Islamic Finance through Cooperatives

in Mauritius

Mr. Raffick Nabee MohomedFounder & SecretaryAl Barakah Multi-purpose Cooperative Society Limited

2nd International & Exhibition on Islamic Banking & Finance 25th August, 2008 at Lahore, Pakistan

About The SpeakerAbout The Speaker

Mr. Mamode Raffick NABEE MOHOMED

Founder and Secretary of Al Barakah Multi-purpose Cooperative Society Limited, Mauritius.Mr. Nabee Mohomed holds a Bachelor of Commerce, a Post Graduate Certificate in Education and a Post Graduate Diploma in Islamic Banking & Insurance (IIBI-London). He is a student at IIIBF for the PG Dip. in Islamic Finance. He is an Educator, also lectures on Islamic Banking & Finance and is an Associate Fellow of the Institute of Islamic Banking and Insurance which is based in London. Mr. Nabee Mohomed has also done a thesis on An empirical study of the Muslim Family in a rural set up.He has presented the case study of Al Barakah Coop at conferences and seminars in Trinidad &Tobago & India. He has also attended several short courses and training.

SHORT COURSES & TRAINING • Muslim Credit Union (Trinidad & Tobago)

- Training in Islamic Finance at M.C.U (3rd Feb. to 21 Feb. 1999) • National Cooperative Training Centre, Mauritius.

- Management & Leadership for Leaders of Cooperative Credit Unions, (24-25 Oct.2001).

• Cooperative College of Malaysia.- Project Preparation and Appraisal (23-27 February 2004)- Corporate Governance (23-26 May 2005)

• Association of Asian Confederation of Credit Unions (ACCU)- Modern Management of Cooperative Credit Unions (02-03 July 2008)

• International Islamic University, Islamabad (Pakistan)- Attended the 22nd International Programme for Human Resource Development from 14/11/2005 to 14/12/05 at Dawah Academy, Islamabad.

Our Organisation

PIONEER IN

PIONEER INISLAMIC

ISLAMIC FINANCE

FINANCEININMAURITIUS

MAURITIUS

AGENDA• Geographical background & Muslims in Mauritius• Islamic Banking & Finance & Muslims in

Mauritius • Integrating Islamic Finance in Cooperatives• Organisation of Al Barakah• Legal Framework• Products & Services• Other activities• Challenges• Conclusion• Opportunities with Al Barakah for Islamic Banking

& Finance in Mauritius

Geographical Background & Muslims in Mauritius Mauritius-gateway to the Africa, South Asia & Asia

Multi-religious society:

Population-1.3 M

Hindu :51%, Christians:28%,

Muslims :18%, Chinese :3% Muslims presence in all walks of life: Islamic

schools, professionals, orphanage, business, etc. Muslims have contributed enormously in the dvp.

of the economy Business operated as family business But as a community, little has been done to

establish the financial system of Islam.

Keen desire by Muslims to re-establish their identity

Establishing an Islamic bank in Mauritius in 1990’s was a manifestation of this desire.

To become part of the Islamic banking phenomena.

Preliminary work carried out . Formation of a Credit Union in the

Cooperative sector (AL BARAKAH)!

Islamic Banking & Finance & Muslims in Mauritius

Islamic Finance through Cooperatives Integrating Islamic Finance in the cooperative

sector:(1) Islamic Finance–based on Islamic ethics: justice, fairness,

sharing, benevolence, cooperation.(2) What is a Co-operative ?

- A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. (ICA)

- Based on values: honesty, openness, equity, equality, democracy, solidarity, self-help, etc.

- 7 principles of cooperatives: V.o.M, Democratic, M.Eco. Participation, Autonomy & independence, Education, training &information, Cooperation among cooperatives, Concern for community.

(3) Credit Unions are financial cooperatives which are in effect community banks.

Why cooperatives?1. Legal framework (Cooperative Societies Act

2005) 2. Values3. Easy formation4. Small capital5. Cooperative sector is more people-oriented6. “Cooperate with all in what is good and pious

and do not cooperate in what is sinful and wicked….” (Q-5:2)

7. Islamic Finance within the cooperative sector around the globe.( T&T, Canada, Malaysia, Thailand, Australia, India, Singapore,…)

8. Mauritius?

Islamic Finance through Cooperatives

Why Al Barakah?1. To provide an alternative to the interest-based

financial institutions for the community. (Community-based)

2. To provide halal investment opportunities and returns.

3. To contribute in a halal way to the overall development of the economy.

4. Formation of Al Barakah (Registered on 10th June 1998)

Islamic Finance through Cooperatives

LEGAL FRAMEWORKOperates:

Within the Co-operative Societies Act 2005

Within the framework of its rules and regulations

In accordance with Islamic Financial Laws.

Organisation Structure Individuals become shareholders Shareholders elect B.o.D,Internal

Controller at AGM B.O.D nominates various Committees Advisors – Dr. Monzer Kahf (USA) Br. Imtiaz Ali (T&T)

To operate as a financial institution based on Islamic cooperative principles and providing a wide range of services on an interest-free basis

To be a leading Cooperative Society in the field of Islamic Finance for a fair and just society.

Goals To present a practical model of Islamic Finance

through the cooperative sector To lay the foundation for an alternative financial

system to the Mauritian population at large.

Objectives1. To create a source of credit for its members for

provident and productive purposes.2. To provide savings facilities to members3. To create the framework to enable members to

manage their financial resources for their mutual benefit

4. To promote the welfare and economic interest of its members.

PRODUCTS & SERVICES BASED ON ISLAMIC FINANCIAL TECHNIQUES Schemes based on Murabahah: 1. Household General Financing 2. Computer Financing 3. Traders/Entrepreneurs Financing 4. Home Financing 5. Air Ticket Financing 6. Motor Vehicle Financing Istisnaa Financing (Manufacture-Sale) Partnership with shareholders (M&M) Interest-Free Loan (Qard-al-Hasan)

Computer FinancingHow it works?

• To purchase new computers sets, Laptop, etc...

Above Rs 10,000 - 50,000Financed the shares

ContributedRs 25025%

48 Months1 or 2 Sureties

Shares / Assets / ComputerRs 100

1 Month Instalment Yearly

4 timesAmount

Financing Limit

Processing FeeMark-Up

Repayment PeriodSurety

CollateralShare Rider

Waiver

Our Special Funds

Reserve Fund (Statutory)Islamic Finance Research, Education & Training Fund (IFRET FUND)Solidarity Fund Dividend Equalisation Fund

OTHER ACTIVITIES

Creating awareness about Islamic Finance.

Organizing lectures, seminars, conferences and workshop.

Organizing mini trade fair, socio-cultural programme.

CHALLENGES1. Individual/organisational/government

level

2. Legal framework

3. Public acceptance

4. Economic potential

5. Human Resource

6. Mass Education

7. Competition

Islamic Banking & Financial Services??

• Mauritius wants to connect to this sophisticated and growing global phenomenon that spans banking, non-banking financial services,micro-finance,insurance and capital markets.

• We will also set the regulatory framework for leasing companies to market products which are shari’ah compliant. (60)

• And to level the playing field appropriate amendments will be made to the legislation to make normal banking and Islamic banking tax neutral.(62)

Budget speech 2008/2009 - Minister of Finance

Opportunities with Al Barakah for Islamic Banking & Finance in Mauritius

Legal & Regulatory Framework

* The Banking Act 2004- Amendments

2007

* The FSDA 2001-(Non-banking activities)

* The Cooperative Societies Act 2005 Membership for corporate bodies Projects/Joint ventures etc.

CONCLUSION

1. 10 years of operation

2. An eye-opener

3. Islamic finance at different levels

4. Well-being of all citizens

M. Raffick Nabee MohomedSecretary Al Barakah M.C.SE-mail: albarakahcoop@hotmail.comTel: (230) 6275766, 7781738