Visit by AIR to Bank Al-Maghrib

Background

1. As part of its planned activities for 2018, the African Institute for Remittances (AIR) envisages visits to different countries for the purpose of sharing experiences and best practices. Such visits provide an opportunity for Members States, especially those benefitting from the Technical Assitance (TA) program, to gain in-depth knowledge of the remittances markets in different countries and to identify scalable actions. Identification of the countries to visit is based on the nature of the remittances markets, and the ensuing regulatory and legal reforms in place to facilitate the leveraging of remittances for social and economic development and financial inclusion. For 2018, one of the countries identified is Morocco.
2. Since the 1960s, the Moroccan government has encouraged emigration on political and economic grounds. Twelve years after Independence, Morocco’s budgetary plans (1968-72) proposed emigration as one of the solutions to solving the under- and unemployment problem, a policy which would simultaneously provide an increase in foreign currency through remittances. Migrant transfers would help finance internal investments, local employment and the creation of a group of nationals with professional skills and attitudes acquired in Europe and favorable to economic development. In particular, remittances were expected to make a contribution to prosperity.
3. The strong economic growth in Western Europe in the 1960s resulted in great demand for low-skilled labor. Morocco signed labor recruitment agreements with the former West Germany (1963), France (1963), Belgium (1964), and the Netherlands (1969). This was the onset of a spatial diversification of Moroccan emigration, which had been mainly directed towards France.
4. Building on foundations already in place, the 1973-77 five-year plan further proposed methods of stimulating emigration services in Morocco and setting up a network of social bureaux abroad. Activities in favor of emigration and the conclusion of labor agreements with different receiving countries would further enhance development, as would the creation of emigration funds designated to aid potential migrants with the costs of establishing themselves abroad (Leichtman, 2002).
5. In 2003, the Global Development Finance Annual Report took formal notice of remittances as an important source of external development finance for the first time, listing Morocco as the 4th largest remittance recipient among developing countries. The World Bank further estimates that remittances to Morocco reached $6.9 billion in 2016, coming mostly from France, Spain, and Italy. In recent years, it has become easier, cheaper, and more attractive for Moroccans to remit money because of a government-encouraged expansion of Moroccan bank branches in Europe, the lifting of restrictions on foreign exchange, fiscal measures that favor migrants, and devaluations that increase the value of foreign currency.
6. In 2011, the average costs of transferring €140 between six countries in Europe (Belgium, France, Netherlands, Spain and Italy) and Morocco was 9.1 per cent[1].The cost of remittances transfers has reduced considerably to reach an average of about 5.2 per cent, for example, for remittances from France in 2017. Morocco has also been relatively successful in channeling remittances through official channels. Morocco therefore provides a good case study for identification of the necessary policy reforms that contribute to reduction in remittance transfer costs and leveraging remittances for social and economic development.
7. The Bank Al-Maghrib has undertaken efforts to strengthen cooperation with central banks and other professional entities to develop and facilitate the exchange of experiences and expertise in various areas. Together with professional associations in the financial sector, Bank Al-Maghrib has set up a consultative platform to discuss the main issues concerning the activities of credit institutions and other professional bodies. During these meetings, discussions focus on developments in the banking sector and the main risks associated with it, regulatory reforms, financial inclusion, customer protection and payment systems. In the context of its actions to promote the financing of Very Small Micro Enterprises (VSMEs), Bank Al-Maghrib works with the General Confederation of Moroccan Enterprises (CGEM) to create a favorable environment for the financing of VSMEs, including diaspora remittances.

Objectives of the Visit

This is a preparatory visit by AIR staff to identify best practices and experiences that can be shared with other AU Member States. The overall objective therefore is to gather experiences and lessons learnt in statistics collection/compilation and legal/regulatory reforms in the Moroccan remittances market. The mission will seek to achieve the following specific objectives:

1. To discuss the regulatory/legal reforms undertaken by Bank Al-Maghrib in the remittances market including initiatives to mobilize the Diaspora and its economic resources.
2. To establish areas of best practices in statistics compilation and regulatory reforms that can be shared with other Member States.
3. To assess the factors contributing to the relatively low cost of transfers, especially in the France-Morocco corridor.
4. To discuss the Moroccan experience in developing effective strategies to promote the contribution of the Diaspora to the economic transformation of Morocco through investment in (Very Small and Medium Enterprises (VSMEs) and, hence, job creation.
5. To consider best practices for leveraging remittances for social and economic development including financial inclusion.
6. To identify actions that can be scaled to other Member States.

[1] https://ec.europa.eu/europeaid/sites/devco/files/study-eu-remittances-for-developing-countries-final-20120730_en_11.pdf