Moroccan lenders shore up small businesses but risks loom

Moroccan lenders shore up small businesses but risks loom

To the good fortune of Morocco’s small businesses, the country’s banks were ready to help them through the pandemic before it had even started.

In early 2020 — when coronavirus had not yet become a global emergency — the government unveiled an 8bn dirham ($900m) fund to finance small and medium enterprises over the following three years, along with other measures to simplify and speed up business loan applications.

The measures turned out to be a lifeline. “The banking sector has been really instrumental in financing the local economy,” says Jamal El Mellali, associate director for financial institutions at Fitch Ratings in London.

“Private sector credit growth in the first half of 2021 was 5 per cent, which is quite dynamic considering the economic conditions.”

Then, when the coronavirus crisis arrived, the initial measures were quickly superseded by two larger programmes, — Damane Oxygène and Damane Relance — which together extended loans at subsidised rates, amounting to more than 65bn dirham by the end of June this year.

Government guarantees covering 80 per cent of loan values under the initial scheme were extended to as much as 95 per cent under the two pandemic programmes — which gave banks the confidence they needed to keep