Micro-credit helps many Moroccans escape poverty

03/11/2006

Microfinance is thriving in Morocco. Poor people who cannot qualify for traditional loans can now start businesses with micro-credit loans.

By Sarah Touahri for Magharebia in Rabat – 03/11/06

[File] Soudoji opened his babouche (slipper) shop using micro-credit.

With the help of low-interest micro-credit loans, many poor Moroccans, including women and people from rural areas, have been able to escape poverty and start their own businesses.

Presently, 12 micro-credit associations exist in Morocco. With help from the UN Development Programme, the US Agency for International Development and other organisations, thousands of loans ranging from 500 dirhams to 50,000 dirhams have been granted. Clients must have a median household expenditure of no more than 2,500 dirhams.

Jihane El Gueddaoui, an Al Amana management attaché for the promotion of micro-enterprises, told Magharebia her association aims to reach more than 500,000 households by 2009. After some beneficiaries complained about the small scale of the loans, the credit limit was raised to 50,000 dirhams.

She says Al Amana is particularly interested in reaching the rural poor.

"The introduction of micro-credit in rural areas is still largely limited to craftsmen, smallholdings and other services, while the potential for financing classic agriculture remains enormous," she pointed out.

According to the National Federation of Micro-credit Associations (FNAM), micro-credit associations' rural clients represent just 34% of the total, though eligible clientele is ten times greater than in cities.

FNAM says the number of loans is continually increasing and has already changed the lives of many Moroccans, even though micro-credit is relatively new in Morocco. While micro-credit loans have existed since the 1970s, they did not begin in Morocco until 1993.

When the income of Hadifa Herrat's husband could not meet the family's needs, she applied for credit from Al Amana. She obtained 3,000 dirhams, which allowed her to buy merchandise for her new clothing business.

"My introduction to the world of business was not easy, as I have always been a housewife. But the start was the hardest part. Now, I'm helping with family expenses," Herrat says proudly.

Others have been able to combat unemployment thanks to micro-credit.

Noureddine Soudoji, an 18-years-old, used a 4,000-dirham micro-credit loan two years ago to open a now flourishing traditional babouche (slipper) manufacturing shop in Rabat.

Soudoji says, "I've been able to make a success of my professional life, having failed at school. Thanks to a friend, I learned about the association that changed my fate."

He hopes to get another loan to expand his business and continue on the path to success.

Morocco is now cited as a successful example of micro-credit and is already serving as an example for other Mediterranean countries.

Moroccan sociologist Rahim Chabour says, "By giving disadvantaged people access to micro-credit, you strengthen their ability to increase their revenue and encourage their participation in the national economy."

The World Bank estimates over 7,000 microfinance institutions serve around 16 million poor people in developing countries.