2023-05-24 16:48:03
A study on the accessibility and diversity of financial offers available to Small and Medium Enterprises (SMEs) in Morocco, and their ability to accelerate Morocco’s transition to the green economy, was conducted by the Ministry of Economy and Finance in partnership with FSD Africa and the British Embassy in Morocco.
“The Ministry of Economy and Finance of the Kingdom of Morocco, alongside its partners from FSD Africa and the British Embassy in Morocco (Foreign Commonwealth Development Office), conducted a study on accessibility and diversity financial offers available to SMEs and MSMEs in Morocco, and on the ability of these companies (which represent 93% of all companies in the country and employ 46% of its workforce) to accelerate the transition from Morocco towards the green economy”, indicates the ministry on its electronic portal.
The supply of green financing has increased in the Kingdom, with several offers emerging in recent years to support green projects, the same source points out, noting that there is an increasingly sophisticated ecosystem of actors capable of stimulating the growth of innovative Moroccan small businesses through debt, equity and grants, whether public institutions mandated to support Moroccan businesses, regional and continental development finance institutions or commercial banks local. Nevertheless, and faced with the growing demand for green financing instruments, an additional effort must be provided through innovative financing systems to fill the financing gap.
The conclusion of the study argues, in this sense, that the country’s commitment to sustainable financial growth will require close collaboration of the various stakeholders, noting that FSD Africa will contribute to the design of a new financial instrument which will increase the availability and accessibility of green financing for Moroccan SMEs, following the publication of this study.
Thus, in line with Morocco’s updated Nationally Determined Contributions (NDCs), SMEs are expected to play an important role in achieving Morocco’s NDCs, with around 40% of mitigation actions (US$15.5 billion) and 55% of adaptation actions (22 billion US dollars) to be implemented by SMEs, either directly or through subcontracting to large companies.
“We note with satisfaction the relevance of this study covering an analysis of supply gaps and needs of green financing targeting SMEs for the design of a new instrument that could meet the unmet demand of SMEs in terms of financing green,” said Economy and Finance Minister Nadia Fettah.
And to add: “Indeed, this work comes at the right time to support the efforts undertaken to implement the Kingdom’s strategic orientation aimed at making sustainability a pillar of development. In this regard, we would like to acknowledge the support of British cooperation in carrying out this study”.
For his part, the United Kingdom’s Ambassador to Morocco, Simon Martin, recalled that “in March 2023, the United Kingdom published its updated strategy for Green Finance. This emphasizes the growth opportunity represented by the transition to net zero for companies, in particular SMEs, and the need for dedicated support. It also highlights the work of FSD Africa in Morocco, already helping to stimulate capital flows for green economic growth”. And to continue: “I am delighted that with this study, we are able to take a new step in supporting Morocco’s flourishing green economy and to further expand our bilateral financial cooperation”.
In turn, the CEO of FSD Africa, Mark Napier, clarified that “Morocco’s potential as a green economy is extremely promising, but it is essential that the economic backbone of the country – small and medium enterprises – be encouraged and supported in their efforts to engage in green projects and activities. Only by designing a green financing system can the Kingdom’s green aspirations be realized. This study constitutes an important and timely intervention that we hope will spark discussions among policy makers, legislators, private capital actors and other stakeholders”.
The GAP analysis has provided a clear picture of areas requiring action within the green finance space. Some key industries – such as construction, transportation, power generation – have strong “greening” potential but are underserved by green credit lines, while areas such as agriculture are well covered , emerges from this study. In addition, key sectors such as fisheries and sustainable habitat remain virtually untouched by green finance offers and need to be taken into account. Finally, the study underlines the absence of key instruments such as green insurance and guarantee products, or investment funds exclusively designed for green activities.
The study makes a series of recommendations in areas ranging from public awareness, regulation and taxation, to technical assistance and technology, among others.
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