Morocco Sees 22% Drop in Business Failures Amid Pandemic, Lowest Since 2015

The year 2020 was marked by the coronavirus health crisis that severely affected all sectors of the national economy. According to a recent study by the Inforisk firm on the nature of failures of Moroccan companies in 2020, 6,612 small and medium-sized enterprises were declared insolvent during this particular year, a decrease of 22% compared to 2019. This is "the largest drop observed since we have been measuring this indicator. This rate takes us back to the level of failures in 2015," notes Inforisk.

In detail, Inforisk specifies that 98.9% of the failing companies are VSEs (Very Small Enterprises), 0.8% are SMEs (Small and Medium Enterprises), and 0.3% are LEs (Large Enterprises). The most affected sectors are commerce, real estate, construction, transportation, and manufacturing. Casablanca-Tangier holds the record with 47% of the failures.

According to the study, this situation is explained by the drop in Morocco’s growth rate of 7% (HCP, IMF, World Bank, etc.) and the cessation of the activities of the commercial courts from March to September last year, due to the widespread lockdown and judicial vacations. In fact, the courts have a large backlog of cases to clear, despite the timid resumption of activities since September.

The firm also recalls the exceptional measures taken by the State to assist companies during this crisis period, in particular the establishment of the Solidarity Fund (35 billion DH). "All these measures have kept thousands of companies on life support, some of which would not have survived without state aid," notes Inforisk. These companies, faced with the crisis, had to adapt in their own way, by opting for a temporary cessation of activities, a reduction in working time, partial layoffs...

The prospects for 2021 do not seem as good, fears Inforisk, which notes the end of state aid, particularly Damane Relance/TPE. Worse, the firm, considering the average 30% drop in business activity in 2020 and a partial recovery expected in 2021 (conditional on the speed of the vaccination campaign), believes that the activity indicators have not yet recovered. For Inforisk, "in 2021, the fall will be harder! The first half of the year is likely to be particularly difficult, with a rapid ’catch-up’ effect".