Al Akhawayn University, Ifrane, Morocco

1. 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

2. Micro Finance Sector in Morocco: Context The size of the population of Morocco is 30 million people, Context Historical Background 44 % of this population live in rural areas, Legal Framework 19 % of this population live below the national poverty line in 2003, Micro Finance Institutions 35 % of this population live below the absolute poverty line (World Bank) in 2003, Role of the Government 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. Special Needs Implications

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

4. 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, Context Historical Background Legal Framework 250,000 beneficiaries from micro credit loans (of whom 80 % are women), Micro Finance Institutions Role of the Government 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, 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). Special Needs Implications

5. 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 , Context Historical Background 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, Legal Framework Micro Finance Institutions Role of the Government 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. Financing & Technical Assistance Special Needs Implications

6. Micro Finance Institutions in Morocco The 3 most important micro finance institutions are: Al Amana, La Fondation Zakoura, et le la FBPMC, Context Historical Background The other micro finance institutions also play a primordial role in the development of the micro finance sector in Morocco, Legal Framework Micro Finance Institutions Micro finance institutions in Morocco receive legal, financial, and technical support from the Government, Role of the Government 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). Special Needs Implications

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

8. 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), Context Historical Background Legal Framework 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, Micro Finance Institutions Role of the Government Financing & Technical Assistance • Number of agencies: 39; • Number of clients: 60,000; • Capital: 90 MDH; • Typology: 80 % urban. Special Needs Implications

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

10. 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 Legal Framework Micro Finance Institutions Role of the Government Financing & Technical Assistance Special Needs Implications

11. Role of the Government Licenses granted to micro finance institutions to exercise their activities + financial, technical and managerial support + Follow up, Context Historical Background 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, Legal Framework Micro Finance Institutions Role of the Government 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. Financing & Technical Assistance Special Needs Implications

12. Financial Support The most important financer is USAID with US$ 16 million in 2001, Context Historical Background 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, Legal Framework Micro Finance Institutions 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, Role of the Government Financing & Technical Assistance International sources of funds push micro finance institutions to be more active in rural areas. Special Needs Implications

13. Technical Assistance 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 Legal Framework Micro Finance Institutions 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, Role of the Government Financing & Technical Assistance The program MicroStart of the UNDP also provided an important technical assistance to micro finance institutions. Special Needs Implications

14. Micro Finance Sector Needs 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, Context Historical Background 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, Legal Framework Micro Finance Institutions Role of the Government Financial support: micro finance institutions are in a constant need of funds to extend their scope of activities, Financing & Technical Assistance 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. Special Needs Implications

15. Implications Big need for introducing and strengthening micro finance at the university level, Context Historical Background Demand for specialists and experts to facilitate the development and the promotion of the sector, Legal Framework Enhancement of investigations and research focused on micro finance, Micro Finance Institutions Role of the Government Teaching micro finance related courses at the university, Financing & Technical Assistance 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. Special Needs Implications

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

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