Prime Microfinance Limited
Created in 1986, Casablanca-based Longofer's principle activity was the marketing of locally made and imported steel products. In 1993, the company changed direction and began manufacturing welded tubes on three production lines. Today it is one of Morocco's leading industrial firms for welded tubes and open profiles with 12 production lines and is also known for planashing, splitting and hot galvanization. Founded in 2002, Casablanca-based Univers Acier was formed as a joint venture by Longofer and Turkish steel operator Demirsan as the first iron and steel company dedicated mainly to the construction sector. Since then, the two family-owned, Casablanca-based companies have become the second-largest manufacturer of long steel products in Morocco with 25 percent market share and considerable export volume as one of the few to produce the long, flat steel reinforcement bars inserted into concrete buildings. For continued expansion and growth, money was needed to buy raw materials such as scrap steel from Portugal and Spain the Longofer group could import to Morocco in order to manufacture its products.
Islamic banking is a system based on the principles of Islamic law and guided by Islamic economics. Two basic principles behind Islamic banking are the sharing of profit and loss and, significantly, the prohibition of the collection and payment of interest by lenders and investors. In order to earn money without charging interest, Islamic banks use an equity participation system called Murabaha. Since funding for this customer needed to follow this format, PRIME MICROFINANCE had to be flexible in the same way as Islamic banks so that no personal assets had to be pledged – while at the same time finding a solution that didn't hinder Longofer group's day-to-day business. This had to be balanced with PRIME MICROFINANCE's own need to mitigate any risk associated with financing a family-owned corporate enterprise. What emerged was a first for PRIME MICROFINANCE – funding based on Islamic banking that used the metals being imported as the basis of a Murabaha structure and was flexible enough to make sense for the customer's end-to-end product cycle. With PRIME MICROFINANCE financing essentially 'on tap' and creating better cash flow, Longofer group is able to scale up its business and quickly reply to big orders – a format that barely exists in Morocco with only 20 transactions of this type.
