Rabat – In a survey of 2,101 Moroccan companies in the formal sector, the High Commission for Planning (HCP) found that financing is a major challenge for the business climate in Morocco.
The survey, published on Tuesday, November 19, looked at the demographics of businesses and their perceptions of the economic and social climate for businesses in Morocco. The questionnaire, conducted from January to July 2019, focused on companies’ experiences in the last three years.
The survey looked at services, trade, industry, and construction but did not include businesses in the informal sector or in agriculture and financial services. The credit system financial institutions provide was one of the major complaints of companies in Morocco.
A majority of companies, 58%, said they were “dissatisfied with the services offered by financial institutions.”
Overall, companies said that restrictions on getting loans increased in the three-year period from 2016-2018.
Forty percent of business leaders agreed that high interest rates were an obstacle to credit, and 34% said that the amount of collateral banks require were an obstacle.
However, some Moroccan companies, 33%, “avoid the use of bank credit for religious reasons,” the HCP survey found.
Traditional interpretations of Islamic Sharia law forbid the taking of interest. Morocco’s central bank authorized five banks, called “participatory banks,” to offer Sharia-compliant financial services in 2017.
Although only 7% of Morocco’s companies export to other countries, 20% get foreign loans.
The survey also highlighted issues companies have with hiring, confusing tax laws, and lack of transparency in government contracts.
‘Courts are too slow’
Along with difficulties getting loans, 51% complained that the business climate in Morocco suffers from lengthy legal disputes. They said that courts take too long to resolve commercial cases. The time spent waiting for courts can limit entrepreneurs.
Another key finding of the survey was that 47% of companies struggled to get access to land. The government holds significant power in real estate decisions. Even more business leaders said that the high cost of energy is a limiting factor for their companies.
The survey also underlined the evident importance of Morocco’s coastal cities. Most of Morocco’s businesses, 63%, lie within the economic corridor from Casablanca to Tangier. The Casablanca-Settat region has 39% of businesses, the Rabat-Sale-Kenitra region 15%, and the Tangier-Tetouan-Al Hoceima region 9%.
Some regions also have proportionately more businesses in different sectors. While Tangier, with its economic free zones, has disproportionately more industrial businesses, Marrakech, with its voluminous tourist traffic, has disproportionately more services companies.
Perhaps most surprising in an era of global connectivity was the survey’s finding that most Moroccan businesses cannot be found online. Only 31% of Moroccan companies own websites.