In implementation of King Mohammed VI’s instructions to make the banking system conducive to development, a program was unveiled by the central bank, the Ministry of Economy & Finance and commercial banks to facilitate access to loans for small and medium sized enterprises, self-employed, young graduates as well as to promote financial inclusion and help structure the informal economy.
In this vein and within the framework of the integrated program of support and financing of SMEs, it has been decided to cap the interest rate on loans to these categories to 2%.
In response to the wishes of King Mohammed VI, the banking sector has capped the interest rate at 2%, which is the lowest rate ever applied in Morocco, said a joint statement issued this Wednesday by the Ministry of Finance & Economy, the Central bank, Bank Al Maghrib, and the Professional association of Moroccan commercial banks, the GPBM.
In the rural world, the ceiling will be set at 1.75%, despite a higher “credit risk”, due to the constriction of the market, sensitivity to climatic fluctuations, and variations of agricultural products prices, the statement said, explaining that the measure is meant to promote a faster emergence of a rural middle class.
King Mohammed VI who presided, on Monday in Rabat, a meeting on an integrated program destined to support and finance enterprises, had, before the meeting, received the Minister of Economy and Finance, the Wali of Bank Al Maghrib and the president of the GPBM.
The Monarch told the officials that the current banking interest rate was high and insisted that the very vocation of this program, its broad ambition and the fact that it mainly targets SMEs and young project-holders require a significant reduction in these rates.
King Mohammed VI expressed the wish that the interest rate to be applied to SMEs, beneficiaries of the integrated program, should not exceed 2%, so that this program reaches its goals, and that it positively impacts the targeted populations and categories.
The King had said in a speech at the opening of the fall session of Parliament in October that Morocco’s vibrant banking sector has “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.”
During the Monday meeting, Central Bank governor said that unlimited refinances will be granted to banking loans targeting the categories cited in the Royal Speech and that commercial banks will refinance loans by the same categories at a preferential rate of 1.25, which is 100 points below the key interest rate.
Speaking on the same occasion, Finance Minister Mohamed Benchaaboun indicated that a $6 million fund created together with the GPBM) will support SMEs, self-employed and help include practitioners in the informal sector to the formal economy.
The measures also target rural population through the promotion of financial inclusion and bringing banking services closer to them to encourage entrepreneurship.
The IMF recently said Morocco’s banking system was sound and resilient.