The long-awaited legal framework to regulate the collaborative financing method is coming to Morocco. The deputies have begun examining a draft law that should provide a framework for crowdfunding. This new means of financing must be open to modest and connected savers.
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Crowdfunding in Morocco
Expected since April 2018, the examination of the so-called “collaborative financing” bill is finally starting in Morocco. Technically, the concept of crowdfunding (“crowd financing”) is to bring together two needs through a platform on the internet: that of the entrepreneur/idea carrier who lacks liquidity and hopes to find financing, and that of a saver who wants to invest a certain amount of money, even modest, in a project with detailed outlines. These are generally small businesses, but this law will also enable associations to raise funds to finance their projects.
Under the banner of crowdfunding, the law admits three types of financing operations, each time via an electronic platform edited and managed by a collaborative financing company: the financing of projects in the form of a loan (crowdlending, for which Bank Al-Maghrib will control the interest rate or the maximum duration of the loan), a grant (crowdfunding: the donor will have to obtain an authorization if the amount exceeds MAD 500,000), or capital (crowd equity).
In the latter case, for management companies that want to propose capital investment, it will be necessary to obtain a visa from the Moroccan Capital Market Authority (AMMC). The platforms must have a minimum capital of $31,000 (MAD 300,000) and the collaborative finance companies that will manage them must have a risk prevention and reduction policy.
Structuring the sector for better regulation
The department and the government were structuring a segment that was going to be a must in most events. Several Moroccan project leaders have made use of this means of financing, but through foreign platforms: “National projects don’t have to be financed by international players. It was necessary to be active to allow Moroccan platforms to take over in a secure and transparent manner,” the Ministry of Finance explained this framework. The State will be able to directly control what is collected through crowdfunding.
The subject of the financial sphere is a bit different. “It is a rather technical text and it takes a certain level to master everything. Unfortunately, I do not think that members of Parliament will be able to amend or improve it. Having said that, the initial text is good and it will allow us to see the emergence of this new segment that is very much in vogue throughout the world. We’re already way behind,” told an investment banker. He said that he would quit his current job to launch a collaborative financing platform.
The government approved the bill last August, which ended a long process that started more than three years ago. The text of “law n°15.18 related to collaborative financing” remained in the drawers of the secretariat of the parliament during this period, before being the subject of discussion for the Finance and Economic Development Committee of the first chamber.
Funding from the general public
Between the passing of the law and the first creation of companies and platforms, there will still be a long time to go. Financial sector players will have to popularize this new means of financing among project owners and the general public who will be called upon to invest in it. The professionals of the financed sector contacted and the parliamentarians say they are confident in the rise of crowdfunding in Morocco.
The banks are very reluctant to finance small projects; the bankers themselves are not trained to support small structures. Like the banks, venture capitalists are also not very keen on new projects. Several bankers, teams from the Central Bank and members of the American Embassy in Morocco participated in the creation of this law.
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First published in jeuneafrique, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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