World Bank commits $150 million to enhance social programs and support small enterprises in Morocco
The World Bank’s Board of Executive Directors have approved today a $150 million financing in support of the Moroccan government’s goal of modernizing its national identification system and provide financing to promote innovative startups and job creation.
With an aim of enhancing social and economic inclusion, the two operations will enable better identification of individuals for better targeting of social programs and lifting barriers to accessing finance for startups and small enterprises.
Almost 5.3 million Moroccans, of which two-thirds from rural areas, live under the threat of falling back into poverty due to their socio-economic conditions. The US$100 million Identity and Targeting for Social Protection Project aim to develop systems to ensure that social programs are better targeted and reach the most vulnerable Moroccans.
Specifically, it will fund the development of a National Population Register (NPR) whereby each individual will have a unique identifying number (UIN) that will facilitate current processes of identity verification as well as a Social Register (SR), which will collect socio-economic information to identify the most disadvantaged households and individuals, eligible for social benefits.
The SR will enhance social spending by reducing the margins of errors and will allow greater coordination among the various social programs and line ministries. Both the NPR and the SR will be managed by a National Agency for Registers, a central institution which will be responsible for managing and assuring the best utilization of information.
The World Bank estimates that the project will help double the impact of poverty reduction programs such as RAMED and Tayssir and will contribute to savings of over 30 million dollars per year as program resources will be allocated only to the most vulnerable households and individuals.
The project will be implemented by the Ministry of Interior over the next five years, through a result-based financing – whereby funds are disbursed upon completion of agreed objectives. Along with resources, the Word Bank will provide technical assistance to help the country develop the institutional, legal, and operational frameworks to ensure the proper use and sustainability of the new systems.
“The current program will benefit nearly 9.3 million Moroccans from the most disadvantaged segments of the population enabling them to have greater access to social protection programs. With a better designed and managed identification system, Morocco will be able to implement more targeted social programs that can have tangible impact on the population” said Diego Angel Urdinola, World Bank Senior economist and Task Team Leader for the new project.
The US$50 million Financing Innovative Startups and small and medium enterprises (SMEs) project, approved today, will help address a market gap in the supply of equity financing for innovative young small and medium enterprises. Evidence from the Middle East and North Africa Region shows that startups have the highest contribution to net job creation.
Despite being the best regional performer with regard to access to finance for SMEs, Morocco has not been able to support innovative and high-growth potential firms at the initial stages of their development. “Young small enterprises are faced with challenges to mobilize financing; mainly because banks cannot finance start-ups (without substantial collateral) due to their lack of an existing sustainable revenue stream, and their perceived high risk, said Randa Akeel, Senior Financial sector specialist and Task Team Leader.
The project will invest in innovative startups and SMEs through private funds to selected promising investments. The project will also address gaps in the supply of investment know-how and support that most entrepreneurs need to create viable startups by providing resources to ecosystem support providers for mentoring and investment-readiness programs. Overall, the project will contribute to increasing Morocco’s innovative private sector through the creation of a Venture Capital market in Morocco
“Both operations support the government’s commitment to reduce social exclusion and promote private sector growth“ said Marie Françoise Marie-Nelly, World Bank Maghreb Country director, “improving targeting of social programs, strengthening social services and facilitating access to opportunities for entrepreneurs is the path to an inclusive growth that is beneficial to all Moroccans.”