Flashback to last October when Morocco’s King Mohammed VI made an important speech to the nation’s parliment. In that speech, the king decried the lack of funding for recent university graduates and SMEs in the kingdom.
“I, therefore, urge our banking sector to show greater commitment and to be more effectively involved in the country’s development dynamic, particularly with regard to financing investment projects and support for productive activities that create jobs and generate income.”
On Monday, King Mohammed VI took a more decisive role in a meeting with the Minister of Economy and Finance, the head of the Morocco’s Central bank and the head of the Professional Association of Moroccan Commercial Banks which is known by its French acronym — GPBM. At that meeting, the Moroccan financial industry agreed to new measures to increase employment in the kingdom
The Central Bank of Morocco (Bank Al-Maghrib) in association with the government and commercial banks annouced a new plan to get money into the hands of new businesses. The plan will see the government and commercial banks set up a fund worth $6 billion Morrocan dirhams or $620 million dollars.
The funds will be targeted at small loans for young entrepreneurs and small and medium-sized enterprises.
New regulations will result in the capping of bank interest ranks for small and medium-sized businesses – known as SMEs– in all sectors including agriculture and especially for young people. The rate is to be no more than 2%. Not surprisingly the 2% rate for SMEs is the lowest interest rate ever set by the central bank of Moroccan. The 1.75% for rural areas is even smaller still but, will serve a large part of Morocco’s workforce. Agriculture is a significant source of employment. The Moroccan agriculture, forestry and fishing sector accounts for roughly 45% of the country’s workforce.
To support the measure the King’s Hassan II Fund will provide a further 2 million dollars worth of support without interest. The effort is projected to create 27,000 new jobs and 13,500 new businesses in the kingdom.
Such a bold financial move might be impossible for other countries on the continent but, Morocco is increasingly an economic leader.
The move comes as France’s Minister of the Economy is set to visit Morocco. While France’s influence on the continent, at least financially may be in decline, Morocco’s is rising.
It is already the second-largest investor on the continent and the largest in West Africa. The Casablanca Finance City aspires to turn the city into an economic and financial hub akin to Hong Kong or Abu Dhabi – an essential bridge between the Global North and South.
The move comes as no surprise and shows the kings interest in finance and fiscal issues which are often overlooked by monarchs and politicians in the Middle East alike.
“I do not think one needs to point out that economic activity hinges mostly on the development of banking services,” the king said in his October speech.