of development and fatāwa that allowed encroachment
the benefits of participating with of the waqf pose serious threat to
financial institutions in the field of the sector.
development.
• W
aqf assets and investments
• T
he failure of the socialist and are not properly preserved and
capitalist regimes to achieve the maintained as required and are
economic well-being has led to the rather neglected or exploited for
increasing recognition of the third or cheap prices. This may lead people
voluntary sector. to move away from this noble
• The growing Islamic fervor in the Sunnah.
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Recommendations • R
e-archiving and documenting waqf
assets, using local and international
• T
here is a need to urgently reconsider
experts, and using advanced
the laws and regulations governing
information systems need to be
the work of the GAAIA in Libya.
urgently undertaken.
• T
he GAAIA is a religious institution
• T
he contracts for the use of waqf
whose role is limited to following
assets by private as well as public
up and supervising mosques
institutions must be reviewed
and schools. However, it should
and brought in line with modern
transform itself for greater
practices.
financialization of the waqf sector.
• T
he re-enumeration and
• T
he sunnah of waqf must be revived
classification of waqf assets
in the hearts of people, by involving a
throughout the Libyan cities must
large group of them as well as private
begin.
and public entities in the practice of
collective waqf work. This can be • T
he GAAIA must be given more
achieved through innovative waqf flexibility in the investment of
types such as waqf funds, equities waqf assets, and its development
and bonds for the support and and activation, to participate in
diversification of its accumulated the economic development of the
assets. country.
• T
he investment of real estate assets • T
he GAAIA must be assisted in
under waqf in prime areas and directing its endowment funds
locations spread throughout the in financing small and medium
country should lead to establishment enterprises for economic
of large partnerships with the public development, and paying more
and private sectors in the agricultural, attention to investment instruments
industrial, commercial and tourism for waqf:
sectors and in services such as * I jārah: Leasing waqf assets
communications, transportation, etc. at rentals based on prevailing
• C
onsidering awqāf as a pillar of the market conditions.
national economy, its importance
* D
ouble rents: Reconstruction of
must be driven home through the
property by the tenant, and then
dissemination of annual reports
leased for a long time by the
of awqāf organizations as well as
original owner.
other relevant information to the
public. Waqf-related courses must be * I slamic investment products,
offered in the curricula of universities such as, waqf funds, mushārakah,
and institutes. Other mechanisms isti�nā‘, muzāra‘ah and musāqāh.
of capacity building, e.g. seminars,
conferences and meetings, may • I nclusion of waqf curricula in
be employed in order to build specialized colleges, and the
managerial expertise, and feed dissemination of awareness and
innovations relevant to this sector. culture of the waqf among people.
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livestock.
4.3 MAURITANIA5
The emergence of the independent state
4.3.1 OVERVIEW OF THE SECTOR has been accompanied by enormous
challenges. Among its tasks is the transfer
The country has known the institution of the nomadic society to a state of
of waqf since the advent of Islam along stability and the establishment of a modern
with the emergence of private educational entity, which necessitates keeping up with
institutions - the Mahadras. The Mahadras developments in the waqf in terms of legal
were mobile seminaries moving from one texts and investment methods.
location to another and benefited from the
profits of the charitable awqāf. The awqāf 4.3.2. REGULATORY & POLICY
comprised herds of livestock from camels,
cows and sheep, under the responsibility FRAMEWORK
of the teachers and mandated persons. In
In this context, in order to organize this
the cities and settlements, the term waqf
important institution, since the late 1970s,
was associated with the mosque and
the Mauritanian authorities have worked
its scientific and religious institutions in
to develop a legislative and regulatory
addition to some other public interests. The
framework. Awqāf was part of the mandate
awqāf were in the nature of:
of the Ministry of Islamic Affairs until the
• P
alm gardens and agricultural lands establishment of a national authority for
are disposed in the interests of the surveillance of the awqāf properties
the mosque and its annexes and in the country in 1982 under decree No.
villages of the hosts and to feed the 119/82. This structure has taken three
needy people. names throughout its history:
• R
esidential housing for Islamic • M
auritanian Awqāf Institution
sciences students and strangers. created in 1982, by decree No.
119/82.
• F
ree water well for people and
livestock. • I slamic Awqāf Institution in 1984,
under the decree no. 128/84.
In addition to these, awqāf were also in the
nature of family awqāf that benefited the • N
ational Awqāf Institution - the
relatives (daughters, divorced or widows, current name of the institution - in
and other relatives in need) that were 1997, by decree No. 57/97.
dispersed across the Mauritanian society
The waqf sector in Mauritania still
in the countryside and cities. Such awqāf
suffers from a clear legislative gap. It is
were also in the nature of residential
managed by regulatory decrees and some
housing or gardens of palm trees, farms or
miscellaneous articles in laws related
5 Paper “Overview on Zakāh & Awqaf Sectors in to the issue of waqf, such as, the law
Mauritania”, Abdallahi Ould Addoud, Deputy CEO of the governing mosques, the law of obligations
Awqaf National Institution (Mauritania) presented during
and contracts.
the Kick-off Workshop of the “Islamic Social Finance
Report”, held in Tunis on 10 June 2017 and co-organized
by IRTI (IsDBG) and Zitouna Tamkeen MFI
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Strengths Weaknesses
• W
aqf has played an active role in the • T
he Awqāf National Establishment
cultural construction of the Islamic is yet to reach anywhere near its
Mauritanian society through its potential in terms of contribution
contributions to the social, economic, to the economic and social
political and even environmental development of the country,
sectors. although almost four decades have
elapsed since its establishment.
• W
aqf has contributed to the provision
of stable resources to provide public • T
o date, there is no legal framework
services and social institutions with regulating the Awqāf National
the necessary tools to meet the needs Establishment, which has caused
of the national community. interference in its powers with other
bodies affiliated to the Ministry of
• T
he system of the waqf has helped
Islamic Affairs.
reduce stratification among members
of society, through material and moral • T
he Awqāf National Establishment
support for the fragile classes of suffers from negligence and
society. mismanagement, due to lack of
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and principles. The Moroccans recognized recognized the sanctity and the importance
the importance and the sanctity of waqf, of awqāf, they kept striving to preserve
and they keep on preserving some of their them from any aggression or behavior
wealth in the name of Allah for charity contrary to the objectives for which they
and solidarity, and therefore the prosperity were created. In the era of Al-Adarissa
of citizens was often correlated to the (789-921), the Mosques of Al-Qaraween
prosperity of waqf. and Al-Andalus in Fes as well as Bab
Dakkala Mosque in Marrakech were
Morocco, like other Islamic countries, came built. The era of the Almoravids (1056-
to know of general waqf with the arrival 1147) witnessed the construction of
of Muslim conquerors. Mosques were the many schools that were a destination for
first type of waqf institutions, dating back students of science from all regions at the
to the days of Uqba ibn Nafi ‘al-Fihri (681- charge of awqāf. More interest was given
683). And over the successive stages in to science and knowledge promotion, and
history, different kinds of waqf emerged
in religious, educational, social and health the first library in Morocco was established
areas due to the progressive practice of in the era of the Almohads (1121-1269).
waqf in the social life of Moroccans. The Marinids (1244-1465) were also
interested in the organization of waqf; they
In addition, when the Moroccan sultans
made trustees for waqf in various cities
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(trustee for every waqf) and they worked In this period many distinguished awqāf
for establishing scientific schools and were created in terms of purpose and the
libraries. For example, they built new ones beneficiaries such as awqāf in the city
and expanded the old ones in the cities of of Fes, including a house dedicated for
Taza, Meknes, Sala, Marrakech and Sebta. wedding and to spend the honeymoon for
They also took care of building mosques the poor and needy, waqf for the removal
and hospitals by hiring doctors to take of stones from the roads, waqf for good
care of patients. In the era of Wattassides loans without interest; awqāf in the city
(1462-1554), the interest in scientific of Marrakech, including a refuge/ shelter
courses was a governmental mandate where 6,000 blind people could sleep,
that was not less than the position of eat and read; and the establishment of
the judiciary, fatwa and the ministry and hospitals called “”Bimarstan” in many
waqf revenues were used to help the Moroccan cities such as Fes, Marrakech,
patient and the homeless. However, the Meknes and Tetouan to treat the sick
mismanagement of waqf funds during and the disabled people; and other awqāf
this period caused a decline. This was dedicated to washing and burying the dead
one of the problems that were faced by from the poor and strangers.
Sa’adis (1554-1659). In their period, awqāf
organization focused on the construction The significant role of the waqf continued
or renovation of mosques, reviving some in the era of French protectorate, where
schools and establishing others, the Sultan Moulay Abdel Hafiz (1908-1912)
establishment of many watering places excluded the religious institutions and
next to the mosques. However, it has been Islamic sanctities from interference by
noticed that social waqf was absent in this the protectorate authorities. For the same
era. purpose, Sultan Moulay Yusuf (1912-1927)
issued more than 35 Dhahir to organize
The most important stage in the history waqf and set ongoing acts to protect them.
of waqf system in Morocco started with The waqf continued to follow the same
Alawite dynasty (since 1640/1666 AD), rules and regulations as those established
where new environment and context in the beginning of 20th Century, which
emerged and made the Kingdom of was known as the “awqāf regulations”, with
Morocco embrace the waqf because special reference to the provisions of the
the sultans of Morocco were perfectly Islamic Sharī‘ah derived from the Maliki
conservative in the principle that waqf jurisprudence.
cannot be sold or lost which create a
positive impact in the hearts of Moroccans During the post-independence phase (from
who become more encouraged to donate 1956), the organization of awqāf kept using
and make waqf. In the era of Mawla Ismail all decrees issued by the King, despite the
(1672-1727), all waqf properties were development of the trusteeship institution
recorded in special official books known for waqf, which moved from “Benniqa
as waqf transfers “Hawalat”. The General Al-Ahbass” and replaced by Ministry of
Trusteeship of Waqf was established under Awqāf having a modern structure. With
the name “Trusteeship of the Trustees”. the development of Moroccan society, the
need arose to organize waqf properties and
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preserve them with many legal procedures its consequences and effects.
for their development and investment, in
order to achieve the desired goals. This is The Code mentions that a general waqf
reflected in the issuance of the Awqāf Code is a legal entity since (art. 12) that cannot
in 2010, combining the legal texts related be seized or acquired by possession or
to waqf and its jurisprudential rules in prescription and it may not be acted on or
harmony with the Maliki School. disposed of except in accordance with the
requirements of the Code (art. 11).
In 2019, the code of Awqāf was amended
and completed by Dhahir No. 1.19.46 The Awqāf Code affirmed that the debts
published in official bulletin No. 6759 of owed to the general waqf are considered
11 March 2019. This amendment can as preferential debts and are not subject
enhance the regulations related to Awqāf in to prescription. They have a priority of
Morocco. collection after the dowry (Mahr), alimony
(Mout’a) and other expenditures due to
the wife, children and parents as per the
4.4.2 REGULATORY & POLICY family code in Morocco. In addition, the
FRAMEWORK Code provides general awqāf with several
exceptions regarding the conservation fees,
The issuance of the Awqāf Code on 23 litigation, expropriation for public interest
February 2010 and its amendment on and for seeking the public charity.
11 March 2019 are considered as a very
important event in Morocco, because The Code has five sections in addition
the legal framework of waqf has been to the introductory section that contains
updated and modernized to preserve general provisions about the definition
waqf, activate its economic and social of waqf, its types and the methods of its
functions, rationalize its management establishment (article 1). This section
and development and overcome the indicated that the trustee functions are
previous weaknesses in rules governing assigned to the King and executed under
waqf. For example, in the previous his authority with delegation to the Minister
legal texts governing waqf before the of Awqāf and Foreign Affairs (article 2).
issuance of Awqāf Code, there was no
legal requirement about how a waqf is However, the code of Awqāf (2019)
established as well as its consequences stipulated many details in Article 2a
and effects, which means that it was related to Awqāf strategy that should be
necessary to refer to the Fiqh in this matter. established by the ministry, which should
Conscious of the importance of this issue be based on global and detailed diagnostic
and the necessity to organize it with of Awqāf properties as well as to:
decisive regulation that would put an end to
• D
etermine the goals to be achieved
the differences and ambiguity, the legislator
in order to ensure the protection,
of this Code decided to allocate the first
development, and valuation of
section to this purpose. The first chapter
Awqāf.
treats the elements and conditions of waqf
and the second chapter was dedicated to • D
etermine the means to achieve the
mentioned goals.
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• E
stablish an accurate timetable for Waqif condition, achieve Waqf objectives
implementing this strategy. and its role in sustainable development, as
well as improving Waqf culture.
• A
dopt the governance system in
order to properly implement this The first section of the code of Awqāf
strategy, including the necessity contains 47 articles that concern the
of updating and improving establishment of waqf and its effects. This
Awqāf management as well section includes two chapters. The first one
as the definition of the tasks is about the elements of the waqf and it
and obligations of the various conditions, and the second one is about the
stakeholders. effects of the waqf contract.
• E
stablish a joint committee The second section concerns the general
to supervise and control the waqf and it contains two chapters.
implementation of this strategy and Chapter one includes general provisions,
the extent to which its objectives considering that the Waqf is a legal
are achieved. entity with several privileges in term of
conservation and litigation. The second
The main directions of this strategy, as
chapter treats the actions that occurred
per Moroccan Vision of 2030, include
on the general waqf, and it allocated some
the preservation of Waqf properties,
articles for compensation and exchanges
governance in Waqf management, respect
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in cash and in-kind, agricultural and non- The third section concerns the family
agricultural leasing with adequate rental waqf (Waqf Ahli) and joint or mixed Waqf
amount, the sale of the tree products, (Waqf Mushtarak). The first chapter has
seeds and other land or materials special articles about family waqf and
belonging to general waqf in order to its control, in this regard many countries
address the violation and injustice to which differed in dealing with the problems of
the waqf is currently being subjected, this type of waqf. The Moroccan legislator
and to liquidate the customary rights chose to retain the family waqf with its
established by general waqf in accordance reorganization under a law issued in
with the provisions and requirements to 1977 and then under the Awqāf Code by
preserve waqf rights. determining the ceiling of the permissible
waqf allowed in three levels: the first
In addition, article 60 stipulated that all beneficiary, his children and then the
legal actions aim at preserving them, children of his children. This waqf will then
developing their incomes in a manner be considered an heir if any. Otherwise it
appropriate to their nature, and achieving will be considered as general waqf if the
an apparent benefit of Awqāf. To this end, founder (waqif) did not specify another
the Endowment Department is charged reference. The chapter indicated that the
with investment and management of general waqf rules in term exchanges are
these funds in accordance with the rules applied also to the family waqf; clarifying
stipulated in this code and in accordance the terms of the trustee, its tasks and
with the strategy referred to in Article 2a. responsibilities, and the reasons for
termination its task. Other articles in the
As per Article 62, the Awqāf department
same chapter are about the liquidation of
may conclude, in the name of public Waqf,
the family waqf especially the control and
contracts and agreements for partnership
the rules of liquidation, the formation of a
with the public or the private sector in
liquidation committee to study the cases
order to implement investment projects
and prepare a report to be submitted to
or income-generating social projects, with
the government authority in charge of
the aim of developing Awqāf income and
awqāf to issue the liquidation decision
contribution in achieving economic and
and then publish each decision for onward
social development. These contracts and
information of the same by the committee
agreements must be concluded within
to the concerned people having the rights.
the framework of special investment that
The second chapter concerns the joint or
must achieve the benefit of Awqāf. The
mixed waqf (Waqf Mushtarak).
partnership must be accompanied by a
feasibility study that includes, in particular, The fourth section concerns the control of
estimated revenues of the project, the the financials of a general waqf. Basically,
obligations, contribution and share of the first chapter contains the principles
each party’s as well as the duration of the of financial and accounting organization
project, the guarantee of its completion and of general waqf followed by the financial
the mechanism for periodic evaluations of supervision and control of general waqf in
the various stages of project completion. the second chapter.
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• T
he status of the Central Controller, services concluded by the waqf
financial supervisor’s assistants administration for the benefit of
and local controllers who are general waqf.
responsible for monitoring waqf
accounts as well as the terms and • E
nacting the financial and
conditions of their appointment. accounting regulations of general
waqf.
• T
he formation of the liquidation
committee for the family waqf and The annual budget for general waqf has
its functions. been prepared every year since 2014 and
it is presented annually to the the Supreme
• T
he determination of the Council for Financial Control of General
procedures for auctions, request for Awqāf for approval in accordance with the
proposals and the direct agreement provisions and regulations of Article 143.
especially for cash exchanges and
sales of general waqf. 4.4.2.1 INSTITUTIONAL STRUCTURE
• T
he determination of the modalities As indicated in the Awqāf Code, the
of making in-kind exchanges for Ministry of Awqāf and Islamic Affairs is
waqf properties. the governmental authority responsible
for general waqf in Morocco. After the
• T
he sale of quarrying materials amendment of the Decree on 26 February
belonging to the general and mixed 2016, which provides its functions and
waqf organization, the central administration
• T
he classification of general waqf of the ministry includes, in addition to
budget. the general secretary and the general
inspectorate, seven directorates including
• T
he classification of accounting the Directorate of Awqāf, which administers
procedures of general waqf. the general waqf. The latter includes five
sections and 20 departments, and its tasks
• T
he definition of how to sell tree
include:
products belonging to general and
mixed waqf. • P
reparation of plans and strategies
for the general waqf management.
• T
he application of Article 61 of the
Awqāf Code. • T
he management of all waqf issues
such as the counting of properties,
• T
he determination of the form of
classification and preservation of
waqf bonds, how they are issued
documents, and waqf maintenance
and the manner of subscription, as
and preservation.
well as how to collect donations
in cash and in kind for the • T
he completion of studies and the
establishment of religious, scientific development of plans and projects
or social projects. for waqf investments to take
benefits from all its potential.
• D
efining the system of
transactions and supplies and • T
aking administrative and
technical measures related to
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• T
he leasing of non-agricultural
4.4.3 CREATION, PRESERVATION waqf property must be for a period
& DEVELOPMENT that is not exceeding three years,
and should only be renewed after
Revenue from rental of buildings and the approval of the general waqf
agricultural lands is considered as the main department with an increasing rate
source of revenue that feeds the budget of of not less than ten per cent of
general waqf, estimated at about USD 45 the leasing value at each renewal
million per year. (Article 94).
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• T
he waqf administration shall, special supervision and control
at the end of each fiscal year, aimed at ensuring the safety of
set the management account the operations and transactions
relating to the outcome of the related to the implementation
implementation of the annual of the accounts and the annual
budget for the general waqf budget of the general waqf,
(Article 150). maintaining their accounting
and monitoring their conformity
• T
he general waqf shall be with the relevant texts. This
exempted, in respect of all their control is carried out at the level
acts, operations or transactions of the local waqf trusteeship
and the associated income, from under the authority of the Central
any tax, fee and benefit from any Controller (Article 152).
local or national tax deduction
(Article 151). • T
he Central Controller, his
assistants and local controllers
The most important provisions and in charge of the control of the
articles of the Awqāf Code about the accounts of the general waqf
control of general waqf are: shall, within their respective
competences, be personally
• T
he financial management responsible for the performance
of general waqf is subject to of control tasks (Article 155).
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• A
council for the follow-up of • T
he opinions of the council,
the financial management of which may require Sharī‘ah
the general waqf, called the authentication and, must be
Supreme Council for Financial referred to the Supreme Council
Control of General Awqāf, will Oulemas for consideration and
be held next to His Majesty the issuance of a opinion in this
King (Article 157) regard, and such opinion is
considered as binding and must
• T
he council shall monitor be communicated for adoption
the financial management of by the governmental authority
general waqf, study the issues in charge of Awqāf and to the
related to them, give an opinion Supreme Council for the Control
on them, and propose all of Public Waqf Finance.
measures aimed at ensuring
their good management in • I n order to assist the Council
accordance with the principles in carrying out its duties, three
of transparency and good permanent committees have
governance, in order to been appointed, namely Budget
preserve awqāf and develop Committee, Examination
their income taking into the Committee, and Studies and
account the objectives and Research Committee. In
principles according to Awqāf addition, the Council can create
strategy mentioned in the other permanent or temporary
Article 2a (Article 158). committees to study specific
issues (Article 161).
• T
he council conducts all
research and investigation
work related to public, submit
4.4.5 STRATEGIC ANALYSIS &
a report of its findings to the RECOMMENDATIONS
King, prepare and present to
Waqf authority the financial The following are some of the strengths,
and accounting organization weaknesses, opportunities and threats of
for approval, provide opinion the waqf sector in Morocco.
on classified projects in the
Strengths
annual Waqf budget and
on issues related to Waqf • Waqf has a long history in Morocco.
Management, carrying out
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AWQĀF
• W
aqf has a developed legal • T
he existence of many waqf
framework in Morocco. disputes and difficulties in judicial
execution.
• A
wqāf has a preferential
tax framework through tax • T
he weakness of economic and
exemptions for all its actions, social impact of waqf investment
operations or transaction at projects.
national and local level.
• T
he absence of major national
• T
he possibility of issuing waqf waqf projects in the social
bond as instruments for the sectors such as education, health
benefit of general waqf in the and social welfare.
context of seeking the public
charity. • F
ailure to carry out national
campaigns to collect donations
• F
inancial management of and issuance of waqf bonds in
general waqf is subject to the context of seeking public
financial supervision and annual charity for the benefit of general
inspection. waqf.
Weaknesses • L
ack of prudence in managing the
waqf expenditures.
• T
he absence of a consolidated
national policy for waqf. This • L
ow levels of annual surplus for
does not help to create greater waqf investment.
synergies between the different
sectors. • W
eakness in the disclosure of
general waqf funds to the public,
• L
ack of community awareness adversely affecting creation of
about the importance of waqf. new waqf.
• L
ack of institutional and human • L
ack of integration between
capacity in the area of waqf, waqf and other Islamic finance
which prevents the utilization instruments such as zakāh and
of all the possibilities allowed Islamic microfinance.
by the legal framework for the
preservation and development of • A
bsence of university programs
the waqf. for the development of
frameworks and competencies
• A
bsence of a special procedure specialized in the field of waqf.
for the family waqf properties
as in the case of general waqf Opportunities
properties.
• T
he allocation of important
financial resources for some
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Islamic Social Finance Report 2020
• L
ack of confidence among
• G
ive more efforts for major
the public as the desire of
national waqf projects in
waqf founders is not always
the social sectors such as
achieved because of the unity of
education, health and social
financial liability of general waqf
welfare.
considered as one legal entity.
• L
ack of sufficient awareness of • C
arry out national campaigns
the sanctity of awqāf among to collect donations and
some beneficiaries from issuance of waqf bonds in
investment opportunities in the context of seeking public
waqf field, and among some charity for the benefit of
parties responsible for waqf or general waqf.
intervening in it.
• T
he integration between waqf
• E
xpropriation of the waqf lands and other Islamic finance
and properties due to the laws instruments such as zakāh
of urban planning development. and Islamic microfinance.
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AWQĀF
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AWQĀF
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The association has sought to retrieve The Ministry of State Property supervises
many Awqāf that were corrupted despite the previously named awqāf since it was
its young age, but also created new awqāf. moved under state ownership.
It achieved positive results in 1875 with a
surplus income of 597,474 riyals. This was The current bill is to establish a public
the result of transparency by its chairman institution with non-administrative purpose
Beyram V, and the deployment of all the that aims to nominate a general secretariat
reports and documents on the pages of the of awqāf and to assume the role of
official government journal, accessible to beholder of public and common awqāf, and
everyone. to oversee the private awqāf by designating
a supervisor if not designated by the waqif.
After Khaïr-eddine Bacha left the High
Ministry and Beyram V left the presidency 4.5.2.2 SUPPORTING INFRASTRUCTURE
of the association, it continued on
Since 2011, several seminars and meetings
the same path, led by Sheikh Ahmed
have been held to introduce the waqf
Ouertani in 1878. Besides, in 1881, the
sector and the discussion around it has
French occupation worked to use the
been carried out by associations and
association assets to serve its interests
research centers. These include the Islamic
and the lands were stolen and given to
Economics Association, Islamic Finance
the settlers and its close allies. Thus, the
Association, Islamic Economy Forum
association deteriorated and especially
in Sousse and Center for Research and
after the release of some of the laws as
Studies in Dialogue of Civilizations and
an act of Inzaal, the law of upholding, the
Comparative Religions. Waqf is also taught
law of netting (replacement) and the law
in academic tracks established recently
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AWQĀF
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• W
eakness of the religious faith,
4.5.6 STRATEGIC ANALYSIS AND with respect to raising funds for
RECOMMENDATIONS the benefit of the waqf or voluntary
work, and the absence of highly
To further diagnose the status of competent professionals and
endowments in Tunisia and then propose frameworks in the field of waqf and
practical steps to achieve the desired volunteers for charitable work.
situation, we present below the SWOT
analysis and recommendations for the • P
oor control over public funds,
sector. including waqf funds, which leads to
corruption and deviation, with weak
Strengths legislation or absence of deterrence.
• W
aqf, before the abolition of • T
he Tunisian desire for civil work
the legal framework, was based and its drive for volunteer charitable
on the system of jurisprudence work.
of the Maliki School and the
Hanafi doctrine and added to the • E
asy use of modern means of
contemporary fatāwa and systems marketing for the importance of the
developed by Khairuddin Pasha endowment and fundraising.
when it founded Awqāf Association
• P
ossibility of benefiting from
for the advancement of the sector.
the studies, conclusions and
• S
ubjecting the waqf funds to the recommendations of the
public financial control and the conferences and seminars that were
incentivization within the framework prepared about the endowment, its
of the draft law, as is the case importance, its role in development,
for companies of all types, with and its participation with the public
exemption from taxes. and private sectors.
Weaknesses • P
otential of waqf to address many
of the problems that the state was
• L
ack of awareness and marketing unable to resolve and its inability to
of its importance aggravated by a provide adequate public services,
complete absence of any discussion especially in health, education and
in the media and mosques. employment.
• L
ack of interaction between • P
ossibility of issuance of sukuk
economists and sociologists and mobilization of waqf funds for
and the decision-makers on the the benefit of public endowments
benefits from endowments and their with investment methods that
positive role in economic and social correspond to the economic reality,
development. especially after the ratification of
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AWQĀF
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124
ISLAMIC
05 MICROFINANCE
with a maturity between 12 to 601 months.
5.1 ALGERIA The public authorities consider it as a
tool aiming to achieve development and
5.1.1 SECTOR OVERVIEW increase employment rates as it targets
the most challenged among its population
Since independence, Algeria has made who have been suffering from high
huge efforts to recover all its rights unemployment rates.
and sovereignty including independent
The first microfinance experience in
monetary policies and issuing a local
Algeria goes back to 1999 and aimed
currency. It started with launching the
at creating 15,000 projects in several
Algerian central bank in 1963 and the
sectors. However, it has not met the
Algerian dinar later in 1964.
expected success as highlighted in the
During the 1970s and in the beginning 2002 international conference which
of the 1980s, the changes that were was a meeting of several prominent
brought to the Algerian financial sector microfinance experts to discuss “the
have demonstrated some limitations and Algerian microfinance experience” and its
weaknesses and addressing them has resolutions.
become urgent from both management
and governance points of view. Before 5.1.2 LEGAL FRAMEWORK AND
that, the creation of the financial money
MICROFINANCE POLICIES
market in June 1989 gave the opportunity
to the non-banking financial institutions Microfinance in Algeria is a key component
to access the money market. From that of the public policy to fight unemployment
moment, the Algerian banking sector has and social exclusion. Between 1999
witnessed several improvements and and 2002, the government has launched
adjustments in order to cope with the fast- a microfinance program under the
paced financial industry. These upgrades leadership of the social development
have been more and more inclusive agency2, providing loans ranging from
to further cover SMEs and very small 50,000 Algerian dinars to 350,000 Algerian
businesses, namely through microfinance. 1 Official Journal N° 6, 2004
2 As a representative of the Ministry of Labor,
Microfinance in Algeria is considered
Social Protection and Vocational Training,
a key vehicle to absorb unemployment and is replaced locally by the representative
and alleviate poverty. Financing amounts of Youth Employment and the National
through microfinance vary from 50,000 Unemployment Insurance Fund
Algerian dinars to 400,000 Algerian dinars
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Islamic Social Finance Report 2020
dinars at a 20 percent interest rate. This strategy through and big network of
program has not succeeded due to several local associations and partnerships
handicaps and constraints3. to facilitate access to financing6.
It offers two types of financing
There are three other major initiatives of which one is a partnership of
undertaken by the Algerian government five public banks. The first one
in order to reduce unemployment and is a 36-months interest-free loan
promote very small businesses and SMEs to buy raw materials (Agency–
programs. This consists of creating Beneficiary) and is given directly
specialized national agencies which are: through the agency and should
not exceed 100,000 Algerian
• T
he National Agency to Support
dinars. It targets the people who
Youth Employment4: It was
have basic production equipment
created in 1996 and had a special
and machines but without funds
purpose. It operates under the
to buy raw materials (we note
lead of the prime minister and
that the financing value in the
the supervision of the minister
southern region can reach 25,000
in charge of employment and
Algerian dinars). The second one
has an independent funding and
is three parties financing (Agency-
management, and has 48 regional
Beneficiary-Bank) and consists of
and local branches across the
loans granted by the agency and
country.
a bank to create projects which
• T
he National Agency for would not cost more than 1,000,000
Microfinance Management5: It Algerian dinars. The agency gives
is a decentralized network of 49 29% of the loan value and the bank
units in each region of the country 70% of the remaining amount. The
spread across the country and entrepreneur comes with only 1% of
supported by follow up cells in the the funding.
smaller rural regions. This body
• T
he National Fund for
provides fast loans with small
Unemployment Insurance7: Created
amounts (1,000,000 Algerian dinars
in 1994 as a national institution
maximum) with a short or long tenor
of social security, 8it has been
and which are generally subject to
in charge of monitoring and
a government subsidy in terms of
supervising the social benefits for
soft interest rates and a guaranty
the dismissed employees as part of
from the collective guarantee fund
a restructuring plan.
for microfinance. Based on its
recent publications, the agency has These three bodies offer technical and
granted 726,359 loans up to now. financial assistance to small business
All of them are interest free. This owners through subsidized loans with
agency builds a decentralization preferred pricing and also through training
3 Website of the Ministry of National Solidarity, 6 Microfinance Gateway, Alegria Portal: https://goo.
Family and Women’s Issues gl/tM8cGj
4 www.ansej.org.dz 7 www.cnac.dz
5 www.angem.dz 8 Under the tutelage of the Ministry of Labor,
Employment and Social Security
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Islamic Microfinance
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centimes) and could reach the amount of Program DEVED-GTZ and with the
25 million at the level of the ten southern participation of the Ministry of Small and
states. Medium Enterprises in the city of Ghardaia.
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Islamic Microfinance
• L
ink with public banks that do Recommendations
not pay sufficient attention to
microfinance because they • S
implify and ease access to the
focus their expertise on other administrative procedures so
activities. that file processing and project
approval becomes more flexible.
• A
bsence of private banks
that encourage competition • E
stablish microfinance
in microcredit, eliminating the institutions focused on financing
incentive to grant such loans. business, craft and service
activities as well as consumer
• D
ifficult administrative and loans.
executive procedures in
processing files and approving • S
et up a retail bank for low
projects. income customers, providing all
kinds of financial instruments for
• L
ack of specialized microfinance.
competencies in Islamic
microfinance. • E
stablish cooperative financial
networks that are in line with the
Opportunities: specific social and economic
realities of Algeria so as to meet
• P
opular demand for funding in the needs of the population in
accordance with the Shari’ah. rural areas and in this context
• G
eneral orientation of the can benefit from the experience
government towards Islamic of the National Fund for
finance in general and Islamic Agricultural Cooperation.
microfinance in particular. • E
stablish independent and
• P
ossibility of positive effects specialized branches in Islamic
on the national economy by microfinance at the level of
financing the real economy. commercial banks.
Threats • C
ancel tripartite funding and
limit bilateral funding and raise
• S
lowdown in finding the the ceiling between agencies
necessary legal and regulatory and banks.
framework.
• Strengthen governance in MFIs.
• A
bsence of clear strategy for
• A
lign the MFIs with their social
developing the sector.
mission.
• U
nequal competition with
• P
rovide training for specialized
traditional microfinance.
human resources in Islamic
microfinance.
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Islamic Microfinance
financial service, trade sector, industry rights locally and internationally, for
sector, agriculture sector and the tourism the initiatives under the supervision
sector (Figure 6). A number of laws and of the (NPSME), when it is achieved.
regulations have been issued, such as
Law 321 of 2002, which regulates, defines • A
rticle 47 of Law No. 472 of 2009
and classifies microenterprises, and small states that financing of micro-
and medium-sized enterprises. This law enterprises through the Rural Bank
also covers supporting infrastructure and shall be the priority of financing
tools of financing. Law No. 73 of 2011 projects that run by women.
also stipulates that small and medium- In addition, among the policies adopted
sized enterprises are financed by various by Libyan government in accordance with
financing methods (lending, Musharaka, Article 7 of Law No. 472/2009, priority
Murabaha, finance lease, etc.) through: should be given to granting loans to the
following projects:
• D
irect finance: Borrowing from
various financial institutions. • P
rojects established in less
• F
inancing through commercial developed areas such as rural and
banks, and by sponsor of lending remote areas.
guarantee fund, for operating • P
rojects using technology that
purposes, from funds allocated to it will preserve the environment and
from state budget. protect natural resources, which
• F
inancing from funds allocated to develop renewable energies and
SMEs from state budget, and this is work towards food security.
done through specialized banks. • P
rojects that provide job
• F
inancing through funds allocated opportunities for Libyans and
for pilot projects and Funds’ contribute to the development of
innovation. human resources and improve their
capabilities.
It is also within the policy of the
government to encourage SMEs by getting • P
rojects that are established by
the following exemptions and advantages: women and having a positive
impact on the national economy.
• A
n exemption from fees for
• P
rojects that rely on local resources
procurement services and
to be converted into final products.
consumption tax.
In general, micro-enterprises in Libya are
• A
n exemption from production
classified into three types: (1) service
and income taxes for a period of
projects, (2) production projects, and (3)
five years from the date of actual
craft projects. Most of micro-enterprises
operation of the project.
are self-financed because investors do
• S
upport the procedures of the not need external sources of finance. They
conservation of intellectual property rely on their savings to finance this type of
project.
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Islamic Social Finance Report 2020
Regarding SMEs, the Libyan legislator exceed LYD 1 million and has from 6 to 25
did not ignore it in Law 321/2002. SMEs employees. (3) Medium-enterprises: for
are financed by borrowing from, or by which the capital does not exceeds LYD 2.5
subscribing to their capital through the million and has from 26 to 250 employees.
financial market. As for the financing of The law also stipulated the establishment
these projects, theoretically, laws and of a Credit Guarantee Fund to guarantee
regulations have been issued regarding
the potential default related to financings
finance of SMEs. However, in practice,
granted for productive purposes.
they have not yet existed for several
reasons: including the political and In 2007, Decision No. 845/2007 was
security instability during last years, and issued to establish the national program
the reluctance of some state institutions
for SMEs (NPSME), followed by the Law
(including Islamic banks) to engage in
No. 73 / 2011 regarding reorganization of
Islamic finance for higher risks in the
the NPSME. Thus, it became an institution
Libyan environment.
independent of the Ministry of Economy,
In the current stage, Islamic finance for with the following aims13:
small and medium enterprises in Libya
• P
lanning and development of
depends on political and security stability,
programs for the development of
providing the appropriate environment and
small and medium enterprises and
providing the necessary support from local
creating a supportive environment
and international institutions for this sector.
for their development.
The financial resources of these projects
are provided from funds allocated in the • A
ddressing difficulties and
state budget under development. Loans obstacles of the implementation of
are granted through specialized banks the policies of the work of small and
(agricultural, industrial and rural banks). medium enterprises.
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Islamic Microfinance
• C
oncluding agreements with
different financial institutions to
obtain funds for lending of SMEs.
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Islamic Social Finance Report 2020
Ministry of Economy
Executive Manager
Small Incubators
Service Unit
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Islamic Microfinance
BI University
of Benghazi
BI of
Technical of BI of IT
Agriculture
BI College of BI University
Technical of Tripoli
BI of
Engineering
Faculty
Source: Administration Department of the National Program for Small and Medium Enterprises.
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Islamic Social Finance Report 2020
The main business centers shown in Business Center, Business Center for
Chart 9 include Tripoli Business Center, Disabilities, as well as other business
Benghazi Business Center, Sabha Business centers in different Libyan cities that will be
Center, Misurata Business Center, Women’s established soon.
BC of Tripoli
BC of BC of
Misurata Benghazi
BC of
Disabilities BC of Sabha
BC of
Woman
BC of BC of BC of BC of BC of BC of BC of
Ajilat Gheryan Tubruq Darna Ejdabya Zentan Zawya
BC under Establishment
Source: Administration Department of the National Program for Small and Medium Enterprises
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Islamic Microfinance
Chart 10 shows the organizational and It has also seven different departments
administrative structure of Islamic including finance and investment
finance funds for small and medium-sized department, small enterprise department,
enterprises. It is one of the main bodies medium enterprise department, incubator
of the Ministry of Economy, and has an department, financial and administrative
independent Sharī‘ah Supervisory Board. department, and audit department.
Chart 10: Organizational Structure of Islamic Finance for Small and Medium
Enterprises
COUNCIL OF MINISTERS
MINISTRY OF ECONOMY
SHURI’A SUPERVISORY
BOARD
Source: Administration Department of the National Program for Small and Medium Enterprises.
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Islamic Social Finance Report 2020
• F
und of Theqa (Trust) for SMES in • O
rganizational difficulties: Absence
Sabha. of clear administrative and
regulatory structures in Libya, as
• F
und of Mubadara (initiative) for
well as administrative instability of
SMEs in Darna.
supporting institutions.
• F
und of Ebda’a (creation) for SMEs
• F
unctional difficulties: Daily
in Benghazi.
problems faced by projects’
• F
und of Ebtekar (innovation) in owners, which include problems of
Misurata. production and marketing.
• C
ompetition difficulties: High
5.2.4 STRATEGIC ANALYSIS & production costs, lack of quality,
RECOMMENDATIONS as a result, such projects unable to
compete locally or internationally.
Strengths
• Other difficulties are:
• I ssuing a group of laws and
legalizations that regulate and —— The absence of institutions
organize SMEs since the last supervising these projects in
decade. various stages.
• E
stablishment of Islamic Financial —— Lack of adequate
Funds (IFFs) to finance SMEs. encouragement such as
exemption from taxes and
• T
he intention of government to customs duties, reduction of
diversify Libyan economy, and interest on loans and banking
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Islamic Microfinance
• T
he existence of the intention • A
dministrative and financial
of the government in terms of corruption in many public
interest in the issuance of laws institutions are an obstacle to
and regulations that organize it. the success and development of
the SME sector.
• T
he existence of the supporting
bodies, as well as financial • F
ailure of Islamic finance
institutions. institutions such as Islamic
banks or banks that have
• T
he ability of using Islamic Islamic windows in financing of
Microfinance in financing these small and medium enterprises in
projects, whether in Islamic Libya.
or specialized banks or even
commercial banks. Recommendations
• E
nact legislation and laws
• L
ibya is a rich country, it has
governing the SMEs as
various wealthy sectors include
facilitating the procedures for
oil, agriculture, tourism, fishing, or
obtaining licenses, financing and
human resources.
marketing.
• P
ossibility to diversify its
• R
egulate human resources of
economy, and allow participation
of the private sector in economic these projects and provide them
development by establishing with legislative cover to preserve
small and medium enterprises and guarantee their rights.
based on this diversity.
• M
otivate private sector to
establish small and medium
• The recent Central Bank
enterprises.
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Islamic Social Finance Report 2020
• M
ore interest for providing
training and rehabilitation
programs, and attract
graduates and provide
consultancy and feasibility
studies.
• E
stablish a database and
linking it with banks, and
investment funds.
• E
numerate and evaluate
Awqāf assets and
reinvestment.
• D
etermine funding ceilings
for projects according to the
number of jobs in each project
and nature.
• P
rovision of land and
industrial zones for the
establishment of projects.
• F
ormation of legitimate bodies
and committees in supporting
institutions for small and
medium enterprises.
• U
tilize Islamic financing tools
to finance such projects.
• C
ooperation with international
support bodies such as
Islamic Development Bank.
• B
enefit from the experiences
of others in the development
of Zakāh funds and Waqf
funds.
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Islamic Microfinance
from the Governor of the BCM, governs the MFIs in category ‘A’ may operate
microfinance sector. Implementing texts in independently or within a network
the form of instructions from the Governor consisting of the establishment of an
of the Central Bank of Mauritania were appropriate structure: either union or
adopted on 02 May 2007: federation.
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Islamic Microfinance
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Islamic Microfinance
RECOMMENDATIONS • T
he launch of Islamic financial
institutions.
Strengths
• The underdevelopment of
• A generally adequate regulatory microfinance in Mauritania is likely
and supervisory framework for to attract the interest of donors.
microfinance and civil associations.
Threats
• A separation of the promotion
(MEFTIC) and supervision • T
he international financial crisis is
(BCM) functions of the sector of likely to reduce development aid
microfinance. budgets;
• A
n active involvement of the private • T
he awareness needed effort to
sector. encourage the potential clients of
Islamic microfinance services.
Weaknesses
• F
inancing difficulties: Stable and
long-term resources are limited. Recommendations
• O
rganizational difficulties: Weak • A
doption of national policies to
organizational and human resource develop microfinance and charitable
capacity. sector.
• F
unctional difficulties: Customers • T
he need of integrated regulatory
of these institutions face the framework to include the Islamic
daily problems of production microfinance.
and marketing, and control of
• D
evelop the institutional structure
legislation.
and supporting infrastructure for the
• C
ompetition difficulties: High sector.
production costs, lack of quality and
• T
he use of technology to count
result in competitiveness at home
and classify the data and statistics
and abroad.
about the sector.
• Lack of adequate encouragement
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Islamic Microfinance
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Islamic Microfinance
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Islamic Social Finance Report 2020
the sector to support its development Ministry for Finance for approval.
in particular to reduce the transaction
costs of MFIs and increase their horizons * E
nsure the implementation by
(reach more beneficiaries), build capacity its members of the provisions of
and encourage greater transparency. the law on microcredit and the
Although the structure of the Meso level texts adopted for its application,
varies considerably from one country as well as ethics, and refer
to another according to several criteria the matter to the Minister for
such as regulation, market maturity or the Finance.
sector strategy, we usually find at least
one professional association (PA). This * P
ropose to the Minister for
association is usually in charge of the Finance any action likely to
sector representation and often capacity promote the development of
building programs. The more mature a micro-credit.
sector of microfinance, the stronger the
market infrastructure and the streamlined * A
ct as an intermediary
services offered. between its members and
the administration and
However, Brigitte Hems of the CGAP avoid exclusion of any other
reminds us in her book, ‘Finance for All, groupings.
Building Inclusive Financial Systems’, that
different markets have need for different * D
esignate its representatives on
types of actors at this level. The Moroccan the micro-credit advisory board.
sector, by its maturity, has a solid meso
level and different organizations with * E
stablish and manage any
complementary missions, thus fulfilling common service that will foster
most of the needs of the sector. the development of microcredit.
The most important actors in the sector The FNAM has 13 member CMAs, including
3 major CMAs, which represent about 90%
• T
he FNAM: In Morocco, the of market shares, and 10 small CMAs.
National Federation of Micro-Credit There are, therefore, two groups of CMAs
Associations (FNAM) created within the FNAM, each with different
on 4 October 2001 under Law needs. The FNAM has historically suffered
18/97 governing micro-credit in from internal problems mainly related
Morocco, is the legal representative to these differences in needs. It has
of the AMCs in Morocco. The some ineffective governance within the
responsibilities of FNAM, as set out organization, where the principle of one
in its statutes (2008), are assigned vote per governing member implies that the
to it By Article 23 of Law 18-97 on needs of large MFIs are underrepresented
Micro-Credit as follows: in order to better respond to the needs and
expectations of small CMAs, the Central
* E
stablish the rules of ethics Bank encouraged the creation of Solidarity
relating to the micro-credit Microfinance Network (RMS). The objective
activity and submit to the of this network is to provide a number of
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154
Islamic Microfinance
• B
abrizk Morocco was also an
5.4.3 ISLAMIC MICROFINANCE initiative which came very close
INITIATIVES to being an Islamic microfinance
institution. The loans provided by
The microfinance sector in Morocco does Babrizk were at 0% which resemble
not yet have a single Islamic microfinance Qar� �asan. However, the loan fee
institution. However, initiatives have was considerably high close to 25%
been taken in the past decade to start a of the value of the loan. Although
Sharī‘ah compliant microfinance institution. the fee was quite heavy, these loans
Although this has not been achieved yet, were very popular especially among
we will briefly discuss what we consider the population who carried at heart
to be some important initiatives on three Sharī‘ah compliance.
different levels of programs, funds and
simple MFI. • O
n the other hand, the Jaidi Fund
had been a very important actor
Over the years many financial whose name appears in many
entrepreneurs saw the great potential in Islamic microfinance initiatives.
Islamic microfinance institutions. However, However, many of those initiatives
the legislation few years ago only allowed seem to have reached an impasse.
them to operate as association. Since In 2014, a memorandum between
then they were integrated in the banking Jaidi and the Islamic Development
and microcredit law greatly increasing the Bank was signed to create a fund
potential. of 70 million aiming at investing
and encouraging the creation of
• K
ahsb is one of the examples of microfinance institutions. The most
Islamic microfinance institutions recent information on the project
conceived but that never is that it has been on standby
materialized. In 2013 with a strong for couple of years now in the
business plan and a multitude of Ministry of Finance. Lastly, 4US
meetings scheduled during an and Jaida worked very closely on
entire year to gather investors and developing a strategy to create an
promote the MFI, Moroccans were economic empowerment program
looking forward to starting the first aiming at converting a number of
Islamic microfinance institution in microfinance institutions to work
Morocco. Sixty million dirhams were on an economic empowerment
going to be the investment for the approach. Both actors were involved
first year with an objective to raise in the creation of the only economic
the capital of the second year. The empowerment institution in North
business plan stated that 90% of the Africa, ZitounaTamkeen.
turnover was going to be through
Murabaha and a share of 10% of the
market was going to be aimed at.
5.4.4 ISLAMIC CROWDFUNDING
The reason behind giving up on the OR COLLABORATIVE FINANCING
project remains unclear.
Crowdfunding platforms started to appear
in the Moroccan market in 2014. The
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Islamic Social Finance Report 2020
platforms include Afineety, Smala & Co, On 2 March 2018, the Ministry of Economy
Cotizi and Atadamoune. Out of these four and Finance issued the presentation
platforms, only two are exclusively focusing note No. 15-18 to present a draft law on
on Moroccan projects: Smala & Co (located Collaborative Financing or Crowdfunding.
in France) and Cotizi14. The Cotizi platform Recently, on 22 August 2019, the draft
published some studies on innovative law was approved by the government
practices, such as the crowdfunding council, provided that its observation and
barometer for Morocco 2014 and on comments are taken into consideration by
developing innovative solutions and apps the general secretariat of the government
in order to boost the rise of crowdfinance. and the ministry of finance and economy16.
In 2015, the same platform, besides On 22 February 2020, the former draft law
crowdfunding services, launched an online was adopted by the parliament.
petition feature to be the 1st platform
offering that in Morocco15. To shed light on some of the provisions
of the law, the first article defined
These platforms were working in the crowfunding or “collaborative financing”
absence of legal framework related to as fund collection operations via an
crowdfunding. In April 2016, Wali Bank electronic platform called collaborative
Al Maghreb announced a plan to prepare financing platform (PFC) managed by
a specific law and regulation regarding collaborative financing company (SFC).
crowdfunding. Today, Morocco is a country The first chapter (section 1) defined and
with great potential just waiting to be presented the providers of crowdfunding
tapped. In this sense, the crowdfunding and distinguished between three categories
represents an incredible opportunity for of crowdfunding: 1) Investment operations,
financing diversification. 2) Loans operations with or without interest
16 http://www.sgg.gov.ma/Portals/0/
14 http://www.cotizi.com/blog/le-crowdfunding-au- conseil_gouvernement/CR/2019/CR_CG_22.8.2019_
maroc fr.pdf?ver=2019-08-28-125641-703
15 http://www.cotizi.com/blog/le-crowdfunding-au-
maroc
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Islamic Microfinance
• T
he institutions no longer operate as
The draft law project reserves section
associations but as MFIs under the
5 (Articles 57 to 63) to describe the
supervision and jurisdiction of the central
participatory or Islamic crowdfunding
bank.
operation or participatory collaborative
financing, which stipulates that the contract • T
he microfinance sector is considered
characteristics will be determined by Bank by highly ranked officials and the elected
Al Maghrib and the high council of Ulemas. institutions of the kingdom as a very
In this regard the SFC must send an annual important axe that can contribute
report to the high council to assure the significantly to the development of the
compliance to their opinions and guidance. national economy
The participatory banks in Morocco
considered as account contributors for Weaknesses:
this category and will handle the SFC bank
• T
he implementation of microfinance
accounts and use the Takaful operators to
institutions remains quite recent in
ensure their operations.
Morocco and thus still has a long way to
This new legal framework may offer a huge promote and encourage on joining the
opportunity to integrate crowdfunding sector.
in Islamic finance in general and Islamic
• A
lot of time has been spent on
Microfinance in particular, facilitate
developing a single product rather than
the operations of Islamic Microfinance
focusing on the entire sector.
institutions and enhance their role
in financial inclusion and economic • E
ndowment remains poorly developed
empowerment. in Morocco although this could be an
important source of investment for the
sector.
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Islamic Social Finance Report 2020
Opportunities: Recommendations:
• T
he opening of participative banks in • T
he creation and the
Morocco opened a vast horizon for development of a network
Islamic microfinance institutions as in the MENA region to
windows of the banks. promote and assist Islamic
microfinance institutions,
• T
he existing law on microfinance in but also to facilitate their
Morocco allows the MFIs to include integration in the economy of
Islamic microfinance products. each country of the region.
• T
he interest of many foreign funds • A
close cooperation and the
and entities to invest in Morocco is a development of partnerships
great opportunity to focus on Islamic between the different
microfinance. institutions operating in other
• T
he existence of some consultancy countries in the region to
firms which showed a high level of benefit from every experience.
experience and readiness to work on
• F
ocus on the development of
this sector.
waqf empowerment which is a
• S
ome Moroccan companies worked new approach to waqf and can
for years on developing Management be one of the main sources to
Information Systems to closely assist financing Islamic microfinance
MFIs in achieving their goals. or economic empowerment
institutions.
• T
he presence of Jaida, a very strong
actor of the sector in Morocco, which • R
aise the awareness of all
holds shares in Zitouna Tamkeen, the involved actors to focus on
only economic empowerment MFI providing the infrastructure for
using Islamic business models in the social and economic inclusion
Maghreb region and using a Moroccan rather than financial inclusion
MIS known as 4US. only.
Threats: • F
inally, differentiate between
Islamic microfinance and
• C
onfusing the potential clients economic empowerment as
between Islamic and conventional two different approaches to
microfinance. poverty alleviation both using
Islamic finance products. The
• A
doption of Islamic microfinance objective is to identify the more
products by some existing MFI might significant impact of economic
focus just on the form and neglect the empowerment on fighting
spirit of the Sharī‘ah. poverty.
• A
dopt single products that will focus
on giving loans rather than on an
economic empowerment approach
and objective.
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Islamic Microfinance
5.5 TUNISIA
5.5.1 OVERVIEW OF THE SECTOR
The Tunisian experience has two basic
stages in microcredit and microfinance.
The political changes that took place in
2011 played a pivotal role in the change of
the state policies.
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Islamic Microfinance
used primarily the mechanism of material and promoting mechanisms of finance and
donation and Qar� �asan coming from the guarantee. Dozens of programs, structures
funds of Zakāh and charity. and funds were created, at the time, mainly
by a presidential decree and laws were
5.5.2 MICROFINANCE POLICY & introduced afterwards. However, there was
absence of a leading and coordinating
REGULATORY FRAMEWORK structure to avoid programs and initiatives
overlapping. At this first phase, the
The Tunisian government has defined
actors of the sector were governed by the
many financing policies pertaining to
following regulatory and legal framework:
microfinance. These policies have targeted
different sectors and different social • B
TS: Since its inception, it has been
groups. subject to the presidential decree
issued on 21 May 1997.
In the first phase27 28 , the Tunisian State
went on to stimulate the formation of • E
nda: Since its establishment, it was
institutions within an integrated strategy governed by Law No. 25 of 1992,
based on several mechanisms aimed at dated 20 April 1992 and a special
further developing the culture of initiative, exemption delivered by the Ministry
attracting and enlightening young people of Finance in May 2005 to apply a
work according to their programs to fight poverty and
higher interest rate than the one
unemployment without these programs being subject to
sufficient conditions and guarantees for success. used in the market29 .
27 Mechanisms of creating projects funded by 29 According the “Market study of Microfinance
Islamic Microfinance “Ali Said” in Tunisia” that have been prepared by IBM Belguim
28 Since starting the application of the Tenth in 1431/2010 on behalf of EUROPEAID, quoting the
Development Plan (1422/2002-1426/2006) “Authorization No. 139 of the Ministry of Finance” for
Enda-Inter Arabe microcredits granting, that allow it to
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Islamic Social Finance Report 2020
• D
evelopment cooperatives providing • I nvolving the private financial sector
micro-credits: Subject to Law No. 67 in Microfinance operations.
of 1999 of 15/7/1999
• P
romoting and supporting the
In the second phase30 31 , there was much growth of the Microfinance industry
talk about the need to prepare a vision for the through the establishment of an
future to strengthen the microfinance sector. institutional infrastructure.
In October 2011, a document was prepared
In the second phase, microfinance actors
by the Ministry of Finance containing32 “The
start to be subject to the following legal
concerted vision of the Microfinance sector
and regulatory framework :
in Tunisia”. In that period, the government
sought to establish this approach as a basic • All types of microfinance
solution in fighting against poverty and institutions are subject to the Law
unemployment, mainly aiming at reaching No. 117-2011, which provides the
out to the various segments and changing possibility of establishing private
their reality. The ultimate purpose of this financial institutions (limited
approach was the financial inclusion of companies) to finance micro-
excluded populations, achieving harmonious enterprises, provided that their
development and strengthening the capital is not less than TND 3
economic fabric. Among the pillars of this million.
approach are the following:
• Development cooperatives are
• Setting the basic regulatory subject to the provisions of Chapter
framework33 to oversee the 58 of Law 117-2011, which was
development of the sector. revised by another Law No. 46-
2014 of 24 July 2014, to enable
• Contributing to the development
development cooperatives to
of regions and priority sectors,
continue their financing if the capital
supervising a detailed market study,
is not less than TND 50,000
better understanding of the needs
of target clients and developing • The BTS has been restructured
the appropriate framework for into an integrated bank providing
Microfinance development. additional services such as bank
accounts
• Structuring the sector and the various
structures and restructuring the BTS. • The BTS was entrusted to offer
murāba�ah product in accordance
apply “an interest rate which takes account of the actual with the refinancing agreement
expenditure necessary for the microcredits granting and between the Tunisian Government
especially and the BTS on 27 November 2012.
The cost of resources, management and training operations
The new laws also provide for the
and operating fees”
possibility of providing conventional
30 The site the supervisory authority for Microfinance and Takaful34 Micro-insurance
in Tunisia products35 ;
31 After 2011’s major political changes 34 Insurance Journal Revised by Law No. 2011 -117
32 It is the result of consultations a range of of 5 November 2011
stakeholders of the sector 35 i.e Microfinance institution could only market
33 Microfinance Gateway, www.microfinancegateway. insurance/Takaful products that have been issued by an
org established insurance company.
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Islamic Microfinance
• E
stablishment of a supervisory
authority for the Microfinance sector 5.5.3 ISLAMIC MICROFINANCE
under the Ministry of Finance36. INITIATIVES
These laws and revisions led to: Knowing that the Islamic microfinance
sector is in its beginning phase, we
• S
etting the ceiling of financing
may treat what appears to us the most
amount at TND 20 for microfinance
significate experiences which are those of
limited companies37 .
the BTS and Zitouna Tamkeen MFI.
• S
etting the ceiling of financing
amount at TND 5,000 for 5.2.3.1 QAR� �ASAN PINANCING PROGRAM
Development Associations38. AND YOUTH EMPLOYMENT SUPPORT PROGRAM
(YES-TU)39
• S
etting loans granted to improve
living conditions at TND 3,000 The BTS financings could reach TND
for MFIs and TND 1,000 for 150,000 and are mainly aimed at university
Development Associations. graduates to support them in creating
SMEs. Therefore, its activity belongs to
• D
evelopment Associations can meso-financing rather than micro one. In
obtain loans from the BTS to the last decade, the BTS was entrusted
strengthen their budget. However, to implement an IsDB program based on
they should not exceed an annual Qarḍ Ḥasan financing. We do not have
interest rate of 5% in addition to detailed information about the program
a 2.5% commission paid by the characteristics and outcomes. A few years
beneficiary by loan. later, the BTS was entrusted to implement
the YES-Tu program. This program is based
All the current MFIs and Development
on a Muḍārabah agreement between the
Associations are under the supervision
IsDB and the Tunisian Government on
of the Microfinance Supervision Authority
28 February 2012 with a value of USD 50
(ACM), the governmental institution
million. The program aims at economic
that have been created by the Ministry
and financial empowerment of young
of Finance and which is entrusted to
people, especially university and vocational
supervise the Microfinance sector. It is
training graduates40 , by financing the
expected that the supervisory function
launch of small projects. It is expected that
will be entrusted, at least partially, to the
this program contributes to improving the
Central Bank of Tunisia (BCT) at a later
living conditions of the various targeted
stage. The Supervision Authority was
beneficiaries. The granted institutional
established in 2012 and it is composed of
support for the program implementation
9 officials and its board is composed of 8
amounted to USD 320,000. The kick-off
members meeting periodically.
workshop was done on 6 and 7 May 2013
36 For more information, see the law number 2128- and the first financing was granted in
2012 dated 28 September 2012 December 2015.
37 Order of the Minister of Finance of 18 January
2012 fixing the ceiling amount of the microcredit and the 39 Bank Brochures
conditions of its grant by the microfinance institutions 40 As well as small farmers, artisans, people with
38 Ibid special needs and skilled workers
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Islamic Social Finance Report 2020
the Bank would start to provide refinancing for the Development Associations under this
program.
Number of
Classification per Total Jobs
financed
education level financing created
persons
5.2.3.2 ZITOUNA TAMKEEN (ZT)43 2016 and its actual operations started
in August 2016. It currently provides
It is the first Islamic microfinance financing not exceeding TND 20,000. The
institution in Tunisia, adopting the institution enables customers to acquire
Economic Empowerment approach in equipment, raw materials and commodities
accordance with Islamic finance principles. at a competitive cost. The Islamic MFI is
It obtained its operations license in May trying to widely introduce the concept of
economic empowerment throughout media
43 Interview with Dr. Nabil Ghallab (ZT President
& CEO), published on the website of Wajahni at http://
presence and a series of partnerships
wajjahni.com with various sectors stakeholders. These
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Islamic Social Finance Report 2020
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Islamic Microfinance
• W
eak knowledge of the financial, • A
large group of entrepreneurs are
administrative and accounting excluded from the financial sector
essentials by the owners of small given the scarcity of adequate
projects or those wishing to invest. Islamic finance institutions and
programs.
• F
ailure to apply one of the safety
standards in Islamic microfinance, Threats
which is the necessity of ensuring
the eligibility of the beneficiary. • F
requent political disputes and the
disruption of many laws regulating
• R
igidity of the current legal the various fields of Islamic
framework, being not flexible Economy.
enough to fit the specific regional or
sectorial needs. • P
oor demand for Tunisian made
products due to fierce competition
Opportunities by imported products that have a
better quality and lower prices.
• T
he large number of potential
microfinance clients to satisfy: from • C
ontinuity of export volatility
400,000 to 1,400,000 clients45. towards Libya and Algeria.
distribution
45 Tunisia Islamic Finance Country Report, IRTI / IsDB Group, CIBAFI, Thomson Reuters, Zawya, 2013
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Islamic Social Finance Report 2020
Recommendations46
financial resources through viable
• W
ork on financing the economic
institutions.
opportunities of small investors
and entrepreneurs, especially the • I mplementation of reforms that
poorest rural populations, through promote access to financial
the provision of integrated Shari’ah- services.
compliant financial services in the
form of grants, loans, financing, • E
nhancing the concept of
deposits and savings accounts, etc. Microfinance and empowering
the target groups according to
• E
stablishment of a fund to cover best practices, achieving financial
the lack of guarantees for the most sustainability and developing
vulnerable ones. income generating activities in
these areas, as well as actualizing
• Simplifying documentary
the process of expanding these
procedures for microfinance
important sectors, whether in
clients according to the nature and
grazing, handicraft, agriculture or
potential of these clients.
other economic activities.
• C
ontributing effectively to reach
• I ntegration of the rural poor into the
the largest number of beneficiaries
main financial services to acquire
in rural areas, by encouraging the
saving and repayment habits.
opening of branches in the interior
• R
edrawing the industrial map in
• M
obilizing large new investments
such a way as to ensure that micro-
in rural infrastructure, agricultural
enterprises and large enterprises
research and agricultural guidance
play complementary roles. It can
services.
be modeled according to the Indian
• F
acilitating the spread of low-cost experience, which adopted a system
financial services through Internet that forces large companies to
and mobile phones. leave more than 1,200 products
for smaller enterprises. This has
• U
pdating legislations and laws forced them to adopt handling as a
to ensure transparent and clear platform.
execution of contracts.
• P
roviding suitable ground for these
• T
he need for complementarity projects, especially regarding
between donors for Microfinance competition, administrative routine
and private capital, rather than and instability of prices of raw
competition. materials.
• T
he need to ensure that the poor • A
mending the current accounting
and the unemployed have access to standard (or issuing a new one) to
46 Based on a study of Hussein Al-Asraj fit the needs of Islamic microfinance
actors.
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Islamic Microfinance
169
Islamic Social Finance Report 2020
(4)
Business Relation/
Business
Economic &
Microprojects
Strategic Partner
(1)
(3)
Zitouna Tamkeen
Business partnerships
Projects study,
for Economic
Training, Financing
Empowerment
(2)
Engineering
of Economic
Empowerment
Social Impact
resources and infrastructure
Zitouna Tamkeen does not only
necessary to navigate, produce and
measure its performance through
market;
financial indicators but most
importantly through social and • E
nabling them to obtain necessary
economic impacts which are financial resources and increase
demonstrated by: them;
• D
eveloping economic abilities • E
nabling them to obtain adequate
so that they can manage their income; and
daily lives;
• S
upport them until they
• E
nabling them to effectively can independently manage
participate in economic administration and make
projects; appropriate economic decisions.
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Islamic Microfinance
(4)
Business Relation/
Business
Partnerships
Economic &
Microprojects
Strategic Partner
(1)
(3)
Zitouna Tamkeen
Business partnerships
Projects study,
for Economic
Training, Financing,
Empowerment Projects
Assistance and (2)
Follow-up
Engineering
of Economic
Empowerment
Projects
Business Model
Social Impact • S
upporting them until they
can independently manage
Zitouna Tamkeen does not only measure its administration and make
performance through financial indicators appropriate economic decisions.
but most importantly through social and
economic impacts which are demonstrated Halib ElKheir Project
by:
In partnership with the Tunisian leader of
• D
eveloping economic abilities so the dairy industry, Delice Holding (DH),
that they can manage their daily Zitouna Tamkeen has launched a major
lives; project in the north-western and central
regions of Tunisia, 2500 small-scale
• E
nabling them to effectively breeders will benefit from the project that
participate in economic projects; will include the financing of purebred herds,
• E
nabling them to obtain resources milking equipment and securing an outlet
and infrastructure necessary to for their productions by DH. This project
navigate, produce and market; includes a training and technical assistance
program provided by livestock advisers. To
• E
nabling them to obtain necessary ensure the sustainability of this business
financial resources and increase model, DH also acts as an off-taker and will
them; ensure the purchase of all the production
from the small farmers.
• E
nabling them to obtain adequate
income; and
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Islamic Social Finance Report 2020
(5) (7)
(6)
Payment Payment
Milk
Farmers and
delivery
Breeders
Delice Holding
(4)
Collection
Milk Centers (1)
production
Business
Zitouna partnership for
(8) Tamkeen EE project
(3)
Deduct (2)
Training, instalments
financing, on behalf Engineering of
assistance and of Zitouna EE Project
follow-up Tamkeen
Bee.preneur Project
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Islamic Microfinance
(5)
Honey (5)
Payment
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Islamic Social Finance Report 2020
• T
he absence of a national guarantee Introduction
fund dedicated to the microfinance
Al-Baraka Bank of Algeria is a member of Al
sector;
Baraka Banking Group. It was incorporated
• T
he lack of local solutions for in May 1991 as the first Islamic Bank in the
the refinancing of microfinance country and operates under a commercial
institutions and social investment banking license issued by the Bank of
funds; Algeria. The main activities of the bank are
retail and commercial banking. The Bank
• M
icro-savings are not authorized by operates 30 branches.
the law; 49 Paper “The Algerian experience in Shariah
compliant Microfinance’, Nacer Hideur, presented during
the Kick-off Workshop of the “Islamic Social Finance
Report”, held in Tunis on 10 June 2017 and co-organized
by IRTI (IsDBG) and Zitouna Tamkeen MFI
174
Islamic Microfinance
The Model • P
aying more attention to individuals
themselves rather than to the
The project can be illustrated as bellow: submitted documents.
German Corporation for International Cooperation GIZ: Financing the technical assistance under
the Small Enterprise Financing Development Program (The third component of the Sustainable
Development Program)
Al-Baraka
Bank of Algeria
(Financing through
Musharakah)
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Islamic Social Finance Report 2020
Partnership
Agreement
Al-Baraka Bank of Algeria FIDES Algeria
(3) (2)
Provide (4) Bringing projects,
(5) Accompaniment,
Musharakah evaluating them and
Payment follow up and
Financing after selecting those ready
approval of FIDES disputes resolutions to be financed
Micro-enterprises
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Islamic Microfinance
• A
mount of financing: Between USD funds (coming from non-Shari’ah
100 and 500 per IGA. compliant sources).
• M
andatory savings equal to 2 • O
rganizing Women in solidarity
to 4 monthly installments of the groups.
financing.
• Mandatory savings.
• C
ontract of accompaniment
• M
oral guarantee of a notorious
between FIDES and the Group of
person.
Women for a fixed commission, not
linked to the financing amount or • H
igh-level jury to resolve potential
duration. disputes.
• F
IDES to pay administrative • D
istribution of roles between
expenses to the bank for financing different parties.
management (excluding wages). • Guarantee fund.
Project Phases Achievements
• F
rom 2008 to 2012: The financial • T
he choice of Mushārakah mode
product was managed by FIDES, the of financing was adequate to the
specialized entity. irregular nature of micro-enterprises
revenues generation.
• S
tarting from 2012: The financing is
fully managed by the Bank. • R
eaching acceptable recovery rates
due to professional accompaniment
• I n 2017: Creation of a Microfinance
and proximity to the beneficiaries.
fund from the “disregarded”
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Islamic Social Finance Report 2020
• C
ontributing significantly in assignments, especially in Islamic
increasing the size of the financed Development Bank member countries50, a
Micro-enterprises and in expanding Moroccan team of experts was behind the
their activities. conception of a Management Information
System “4US” dedicated to managing
• Creating additional jobs. Economic Empowerment operations. The
• I mproving significantly the development of the MIS started in 2009.
management of the financed Micro-
The Model
enterprises.
Economic Empowerment approach, which
• Promoting entrepreneurship
the MIS adopted, is a comprehensive
development among small
approach for doing business with
entrepreneurs.
disadvantaged population by considering
Challenges them as real qualified partners, rather than
burdens. It offers successful solutions to
• A
bsence of an appropriate legal defeat almost all development challenges:
framework. access to opportunities, access to
support investments, establishing smart
• U
nbalanced or unfair competition
partnerships and access to suitable
for government programs that have
financing and markets.
preferential terms.
• W
eak geographic expansion of the Advantages of the Model
experiment.
The particularity of 4US is that it was
• F
ailure to transfer expertise to the designed to suitably fulfill the field
local team resulting in the lack of needs; the MIS was not adapted from a
control of the portfolio after the conventional microfinance nor an Islamic
withdrawal of the technical support finance system. The system is gradually
of the specialized entity. gaining in efficiency due to its deployment
and utilization in different countries such
• T
he difficulty of integrating as Sudan, Yemen and Tunisia, and is still
Microfinance activity into the Bank’s on a permanent adaptation based on
activities. multiple local challenges. 4US targets four
categories of beneficiaries: Individuals
5.6.3 “4US” MANAGEMENT and families, solidarity groups, productive
INFORMATION SYSTEM (MIS), unions and sustainable development
village.
MOROCCO
The system has the ability to manage large-
Key ideas: Customization to Economic scale projects for hundreds of beneficiaries’
Empowerment specificities groups, and handles most Islamic financing
modes.
Introduction
50 ited Arab Emirates, Qatar, Bahrain, Saudi Arabia,
After more than 30 years of field Kuwait, Yemen, Egypt, Palestine, Sudan, Algeria, Tunisia,
experience in Islamic Social Finance Libya, Mauritania, Guinea, Chad, Cameroon, Mali, Djibouti,
Benin and Nigeria
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Islamic Microfinance