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C O N F I D E N T I A L CASABLANCA 000037 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR NEA/MAG AND NEA/PI 
 
E.O. 12958: DECL: 02/26/2017 
TAGS: ECON EFIN KDEM MO
SUBJECT: CREATING JOBS OR JUST SKEPTICISM IN MOROCCO 
 
 
Classified By: Principal Officer Douglas Greene for reasons 1.4 (B) and 
 (D) 
 
¶1. (C) SUMMARY: Moukawalati, the GOM's job creation 
initiative, offers young entrepreneurs loans, guidance 
and training to start their own businesses, with the 
ultimate goal of lowering unemployment.  The program has 
been slow to get off the ground since its launch nearly 
seven months ago.  This is due in part to the large 
number of actors involved, from Chambers of Commerce to 
microcredit organizations to banks.  In addition, the 
lack of sufficient risk management mechanisms makes 
banks wary of lending to program participants, while 
microcredit associations may not be the ideal partners 
the government assumes them to be.  Skeptics charge that 
pressure to reduce unemployment has led the government 
to kick-start a job creation program by copying an 
existing, but smaller-scale model, with the result that 
the program is moving forward without taking stock of 
past lessons and current realities.  END SUMMARY. 
 
-------------------- 
WHAT IS MOUKAWALATI? 
-------------------- 
 
¶2. (U) Launched in July 2006, Moukawalati (Arabic for 
'My Business') is a government initiative to create jobs 
by helping educated, unemployed individuals start small 
enterprises.  Its goal is to create 30,000 small 
businesses by 2008.  Since each enterprise must employ a 
minimum of two people, the program hopes to generate at 
least 60,000 new jobs, and ideally would like to reach 
90,000.  Moukawalati satellite offices, or 'windows,' 
have opened in nearly 50 locations across the country. 
 
¶3. (U) The Moukawalati program offers up to almost USD 
30,000 for entrepreneurs to start their own businesses. 
The state offers several benefits to program 
participants.  It offsets limited expenses of up to USD 
¶1100.  It grants an advance in the form of an interest- 
free loan for up to 10 percent of the project's cost, with a 
USD 1700 limit, reimbursable in six years with a three 
year deferment.  And, it guarantees 85 percent of the bank 
credit needed to launch a project. 
 
--------------------- 
WHO RUNS MOUKAWALATI? 
--------------------- 
 
¶4. (U) While Moukawalati is a government program, it 
relies on numerous institutions to carry it out. 
Depending on where you are, Moukawalati 'windows' may be 
located at a local Chamber of Commerce, Industry and 
Services (CCIS), a microcredit organization, a local 
branch of the Office of Professional Training and Job 
Promotion (OFPPT), or even a university.  The satellite 
offices have been tasked with collecting project 
proposals and, sometimes, prescreening them to determine 
which ones to send to the regional selection committee, 
based out of a Regional Investment Center (CRI).  The 
National Agency for the Promotion of Employment (ANAPEC) 
centralizes project dossiers once they have been 
approved, and releases state funds.  Certain 
organizations provide training to approved applicants. 
Zakoura, for example, is one of Morocco's largest 
microcredit associations, and has become a Moukawalati 
partner to provide training to fledgling entrepreneurs. 
Banks are expected to assist with financing. 
 
--------------------- 
IMPLEMENTATION ISSUES 
--------------------- 
 
¶5. (U) Moukawalati has been slow to get off the ground 
since its launch over six months ago.  To begin with, 
banks have not stepped up to the plate as the government 
had expected.  An article in La Vie Eco at the end of 
2006 suggests that personnel at regional branches are 
 
not as concerned with the program as decision-makers at 
headquarters, so that while bank higher-ups may have 
proffered their support, branches are not making good on 
the promise.  In addition, banks have not instituted 
information systems for Moukawalati dossiers as quickly 
as they were supposed to. 
 
¶6. (U) Perhaps the biggest reason banks have not offered 
credit to Moukawalati participants in large volume is 
that risk, lower profit margins, and elaborate follow-up 
make such a proposition unappealing.  Nevertheless, they 
recognize that providing investment credit to new 
businesses is vital to Morocco's growth, and may be 
worthwhile.  They are now examining options that provide 
guarantees and help restructure debt through mechanisms 
such as the Central Guarantee Fund (CCG). 
 
¶7. (U) At the same time, several banks have started 
their own initiatives to provide investment credit for 
business creation, independent of Moukawalati. Banque 
Populaire, for example, offers a package called Business 
Project that charges only 5.5 percent interest on 
credit, supposedly the lowest on the market. 
Attijariwafa Bank also has a program, structured so that 
financing and interest rates depend on the size and 
nature of client activities, allowing for better risk 
management.  In general, banks would be more inclined to 
loan money to small projects if better risk management 
tools existed in Morocco. 
 
¶8. (C) The state's expectation that microcredit 
organizations participate in the Moukawalati initiative 
may also complicate implementation.  According to Rida 
Lamrini, President of the National Federation of 
Microcredit Associations (FNAM), microcredit is not 
designed to finance start-ups.  Instead, microcredit 
organizations typically grant small loans, which 
increase in amount only once borrowers establish 
credibility.  Lamrini distinguishes between fighting 
poverty and creating jobs, and contends that 
microfinance targets the former, while Moukawalati and 
banks engage in the latter.  Microcredit organizations 
such as Zakoura may serve as Moukawalati satellite 
offices in some locations and provide training to 
entrepreneurs, but Lamrini believes their fundamental 
mission is income generation, not job creation.  In a 
recent article on Moukawalati in Le Journal, Moncef 
Kettani, President of the Moroccan Union of Small and 
Medium-Sized Enterprises, echoes Lamrini's point, noting 
that the government relies too heavily on microcredit 
organizations rather than ones such as his that have 
more relevant experience granting credit to young 
investors. 
 
--------------------- 
PROSPECTS FOR SUCCESS 
--------------------- 
 
¶9. (C) Skepticism abounds about whether Moukawalati will 
be successful.  While the GOM consulted some of the 
larger microfinance organizations before implementing 
its program, it did not involve FNAM, the microcredit 
federation.  (Lamrini says he is glad about this, since 
what he hears about the program is not encouraging).  In 
an article in Telquel printed soon after the program's 
launch, Hamad Kessal, former President of the Federation 
of Small and Medium-sized Enterprises, cautioned that 
there is more to the problem than simply giving the 
inexperienced a chance.  He notes that in the current 
business environment, start-ups have neither the means 
nor the resources to wait for payment or invest in 
expanding.  He puts the imperative on the government to 
institute mechanisms that help businesses manage risk 
and access capital for growth.  He also sees a role for 
large, established companies and professional 
associations, which can draw upon their sector expertise 
to help evaluate projects and mentor new entrepreneurs. 
The President of the Confederation of Moroccan 
Enterprises (CGEM), Moulay Hafid Elalamy, shares this 
view, and has emphasized the need for large companies to 
do their part in cultivating innovative, new ventures. 
 
¶10. (U) Skepticism regarding Moukawalati's prospects for 
success also stems from uncertainty about program 
design.  A similar program for young investors in the 
nineties had a high failure rate and raised the ire of 
many banks when borrowers defaulted on loans.  According 
to survey results published in February's issue of 
Economie et Entreprises, 47 percent of respondents associate 
Moukawalati with the failure of this previous program. 
 
¶11. (C) According to Abdelhak Marsli, Secretary General 
of Banque Populaire's Foundation for the Creation of 
Enterprise, the government essentially borrowed the 
Foundation's business creation model to create 
Moukawalati.  While this may have been expedient, the 
program run by the Banque Populaire Foundation is small 
and selective, with detailed follow-up and record- 
keeping at a level that may be hard for Moukawalati to 
replicate, given its much larger target group.  A 
contact who works in the financial services sector 
expressed precisely this concern, saying that he doubted 
Moukawalati could offer sufficient follow up to improve 
the odds of success. 
 
¶12. (C) COMMENT:  Strong pressure from the GOM to reduce 
high rates of unemployment appears to be propelling 
Moukawalati forward without regard to the varied 
concerns surrounding it.  As skeptics such as Kettani 
indicate, the GOM needs to review the program and the 
mistakes of the past before rushing head first into 
full-scale promotion.  In addition, the government seems 
to expect buy-in from a broad spectrum of players, which 
it has yet to get in full.  Nonetheless, the program is 
still in its early stages, and the lag in approval of 
many applications offers it time to learn from its 
mistakes.  Planned technical assistance from a number of 
international donors should also contribute to that 
effort.  END COMMENT. 
 
GREENE