Entrepreneurship in Morocco: what the OMTPME figures say

Entrepreneurship in Morocco: what the OMTPME figures say
Entrepreneurship in Morocco: what the OMTPME figures say

The national entrepreneurial fabric, of which young very small, small and medium-sized enterprises (SMEs) constitute almost all, remains faced with multiple challenges. This is further highlighted by the latest regional reports from the Moroccan Observatory of Very Small, Small and Medium Enterprises (OMTPME) published on May 16.

Offering a fluoroscopy of the productive system of the different regions whose data could be processed (the regional reports on the southern provinces are not yet ready, due to additional processing of the raw data from these regions, editor’s note), these reports also reveal the constraints faced by these actors.

Decline in creations, increase in dissolutions

Almost all Moroccan SMEs are microenterprises with fewer than 10 employees. The predominance of these in the Moroccan entrepreneurial fabric is constant between regions at rates which vary between 80 and more than 95%. In addition, these are mainly young companies whose age does not exceed 5 years. These recent companies constitute more than half, or even up to two thirds in certain regions, of the productive fabric.

While the small size and lack of maturity of the national entrepreneurial fabric makes it less robust in the face of crises, the OMTPME figures for the year 2022 further confirm the worrying trend which has continued acutely since the outbreak of the health crisis: the deceleration of business creation in the face of the rise in the number of dissolutions. According to the same Source, 6 out of the 9 regions studied show negative trends in terms of entrepreneurship with declines in the number of businesses created ranging from 2.2% to 34.5% year-on-year.

The three other regions, namely Casablanca-Settat, Marrakech-Safi and Béni Mellal-Khénifra respectively show moderate increases of 1.3%, 3.4% and 4.7% in the number of businesses created between 2021 and 2022. In all of the nine regions concerned, construction remains the first sector of activity integrated by these new players (between 30 and more than 50%, depending on the region). In addition, almost two thirds of these newly created companies have a single-member limited liability company (SARL-AU) status, with a prevalence of around 60% across all regions.

Another worrying observation: the deceleration in the creation of new companies is accompanied by an increase in the dissolution of pre-existing ones. Indeed, the number of companies that ceased their activities in 2022 increased in all regions, with significant increases ranging from 10.8% in Casablanca-Settat to 80% in Marrakech-Safi. These rates oscillate between 20 and 40% for the other regions, with a single exception: Tangier-Tétouan-Al Hoceima, where the number of business failures is down by 22% for 2022.

Deterioration of SME cash flow

The continuation of the wave of failures in 2022 highlights the constraints faced by SMEs, struggling more and more to ensure their survival. For those who manage to stay the course, the situation is no better. Indeed, OMTPME figures show that these companies are facing an increasingly complicated financial situation, while their cash flow continues to deteriorate. In more than half of the regions for which data is published, the number of SMEs reporting positive cash flow is declining.

Although a good part of these companies highlight an improvement in their financial situation compared to 2020, the results of the regional reports reveal problems in terms of liquidity, with average general liquidity ratios of microenterprises in all regions below 1% (acceptable threshold reflecting a company’s capacity for its short-term debt, editor’s note).

Another problem for Moroccan SMEs remains access to financing. In this sense, OPTME data sheds light on the difficulties that arise in this regard, while equity and credits from associates remain the main means of financing for businesses throughout Morocco. The share of bank loans in the liabilities of Moroccan SMEs thus remains limited, not exceeding 20% ​​and often oscillating between 10 and 15% in the majority of regions. On the other hand, debt owed to partners takes up a significant part of the liabilities of companies across the country, up to 40% in certain regions.

Regional reports on SMEs highlight another obstacle to access to financing: the age of these companies. A comparison between the distribution of outstanding loans in the different regions in 2022 makes it obvious that priority is often given to companies whose capital has been in existence for a decade or more. Indeed, SMEs aged over 10 years concentrate, in certain regions, up to 70% of the total outstanding SME credits. This obstacle is even more imposing for businesses run by women, with shares sometimes not exceeding 2% of overall outstanding loans.

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