Finéa II development loan

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Micro, small and medium-sized enterprises (MSMEs) are important economic and employment drivers in Morocco (93% of all companies, 46% of all employees, 38% of GDP). However, their growth is hampered by the current lack of access to financial services. The main reasons for the inadequate supply are the scarcity of - especially long-term - refinancing funds from Moroccan commercial banks, their historical focus on larger companies with government contracts (and thus lower risk) and their lack of expertise in MSME-oriented lending and monitoring technologies. A promotional loan (FöK) of EUR 200,000 thousand from 2013 to Finéa S.A. (Finéa) was therefore intended to facilitate access to loans for Moroccan MSMEs via local commercial banks. Finéa is a subsidiary of the national Moroccan promotional bank Caisse de Dépôt et de Gestion (CDG) that specializes in MSMEs. With the project, Finéa has been developed into a lending bank similar to KfW, which selects suitable commercial banks for the MSME program based on economic and development policy criteria and concludes and monitors loan agreements with them. The current project, a FZ promotional loan to Finéa II in the amount of EUR 150,000 thousand, builds on this. KfW's commitment addresses the weak points of the Moroccan banking system by 1.) providing Moroccan MSMEs with long-term financing for investments and short-term bridging loans to secure their liquidity, 2.) making the development of an MSME portfolio attractive for Moroccan commercial banks and 3.) supporting Finéa and the commercial banks in their MSME-oriented lending and monitoring technologies as part of the accompanying A+F measures. The Finéa I loan was primarily used by Morocco's three leading banks (Attijariwafa Bank, Banque Marocaine du Commerce Extérieur / BMCE, Banque Populaire / BCP). As a result, they have significantly expanded their involvement in the MSME sector. The fact that the funds were called up by the commercial banks within a short period of time and have largely already been granted to MSMEs shows the high demand. Due to the high market share of the banks mentioned, which together exceeds 60%, we expect a strong demonstration effect for the MSME sector in the entire banking market. This is already evident in the high demand for the new loan. The transaction structure is to largely correspond to the loan from 2013. The vast majority of the funds provided by KfW are to be passed on by Finéa to Moroccan commercial banks to refinance MSME loans. Finéa is responsible for examining and selecting the commercial banks, concluding contracts and monitoring. The commercial banks that receive a loan from Finéa are responsible for selecting the MSMEs and setting the terms and conditions. The loans are granted both for investments and as working capital loans. Finéa only bears the commercial bank risk; the end customer risk is borne by the commercial banks. Another part of the funds (max. 10%) is to be used as a bridging loan paid directly to MSMEs.