Morocco has allocated MAD 8 billion (€754 million) for the Fund to Finance Entrepreneurship, as part of the integrated program to support and finance entreprises.
Rabat – Morocco’s banking sector has decided to cap the interest rate at 2% for small and very small enterprises. The interest rate is the lowest ever and aims to promote entrepreneurship.
The decision to reduce the interest rate of Moroccan banks came at the instructions of King Mohammed VI.
The move is part of the broader, integrated program for the support and financing of new businesses that the King approved on Monday, January 27.
The program is dedicated to supporting new start-ups, in addition to small and very small enterprises. It also offers an even lower rate of 1.75% for businesses in rural areas.
Speaking at the royal palace in Rabat on Monday before banking officials, the King insisted that interest rates be lowered for Moroccans seeking to launch businesses.
The meeting resulted in the creation of a MAD 6 Billion (€565.23) “Fund to Finance Entrepreneurship.” GPBM and Bank Al-Maghrib will equally contribute to the financing of the fund, according to Maghreb Arab Press (MAP).
In addition to the creation of the fund, King Mohammed VI also ordered the Hassan II Fund to allocate MAD 2 billion (€188.42), without interest, to support the financing of entrepreneurship in rural communities. The total funding now amounts to MAD 8 billion (€754 million).
“The ambition of this program and the fact that it mainly targets small and medium-sized enterprises and young project holders require a significant reduction in these rates,” said the Ministry of Economy in a joint statement with Bank Al-Maghrib and the GPBM.
“Fixing the level of these rates would help promote entrepreneurship, create employment and gradually mark a shift in the mindset related to bank loans,” the statement added.
In recent years, King Mohammed VI has drawn special attention to promoting the emergence of a rural middle class. He instructed that interest rate be reduced to 1.75%, despite the higher “credit risk” due to the narrow market, weather, and large variations in the prices of agricultural products.
The Minister of Economy Mohamed Benchaaboun, the Governor of Bank Al-Maghrib, Abdellatif Jouahri, and the President of the Professional Grouping of Banks in Morocco (GPBM), Othman Benjelloun all attended the audience with King Mohammed.