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Business Briefs Morocco: New Finance Law Reflects King’s Prioritization of Social Development; Recent Study Looks at Moves to Support Enterprise and Entrepreneurship Growth; USAID Reports on Efforts to Bolster Role of Small Enterprises in Kingdom’s Economy– Jean R. AbiNader

Jean R. AbiNader, Moroccan American Center

Jean R. AbiNader, Moroccan American Center

Jean R. AbiNader
August 22, 2018

Head of Government, Saadeddine Othmani, unveiled the proposed 2019 Finance Law, which strongly emphasizes social development. It clearly responds to King Mohammed VI’s recent speeches lamenting the uneven and inadequate state of economic and social development, which has led to demonstrations in several areas in Morocco and a boycott spurred by the rising costs of essential consumer items. 

An article in La Tribune Afrique noted that the Prime Minister laid out the following conditions to Parliament concerning the draft Finance Law, “To ensure that priority is given to the basic social sectors, the improvement of the purchasing power of citizens, the strengthening of social protection measures and the promotion of employment.” In addition, it should facilitate the continuation of major projects and existing national plans that outline the country’s economic growth strategy.  Among the social projects being targeted are education, health, employment, social welfare programs, reforms of social welfare, and improving consumer access to goods at reasonable prices.

This past session, several initiatives did not make it to the draft bill stage, frustrating reform of the health system, ensuring the viability of social security funding, and a coordinated strategy for improving employment opportunities for youth.

Among priority legislation are continuing efforts to promote the growth of small businesses, start-ups, and entrepreneurs, through improvements in funding options including crowdfunding. According to the assessment provided by Oxford Business Group, the Ministry of Economy and Finance, introduced a draft bill “Setting out the regulation of crowdfunding for both prospective investors and businesses,” including no or low interest loans, direct grants or gifts, or investments that exchange funds for equity. The Central Bank, Bank Al Maghrib (BAM), will have regulatory authority over peer-to-peer and donation-based financing. The Ministry of Finance and Economy, will supervise investment or equity crowdfunding activities from conventional or Islamic financial sources. It is not known if the recent changes at the Ministry will affect the bill’s prospects the next session of Parliament.

The article notes that “The development is expected to provide a new source of funding to entrepreneurs, start-ups and other small businesses, many of whom struggle to qualify for capital through traditional methods, and should help to improve entrepreneurship among domestic businesses… On top of increased avenues for funding, another positive development for small businesses is the rollout of a mobile payment system, expected in the third quarter of the year.” Morocco has closely observed the positive impact of mobile payments in East Africa and has developed its model on those successful programs for transactions including, “Transfers between individuals; retail purchases; payments for bills and services in both the public and private sectors; social benefit payments; the purchase of telephone top-ups; and payments to wholesalers by retailers”.

There is resistance for further easing of the foreign exchange rate, until more reforms are in place, according to a Reuters.com posting. Ahmed Lahlimi, High Commissioner of the High Commission for Planning (HCP) recently said that “The reform of the dirham exchange system should have come as a culmination of other reforms. We need to reform the educational system first, fight corruption, and improve the management of the economy.”

Bankers, analysts, and industry leaders agree. “They said foreign investors and local industry alike need a better state education system to produce a qualified workforce. Looser rules on importing technology and raw materials are needed as well,” they said. Easing bureaucratic obstacles to the importation of goods is essential for companies to respond quickly as market conditions change. Lahlimi has been quite outspoken about the need to restructure and reform the educational system so that it reflects market demands, including promoting vocational and technical skills workers.

USAID updates report on its economic development work in Morocco, with a heavy emphasis on enabling graduates of public university and vocational technical center to find jobs. It is initiating Career Centers in six universities, training centers, and Ministry of Labor locations to train graduates in soft skills needed to pursue jobs in today’s markets. It is hoped that these centers can promote the acquisition of work readiness skills that will become part of the national curricula.

The report continues, “Furthermore, small and medium enterprises will have new financing opportunities emerging from Moroccan investment portfolio companies, where positive returns will allow continued investing and lending. In addition, USAID is engaging with the private sector to provide specialized workforce development partnerships.” Examples of projects to date are a 50% portable loan guaranteed of up to $7 million to set up the first cold storage facility at Tangier-Med Port FrioPuertoTangier; a partnership with Volvo for the maintenance of Volvo industrial and commercial equipment at a training center in Settat; and H2O Maghreb, “Which aims to establish a state-of-the-art training center to deliver market-driven training programs in water management practices to Moroccan youth and water management professionals,” according to the report.

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