Morocco’s Microfinance Sector Struggles Amid COVID-19 Economic Fallout

Microfinance institutions (MFIs) have been heavily impacted by the insolvency of some of their low-income clients. According to L’Économiste, they had to proceed with massive deferrals of their maturities towards the associations of which they are contractors. This state of affairs is due to the restrictions related to the containment measures.

The newspaper notes indeed, that the cessation of activities has caused a drop in funds for the organizations, forced to implement a recovery plan to avoid seriously undermining the solvency of the operators.

However, the health crisis presents itself as an opportunity for the finance sector to integrate new possibilities into its system. We can mention the digitization movement and mobile money, which will allow the sector to convert cash financial flows into electronic flows and facilitate the development of new offers such as nano-credits, savings or micro-insurance.

The same source estimates that the diversification of the offer would guarantee the survival of the microcredit industry, which has gone from 7.5 billion DH up 10.7% year-on-year to 1.6% over three months, due to the state of health emergency decreed by the Moroccan authorities.