MicroFinanceMorocco

Al Akhawayn University, Ifrane, Morocco : Al Akhawayn University, Ifrane, Morocco The State of the Micro Finance Sector in Morocco By Ahmed Driouchi & El Mustapha Azelmad The Institute of Economic Analysis and Prospective Studies & School of Business Administration


Slide2 : Micro Finance Sector in Morocco: Context The size of the population of Morocco is 30 million people, 19 % of this population live below the national poverty line in 2003, 44 % of this population live in rural areas, 35 % of this population live below the absolute poverty line (World Bank) in 2003, Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance The unemployment rate in Morocco reached 24.1 % in 2003, The number of micro enterprises in Morocco is estimated to be 500,000. They constitute the principal source of employment for the poor people.


Slide3 : Historical Background (1) 1990s: micro finance activities have started in Morocco, 1993: AMSED, a Moroccan NGO, has granted a first loan to a woman to start her business, By late 1990s, many other institutions have emerged and contributed to the development of the micro finance sector in Morocco, Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance In 1997, the implementation of the MicroStart Program (a UNDP sponsored program to promote the micro finance sector in Morocco) has allowed the emergence and the financing of many other micro finance institutions.


Slide4 : Historical Background (2) In the year 2000, Hassan II Fund has supported the sector by a subsidy of Euro 10 million. This financial contribution has allowed to increase the number and the amount of loans granted, 250,000 beneficiaries from micro credit loans (of whom 80 % are women), Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance Even though the micro finance sector in Morocco is very young, a certain maturity has been reached (excellent rates of reimbursement: 99 % in the majority of cases). Estimations indicate that the number of micro enterprises (500.000) can increase to 1,200,000 potential micro enterprises if support in brought to the sector,


Slide5 : Legal Framework The law 18 97 on micro finance was voted in 1999. It aims at strengthening the rules and regulations applicable to micro finance , In February 2000, the Moroccan Ministry of Finance has approved and implemented the law that attributes licenses to micro finance institutions. This law stipulates that micro finance institutions are allowed only to grant loans but not to collect deposits, Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance Another important point of this law is the viability of micro finance institutions. Any institution has to substitute initial subsidies by equity capital coming mainly from exercising its activity. Otherwise, the license to the institution will be cancelled and the capital will be distributed to another company.


Slide6 : Micro Finance Institutions in Morocco The 3 most important micro finance institutions are: Al Amana, La Fondation Zakoura, et le la FBPMC, The other micro finance institutions also play a primordial role in the development of the micro finance sector in Morocco, Micro finance institutions in Morocco receive legal, financial, and technical support from the Government, Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance They have regional offices, placed mainly in rural areas, and are devoted to different purposes (micro projects in the field of equipment, education, industry, agriculture, and other micro level activities).


Slide7 : Al Amana - Rabat Provide financial and non financial services for men and women willing to start their small businesses, Based mainly in urban areas and grants individual loans to finance the purchase of equipment, Training, non financial services (information, actions on economic and social environment) to promote management of activities, Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance Number of agencies: 80; Number of clients: 61, 434; Capital: 110 MDH; Coverage: urban.


Slide8 : Fondation Zakoura - Casablanca The fondation zakoura covers both urban and rural areas and finances projects of the very poor populations (97 % of its clients are women), Provides micro credit for non formal education, fighting illiteracy in rural areas for children aged between 8 and 16; in addition to being involved in health and housing programs, Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance Number of agencies: 39; Number of clients: 60,000; Capital: 90 MDH; Typology: 80 % urban.


Slide9 : FBPMC - Casablanca With loans fixed at 3000 DH, the FBPMC intervenes mainly in urban areas in fields superior to other micro finance institutions, Target: micro entrepreneurs who already have some means and who are willing to start their micro firms, Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance Number of agencies: 21; Number of clients: 17,000; Capital: 80 MDH; Typology: urban.


Slide10 : Other Micro Finance Institutions 1- ATIL-MC Tétouan: local economic development; 2- Al Karama- Oujda: poor women excluded from the banking system; 3- INMAA- Ouarzazate: new micro credit products for rural sectors; 4- FONDEP – Rabat: socio-economic infrastructure and illiteracy among women in rural areas; 5- Association AIMC - Méknès: economic and social development of the Méknès region. 6- AMSSF-MC Fès: deprived populations in the region of Fès. 7- Fondation Crédit Agricole pour le Micro Crédit – Rabat : agricultural development; 8- AMOS – Khénifra: individual loans for deprived segments + solidarity Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance


Slide11 : Role of the Government Licenses granted to micro finance institutions to exercise their activities + financial, technical and managerial support + Follow up, Program MicroStart (2000): developed with the support of the UNDP and whose aim is : strengthen the capacity of micro finance institutions to ensure sustainability of access to financing, technical training, and institutional support, Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance In the year 2000, the Moroccan government has granted Euro10 million to strengthen the micro finance sector in Morocco. The 8 micro finance institutions which were licensed by the Ministry of Finance at that time received Euro 5 million in the first segment.


Slide12 : Financial Support The most important financer is USAID with US$ 16 million in 2001, The next two important sources are: Hassan II fund with US$ 8.7 million and Program MicroStart of the UNDP with US$ 1.7 million, The most active institutions receive most of the financing because these associations are performing and target the desired customers and have the institutional capacity to absorb the funds in question, Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance International sources of funds push micro finance institutions to be more active in rural areas.


Slide13 : Technical Assistance Al Amana received technical assistance financed by USAID. Zakoura received similar assistance with financing from EU. ATIL received a technical assistance supported financially by APS, Italy, Technical assistance consists in supporting the development and operating of micro finance institutions: training workshops in the key fields of micro finance and individual consultations and evaluations, Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance The program MicroStart of the UNDP also provided an important technical assistance to micro finance institutions.


Slide14 : Micro Finance Sector Needs Institutional strengthening: knowledge and targeting of clients, methodologies of granting loans, development of business plans, enhancing internal management structures, appropriate information systems and financial management, Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance Financial support: micro finance institutions are in a constant need of funds to extend their scope of activities, Supervision and coordination: urgent need for establishing accounting systems and standard evaluation criteria in order to facilitate the benchmarking and the integration of the Moroccan micro finance institutions in the international micro finance system. Strengthening human capital: the micro finance sector in Morocco is in a great need for specialists and experts in the field to accompany the development and the extension of the sector,


Slide15 : Implications Big need for introducing and strengthening micro finance at the university level, Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance Enhancement of investigations and research focused on micro finance, Teaching micro finance related courses at the university, Demand for specialists and experts to facilitate the development and the promotion of the sector, Creating academic support for these courses (study cases, research outcomes), Continuous education on issues of the micro finance sector and university support and follow up during the implementation phase.


Slide16 : Why Al Akhawayn University? An open and international institution, Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance Languages: English, French ,and Arabic, Partnerships with other universities and international organizations world wide. Flexibility in introducing new courses in the curriculum (Anglo-Saxon system),


Slide17 : Implications Context Historical Background Role of the Government Special Needs Legal Framework Micro Finance Institutions Implications Financing & Technical Assistance Micro Finance (micro credit, micro insurance, micro economics, and micro Enterprises) School of Business Administration School of Science and Engineering School of Humanities and social sciences Regular classes Women Empowerment Center Executive Education Center (EEC) The Institute of Economic Analysis and Prospective Studies (IEAPS) Research and Investigations Continuons Education Support for women