Moroccan SMEs plagued by opaque credit access

It is not enough just to liberalise an economy; companies need to be able to access credit on a level playing field to grow, invest, innovate or plan research and training activities. In Morocco, there is “a real resource allocation problem that stifles the competitiveness of business”, claims Patricia Augier, deputy director of the International Finance and Economic Development (DEFI ) Research Centre at the University of the Mediterranean (l’Université de la Méditerranée).

As the co-author of a 127-page report entitled “Deep Integration, Firms and Economic Convergence” (research no. FEM 33-23), submitted to Femise in July 2010 with the help of Moroccan and British researchers, Ms Augier debates the impact of the economic climate on business productivity.

The working paper examines the quality of the Moroccan banking system, the development of infrastructure and the regulatory and administrative framework. 

 

Ms Augier highlights the need for Morocco to improve its corporate accounting system and insists on accounting transparency. “A mechanism needs to be put in place that provides banks with better visibility and allows them to take risks. Financial institutions must adjust their lending criteria”, she stresses, adding that there is no such allocation problem for companies that have their accounts certified.

Credit is generally awarded to exporters and big companies that have foreign capital or significant lobbying power; paradoxically, indebted SMEs find it difficult to get financing. Moreover, bank guarantees in Morocco are generally mortgages on personal movable or immovable property – something of an obstruction to business growth!

The report also highlights the productivity gap between companies in the same sector or region. “SMEs may be affected by competition from the black market and significant gaps in local tax laws, giving rise to a lack of visibility. Fiscal differences and red tape mainly affect small businesses – generally those that do not export or have no foreign capital,” adds Ms Augier.

The report, which is the result of a year’s research, is available on the Femise and DEFI websites.