The Transparent Pricing Initiative in Morocco published standardized pricing data from 6 microfinance institutions, representing an estimated 60.1% of the total micro borrowers in Morocco. Launched in April 2013, the Initiative was delivered in partnership with Planet Rating and was funded by the Netherlands Platform for Microfinance (NPM). .
Microfinance in Morocco
Prior to the financial crisis in 2008, the Moroccan microfinance market was the largest (in temrs of Gross Loan Portfolio) in the Middle East and North Africa (MENA) region. It had experienced strong growth and a high degree of market penetration owing to continued support from local and international donor organizations and investors. However the rapid growth was unsustainable given the limited regulatory oversight at the time and the high level of client over-indebtedness. This coincided with the financial crisis, which lead to a deterioration in loan portfolio quality and increase in overall market risk.
An intervention by the Ministry of Finance, together with Banque Al-Maghrib (BAM) – the Moroccan Central Bank, instituted a tighter prudential framework in the areas of governance, internal control, loan and asset quality, and the mitigation of operational risks. In addition, the government orchestrated a merger between two of the largest Microfinance Institutions (MFIs) at the time – Zakoura and Fondation des Banques Populaires (FBPMC) which is now known as Attawfiq Micro-Finance. This aimed to protect consumers, create stability and strengthen and restore confidence in the industry. The microfinance market in Morocco is dominated by few large institutions and continues to be the largest in the MENA region.
Truth-in-Lending Legislation
The regulatory environment of the Morocco microfinance market was established through the microcredit law of 1999 issued by BAM, and strengthened in later years following the microfinance crisis. The current regulatory framework has succeeded in tightening regulation through increased supervisory mechanisms. However, specific legislation promoting truth in lending and consumer credit transparency has not been yet incorporated. The microfinance association, Fédération Nationale des Associations de Microcrédit au Maroc (FNAM) – established in 2004 – and Centre Mohammed VI de Soutien à la Microfinance Solidaire, a support center for microfinance established in 2007 are two of the most prominent organizations promoting consumer protection principles and best practice in the microfinance industry in Morocco. In addition, the credit bureau, which was initiated by the four largest MFIs in the country, is also helping to prevent the once prevalent cross-borrowing and client over-indebtedness in the industry.
Morocco Price Graph
The price graph presented below shows the prices of microloan products in the Morocco dataset. Each data-point represents a real loan given to a real borrower, calculated using original loan documentation from the institution. The size of the data-point correlates with the number of borrowers that have a loan of that product at that loan amount. The color of the data-point correlates with the Transparency Index of the sample. The interactive legend beneath the graph can be used to change the graph axis and labels. Try the custom feature to see price correlations with attributes such as loan purpose, institution type, loan term and percent of gross national income.
The pricing data reveals a curve in the market average APR, showing that loans of a smaller size rise dramatically in price. Each bubble represents the price of a real loan given to an actual client. The size of the bubble represents the number of clients with loans of this approximate size, and the colour indicates the Pricing Transparency Index for this loan product sample. The data indicates a strong correlation of loan products with lower prices being advertised with a more transparent price.
