Rabat - There is a consensus among politicians in Morocco and elsewhere that Small and Medium-Sized Businesses (SMEs) are the “backbone” of the economy.
Aside from being an appealing election slogan, however, describing SMEs as the backbone of national economies is particularly accurate as SMEs make up 90% of all businesses worldwide, and generate 50% of job positions, according to data from the World Bank (WB).
The trend is even more prominent in emerging markets where SMEs account for up to 40% of the Gross Domestic Production (GDP), the WB report indicates.
In Morocco, SMEs account for 90% of the country’s production fabric, mirroring international trends, notes a report from the Oxford Business Group.
The same report indicates that despite their immense potential to generate jobs and expand the country’s middle class, Moroccan SMEs face an issue of unfulfilled potential as they only contribute 30% to the country’s exports.
Access to financing seems to be a major setback for SMEs in Morocco. Last February, Morocco’s Central Bank Governor, Abdellatif Jouahiri, highlighted this issue during a high-level meeting with government officials, explaining that without adequate access to financing, growth prospects for Moroccan businesses will remain restrained.
The Oxford Business Group’s report sheds light on other two aspects that could potentially support SMEs in emerging markets to accelerate their growth rate.
The group first proposes the creation of industrial parks and special economic zones (SEZs) specially dedicated to SMEs in Morocco and across Africa.
While governments typically establish SEZs to attract foreign investors, the report maintains that they can do -- and should be doing -- much more to support local businesses.
A prime example of the instrumentality of SEZs is Egypt’s Polaris Parks. In addition to hosting international companies, the parks are also home to local companies.
One such park in Egypt comprises 300 ready-made business units, offering companies a wide range of infrastructure for industrial-grade businesses.
The group’s second recommendation to bolster the contribution of SMEs is capitalizing on the African Free Trade Zone Area (AfCFTA).
Launched in January 2022, the AfCFTA includes 54 of Africa’s 55 countries, with a combined GDP of $3.4 trillion.
Given the AfCFTA's potential to boost inter-continental trade by guaranteeing the free flow of goods and services, it can significantly contribute to the growth of African SMEs including those in Morocco.