Morocco Looks to Strengthening Small and Medium Enterprises – Jean R. AbiNader
Goal is to Generate Needed Jobs through Entrepreneurship
Jean R. AbiNader, MATIC
September 29, 2015
The US and Morocco, and indeed the entire MENA region and Africa, face a similar challenge – how to generate thousands of jobs without overtaxing government budgets. In the US, we have a relatively robust network of community colleges, skills training centers, and related institutions that focus on bringing skilled human resources to the market. Yet the US is also suffering from a deficit of people working in technology fields, the trades (carpentry, auto mechanics, plumbing, etc.) and producing college graduates who have few financial and technical skills. The most recent estimates published by Bloomberg indicate that the US needs to create 2.4 million jobs to reach 5.1 percent unemployment – considered full employment by US standards.
So what about countries that don’t have the same types of networks for education and training? And what are the skills that are needed for real jobs in the marketplace? Over the past decade, the World Bank and other multilateral institutions have been engaging MENA and Africa on these questions, promoting solutions that rely in large part on public-private partnerships for the needed results.
Many programs focus on small and medium sized enterprises, SMEs, which in the West, are responsible for the majority of job growth. Not so in Africa and the MENA countries. SMEs are still developing in emerging and frontier markets. Many are part of the informal economy, where employment is sporadic and poorly compensated relative to formal manufacturing jobs, and access to financing and training for expansion is limited.
SMEs growth in recent years has resulted primarily from local companies becoming part of supply chains for larger projects, ranging from construction and tourism to automobile and aeronautical manufacturing, and a range of services and specialty products. There are several categories of SMEs, and each has its challenges.
At the top of the rung are SMEs that sell finished or ready-to-use products to larger companies. Most of these are found among the 300+ firms working with the major automobile producers and aeronautic parts suppliers in Morocco, as well as hundreds of others located in larger cities, near car and consumer goods sales outlets, which generally use occasional labor. Some are part of the formal economy, which means they pay taxes, and occasionally these SMEs outsource to small providers for specific needs. These SMEs are challenged by access to expansion financing, hiring skilled workers, and navigating technology upgrades and equipment purchasing.
Rapidly entering this segment are the new-to-market technology companies and those that are applying technology to traditional sectors, such as power, communications, sales, catering, and consumer services. While these firms grab the headlines due to the large proportion of entrepreneurs and youth that people these companies, they still represent a minority among SMEs; yet they are perhaps best poised to create thousands of jobs in the next decade.
More numerous, in fact the largest majority of Moroccan companies, are SMEs that exist in every city, town, and village providing basic services that citizens require and that are the largest segment of the informal economy. How this part of the workforce will become a strong contributor to the overall economy is subject to debate. Yet no one can deny that these informal firms, as well as the tech firms, are the first line of innovation and creativity in terms of providing services to meet existing and emerging demands.
The Moroccan Campaign to Build Jobs
A recent article in The African Report focused on Morocco’s SME support efforts through the country’s special agency for SMEs and legislation that has been passed to provide funding and logistics support. “Since 2014, 20% of government contracts are reserved for SMEs. The Casablanca Stock Exchange (CSE) is also working with the London Stock Exchange to pick groups of small companies to receive two years of business training and contacts with investors. Karim Hajji, chief executive of the CSE, explains: ‘SMEs often have a problem reaching capital markets. They are not aware of the needs of investors as far as information, reporting requirements and strategic business plans’.”
Among the programs supporting SMEs, according to the investment authority’s website, is IMTIAZ, providing direct financial support to high potential SMEs through access to bank credit and support growth accelerators. SME beneficiaries are selected through a national competition. A companion program, MOUSSANADA, aims to improve SME productivity through targeted assistance on a specific business function, such as product quality, organizational structure, process, design, and related elements.
The most recent program is EMERGENCE INVEST, composed of three public-private investment funds: Venture Capital, Capital Development and Capital Transmission. The funds are designed to deal with key challenges, including under-capitalization, acquiring long-term bank financing, identifying and selecting appropriate board members and shareholders, facilitating growth, and creating more SMEs. While still in their first phase of operations, the funds show positive results and their funding is being renewed.
There is no better measure of how Moroccan SMEs are succeeding than the recently completed CEED (Center for Entrepreneurship and Executive Development) Conference, which took place on September 15-16 in Casablanca. It is an annual conference that brings together companies and entrepreneurs to network, attend workshops, and acquire new skills and technologies. As reported in Morocco World News, CEED works across many different sectors and with all levels of business development, from concept to mergers and acquisitions.
According to the article, “CEED is a wonderful initiative that is a source of great help in supporting, guiding, educating, and mentoring the entrepreneurship community. They invite speakers with a wide breadth of knowledge and experience. The speeches, interactive Q&A sessions and panel discussions are an invaluable source of information for entrepreneurs, startups and even for people who already have established successful businesses. In addition, the Conference attendees had a great opportunity to network amongst themselves, meet new people that they can learn from or collaborate with in their various entrepreneurship endeavors.”
Contrary to stereotypes about business leaders in the Middle East, the president of CEED is a woman, Fatima-Zahra Oukacha. She recently started an investment fund for impact projects and spoke about the importance of arranging meetings between entrepreneurs and companies with whom they shared common interests. Her faith in Morocco’s entrepreneurs is evident in that she is already planning next year’s event, which is attracting attention from major technology giants around the world.