New data revealed an increase in families’ resort to debt in order to finance their consumption, as they obtained loans worth 8.7 billion dirhams from microcredit associations “banks for the poor” at the end of last March, according to the monetary statistics report issued by the Bank of Morocco, in addition to loans worth 79.2 billion dirhams from During the same period, the total amount of loans directed to this category of customers exceeded 391 billion dirhams from financing companies.
The High Commission for Planning highlighted the deterioration of the financial situation of families and the worsening of their indebtedness, as it confirmed in its latest research that 42.3 percent of families depleted their savings or resorted to borrowing during the first quarter of the current year, while the rate of families that were able to save part of their income did not exceed 1.8 per cent. percent, while 55.9 percent of families stated that their incomes cover their expenses.
Household debt has recorded rapid growth since the outbreak of the Corona pandemic in 2020. The report on the stability of financial conditions issued by the Bank of Morocco, the Moroccan Capital Market Authority, and the Insurance and Social Reserve Control Authority (ACAPS) revealed an increase in the value of housing and consumer loans granted to families by 3.4%, so that the value of the debt of this category of customers to banks jumped to 399 billion dirhams during the period. Only one year.
Credit risk
The increase in outstanding loans granted by microcredit associations (banks for the poor) has enhanced the risk margin associated with non-performance, as the level of non-performing loans recorded a significant increase in parallel with the development of exploitation and collection costs for these associations, especially after a number of them became involved in public financing initiatives for project owners, such as “Forsa” program.
Muhammad Yazidi Shafi’i, an expert in applied economics, confirmed that indicators related to the margin of non-performance risk have become a matter of concern for microcredit associations, in light of the repercussions of inflation, high prices, and the decline in the purchasing power of families, explaining that these developments forced the associations to reconsider their lists of credit products. And focus on other products, such as microinsurance, in order to increase its turnover.
Yazidi Shafii added, in a statement to Hespress, that microloan associations are required today to ensure the sustainability of lending operations and reduce risks, by taking various preventive measures, including carefully evaluating loans and borrowers, diversifying the loan portfolio, as well as strengthening internal control and continuous formation of frameworks, stressing the necessity of Strengthening the communication of “banks for the poor” with the financial and supervisory authorities to monitor risks and take the necessary measures.
Borrowing culture
The past two years revealed an important shift in the culture of borrowing among families, which was evident through the growing demand for borrowing despite the successive increase in the main interest rate by the Bank of Morocco, as the development in the cost of loans did not prevent the acceleration of credit demand in order to finance consumption and the purchase of equipment in the long term. The short one. This is a culture that has been taking root in Morocco, and is based on debt to cover consumer needs.
According to Salah Ismaili, a financial and banking consultant, the culture of borrowing among families in Morocco reflects a variety of social, economic and cultural factors, explaining that understanding this culture plays a crucial role in analyzing families’ use of credit and their levels of indebtedness, highlighting that in some cases, economic conditions encourage… To take out loans as a means of meeting essential needs, such as housing, education, or improving the standard of living. In this case, financial culture respects debt as a natural means of achieving personal and social goals.
On the other hand, Ismaili pointed out the emergence of aspects of the culture of borrowing that pose challenges, explaining that the growing culture of excessive use of credit leads to negative repercussions on the financial sustainability of families, as some tend to borrow without good planning or awareness of the resulting financial risks, and this may result from Lack of proper financial culture and lack of awareness of basic financial concepts.
