MARIE-ALEXANDRA VEILLEUX-LABORIE

Morocco 2020/21 | ECONOMY | VIP INTERVIEW

TBY talks to Marie-Alexandra Veilleux-Laborie, Director for Morocco at the European Bank for Reconstruction and Development (EBRD), about the green economy, lessons learned since the onset of the pandemic, and goals and expectations for the year ahead.

What is your strategy behind working with the Green Climate Fund, and how would you characterize the strength of Morocco's green economy?

Morocco's green economy has a huge potential, particularly with the COVID-19 impact, which is accelerating the need for a greener, more sustainable, and inclusive growth. The EBRD aims to support the government of Morocco's National Sustainable Development Strategy in guiding the actions of both public and private actors towards a green and inclusive economy. Back in 2015, we deployed our first green financing package called the Morocco Sustainable Energy Financing Facility (MorSEFF), together with other international financial institutions: that was a EUR110-million financing program designed to support businesses investing in energy efficiency and renewable energy projects, through two partner banks in the country: BOA and BCP. It incentivized MSMEs and corporates to invest in green equipment. This program was a huge success and contributed to the creation of a green financing market. That was our first step in 2015, and since then other local banks have requested more green financing from EBRD because we have enabled the creation of a market, by addressing market barriers and entrenched behaviors that hinder the uptake of green technologies and solutions. Our financing package includes several key components, one of which is money through credit facility, technical assistance to the partner bank that allows it to design a dedicated offering, as well as incentives to the end-borrowers. That was a winning formula that helped us attract more clients and since then we followed up with new programs such as the Green Value Chain, co-financed with the Green Climate Fund and the EU. We have also partnered with the Green Climate Fund to support the modernization of the irrigation system in the Saïss area, through the provision of EUR 120million loan to the Saïss Water Conservation Project and EUR32 million grants from the Green Climate Fund. This project is 100% a green. We have also launched recently a third large program, which is a green economy financing facility II (GEFF-II) that provide intermediated finance of at least EUR 150 million which may include up to EUR37.5 million of co-financing from the Green Climate Fund and EUR 18million grant from the European Union to financial institutions in Morocco. These funds will be for on-lending in green investments, contributing to the estimated EUR32 billion of additional finance needed to meet National Sustainable Development Strategy's targets for Greenhouse Gas emission reductions.

Do you continue returning to Morocco because you see signs of promise and potential in its green economy?

Yes, there is definitely great political will here. The authorities are committed to making Morocco greener through the launch of similar financing programs. Moroccan businesses are also wiling to grow or stay competitive through reduced operational costs (particularly energy, material and water costs) and production capacity expansion; we are encouraging them to adopt high-performing technologies and best practices, and we are assisting them with access to dedicated green finance. We also have a strong policy dialogue with the Ministry of Energy that supports the deployment of its renewable energy strategy, in particular opening up the sector to private developers. We have a number of technical assistants at the ministry and with all the different key stakeholders. Morocco has a great potential thanks to its natural resources, a diversified economy that relies on highly granular players of micro and SMEs, as well as a strong and resilient banking sector.

What were the main lessons learned during this past year, and how has EBRD demonstrated resilience?

The Bank was one of the fastest development financial institutions to deploy a solidarity package to its existing partners at the beginning of the pandemic in 2020; Morocco was the first one to receive it in April 2020. The idea of the solidarity package was—and still is—to support our partners in meeting liquidity needs. Bank of Africa (BOA)—and later other banks—expressed the need for short-term financing in anticipation of the upcoming economic crisis. Our support was composed of a short-term, EUR100-million liquidity loan to BOA and an increase in the uncommitted multi-currency trade finance limit by USD50 million. This package helped BOA to address the challenges and the difficulties faced by many of its clients at the time and truly anticipate market needs. We were the only development financing institution able to provide working capital, cash financing and guarantees, and short-term liquidity.

What is the importance of the SME sector in Morocco, and what role do you see them playing in the country's economic recovery?

Locally, MSMEs represent the bulk of the economy as well as the backbone in terms of job creation. We are a strong believer that they play—and will continue to play—a key role in the post-COVID-19 economic recovery should they be supported well during this period. The government has launched a number of initiatives to support them. We also support them through both direct and indirect financing and our advisory business. Caixa Bank is one of the many examples with which we signed some financing to support SMEs. In addition, we signed a loan with CIH dedicated to SMEs and as well as a trade finance limit with others. We also provide them with technical assistance; we have a fantastic program financed by the EU called the Advisory for Small Business, which offers technical assistance to SMEs. We finance local consultants or international experts to meet the specific needs of SMEs.

What have been your strategies and challenges for assisting women in Morocco?

The existing finance offers for women are not in line with the demand, and there are limited products in place that do not require collaterals. Second, there is a need to increase general awareness about gender inequality and design a specific offer that targets female entrepreneurs. It should not only be about financing but also about advisory services. Third, there is a low banking penetration of women; approximately 17% of women in Morocco have a bank account versus 35% in the MENA region. We have rolled out the Women in Business program with a number of banks in the country that features a package of financing similar to the green offer; however, here we also have a first-loss risk cover that allows banks to take on greater risks when financing female entrepreneurs. We also have a full package of technical assistance for female entrepreneurs in terms of coaching, mentoring, and skills enhancement to provide solid advisory services for female entrepreneurs to better run their daily businesses.

What are your goals and expectations for EBRD in Morocco this year?

2020 was a record year for the Bank in Morocco since it started in 2013. We signed and committed EUR750 million of investments in the kingdom. It was a record year because we were able to deploy the solidarity package and meet our clients' needs during a severe systemic crisis. I expect 2021 to be a great year for us as well, though it is difficult to predict. We will continue to remain close to our clients and partners to truly understand their needs and help them be innovative to remain resilient. The green agenda will remain high, and we are starting to deploy a new green financing package for banks and MSMEs that will likely be successful. We will continue to support public and private companies with innovative financing packages. Also, this year will be important for us, as we will define and approve our new country strategy for the next four years. That will be in line with the new economic development model that Morocco is working on right now.