Lawyer at the Bars of Casablanca, Paris and Montreal,
Is the 50-20 law ambitious enough for the microfinance sector in view of the challenges?
This law is undoubtedly a major legislative contribution to the world of microfinance in Morocco. Because it will, of course, inaugurate a structural transformation of a sector that has undergone a real change since Law No. 18-97 of February 5, 1999 relating to micro-credit, through the integration of micro-credit associations into the banking law n°103-12 of 2014 as assimilated organizations (article 11), to finally arrive at the emergence of what the new law now calls “microfinance institutions”.
The development of microfinance in Morocco has made it possible over the last twenty years to take an interest in people who were hitherto excluded from banking services and to make it possible to probe, for the use of regulatory authorities and public authorities, these fringes of society “unbankable” but able to meet the minimum conditions for obtaining a micro-credit, with a view to their financial inclusion. The current actors of microfinance in Morocco have been able to demonstrate that the offer of financial services to the poorest could both be economically profitable and effective in the fight against poverty. It appeared, however, that a large part of the target population does not yet have access to this type of service.
Does this reform lead to major changes?
This law now offers, in my opinion, a very favorable legal framework for the evolution of the financial offer of microfinance institutions and the movement towards a phase of strong growth resulting from a dual-optical strategy. The first is commercial, with the expansion of the offer in terms of products and customers. It will be a question of proposing a range of products, flexible according to regions and populations, innovative payment and collection systems, accessibility, with the definition of simple to use, fast and user-friendly solutions. And two, financial services (with the implementation of innovative techniques for financing, fundraising, granting, credit management and collection management, and non-financial services by facilitating the connection between lenders and borrowers and by offering technical assistance or advisory services, through development associations, etc.).
How can micro-credit institutions adapt to this new environment?
Microfinance institutions are called upon to carry out a real legal transformation. First of all, they take either the form of a public limited company, in accordance with Law No. 17-95 relating to public limited companies, or the form of an association in accordance with the provisions of the dahir of November 15, 1958 regulating the right to association. However, if they wish, in addition to their microfinance activity, to receive funds from the public and to carry out fund transfer operations, they must have the form of a public limited company and seek approval as a credit institution from Bank Al -Maghrib. And for the exercise of micro-insurance operations they must require approval from the Insurance and Social Welfare Supervisory Authority. Microfinance associations will remain, but they can only carry out their microfinance activity through a public limited company approved as a credit institution under the conditions described above, or by contribution to this company. From now on, they will bear the name of development associations in the field of microfinance and can only, by themselves, carry out activities of training, consulting and technical assistance services in the field of microfinance. From a prudential point of view, the new law provides that the dividends which would be paid out by a public limited company approved, as a credit institution to carry out the microfinance activity for the development association, will be used to constitute reserves for the coverage of the risks inherent in the microfinance activity of the said credit institution. A circular from Bank Al-Maghrib will be issued later in order to specify the terms and conditions for the constitution of these reserves. In addition, the National Federation of Microcredit Associations will be replaced in the Credit Institutions Committee by a professional association of microfinance institutions whose president would be a member by right (article 25) like the other presidents of professional associations such as the professional association of payment institutions or the professional association of financing companies.
The challenges are multiple…
Absolutely. Current microfinance associations have only twelve months from the date of publication of the new law in B0 to bring their statutes and operating rules into compliance with the provisions of the banking law and the new legislation. Thus, they must operate the transfer into public limited companies and carry out all the subsequent legal formalities but also, and above all, make the necessary authorization requests to the supervisory authorities. Finally, in terms of their internal functioning, the new framework can constitute a real opportunity for the microfinance associations which create credit institutions to deploy their strike force which constitutes the capillarity and the importance of their branch networks extended to throughout the territory, either by creating real financial groups, or by sealing, initially, partnerships with existing banks for the management of the back office with the objective of reducing costs and processing times by delegating the management of payments and collections.
Modeste Kouame / Eco Inspirations