WB Lends Morocco US$350 Million to Develop Financial Support.
18.05.2017-Rabat/ The World Bank (WB) announced, on Tuesday, a $350 million program to support wide-ranging reforms of financial intermediation in Morocco.
The loan supports new sources of financing for small and medium enterprises (SMEs) while improving the regulatory oversight of the banking sector, said the financial institution, adding that the operation also supports capital market development by broadening the range of instruments and strengthening the protection of Moroccan investors.
According to the World Bank, the loan addresses the financial sustainability of the civil service pension fund, thereby preserving its role as a major institutional investor. The program will eventually unleash new financing solutions for small enterprises and the real economy more broadly, it noted.
In order to improve access to finance and promote financial inclusion, the Second Capital Market Development and Small and Medium Enterprise Finance Development Policy Loan (DPL) supports the expansion of the state's loan guarantee schemes into Morocco’s regions. It also supports the development of credit information on new borrowers to facilitate lending decisions, as well as the provision of alternative payment services outside the traditional banking system, said the same source.
With the financial sector exposed to new risks as the economy develops and Moroccan companies diversify into Africa, the DPL also supports enhanced central bank supervision of banks particularly those belonging to large financial conglomerates that could pose a risk to the entire financial system, stabilizing the finances of the Caisse Marocaine des Retraites (the mandatory pension fund for civil and military services).
"Morocco has made significant progress over the past two decades in modernizing its financial system and creating an environment conducive to private sector development," said Marie Francoise Marie-Nelly, World Bank Maghreb Country Director for the Maghreb and Malta, adding that "Global experience shows that private initiative is the engine of job creation, and better access to finance for SMEs, along with other financial inclusion efforts while safeguarding financial stability, will help unlock the immense potential of Morocco’s youth and women.”
Low-income households in particular are expected to benefit from the reforms supported by the DPL, said the World Bank, noting that increased access to finance for small and medium enterprises will create more opportunities and generate jobs. The rise in pensions for those at the bottom wage scale will prevent any sudden drop in take home pay and help maintain their levels of consumption.
"Strengthening capital markets and creating a dynamic, private sector-led economy will also allow Morocco to capitalize on new investment opportunities,” said Gabriel Sensenbrenner, World Bank Lead Financial Sector Economist and Team Leader, adding that "This program will equip the financial system with instruments that help it allocate resources to where they are most productive, while safeguarding financial stability. This is particularly important as Morocco becomes a hub for Africa’s economic development.”
This DPL complements an operation approved in March this year supporting equity financing for innovative young and fast-growing enterprises in Morocco. It is also aligned with the World Bank Group strategy to help develop capital market solutions to mobilize private financing for infrastructure projects in client countries.
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