How was the Moroccan participatory environment built up?
We deployed our services progressively, as the Moroccan Central Shariah Board approved contracts. We first deployed mortgage financing contracts, then equipment for individuals or industries (cars), an investment mandate that allows participation banks to finance themselves with the Moroccan banking system or institutional investors, and, finally, a contract of investment deposits, which is the savings product for individuals and institutional investors. The Moroccan participatory environment was built gradually by responding to the financing needs of individuals and economic agents primarily on tangible goods, then through the establishment of a mechanism for financing the banking system, and finally investment deposits in 2019. During this period, there was support at the fiscal level because the finance law of 2016 established fiscal neutrality between the participatory and conventional systems. The finance laws of 2018 and 2019 each brought a number of tax measures that accompanied the establishment of products of participatory banks. 2019 was a rich year because it resulted in, among other things, the completion of this fiscal project as well as the issue of sukuk by the state in 2018.
Liquidity is a major challenge in the banking sector. Does it also affect participatory banking?
Indeed, one of the main challenges facing the participatory sector in Morocco is that the level of financing far exceeds the deposits collected by participation banks. There are five participative banks and three windows, so there are eight operators in Morocco. The five banks are all subsidiaries of large Moroccan banks, and the three participative windows depend on French banks operating in the Moroccan market. At the end of 2019, the entire participative environment collected the equivalent of MAD3 billion in deposits and approximately MAD335 million in investment accounts. In comparison to financing, with MAD9 billion in resources, there is a huge gap. This gap is financed mainly by Wakalat Al Istitmar, provided by the head banks of the participative banks. This is the main challenge. We started talks with the central bank in order to put in place other mechanisms to allow participation banks to fill this liquidity gap.
How has COVID-19 affected your short-term strategy?
We had to ensure the health of our employees and our customers, as well as the continuity of service. We deployed different forms of work: teleworking for some central functions and rotations for the branch network employees. Thankfully, there were no issues for these first two weeks. We also encouraged our clients to use mainly digital means through mobile and internet banking. With regard to liquidity management, the central bank took a number of measures to support the banks, in particular the introduction of unconventional refinancing mechanisms by the central bank for the benefit of banks. The central bank had already lowered the key interest rate from 2.25% to 2%, and it took all the necessary steps to ensure satisfactory liquidity in the banking system. There was also implementation by the government at the level of the guarantee fund of a certain number of accompanying measures for banks in terms of guarantees.
What role has digitalization played in your operations?
Earlier this year, we launched a new version of our application that meets 95% of our customers' needs. They can consult their balance, make transfers, pay their water and electricity bills and taxes, and so on. All these elements are there to manage this exceptional situation so people do not need to go out. We have even accompanied the national solidarity effort by setting up automatic transfers to the national fund of COVID-19, a fund set up by the King that helps all the vulnerable agents following this pandemic. The fund was set up in April in just two weeks. All these allow our clients to bank safely from home without having to go to a branch.