The EBRD and Morocco are joining forces to develop local currency lending to small businesses and provide affordable loans to Moroccan banks and microfinance organisations.

During a visit to Morocco EBRD Vice President Alain Pilloux signed a Memorandum of Understanding today with Morocco’s Ministry of Economy and Finance and the Central Bank (Bank Al Maghrib) of Morocco which will pave the way for lending to local small and medium-sized enterprises (SMEs) in local currency, mitigating their exposure to exchange rate volatility.

The EBRD established its Local Currency and Capital Markets Development Initiative (LC2) in the aftermath of the global financial crisis to strengthen local capital markets and to encourage the use of local currencies in the countries where it works. Local capital markets provide a reliable source of funding, thereby contributing to financial resilience and sustainable growth. Technical cooperation and donor support provide vital backup for the programme.

Morocco is committed to develop the local currency Dirham and local capital markets and determined to support access to affordable local currency funds for local private businesses. To achieve this goal the Moroccan authorities are promoting a macroeconomic, regulatory and market environment that supports the development of local capital and money markets and local currency borrowing.

Marie-Alexandra Veilleux-Laborie, EBRD Director for Morocco, said: “The signing of this MoU is an additional step in strengthening our commitment in Morocco. It will allow the EBRD to lend at competitive rates in Moroccan Dirham to local SMEs, which are the backbone of Morocco’s economy. This confirms the EBRD’s commitment to the country and its strong willingness to support the development of the Moroccan private sector.”

To supplement LC2 the EBRD also launched a €500 million SME Local Currency Programme, which combines EBRD financing with donor resources to provide eligible borrowers with access to affordable funding. To date, over 300,000 SMEs in countries where the programme has been rolled out have benefited from the joint initiative of the EBRD’s Local Currency and Local Capital Markets and SME Finance and Development groups.

Morocco is a founding member of the EBRD and became a country of operations in 2012. To date, the Bank has invested over €1.2 billion in over 30 projects in the country. The Bank has also supported more than 340 Moroccan SMEs by providing business advisory services.