Morocco will introduce its first fully-compliant Islamic bank by 2016, says the country’s central bank governor Abdellatif Jouahri.

Islamic banking has been growing across the Mena region and beyond in recent years. International Islamic banking assets were expected to exceed US$778bn last year, and are set to triple to more than US$2tn in the next four years, according to Ernst & Young’s analysis.

The Moroccan government only adopted last January a bill drafted in 2012 regulating shariah-compliant banking products and allowing foreign Islamic banks to operate in the country’s banking sector. Morocco has also approved plans to create a shariah board of Islamic scholars to preside over the Islamic finance industry. While the country has been slow to set it up, it is not too late to profit from the popularity of Islamic banking. “It is going to be extremely good for the Moroccan economy,” Maninder Bhandari, managing director at Encore Solutions, tells GTR. “There is definitely going to be high demand for the services,” he says.

Islamic banking’s popularity is due to the less speculative nature of its products

While Islamic banking currently occupies a small percentage of the market share, demand for this type of product is high and constantly growing, as the nature of these transactions is less speculative than in conventional banking. “Islamic banking really helps in that respect and it increases the size of the economy and transactions therein,” says Bhandari.

According to him, the reasons for Islamic banking’s popularity are not simply religious, but also financial – from a borrowing as well as deposits perspective, as profit rates paid on deposits and balances by Islamic banks are usually higher than those paid by conventional banks, and related to risk and safety – because all the counterparties involved in Islamic banking transactions are taking an equal risk and not just passing the risk on to the client.