The Rise, Fall, and Recovery of the Microfinance Sector in Morocco
This paper examines the rise, fall and recovery of Morocco’s microfinance sector.
The Moroccan microcredit sector has enjoyed extraordinary growth. According to MIX data, MFI loan portfolios multiplied 11 times and client outreach by 4 times from 2003 to 2007. In 2007, however, some signs of stress, such as loan delinquency and multiple lending started to emerge. Unprecedented growth had overstretched MFI capacity, translating into lenient credit policies, obsolete management information systems, lack of internal controls, and sub-standard governance.
The response of the Moroccan microfinance sector has been swift and timely. The following measures have been taken by various actors to restore confidence in the sector and build the foundation for a more solid and mature microfinance industry:
- Local commercial banks have maintained their credit allocations;
- MFIs have slowed down their growth and reduced their balance sheet size;
- MFIs have adopted aggressive recovery plans, tightened credit processes, and put together teams dedicated to loan recovery;
- Government has moved to strengthen MFIs, control multiple lending, prevent over-indebtedness, secure liquidity for the sector and improve the regulatory framework.
