All of them. In view of the frequent and rapid changes in its external environment, economic diversification is a way to strengthen our resilience and enhance our competitiveness. Morocco is fully aware of this challenge, and has relentlessly sought to diversify its productive fabric and exportable offer. Look at the change in the structure of Morocco’s exports and the importance of the weight of Morocco's new global crafts in this structure. Since 2014, cars have topped the list of all exported products. At the same time, Morocco also capitalizes on its traditional comparative advantages. Specifically, the production, processing and exportation of phosphate, of which Morocco has the world’s largest reserves, is witnessing a qualitative leap, as the OCP Group has developed and implemented an ambitious strategy with national and continental objectives.
Morocco is also pursuing a policy to diversify its economic partners, particularly since the beginning of this millennium. The opening-up towards Africa, with which our country shares strong geographical and historical ties, is the fruit of this policy implemented at the highest level of the State.
Aware of the challenges of climate change but also the related opportunities, Morocco has designed a strategy to develop renewable energies that will help the country reduce its energy dependence and also position itself as a hub of expertise and a success story in this area. The other major challenge today is the digital revolution. The country needs to brace itself for the challenges that this revolution imposes and also to seize the opportunities that it presents, bearing in mind that the impact of such revolution can already be seen in many areas.
As far as infrastructure development is concerned, I think it is not hard to observe the progress made in this area since the beginning of the 2000s. Morocco has significantly transformed its infrastructure; building highways and numerous ports including the one in Tangier, which is today one of the most important ports in the Mediterranean. The last major project in this respect is Africa’s first high-speed rail.
Question 3:. How can Morocco achieve sustainable employment?
Employment today represents a real economic and social challenge that Morocco faces alongside a large number of developing and even advanced countries. It is a challenge that has been further exacerbated by the repercussions of the digital revolution and the massive arrival of cohorts of job-seekers resulting from the demographic transition in the Kingdom.
It is a multi-dimensional issue. Job creation needs a rapid and sustained growth, to which should contribute the efforts of diversifying the economy and enhancing its competitiveness. Besides, the education and training system should aim at preparing a qualified workforce with the needed skills for the job market. Last but not least, appropriate regulations of the market would be needed to smooth its functioning.
Question 4: What can the financial sector and the Moroccan banks do in order to support this development?
The banking sector, which is the main component of the financial sector in Morocco, is crucially important for the economic development of our country. It contributes to mobilizing savings and financing investments, helps companies and corporation, and also helps meeting household’s housing and consumption needs. Over the last 15 years, the credit penetration rate increased sharply from 55 percent to almost 90 percent of GDP and the share of loans benefiting small and medium-sized enterprises (SMEs) grew to 34% of the companies’ loans portfolio.
This change stems from various measures and actions, undertaken by Bank Al-Maghrib, public authorities and the professional associations of the banking sector to facilitate access to banking services and promote the financing of the SMEs as an essential component in the Moroccan economy.
Those measures and actions include the following:
• Enhancing financial transparency of companies and the establishment of a Credit Bureau;
• Adapting the loans government guarantee system to the needs of the SMEs;
• Setting up a national observatory for the SMEs and a foundation for financial education.
Bank Al Maghrib has also set up a support mechanism for the SMEs through the granting of banking refinancing backed by loans to this target, as well as the creation of a financial support fund for this category of businesses, intended for co-funding, with banks, viable businesses that are experiencing temporary difficulties.
The microcredit sector is also key to promoting financial inclusion and funding of microenterprises.
Additionally, the recent establishment of a participative banking offer aims at diversifying the sources of the economy financing.
Building on the actions that have been made, Bank Al-Maghrib is working, in coordination with the Ministry of Economy and Finance, to set up a national strategy for financial inclusion aiming at promoting a more inclusive and a better targeted economy, to serve young people, women and very small companies, taking into account the regional aspects in financing economic actors.
Furthermore, while most of the financing of the economy continues to be provided by the banking sector, reliance on alternative sources of financing should be boosted, particularly through the capital market, including for the SMEs.
Question 5: How should the regulatory environment adapt to the future of the Moroccan economy?
During the last 15 years, Bank Al-Maghrib stepped up efforts to enhance the resilience of the banking system to ensure its stability and its ability to sustainably finance the economy. Several reforms were thus initiated both at the micro and macro-prudential levels.
On the micro-prudential level, Bank Al-Maghrib reformed the Banking Act twice, in 2006 and 2015, to give the Central Bank a large autonomy in banking supervision. It worked on the implementation of the Basel standards, following a progressive approach. First, it started, in 2007, with the Basel II, particularly its three pillars, and has then gradually raised the solvency ratio to reinforce the banks' financial base, and also to pave the way for the adoption of the new Basel III.
In 2013, Bank Al-Maghrib implemented equity capital and short-term liquidity standards under Basel III and, at the same time, started identifying qualified banks of systemic importance that were subject to appropriate prudential supervision.
Aware of the impact of these reforms and their possible impacts on the financing of the economy, especially on the SMEs, Bank Al-Maghrib opted for a gradual implementation of these reforms. Impact assessments were conducted over a multi-year period and were fundamental in determining each and every aspect of the transitional provisions to have smooth impacts over a five years period.
At the cross-border level, the three Moroccan banking groups have implemented, over the last ten years, a development strategy beyond the national borders, targeting mainly sub-Saharan Africa. These groups are currently present in 34 countries, including 26 in Africa. This expansion is itself a driver for growth for these banks. It’s also a vehicle for the financial inclusion of the local populations and for financing the economic and social needs of the host countries. Whilst supporting this strategy, Bank Al-Maghrib ensures that its implementation is carried out on a sound basis, through the regulatory standards and a cross-border supervision; contributing sustainably to financial stability and to strengthening cooperation with the supervisors’ community from the host countries.
On the macro-prudential level, Bank Al-Maghrib has stepped up efforts, in coordination with the other financial sector regulators, to establish a system with an institutional, analytical and operational framework. The aim is to better control the various systemic risks that can impact the economic growth and to strengthen the resilience of the banking and financial system to shocks.
Undoubtedly, strengthening bank regulation is essential to preserve the resilience of banks and ensure long-term sustainable economic growth. Yet, Bank Al-Maghrib pays particular attention to balancing financial stability objectives and to the need to preserve banks' ability to finance the economy.
In addition, and in order to diversify the sources of economy financing, reforms are being undertaken to have a model of non-banking actors. This is made possible through new concepts like Crowdfunding and also by reviewing the framework governing microcredits to boost this activity through a framework governing the collection of micro-savings.