Shariah Guide to Murabaha

Murabaha (literally "profitable sale") is a sale contract where the bank discloses the original cost and adds a known profit margin. The buyer knows exactly what the bank paid and what profit it earns. This transparency is a core Shariah requirement, unlike conventional lending where interest accrues on a debt.

Step 1: You identify a property and request financing. Step 2: The bank purchases the property from the seller (real ownership transfer). Step 3: The bank resells the property to you at cost plus a disclosed profit margin. Step 4: You pay the total price in fixed monthly installments over the agreed term. The profit margin is fixed at signing and cannot change.

Morocco follows the Maliki school of Islamic jurisprudence. The Supreme Scientific Council (CSO) has validated Murabaha as Shariah-compliant, provided the bank takes real ownership of the asset before reselling, the profit margin is disclosed, and the price is fixed. The Maliki school emphasizes maslaha (public interest) and considers Murabaha a legitimate commercial transaction.

In a conventional mortgage, the bank lends money and charges interest, a debt-based transaction. In Murabaha, the bank buys and resells, an asset-based transaction. Key differences: (1) No compounding interest in Murabaha, (2) Fixed total price from day one, (3) The bank bears risk during ownership period, (4) Profit margin is a sale margin, not interest on debt.

Law 103-12 established participatory banking in Morocco. Bank Al-Maghrib (the central bank) supervises all participatory banks, while the CSO provides Shariah compliance opinions. Tax parity ensures Murabaha profit margins are deductible like conventional mortgage interest (limited to 10% of taxable income, capped at 1,000,000 MAD). Registration fees are 4% of the property price.

The Daam Sakane program (2024-2028) provides direct subsidies for first-time homebuyers: 100,000 MAD for properties up to 300,000 MAD (incl. VAT), or 70,000 MAD for properties between 300,001-700,000 MAD. The property must be new construction, first sale, and occupied as primary residence for at least 5 years. As of 2026, co-owners are also eligible.