Banking on entrepreneurs: Small businesses are being offered unprecedented support

As seen in many emerging markets around the world, Morocco’s small and medium-sized enterprises (SMEs) play an important role in the national economy. Although they account for nearly half of employment and over 30% of GDP, the country’s SMEs often suffer from poor access to finance; currently receiving just under a third of total credit. SMEs’ overall contribution in terms of added value to the economy represents only 20%, due in large part to structural constraints that limit both their sustainability and their growth potential. Eager to unleash growth in this segment, the government is partnering with lenders to see how this group of borrowers, which makes up about 95% of registered businesses, can better access credit.

SECURING CREDIT: Defined as firms employing less than 200 people and with a maximum turnover of Dh175m (€15.6m), SMEs frequently experience problems securing working capital. This may cause firms to resort to money lenders that charge high rates, which reduces margins and confines their expansion To encourage banks to lend to small businesses, the Central Guarantee Fund (Caisse Centrale de Garantie, CCG) announced that it would act as a guarantor for SMEs that are seeking credit from banks.

Under the Daman Express programme, launched in June 2012, if a firm’s application for loan support is approved, the CCG will guarantee 70% of credit principal provided that total loan amount does not exceed Dh1m ($88,900). If the firm is unable to repay the debt, the CCG can also step in to assist the business owner in negotiating a payment plan with the bank.

INTERNATIONAL ATTENTION: Following a July 2012 conference in Casablanca, the European Bank for Reconstruction and Development (EBRD) announced plans to establish a new lending initiative, via local lenders, which could improve access to credit for smaller firms.

In October 2012, the bank committed €20m to a fund managed by regional private equity investor, AfricInvest-TunInvest Group, with the objective of providing debt financing to SMEs. A second €20m disbursement was provided to Société Générale Marocaine Bank (SGMB) in December, for on-lending to local SMEs. The EBRD has also begun providing business advice through its Small Business Support programmes.

The EBRD initiatives will operate in tandem with a number of national programmes that target capacity building for SMEs. Technical limitations and a lack of skilled labour have significantly restricted the sector from realising its full potential. These gaps prompted the Ministry of Industry, Commerce and New Technologies to launch two programmes that aim to provide SMEs with both financial and advisory assistance.

LOCAL INITIATIVES: The National Agency for SME Promotion (L’Agence Nationale pour la Promotion de la Petite et Moyenne Entreprise, ANPME) is the most visible component of this new strategy. ANPME is primarily responsible for implementing the Moussanada and Imtiaz programmes, which together account for roughly Dh1bn (€88.9m) worth of expenditures.

By the end of 2012, some 469 businesses, mostly in Casablanca, benefitted from the Moussanada programme. Moussanada focuses primarily on providing tools and guidance for SMEs in developing both strategy and organisation, as well as boosting their capacity for production processes, design, and research and development on an industry-specific level.

The Imtiaz programme provides direct financial support equal to 20% of an investment, up to a total investment value of Dh5m (€444,500). In 2012, 36 projects participated in Imtiaz, receiving Dh141.2m (€12.5m) on a total of Dh897m (€79.7m) investments. These projects led to the creation of 1967 new jobs.

Voluntary campaigns from the private sector have also focused on improving SME engagement with the formal economy and financial institutions. In January 2012, local financial institution Groupe Banque Populaire and the Moroccan Business Confederation signed a new three-year partnership agreement. The partnership aims to improve credit access and also develop a new information exchange network dedicated to SMEs.