Compared to most of its regional peers, Morocco’s banking sector has achieved a high level of sophistication. This has translated into high penetration rates for financial services, regional expansion of major banks and the development of services targeting lower-income populations. These factors have allowed the country’s financial system to become one of the region’s most inclusive. However, with part of the Moroccan population still outside the banking system and a culture that is used to dealing with cash, sector stakeholders must look for alternative ways to continue their expansion.
By the Numbers
Several signs point to a moderate increase in banking penetration in recent years. As of the end of 2017 the total number of bank accounts in Morocco reached 26m, a 6.4% increase on 2016 figures, according to the “2017 Annual Report on Banking Supervision”, published in July 2018 by Bank Al Maghrib (BAM), the country’s central bank. Roughly 56% of Moroccan adults had at least one bank account by the end of 2017, compared to 14% in the Middle East, 34% in sub-Saharan Africa and 62% worldwide. The number of bank cards in circulation expanded from 11.8m in 2015 to 14.1m in 2017, while the number of bank branches in the whole of the kingdom grew from 5711 in 2013 to 6388 in 2017.
Morocco’s solid regional positioning has benefitted from government policy measures. Set on improving the population’s access to financial services, the monetary authorities banned the practice of requiring minimum deposits to open new accounts and made it obligatory for banks in the kingdom to offer a number of elementary banking services at no cost. Access accelerated further with the 2009 inauguration of the national postal bank, Bank Al Barid, which leveraged the existing postal network for the provision of banking services. This enabled populations in rural areas to establish bank accounts. Between 2009 and 2014 Al Barid Bank saw the opening of 6m new accounts, according to the World Bank. Furthermore, the share of small and medium-sized enterprises with access to financing or a line of credit doubled between 2007 and 2015.
More recently, the entrance of participatory banking institutions to the market, in hand with new rules overseeing the operation of non-banking payment institutions allowed under the 2015 banking regulation, is expected to maintain banking inclusion at the top of the country’s development agenda.
Building on the success that government measures have had, the Ministry of Economy and Finance began working with BAM on a National Financial Inclusion Strategy in late 2017. This aims to not only prioritise the areas in which regulatory policies can have the greatest impact, but also to help clarify the role that the banking sector and monetary authorities should play in the wider economy. More importantly, the new strategy will help to coordinate efforts in several fields related to financial inclusion, such as housing finance, microfinance, mobile payments and funding for small businesses. The outline of the roadmap was presented by Mohamed Benchaâboun, the minister of economy and finance, in early February 2019.
The promotion of financial inclusion has also become a regional topic on which Morocco aims to be a principal proponent. In May 2017 BAM chaired a Euro-Mediterranean seminar in partnership with the World Bank and the Central Bank of France under the theme “Digital Transformation: Financial Inclusion and Stability”. Leading the pack in financial inclusion is critical for the kingdom, not only as a means to improve access within its own borders, but also to support its broader strategy of economic cooperation within Africa and its ambitions to transform Casablanca into a regional centre for finance. “Casablanca Finance City has not yet become a true financial hub, but it has managed to be attractive for many companies that look towards Africa,” Laurent Dupuch, chairman of the board of BMCI Group, told OBG. “Due to its structure, Casablanca has become a city where companies meet and talk about the African and international markets on a daily basis.”
However, this urban focus also underscores persisting regional disparities. Due to their economic weight and the presence of more affluent citizens and the business community, a small number of Moroccan cities are the focal points for banking activity, and therefore display higher levels of financial inclusion. The two regions of Casablanca-Settat and Rabat-Salé-Kenitra – the country’s economic and political centres – accounted for 44% of bank branches, 56% of deposits and 80% of credit allocation in 2017, according to BAM. Gender disparities also exist. While 77% of Moroccan men had at least one bank account as of 2017, the percentage of women holding the same was 37%. Addressing these geographic and gender-related differences will require a mix of physical branch expansion, digital solutions and service offers that target certain segments of the population.
Seeing wide success in other countries, Morocco introduced the M-Wallet mobile payment system in November 2018, jointly overseen by BAM and the National Agency for Telecommunications Regulation (Agence Nationale de Réglementation des Télécommunications, ANRT). The new payment system aims to take advantage of the country’s high mobile phone penetration and robust telecommunications infrastructure to advance inclusion. According to a September 2018 study by the ANRT, 92% of Moroccans over five years of age have a mobile phone, with 73% of them using a smartphone. M-Wallet allows mobile users to transfer money, pay for products and services, and withdraw cash.
The introduction of mobile money is a significant milestone, not only because of the role it can play in financial inclusion, but also in terms of decreasing the use of cash in most day-to-day transactions. According to Mamoun Tahri-Joutei, director of economic intelligence at BMCE Bank of Africa, the expansion of mobile money across the continent has underlined its role as a driver of inclusion.
“Mobile payment systems are one of the most impactful mechanisms for bringing more people into the banking system. Kenya, for example, has a high penetration of banking activity thanks to mobile payments, although if you look at the number of accounts, it remains relatively small,” he told OBG.
Indeed, much of the banking sector’s expansion has been driven by the growth and diversification of access points. However, the annual number of new branches has seen a steep reduction in recent years, pointing to a slowdown in the degree to which banks are pursuing brick-and-mortar growth. While 264 branches were inaugurated in 2013, the number had fallen by more than half by 2017, which saw the opening of 105 new branches. Nevertheless, this does not mean that there is no room for banks to grow their physical distribution networks. “Some rural areas are underserved, thus there are parts of the country where it makes sense for banks to continue to expand their physical network,” Hiba Zahoui, director of banking supervision at BAM, told OBG. Indeed, bank branch density remains largely skewed towards urban areas, which have one banking access point per 2005 people, compared to one for some 11,050 people in the kingdom’s rural areas, according to BAM’s 2017 annual report.
Another way to increase financial inclusion is by offering customers basic banking services at accessible prices. For instance, the kingdom’s biggest bank, Attijariwafa Bank, launched Wafa Cash to allow users to transfer money through a network of 2000 agencies across the country. “A lot of people that work in Casablanca send money to their hometowns through this type of service. These people are increasingly being served by the banking sector through money transfers – and maybe a bank card – all at low prices they can afford,” Karim Gharbi, partner at CFG Bank, told OBG. “It is a way into banking.”
Financial inclusion will also likely see a boost from the entrance of participatory banking institutions. After BAM approved the inclusion of participatory banks in the sector at the start of 2017, the first of these, Umnia Bank, began operations in May that year. As of November 2018, five participatory banks and three participatory windows within traditional banking institutions were active in the country (see overview).
“I think these banks will surely bring more people into the banking sector since they help expand the customer base into new segments,” BMCE Bank of Africa’s Tahri-Joutei told OBG. The early growth of the segment has been impressive. By October 2018 participatory banks added 50,000 new bank accounts, allocated Dh3bn (€269.8m) worth of finance and captured Dh1.2bn (€107.9m) in customer deposits.
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