AlHuda CIBE- presentation on Islamic Financail Co-operatives by Mr. Mamode Raffick

1. Mr. Mamode Raffick Nabee Mohomed
Founder/Secretary
Al Barakah MCSL
ISLAMIC FINANCIAL CO-OPERATIVESISLAMIC FINANCIAL CO-OPERATIVES
TO MEET THE FINANCIAL NEEDSTO MEET THE FINANCIAL NEEDS OF
THE COMMUNITY
Case Study Of:
Al Barakah Multi-purpose Co-operative society Limited
Mauritius
4th International Conference & Exhibition on Islamic Banking & Takaful
2 November 2010, Lahore, Pakistan

2. 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 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.

3.  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)

4.  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

5.  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–Mit Ghamr 1963
 Emergence of IFI & growth
 Satisfaction/Criticism
 Types of Islamic Financial Institutions (IFI)
 Dominance & neglected areas & Evolution

6.  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 (Sudin Haron &
Kumajdi Yamirudeng)

7.  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.

8.  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.i
ca.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)

9.  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

10.  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…)

11. 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

12.  Murabahah
 Ijarah
 Mudarabah
 Musharakah
 Diminishing Musharaka
 Istisna
 Qard-ul-hasanah/IFL

13.  Statutory Reserve – according to Coop Act
 Dividend equalization Fund
 Social Takaful Fund
 Profit Equalisation Reserve
 Zakat Fund

14. Al
Barakah
Multi-purpose
Co-
operative
Society
Limited
Mauritius

15.  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.

16.  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)!

17. 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

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

19.  Advisors– Dr. Monzer Kahf (USA)
Dr. Ashyraf Dusuki(Malaysia)
Br. Imtiaz Ali (T&T)

20. 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.
VISION
MISSION
GOALS
 To present a practical model of Islamic Finance
through the co-operative sector.
 To lay the foundation for an alternative financial
system to the Mauritian population at large.

21. 1. To create a source of credit for its
members for provident and productive
purposes.
2. To provide savings facilities to members
3. 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.
Objectives

22.  Tailor-made schemes based on
Murabahah:
1. Household General Financing
2. Computer Financing
3. Traders Financing
4. Home Financing
5. Air Ticket Financing
6. Motor Vehicle/Cycle Financing
7. Land & Property Financing
 Istisnaa Financing (Manufacture-Sale)
 Partnership with shareholders (M&M)
 Interest-Free Loan (Qard-al-Hasan)
 Hajj Savings Account

23. Statutory Reserve
Profit Equalisation Reserve
Dividend Equalisation Fund
Social Takaful Fund
Creating awareness about Islamic Finance.
Organizing lectures, seminars, conferences and
workshop.
Organizing mini trade fair, socio-cultural
programme.

24. 1. Individual/organisational/government level
2. Legal framework
3. Public acceptance
4. Economic potential
5. Human Resource
6. Mass Education
7. Competition

25.  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

26.  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.

27. 1. 10 years of operation
2. An eye-opener
3. Islamic finance at different levels
4. Well-being of all citizens

28. Mamode Raffick Nabee Mohomed
Founder/Secretary Al Barakah M.C.S.L
E-mail: albarakahcoop@yahoo.com
www.albarakahcoop.org
Tel: (230) 6275766, 7781738