International Conference on Islamic Banking & Finance in Mauritius

1. International Conference onIslamic Microfinance in Mauritius Organized By : CENTER OF ISLAMIC BANKING & ECNOMICS

2. ISLAMIC FINANCIAL CO-OPERATIVES TO MEET THE FINANCIAL NEEDS OF THE COMMUNITY Case Study Of: Al Barakah Multi-purpose Co-operative society Limited Mauritius Mr. MamodeRaffickNabeeMohomed Founder/Secretary Al Barakah MCSL International Conference on Islamic Banking & Finance 05-06 April 2011, Mauritius

3. About The Speaker Mr. MamodeRaffick NABEE MOHOMED Founder and Secretary of Al Barakah Multi-purpose Cooperative Society Limited, Mauritius. Mr. NabeeMohomed 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. NabeeMohomed has also done a thesis on “An empirical study of the Muslim Family in a rural set up”. He has acted as panelist and speaker at International Conferences and seminars on Islamic Finance and presented the case study of Al Barakah MCSL in Trinidad &Tobago, India, Pakistan, Malaysia and South Africa. He has also attended several short courses and training.

4. 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. Cooperative Muslimine Malaysia Berhad (Malaysia) -Internship in Islamic Finance & Islamic Accounting for Islamic Co-operative Societies (15 December 2008-02 January 2009)

5. AGENDA Islamic Finance & Islamic Financial Institutions Concept of Co-operatives Islamic Financial Co-operatives Financing intruments of IFC Reserves & Funds Case Study of Al Barakah Multi-purpose Co-op Society Ltd.-Mauritius 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

6. Islamic Finance & Islamic Financial Institutions Islam is a practical way of life with its own system Inheritance in the economic sphere & scholars at work Initiatives-No working model & since 1960’s IBF started–MitGhamr 1963 Emergence of IFI & growth Satisfaction/Criticism Types of Islamic Financial Institutions (IFI) Dominance & neglected areas & Evolution

7. Evolution of Islamic Banking &Finance According to Professor Rodney Wilson “Formal Islamic banking first emerged in the early 1960’s through credit unions of Muslim landowners in Egypt and Pakistan who simply pooled their resources and could then in turn draw out funds for agricultural improvements on a non-interest basis.” (The evolution of Islamic banking and emerging trends in Islamic Finance) Interest Free Financial institutions (IFFI) of India are the forerunners in the history of global Islamic financial movement. Tracing the history of growth of interest free financial institutions in India, it is reported that such organized credit society had shown its presence as early as 1890. According to the directory of Islamic banks in India, such efforts in the organized sector in the style of the Patni Cooperative Credit Society Ltd. was established in 1942… A recent study conducted by Bagsiraj (2003) shows that there are institutions that have grown to a size of 14 Islamic Cooperative Credit Society (ICCS) in India. It may be noted that these institutions primarily fulfill the casual social needs of the people at a very small scale. (Dr Rahmatullah-IFFI of India in crisis/Bagsiraj-IFII,published by KAU, Jeddah in 2003) “The history of Islamic Financial system in Thailand started with the establishment of a cooperative society, Pattani Islamic Saving Cooperative that operates based on shariah in 1987….. These Islamic cooperative societies have successfully established themselves as viable financial institutions in managing and mobilizing Muslims in this region.” ( Islamic banking in Thailand: prospects and challenges (SudinHaron & KumajdiYamirudeng)

8. The Cooperative Ideology Movement and Credit Union Concept of cooperative: - From the beginning of human society, cooperation has always been a vital factor in human development. - As a social creature, it is the natural urge of man to cooperate with each other. - Cooperation conveys the idea of helping each other and making joint efforts to achieve a common goal. The Cooperative movement emerged in the middle of the 19th century by the Rochdale Pioneers. On the 24th October 1844, in Rochdale, Lancashire England, a group of people faced with economic exploitation and deprivation set up a cooperative store, based on the principles of self-help and mutual help. They defined a set of principles which became the basis for the cooperative ideology which has spread all over the world be it a capitalist, socialist or Muslim society.

9. 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. (www.ica.coop) 7 principles of cooperatives: 1. Voluntary and open membership (VoM) 2. Democratic member control (DmC) 3. Member economic control (MeC) 4. Autonomy and independence (A&I) 5. Education, training and information (EtI) 6. Co-operation among co-operatives (CaC) 7. Concern for community (CfC)

10. Class of co-operative societies Sectors of the economy-PMT Class of Co-op societies/Multi-purpose Co-operatives - Consumer Co-op, Producers, Marketing, Housing, Catering, Financial Co-operatives/Credit unions etc. What is a Credit union? - A credit union is a financial cooperative that may accept savings, deposits, provide credit and other financial services to its members. - Credit Unions are financial cooperatives which are in effect community banks. - Membership: people from all walks of life, - Common bond - Owned & controlled by shareholders/members - Capital: mobilising from shares ,savings & deposits from members - Financing/not for profit maximisation - Surplus-back to shareholders

11. Islamic Financial Co-operatives Generally Conventional co-operatives/credit unions are interest-based Credit unions called by different names: - In Africa-Savings And Credit Cooperative Societies (SACCOS) which emphasise on savings before credit. - In Afghanistan-(IIFC) Islamic Investment and Finance Cooperatives which comply with sharia. IFC are institutions based on the principles of Islamic Finance. Efforts over the past 30 years to set up IFC Community-based and providing Islamic financial services to the community Islamic Financial Co-operatives around the globe (T&T, Canada, Malaysia, Thailand, Indonesia, USA, Australia, India, Singapore, Afghanistan…)

12. Islamic Financial Cooperatives Why IFC? 1. Conceptual framework “Cooperate with all in what is good and pious and do not cooperate in what is sinful and wicked….” (Q-5:2) 2. Legal framework is less regulated than the corporate sector (Cooperative Societies Act ,CU Act) – Shariah-compliant 3. Values - Islamic Finance–based on Islamic ethics: justice, sharing, cooperation. - Cooperatives based on values: honesty, equity, equality, solidarity, self-help, etc. 4. Easy formation & more elastic 5. Small capital requirement 6. Community –based & more people-oriented( IEViews..) 7. Spread ownership of business and reduce concentration of wealth 8. Different purposes - open to any type of economic activity 9. Incentives & Benefits –Tax 10. Democratic

13. Financing instruments of IFC Murabahah Ijarah Mudarabah Musharakah Diminishing Musharaka Istisna Qard-ul-hasanah/IFL

14. Reserves & Funds Statutory Reserve – according to Coop Act Dividend equalization Fund Social Takaful Fund Profit Equalisation Reserve Zakat Fund

15. Case study Al Barakah Multi-purpose Co-operative Society Limited Mauritius

16. Geographical Background & Muslims in Mauritius Mauritius-gateway to 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.

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

19. To become part of the Islamic banking phenomena.

20. Preliminary work carried out.

22. LEGAL FRAMEWORK Operates: Within the Co-operative Societies Act 2005 Within the framework of its rules and regulations In accordance with Islamic Financial Laws.

23. Organisation Structure Advisors– Dr. MonzerKahf (USA) Dr. AshyrafDusuki(Malaysia) Br. Imtiaz Ali (T&T)

27. Partnership /JV with shareholders (M&M)

28. Interest-Free Loan (Qard-al-Hasan)

30. CHALLENGES Individual/organisational/government level Legal Framework Public acceptance Economic potential Human Resource Mass Education Competition

31. 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

34. Jazak Allah Thank You MamodeRaffickNabeeMohomed Founder/Secretary Al Barakah M.C.S.L E-mail: albarakahcoop@yahoo.com www.albarakahcoop.org Tel: (230) 6275766,

35. Head Office: 192- Ahmad Block, New Garden Town , Lahore, Pakistan Ph: +92-42-35913096-8, 35858990, 38407850 Fax: +92 -42-35913056E-mail : info@alhudacibe.com Web: www.alhudacibe.com