Vision and Consistency: USAID Support of Al Amana and the Law on Microfinance in Morocco

This case study showcases the US Agency for International Development's (USAID's) attempts at pursuing a vision for large-scale microfinance in Morocco. It hopes to achieve this by creating a best-practice microfinance institution (MFI) and by facilitating an enabling legal framework. The case study provides information on:

• The status of the microfinance sector at the time of USAID's entry;
• USAID's strategy at the time of entry in the Moroccan microfinance sector in 1996.

Further, the paper states that:

• USAID invested US $10.5 million over a period of eight years to establish Al Amana as a sustainable MFI and to encourage microfinance policy formulation;
• Al Amana transitioned to a financially and operationally sustainable MFI with 125 branches, over 100,000 active clients, and an outstanding portfolio of DH 247.7 million (US $28.1 million) by the project end;
• USAID's program was complemented by the US $1.7 million technical assistance program (1997-2000) of United Nations Development Programme (UNDP);
• USAID facilitated the adoption of a new microfinance law in 1999 that permitted non-governmental organizations (NGOs) to provide micro-credit services in Morocco and freed them from the interest rate caps levied on banks and financial companies.

Finally, the paper lists the challenges to microfinance in Morocco:

• Conflicting role of the Ministry of Finance;
• Need to encourage a more market-oriented approach for providing financial services to the poor.

Thus, the paper appreciates USAID's role both as an investor and as a policy advocate in strengthening the microfinance sector in Morocco.