Microcredit: The new ceilings | The Economist



The increase of the ceiling of the loans granted by the associations of microcredit will make it possible to cover a new clientele, mainly micro-companies, little served by the traditional banking circuit. (Ph Bziouat)

The new thresholds for loans granted by microcredit associations will soon be effective. The decree implementing the law on microfinance activities has just been published in the Official Bulletin. This regulation is provided for by the law passed by Parliament a few months ago.

Today, the new system, allowing loans of up to 150,000 DH, opens the door to a new clientele, mainly composed of micro-enterprises. These are currently little used by the conventional banking circuit. A study conducted by the Ministry of Finance showed that almost a third of small businesses have shown their willingness to obtain funding in excess of 50,000 DH.

Today, the implementing decree defines 3 loan tranches. That ceiling of 50.000 DH, is intended for the customers wishing to create or develop a production activity or service delivery, with the aim of ensuring their economic integration.

This maximum amount may be increased to 150,000 DH for persons wishing to create or develop a production or service activity, if they fulfill a series of conditions. These include being registered in the commercial register, holding the status of auto-entrepreneur, be subject to the business tax, or be registered in the national register of cooperatives. Another loan tranche is also planned. It is capped at 100,000 DH. It is intended for people who want to buy or build a home, or connect their homes to the electricity or drinking water system.

This increase in the ceiling of credits granted will have to reinforce the craze for this type of financing products. They rely on certain decisive advantages for the targeted clientele, generally people in vulnerable situations. This is essentially the proximity and absence of the strict requirements of the traditional banking system.

After several years of activity, the level of outstanding payments remains controlled, ranging between 3 to 5%, according to the statistics of the Department of Finance. Microfinance operators, for their part, aim to boost their activity after raising the thresholds. This will enable them to improve the coverage rate, currently at 2.5% of the population, compared to 5% in Mexico and 15% in Peru.


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