Morocco’s small and medium enterprises (SMEs) have recently benefited from the growing interest of financiers and the increasing emphasis on the link between corporate governance and terms of credit.
In November 2006, an awareness-raising campaign was launched on financing and corporate governance for SMEs. The program is a joint initiative of the Central Bank (Bank Al-Maghrib), the Banking Association (GPBM), the Agency for the Promotion of SMEs (ANPME) and the Investment Guaranty Agency (CCG).
Aimed at promoting best practice in the cooperation between SMEs and the banking sector, the campaign comes amid a flurry of workshops meant to address funding problems.
“The goal of this operation is to loosen the structural constraints that hinder the activities of SMEs,” noted Abdellatif Jouahri, the governor of Bank Al-Maghrib.
The predominance of SMEs in the agro-industrial, construction, tourism, high-tech and chemical sectors has made the matter all the more pressing. Indeed, SMEs represent 99.6% of companies operating in these areas, employing 55% of labor.
Many SMEs are still facing high costs for credit as well as generic funding programs, which are not tailored to their needs. Large banks charge between a 5.5% and 6.5% interest rate, while the market interest rate for SME loans varies between 8% and 13%, substantially above rates offered to larger companies.
Promising partnership
The issues of transparency and corporate governance are accountable for these shortcomings, as well as the lack of guarantees and reliable information about SMEs.
In response, the central bank has initiated a number of programs to improve transparency and the free flow of information, as well as to encourage commercial banks to extend their services to SMEs.
“We admit that the execution of special programs for SMEs is slow,” noted Jouahri. “This is due to, among other issues, the harmonization of financial information, the normalization of accounting information and the setting up of a ratings system for a better analysis of credit risk by banks.”
Commercial banks, such as Groupe Banque Populaire, BMCE and BMCI, currently offer financing services to SMEs. Following the trend, on November 28, Attijariwafa Bank, the largest private bank in Morocco, initiated a partnership with ANPME.
Companies will benefit from tailor-made financial services, technical assistance and capacity-building. While the ANPME can take up to 90% of the cost of the technical assistance plan, Attijariwafa will provide services for the restructuring and consolidation of debt as well as loans at a lower interest rate. Many similar programs form the nexus between SMEs’ funding needs and best practice at the level of corporate governance for most Moroccan companies.
“We have created a network of more than 25 business centers dedicated to these companies, satisfying the need for proximity demanded by our SME clients, as well as their financing and financial management needs,” said Boubker Jai, director general of Attijariwafa bank. “Given that the economy includes a number of SMEs that are not necessarily well-structured, we owe it to ourselves to do more and act as real advisors.”
The strategy is thus to integrate the relationship between banks and SMEs into a partnership with promises of greater transparency on the part of SMEs and more straightforward access to credit offered by banks. The business association, the Confederation Générale des Entreprises du Maroc (CGEM), emphasized the advisory role of banks in this process.
Campaign in high gear
“We want the project to be guaranteed itself and that the bank insures rapid responses to all the needs of SMEs as well as playing an advisory and assistance role,” explained Khalid Benjelloun, president of the CGEM.
On November 23 and 24, corporate governance featured high on the agenda of the Organization for Economic Cooperation and Development’s (OECD) working session. In preparation for a general code of corporate governance for Moroccan enterprises, including SMEs, the session brought together personalities from the public and private sectors.
Alexander Bohmer, coordinator of the MENA-OECD Investment Program, said, “On one hand, the availability of traditional bank financing to SMEs remains a burning question for Morocco, particularly in light of Basel II requirements by local and foreign banks. On the other hand, the growth in alternative sources of finance such as private equity, which is in line with a similar trend in some OECD countries, represents a positive development for Moroccan SMEs.”
The high-profile campaign has focused on assisting SMEs within the Moroccan economy. With an increasing number of SMEs listed on the Casablanca stock exchange, investors and policy makers are becoming aware of the needs of unlisted SMEs.
