Since June 2022, Southbridge A&I has been honored to engage with UN Women to accelerate the promotion of gender equality among financial institutions and the private sector in Morocco.
The latest Speech from the Throne by His Majesty King Mohammed VI, on July 30, 2022, reaffirmed the imperative of gender equality as a national priority: “It is essential that all Moroccans, men and women alike, play an active part in the development dynamic”, et ce « dans tous les domaines ».
Women's access to economic activity is a key development issue, both for economic competitiveness and for the Kingdom's human development indicators. Increasing the female employment rate is one of the ambitious objectives of the 2021-2026 government program, with a target of 30% by 2026. However, this rate, at 21.5% in 2021, has fallen over the past year, notably as a result of the COVID-19 crisis, accentuating the precarious situation of women.
SouthBridge A&I is committed to working with UN Women to propose breakthrough solutions that will help achieve the government's objective. An important bias is to use financing as a real gas pedal of women's economic inclusion, following the example of certain Latin American countries that have experienced this transition.
As part of this UN Women support, the Southbridge A&I team met with over 50 decision-makers from the financial ecosystem (ministers, bank chairmen, risk managers, public agency directors, association chairmen and chairwomen) to understand and take stock of the state of gender mainstreaming in the country's financial sector. In addition, more than 70 business and cooperative leaders were also approached to gather the perspective of women entrepreneurs on Morocco's financial system.
The national diagnosis revealed five major findings:
1) Morocco is a country where women are entrepreneurs, but only to a limited extent in the formal world. According to the Observatoire Marocain de la très petite, petite et moyenne entreprise (OMTPME), in 2022, only 16.2% of business leaders in Morocco will be women, even though, on average, projects carried out by women in microcredit associations account for over 50% of the portfolio. Similarly, it is estimated that in the informal sector, one out of every 2 businesses is run by a woman.
2) Furthermore, within financial institutions, the risk represented by women as borrowers is perceived as lower by all the financial players surveyed, as debt repayment is more rigorous with better visibility on future flows. In fact, the default rate is significantly lower among microcredit associations (default rate communicated by microcredit associations to May 2022: 20% for men vs. 17% for women), which are the only ones tracking this indicator today.
3) In this respect, a number of gender-oriented financing initiatives tested in Morocco have demonstrated their ability to have a significant impact, such as Tamwilcom's (formerly CGG) Ilyaki product, launched in 2013, whose mechanism has enabled the financing, via the banking and micro-finance sectors, of 17,000 female VSEs operating in various economic sectors, with a volume of loans guaranteed up to 80% reaching 2 billion dirhams.
4) However, the national banking sector has raised less than $50 million in gender-oriented financing, while other countries manage to raise hundreds of millions, even billions of dollars. In Colombia, for example, the $20 billion 'Fundo Mujer Emprende' program has been set up nationwide to finance and support women's entrepreneurship. Even though bank financing can be highly competitive: Morocco's only gender bond, led by BCP, was subscribed to by Moroccan institutional investors at a significantly lower rate than the market.
5) In fact, when we interview both financial institutions and women entrepreneurs, two complementary views emerge. According to the banks surveyed, the problem of financing for women is not one of supply, but of limited demand. In addition, almost 35% of the women surveyed felt that they did not benefit from banking offers adapted to their needs and specificities, and over 30% felt that they had been refused financing directly linked to their gender.
This national diagnosis was the subject of a high-level working session held in Casablanca on November 10, attended by some thirty participants: representatives from the Ministry of the Economy and Finance, the Ministry of Solidarity, Social Integration and the Family, the Ministry of Tourism, Crafts and the Social and Solidarity Economy, Bank Al-Maghrib, the Moroccan Capital Market Authority, the Tamwilcom institution, the Maroc PME agency and national banks.
Discussions also focused on extending the definition of projects/enterprises to be financed to reduce gender inequalities, with the introduction of the “Gender Lens” concept, now increasingly used by international donors. Gender Lens” encompasses not only projects/companies led by women (shareholding or management), but also projects/companies promoting women's employment or developing services for women, thus furthering the integration and empowerment of women in the economic world.
We also discussed the relevance of a supply shock based on gendered, differentiated financing products covering all financing solutions (grants, debt, capital, guarantees), as well as the structuring of demand, with, on the one hand, the necessary and specific support for the development of women's entrepreneurship, and on the other, the setting up of qualification structures to identify and target “Gender Lens” projects for financing.
This working session took place ahead of an international symposium organized by UN Women on sustainable and inclusive finance, to be held in Casablanca on December 14, in order to raise awareness among national and international players and present an aggressive strategy geared towards achieving government objectives.
