OBG talks to Jacques Attali, President, PlaNet Finance

Interview: Jacques Attali

What impact have microfinance institutions (MFIs) had on rates of financial inclusion?

JAQUES ATTALI: In Morocco, MFI customers are not taken into account for the purposes of calculating the country’s rates of financial inclusion. In fact, solely the act of opening a bank account in the traditional banking sector counts towards those statistics. Barred by regulations from taking deposits, certain MFIs have instead sought to promote financial inclusion among young people by launching an educational programme that encourages them to open savings accounts in the traditional banks.

Improving financial inclusion has been made possible mainly thanks to Al Barid Bank. The banking penetration rate has leapt from 34% in 2010, when Al Barid Bank was founded, to 54% today. Al Barid Bank has launched a complete range of basic products at affordable prices, including a mobile banking solution. PlaNet Finance assisted the bank with creating a user-friendly service interface. The expansion of the bank’s branch network has supported our goal to open 500,000 new bank accounts per year.

Where do you see potential for MFI growth in 2014, and what can be done to support small and medium-sized enterprises (SMEs)?

ATTALI: Nowadays the microcredit industry is estimated to serve around 800,000 people in Morocco. The aim is to reach 3.2m people by 2020. However, such an ambitious figure requires penetration of new markets. MFIs will have to continue with geographical expansion, particularly in rural areas where such services are not in place. Most MFIs have opened mobile branch offices to increase their penetration rates. A further potential growth area for MFIs could be financial products adapted for the requirements of cattle breeders, small farmers and agricultural cooperatives. The Moroccan government has also launched a national strategy to promote SMEs, encompassing legal, fiscal and financial reforms. Two of the main incentives put in place by the government are the creation of a product of public guarantee for loans aimed at SMEs and the creation of local investment funds. Another opportunity to be exploited is SME financing, as they are important sources of growth and employment. SMEs currently face difficulties in obtaining finance both from banks and MFIs. Banks consider them too risky and the administrative burden associated with lending to them makes the loans not cost-effective. On the other hand, MFIs are prevented by legislation from offering loans of more than Dh50,000 (€4440). Filling this gap in support is necessary in order to provide the required capital to foster the creation and development of SMEs. There are broadly two possible solutions to this problem: either MFIs can support SMEs by offering them specially adapted products and services, or banks can set up programmes to provide smaller-scale loans to SMEs.

From where do MFIs currently obtain the majority of their funding, and what reforms are needed to sustain the growth of the sector?

ATTALI: MFIs receive approximately 80% of their financing from local banks and the remaining 20% from Jaida, a fund that invests in MFIs, bringing together national and international organisations such as Caisse de Dépôt et de Gestion, Caisse de Compensation, the French Agency for Development, Bank aus Verantwortung and Al Barid Bank. For the time being, taking customer deposits remains a prohibited source of funding for Moroccan MFIs due to their regulatory status as associations. By contrast, customer deposits can constitute up to 60% of the funding of MFIs in West Africa. To address this situation, major Moroccan MFIs have undergone a process of transformation to become financial institutions. It will then be for the authorities, including Bank Al Maghrib and the Ministry of Economy and Finance, to decide whether MFIs are allowed to take deposits.