The Microcredit Sector in Morocco Pre and Post Crisis

This paper examines the Moroccan microcredit sector crisis. It is based on the experience of Grameen-Jameel Microfinance Limited, and on testimonials of individuals working in the sector.The paper states that the period 2005-2007 witnessed the initial success of the microcredit sector in Morocco due to support from government, donors, and local talent. The crisis began in 2008 with unsustainable growth, limited internal controls, repayment problems, and cross indebtedness. During 2009-2011, regulatory and supervisory authorities developed prudential regulation and guidelines for internal controls, governance, and reporting to stop the deterioration of the sector. Lessons learned from the crisis highlight the importance of:

• Going back to the basics of microcredit and re-establishing policies, procedures, and controls to ensure that methodology is in line with the institutions mission;
• Focusing on the client;
• Growth that is driven by the market and motivated by the existence of market need;
• Comprehensive framework for internal control and risk management;
• Demonstrating the impact of programs on recipients;
• Bringing laws up to date with the level of maturity of MFIs;
• Coordination and information exchange between institutions;
• Developing emergency plans.