SMEs in Morocco

Introduction My name is Afifa Tear, and I am an MBA student at Johnson and Wales University. The main purpose of this document is to highlight the importance of new policies to improve the consistency and effectiveness of SMEs assistance in Morocco, which would be beneficial for the domestic economy development. Overview of the Issue Strengthening and consolidating the Moroccan economy is primarily acting on Small and Medium Enterprise, which is the most central component of the Moroccan economic fabric. This specificity is not unique in Morocco: around the world, SMEs represent over 95% of companies, 60 to 70% of employment, and the economies of OECD countries (Convention on the Organization for Economic Co-operation and Development) owe a large portion of their employment creation. In the wealthy countries, the SME is associated with innovation, dynamism and easy adaptation to change and market development, however in countries with transitional economies, such as Morocco, the most small and medium enterprises are still too marked by structural weaknesses that prevent them from enjoying the flexibility and strength of specific adaptation to these small structures. Moroccan SMEs see indeed their growth strongly inhibited by a fragile financial structure and a familialistic management mode. Undercapitalization, lack of financial transparency, weakness of management structures and internationalization of this business category handicap entrepreneurial dynamism as well. In addition to these structural weaknesses of the economic fabric, there is the predominance of the informal sector. If there are no figures on the portion of black economy in Morocco, but it is still a fact that nobody can deny: a large number of businesses, particularly small ones (the majority of the economic fabric) are only partially applying government regulation and particularly fiscal. This part of the informal activity is not inconsequential on economic activity: it inhibits the development of these companies that, because of their illegal nature, cannot grow beyond a certain size, it creates an unfair competition for businesses that comply with the rule. Experiences throughout the world have also shown that the relative importance of SMEs and the informal economy has always been inversely proportional to economic development. Strengthening the fabric of the Moroccan SMEs leading network of business and employment, cannot be done outside of an effort to reduce the weight of the informal economy. The implementation of the appropriate tax system accompanied by incentive measures designed to remove structural constraints faced by small and medium enterprises will contribute to the emergence of a strong and competitive SMEs network. Aware of the importance of SMEs in the economic fabric of Morocco, the Moroccan authorities have implemented in 1983 various programs and initiatives to ensure legal, fiscal, social and administrative support for this business category, in order to help its upgrade. Despite the substantial effort of government, these support programs have had little impact on the development of SMEs. Since the mid-80s until today, the contribution ...