Public Disclosure Copy The World Bank Implementation Status & Results Report Morocco Microfinance Development Project (P144500) Morocco Microfinance Development Project (P144500) MIDDLE EAST AND NORTH AFRICA | Morocco | Finance, Competitiveness and Innovation Global Practice | Recipient Executed Activities | Investment Project Financing | FY 2013 | Seq No: 9 | ARCHIVED on 03-Jun-2018 | ISR32152 | Implementing Agencies: Ministry of Economy and Finance, Ministry of Economy and Finance, Central Bank of Morocco (Bank Al-Maghrib) Key Dates Key Project Dates Bank Approval Date:27-Jun-2013 Effectiveness Date:25-Jul-2013 Original Closing Date:31-Jan-2018 Revised Closing Date:30-Jun-2019 Project Development Objectives Project Development Objective (from Project Appraisal Document) The project objective is to promote access to finance to low income households and micro and small enterprises through the promotion of a sustainable and inclusive microfinance sector. Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Moderately Satisfactory  Moderately Satisfactory Overall Implementation Progress (IP)  Moderately Satisfactory  Moderately Satisfactory Implementation Status and Key Decisions This project, a $4.9 million grant financed under the Middle East and North Africa Transition Fund (Deauville) and implemented by the Moroccan Ministry of Economy and Finance (MEF), aims to improve access to finance for low-income households and micro and small businesses through the development of an inclusive and sustainable microfinance sector. The project advances sectoral reforms to the microfinance sector and supports the Government of Morocco’s (GoM) broader financial inclusion objectives. Authorities are driving these efforts based on a growing body of evidence demonstrating the impact of financial inclusion on reducing poverty, hunger, and gender inequality. The project is aligned with pillar one of the FY17- 18 Country Partnership Strategy (CPS) as well as the 2017 Morocco Systematic Country Diagnostic currently under development. 6/3/2018 Page 1 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Morocco Microfinance Development Project (P144500) The project finances four types of outputs: 1) studies and diagnostic aimed at accelerating reforms related to the supervision and regulation of the sector; 2) improvements to market infrastructure (mapping tools, communications support for sector association); 3) training tools (financial education/literacy), and 4) convening support in the form of workshops and conferences. Since the latest reporting period (September 2017), activities have advanced across all three components of the project. Deliverables of strategic importance to Moroccan authorities include: • Ongoing revision of existing microfinance law (18-97) to adhere to international standards with relation to the supervision of microfinance companies. • Development of a national financial inclusion strategy (and related inter-governmental coordination) • Sectoral development studies (e.g. study on market potential for microfinance, studies examining sectoral credit risk and assessment tools, studies on digitization of microfinance, etc). • Tools to improve market infrastructure (supporting SME observatory, digital financial education tools) • Demand-side survey (Findex) update (5,000 sample size) • Capacity building for public authorities, including the project management unit • Periodic learning and convening events (Oct 2016 regional financial education conference; 2017 Euromed conference on financial technology). The project is currently set to close June 30, 2019. 6/3/2018 Page 2 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Morocco Microfinance Development Project (P144500) 6/3/2018 Page 3 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Morocco Microfinance Development Project (P144500) 6/3/2018 Page 4 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Morocco Microfinance Development Project (P144500) 6/3/2018 Page 5 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Morocco Microfinance Development Project (P144500) Risks Overall Risk Rating Risk Category Rating at Approval Previous Rating Current Rating Overall  --  Substantial  Substantial Comments Risk remain manageable albeit substantial given complex project design, governance structure, and implementing capacity given competing priorities. Risk rating will be reviewed during June 2018 mission upon review of action plan and recommendations captured in this ISR. Results Project Development Objective Indicators PHINDPDOTBL % of Adults (and women) with an account at a formal financial institution, including low income households (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 39.00 41.00 29.00 51.00 Date 01-Dec-2012 21-Feb-2017 10-Apr-2018 01-Feb-2018 Comments The Global Findex database 2017, which was finalized in February 2018 and shared with authorities in March 2018, shows that only 29% of Moroccan adults have access to a formal transaction account.This is much lower than both supply-side figures provided by the Central Bank and lower than a 2014 financial capability survey that yielded a headline figure of 41%. The difference can be explained as follows: Supply side figures generally compile total number of accounts divided by the total population, whereas findex uses interviews to ask people if they have an account - and people generally do not report accounts that they have not used for many years. Supply side figures estimate financial inclusion based on the total number of accounts, including Moroccan diasporas’ bank accounts, multiple accounts per individuals, and dormant accounts. According to the findex team, sampling errors and methodological questions call into question the results of the 2014 survey. http://www.worldbank.org/en/topic/financialinclusion/publication/2014-morocco-financial-inclusion-and-capability-survey It is also worth noting that Findex survey efforts in previous years which were financed by the Development Economics Research Group and not made public, with totally different geographic sampling areas (and households), found almost identical headline numbers. The task team has prepared talking points to the client outlining results of the 2017 Findex survey and differences in results from both official supply side figures and the 2014 financial capability survey. 6/3/2018 Page 6 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Morocco Microfinance Development Project (P144500) PHINDPDOTBL Number of end-beneficiaries of MFIs, including low-income households, microenterprises, and small firms (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 804,000.00 907,157.00 937,599.00 1,100,000.00 Date 01-Dec-2012 17-Aug-2017 29-Dec-2017 01-Feb-2018 Comments As measured by the number of active loan accounts. PHINDPDOTBL Portfolio at Risk - Microfinance (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 6.70 3.00 3.00 6.40 Date 01-Dec-2012 17-Aug-2017 17-Aug-2017 01-Feb-2018 PHINDPDOTBL Outstanding Microfinance Loan Portfolio (USD mn) (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 550.00 765.00 808.00 590.00 Date 01-Dec-2012 20-Jul-2017 20-Jul-2017 01-Feb-2018 Comments As measured in millions of USD, based on data from Central Bank (BAM), received through the Ministry of Economy and Finance on March 15, 2018. Overall Comments 6/3/2018 Page 7 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Morocco Microfinance Development Project (P144500) Intermediate Results Indicators PHINDIRITBL Strengthening Institutional, Legal, Regulatory, Tax and Governance Framework for Microfinance: Regulatory Studies Completed (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2.00 2.00 3.00 Date 01-Dec-2012 18-Aug-2017 10-Apr-2018 30-Jun-2019 Comments - Study on legal and regulatory framework for microfinance sector - Study on market potential for microfinance sector - Study on sectoral credit risk assessment (selection of firm currently being finalized) will meet the indicator. Other studies inscribed in the 2018 work plan include: - study on transparency principles in the microfinance sector, - study outlining impact analysis of microcredit on broader economic development in Morocco, and - interest rate analysis on broader financial inclusion. PHINDIRITBL Strengthening Institutional, Legal, Regulatory, Tax and Governance Framework for Microfinance: Number of operational and regulatory initiatives implemented by BAM and other key stakeholders (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.00 2.00 3.00 Date 01-Dec-2012 18-Aug-2017 10-Apr-2018 30-Jun-2019 Comments - Restructuring of the FNAM following December 2013 workshop on legal and regulatory framework - Launch of a working group comprised of MEF, BAM, and select market actors (represented by FNAM) preparing the new microfinance law. 6/3/2018 Page 8 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Morocco Microfinance Development Project (P144500) PHINDIRITBL Strengthening Market infrastructure, product innovation and funding sources for microfinance: Number of alternative microfinance products developed and piloted (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2.00 3.00 3.00 Date 01-Dec-2012 18-Aug-2017 10-Apr-2018 30-Jun-2019 Comments Indicator met through: 1. Microinsurance (via partnership model). 2. Work on non-bank payment service providers, specifically integration of microfinance institutions in this category of activity. 3. Including microfinance sector in Islamic finance activities through dedicated financing windows (fenêtres dédiés). As stipulated in article 61 of the Banking law. PHINDIRITBL Strengthening market infrastructure, product innovation and funding sources for microfinance: Number of Trainings to Micro Entrepreneurs Delivered (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 653.00 1,697.00 1,100.00 Date 01-Dec-2012 18-Aug-2017 10-Apr-2018 30-Jun-2019 PHINDIRITBL Integrating Microfinance into a national financial inclusion strategy: Financial Inclusion Stock-Taking Completed (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N Y Y Y Date 01-Dec-2012 18-Aug-2017 18-Aug-2017 30-Jun-2019 Comments Indicator met through: - May 22-23 2017 reflection workshop (70 stakeholders with one day dedicated to evaluation of existing initiatives). - Central Bank paper on financial inclusion strategy stocktaking and international best practices (disseminated September 2017). - Dedicated mission providing financial inclusion stocktaking and technical report on governance structure for financial inclusion strategy (see March 2017 aide memoire). 6/3/2018 Page 9 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Morocco Microfinance Development Project (P144500) PHINDIRITBL Microfinance into a national financial inclusion strategy: Evaluation Completed of Existing Financial Inclusion Integrating Measures (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N Y Y Y Date 01-Dec-2012 18-Aug-2017 10-Apr-2018 30-Jun-2019 Comments Indicator met through supportive actions: - May 22-23 2017 reflection workshop (70 stakeholders with one day dedicated to evaluation of existing initiatives). - Central Bank paper on financial inclusion strategy stocktaking and international best practices (published September 2017). PHINDIRITBL IntegratingMicrofinance into a national financial inclusion strategy: Number of Beneficiaries Receiving Financial Literacy Training (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 6,000.00 8,845.00 15,655.00 14,000.00 Date 01-Dec-2012 18-Aug-2017 10-Apr-2018 01-Feb-2018 Overall Comments Broken down as follows: Centre Mohammed VI: - 1697 microentrepreneurs (3394 days of training) - 786 microfina nce clients (1572 days of training) - 2672 trained via partnerships (representing 4761 days of training). National Foundation for Financial Literacy: - 5000 illiterate individuals - 1900 artisans - 3600 farmers/individuals working in the agricultural sector Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P144500 TF-15084 Effective USD 4.90 4.90 0.00 2.36 2.54 48% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date 6/3/2018 Page 10 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Morocco Microfinance Development Project (P144500) P144500 TF-15084 Effective 25-Jul-2013 25-Jul-2013 25-Jul-2013 31-Jan-2018 30-Jun-2019 Cumulative Disbursements Restructuring History Level 2 Approved on 30-Jan-2018 Related Project(s) There are no related projects. 6/3/2018 Page 11 of 11 Public Disclosure Copy