Morocco: Nurturing growth
In light of the sizable role they play in both economic growth and job creation, Morocco’s small and medium-sized enterprises (SMEs) have been the target of a broad set of initiatives in recent years by a variety of public and private institutions to help improve SME access to funding and capacity building.
SMEs, which are defined by the Ministry of Commerce and Industry as businesses employing less than 200 people with a maximum turnover of Dh50m (€4.5m), are a major engine of the economy and currently account for around 93% of all registered businesses, 46% of employment and 38% to GDP.
However, their 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.
Perhaps the single biggest impediment for SMEs is access to finance. Businesses still struggle to obtain credit, as most of them fail to meet the financial requirements imposed by banks. In fact, in spite of the overwhelming numerical size, credit granted to Moroccan SMEs accounts for just 24% of total domestic loans, local media reported in May.
Following a recent conference in Casablanca, the European Bank for Reconstruction and Development (EBRD) announced a plan to establish a new lending initiative, via local lenders, to improve access to credit for smaller firms by July.
As part of a broader €2.5bn campaign, the EBRD will lend money to local financial institutions operating in the private sector, which will then in turn lend money to SMEs. The bank has also announced it plans on providing venture capital to SMEs as a way of boosting financing, while at the same time providing advice, and improving back office functions.
The EBRD initiative will operate in parallel with a number of national programmes that target capacity building for SMEs. Technical limitations as well as a lack of skilled labour have significantly restricted the sector from realising its full potential, prompting the Ministry of Industry, Commerce and New Technologies to launch two programmes that have sought to provide both financial and advisory assistance to SMEs.
The National Agency for SME Promotion (L’Agence Nationale pour la Promotion de la Petite et Moyenne Entreprise, ANPME) has served as the most public face of this new strategy, tasked with implementing the Moussanada and Imtiaz programmes which together account for roughly Dh1bn (€90.4m) worth of expenditures.
By the end of 2011, 341 businesses, mostly in Casablanca, benefitted from the Moussanada programme, and the ANPME announced in January that it planned to support another 500 enterprises in 2012. 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 aims to provide direct financial support from the government to cover 20% of total investment with a maximum ceiling of €445,572. In 2011, 47 projects benefitted from Imtiaz funding for a total investment of more than €89.11m. These projects are expected to generate an additional turnover of €1.36bn over the next five years and create more than 4500 new jobs.
Voluntary campaigns from the private sector have also aimed to expand the role of SMEs in the formal economy, through greater engagement with local financial institutions, as evidenced by the recent renewal of the SME support initiative from Groupe Banque Populaire (GBP) and the Moroccan Business Alliance (la Confédération Générale des Entreprises du Maroc, CGEM).
The initiative focuses on three main pillars: the establishment of a research observatory dedicated to microeconomic issues facing SMEs; the organisation and hosting of national and regional events as well as business-to-business (B2B) meetings; and the provision of entrepreneurship and basic business training across the country.
Should the government continue to ramp up its efforts to mobilise the necessary capital and expertise for SME expansion, the sector’s ability to increase job creation and drive economic growth will only grow further.