MEII takes a specialized approach to each of our countries of operation.
Missing Middle SMEs
MEII is in the process of raising a regional risk capital fund called Sharaka Capital Fund (the “Fund”) – “Sharaka” means “partnership” in Arabic. The focus of this risk capital investment vehicle is to finance Small and Medium Enterprises (“SMEs”) in Egypt, Morocco, Tunisia, Jordan and Palestine. MEII is targeting a first close of $50 million to launch Phase 1 operations in Egypt and most likely Jordan, or in another market where MEII has ongoing operations. MEII will seek a second close of $125 million for Phase 2 to grow operations, including additional target countries, followed by a final close of $250 million for Phase 3 to complete the Fund.
Since the 1980's, Morocco has made several improvements on their economic framework and has achieved significant economic progress. Despite the progress that has been made, Morocco continues to operate below potential and the World Bank predicts that real GDP will slow further due to a decline in agricultural output.
With regards to the labor force, the unemployment rat was steadily declining from 9.30% at an average of 0.11% a year between 2015 and 2019. However, amidst the COVID-19 pandemic in 2020, Morocco was pushed into its first recession since 1995. The King announced plans for economic recovery in 2021 with an emphasis on public health services, investment projects, and public-private partnerships for SMEs.
Small and Medium Enterprises in Morocco
The importance of SMEs to the Moroccan economy is clear. They are responsible for 90% of the country’s GDP, where about 92% of all companies are SMEs. Traditionally a good proportion of these are “micro” businesses that employ less than four people, use personal savings for financing, and tend to offer limited value to the overall economy in terms of innovation, job creation or global competitiveness.
The COVID-19 pandemic and subsequent shutdowns have hit the MSME sector the hardest. To combat this impact, the Central Bank of Morocco announced a series of monetary measures to support access to credit for businesses and households by enhancing banks’ refinancing capacity with the Central Bank.
In Morocco, the access of SME to bank lending has been a hot issue for some time; In general, Moroccan banks are widely regarded as extremely conservative in the appraisal of loan applications. Collateral requirements are also considered to be excessively stringent, and the usefulness of the credit guarantee schemes managed by CCG (Caisse Centrale de Garantie) is sometimes called into question.
As for credit penetration and access, the World Bank’s Doing Business Report 2021 ranked Morocco 53 out of 185 countries compared to their rank of 104 in 2013.