Alhuda Cibe - Islamic Financial Cooperative

Religiosity and threshold effect in social and financial
performance of microfinance institutions
Mohammad Ashraful Mobin
AL BARAKAH
MULTI-PURPOSE CO-OPERATIVE SOCIETY LIMITED
H.O.: Madam Lolo Road, Rose Belle, Mauritius
Tel: (+230) 6275766
E-mail: [email protected]; www.albarakahcoop.org
ISLAMIC FINANCIAL COOPERATIVE

Case study of AL BARAKAH Multi-purpose
Cooperative Society, Mauritius
Agenda
Introduction: The Islamic Finance industry

The Coop Movement & Financial Cooperatives /CU
Financial Cooperatives /Credit Unions Worldwide
The Financial Cooperatives/ CU Movement and Islamic
Financial Institutions
Islamic Financial Cooperatives/Credit Unions
Setting up Islamic Financial Cooperatives/CU/SACCO
Financing Instruments of Islamic Financial Cooperatives/CU
Reserves and other Funds of IFC/ICU
Case Study of AL Barakah MCSL
Mauritius and Africa
Conclusion
Setting up Islamic Financial Coop/CU/ SACCOS in Africa

Conceptual Framework
Cooperate with all in what is good and pious and do not cooperate
in what is sinful and wicked (Q-5:2)- Taawoun
Legal Framework Easy formation, less regulated than

other corporate sector (Cooperatives Act ,Credit Union Act);
Shari'ah-compliant- WOCCU
Values:
IF based on Islamic ethics/values: justice, sharing, solidarity
Coop based on values: honesty, equity, solidarity, selfhelp,mutual-help etc
Common bond - IB
CBO (community-based organization) / Member-owned
organization
Small seed capital can promote saving culture among the
community
Incentives & Benefits Tax Relief in certain countries
Multi-purposes - open to various types of economic activity
Broaden ownership of business and reduce concentration
of wealth
Democratisation of the IFS (SMFInst.)
Islamic Financial Coop/CU

Formation & Organization
Initial contribution of founder members who are conscientious and
committed people to provide an alternative to the interest-based
institution.
Democratic Structure / Management

Democratic: 1man-1vote, Board & Sub-committees
Shareholdings / Membership / Returns

Open to people from all walks of life, established by the
people, for the people
Community-based organization (CBO) - Member-owned

society where the spirit of ownership and sense of belonging
to an Islamic financial institution will be present.
Financial
dignity
by
mobilizing
capital
from
the
community/members -shares, savings and deposits
Not-for-profit-maximization
Organs of Control, Audit & Good Governance

AGM appoint Internal Controller, External Auditor, sub-committees
and Shariah Supervisory Committee to ensure that the affairs of
the institution are conducted in accordance with Shariah and
within provisions of the Law of the country
Islamic Credit Unions

Marketing
Lack of awareness of Islamic financial products.

Correcting misconceptions about ICU - not a charitable institution or a
benevolent society but a business organization operating on Islamic lines for
the community.
Education & Training
Islamic Finance Education Program (IFEP) for existing and potential members
Topics and aspects such as Conceptual Framework of Islamic Finance, Basic
Islamic Financial Laws, Quranic Verses concerning the economic system of
Islam, Ethics and operation of the ICU.
Weekly/Fortnightly
education
sessions
for
members
and
their
beneficiaries/dependents/sureties + opportunities to conduct financial
transactions and other businesses of the ICU at the same time - e.g.
application for membership, financing, collection of installments,
announcements.
Location
Inception stage - Mosques, Islamic educational institutions, and centers can be
used for these activities.
Financing Instruments
Murabahah (Cost- plus financing); Ijarah (Leasing); Istisnah (Construction Finance);
Salam (Forward purchase of a commodity); Mudarabah (Passive Partnership);
Musharakah (Joint venture); Musharakah Mutanaqisa (Diminishing Musharakah);
Qard (Interest-free loan)
ISLAMIC CREDIT UNION:

AN INCLUSIVE FINANCIAL INSTITUTION TO MEET THE NEEDS OF THE COMMUNITY
IN AFRICA
Al Barakah
Multi-purpose
Co-operative
Society Limited
Mauritius and Africa

Belonging to Africa, Mauritius is a dot on world map, but a
reference in the region
Mauritius is a member of the African Union, Southern African
Development Community (SADC), the Common Market for
Eastern and Southern Africa (COMESA) and the Indian Ocean
Rim Association for Regional Cooperation (IOR-ARC).
In 2012 the Board of Investment of Mauritius launched the Africa
Centre of Excellence to discover investment opportunities in the
African continent, to provide information on Mauritian companies
doing business in Africa, to facilitate joint venture opportunities
between the international investors and local companies.
Mauritius has signed Investment Promotion and Protection
Agreements (IPPAs) with 15 African countries
International Arbitration Act 2008 Mauritius is increasingly
being used as an arbitration jurisdiction and in particular as a
centre for International Commercial and Investment Arbitration,
in the African Region.
Chartered Institute of Logistics and Transport Africa Forum
Meeting, Wednesday 09 March 2016
Facilities in Mauritius
Facilities in Mauritius - Liberalised Legal Services to enable foreign

law firms to establish local offices or joint ventures with Mauritian
lawyers
Air transportation sector, a historical agreement has been signed with
Changi Airport Singapore for the establishment of an air corridor
between Asia and Africa using Mauritius and Singapore as hubs. Air
Mauritius has made good progress to increase the number of
destinations and frequencies in Africa, which is also planning to
operate to Dar-es-Salam and Maputo as from May this year. Other
destinations such as Harare, Lusaka, Mbabane and Gaborone
upcoming ( PM Keynote Address )
International banks operating in Mauritius HSBC, Standard chartered
Bilingual English, French & other Asian languages
Commitment of authorities to promulgate Islamic Finance in Mauritius
2007: Adherence of the BOM as Associate Member to IFSB. Graduated
to Full Membership in October 2008
April 2009: Launch of Islamic window by HSBC Amanah and October
2009: Islamic banking license granted to Century Banking Corporation
Ltd
2010: Signing of Agreement for the establishment of International
Islamic Liquidity Management Corporation (IILM). The BOM becomes
founding member of IILM.
Why Mauritius
Impressive track record, political
stability and more than 3 decades of
sustained economic growth
Secure investment location with
established rule of law
Freest and most business-friendly
country in Africa
Peaceful, multi-ethnic with a unique
lifestyle in a blend of cultures
Investment-friendly regulatory regime
Ocean State with one of the largest
Exclusive Economic Zones in the
world
Preferential market access to Africa,
Europe and the USA
State-of-the-art infrastructure
Active double taxation agreement
(DTA) with 43 countries
Quick Facts
GDP per capita: approx.
USD 9,200 *
Moodys Investors
Service: BAA1 (2015)
Population: approx. 1.3
million
Political System:
Democracy with free and
fair elections held every 5
years
Official Language: English
Legal System: dual
system (Common & Civil
Law)
GDP Growth: 3.4% *
Unemployment: 8% *
* 2015 est.
Why Mauritius
International Benchmarks
No Index
1
2
3
4
5
6
7
8
9
World Bank Doing Business 2016
Global Rank
32 out of 189
countries
Global Competitiveness Index 2015- 46 out of 140
2016
countries
Corruption Perceptions Index 2015
45 out of 168
(Transparency International)
countries
International Property Rights Index 31 of 97
2014
countries
Mo Ibrahim Index of African
Governance 2015
2016 Index of Economic Freedom
15 out of 178
(Heritage Foundation)
countries
Economic Freedom of the World 2015 6 out of 157
(Fraser Institute)
countries
63 out 188
Human Development Index 2015
countries
Global Enabling Trade Report 2014 29 out of 138
World Economic Forum
countries
Africa
Rank
1st
1st
5th
2nd
1st
1st
1st
1st
1st
Geographical Background & Population of

Mauritius
Location I.O, gateway to Africa, South Asia &
Asia
Political - Democratic
Multi-religious society
Population: 1.3 M
Muslims in Mauritius
Presence in all walks of life: Islamic schools,
professionals, orphanage, business, politics, etc.
Contribute enormously in the development of the
economy
As a community, little has been done to establish the
IBF.
In 1990s there was a keen desire by Muslims to
establish an IB in Mauritius.
Preliminary work carried out Research - Different
Laws, Coop Law
Formation of an Islamic Financial Cooperative/Credit
Union in the Cooperative sector - AL BARAKAH
Formation of ABMCSL
Formation meeting by promoters & committed
members
Draft Rules, Regulations
Registration with the Registrar of Cooperatives
(10th June 1998)
Legal Framework
Operates:
- Within the Co-operative Societies Act 2005
- Within the framework of its rules, regulations and
policies
- According to Islamic Financial principles
17
Organisational Structure
Shari'ah Advisor: Dr. Monzer Kahf
Products & Services
19
Other Activities
Creating awareness about Islamic Finance by
organizing lectures, training, seminars,
conferences, workshop,
Organising Umrah
Coming Insha Allah * AB Zakat Fund * Halal
Tourism
Opportunities with AL BARAKAH for IBF in
Mauritius
Legal & Regulatory Framework:
The Banking Act 2004 - Amended 2007
The FSDA 2001 (Non-Banking activities)
The Cooperative Societies Act 2005 -Membership
for corporate bodies for projects/joint ventures.
Challenges at various levels

Change in the mindset of Individuals Government / Regulators Level
Must support community-level finance by providing a favorable
legal, and tax incentives .In many countries, credit unions are
governed by the Credit Union Act although the global trend is
moving towards the regulation and supervision of credit
unions by the Central Bank. (Trinidad and Tobago, Republic of
Ireland). The same policy can be applied for the regulation
and supervision.
Global Level
- Due to the prevalence of ICU globally, there is a need for
international bodies of IF such as AAOIFI, ISRA, IFSB and
IDB to at least establish a special unit or department for
development of this sector. Responsibility as regulator,
facilitator and for developing Shariah standards for
products that promote these efforts.
- WOCCU, has already taken the lead in this perspective by
establishing Islamic Investment and Finance Cooperatives
in Afghanistan (20042012) and afterwards, becoming the
first to publish the Islamic Finance Manual (a first known
Conclusion
ICU is in line with both cooperative and Islamic principles
Financial services to all strata of the community in Africa.
Opportunities of managing the wealth of the community in a
Shariah compliant manner.
ICU will assist to build up a robust community-based financial
institution, spread ownership of business and reduce concentration
of wealth.
A combination of self-reliance with active participation of the
community will strengthen economic and social development in
Africa
Global prosperity cannot be pursued without the inclusion of the Africa
ICU can make people have to learn to live a modest and balanced
material and spiritual lifestyle/good life (Hayat tayyiba) to attain
success (falah).
Overall, the whole global community will benefit if they take the
initiative to bring about the desired change as Allah says:
Indeed, Allah will not change the condition of a people until they
change what is in themselves (Ar-Ra`d 13:11)
Concern for community - Finally it will be the job of everybody
Mr. Mamode Raffick NABEE MOHOMED

Founder & Secretary
AL BARAKAH MCSL
E-mail: [email protected]
[email protected]
www.albarakahcoop.org
Tel: (+230) 6275766, Mb. 57781738
AlHuda CIBE FZ LLE - U.A.E

P: + 971 56 9286664, + 971 55 938 99 00
AlHuda Center of Islamic Banking & Economics Pakistan
Ph: (92-42) 35913096 - 98, Fax: (92-42) 35913056
Email: [email protected]
Website:
www.alhudacibe.com

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Religiosity and threshold effect in social and financial

performance of microfinance institutions

Mohammad Ashraful Mobin

ISLAMIC FINANCIAL COOPERATIVE

Introduction: The Islamic Finance industry

Setting up Islamic Financial Coop/CU/ SACCOS in Africa

Legal Framework Easy formation, less regulated than

Islamic Financial Coop/CU

Democratic Structure / Management

Shareholdings / Membership / Returns

Community-based organization (CBO) - Member-owned

Organs of Control, Audit & Good Governance

Islamic Credit Unions

Lack of awareness of Islamic financial products.

Education & Training

ISLAMIC CREDIT UNION:

Islamic Credit Unions

Islamic Credit Unions

Mauritius and Africa

Facilities in Mauritius - Liberalised Legal Services to enable foreign

World Bank Doing Business 2016

Geographical Background & Population of

Shari'ah Advisor: Dr. Monzer Kahf

Products & Services

Challenges at various levels

Mr. Mamode Raffick NABEE MOHOMED

AlHuda CIBE FZ LLE - U.A.E

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