Financial Inclusion and Digital Economy DPF

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Morocco has made significant social and economic progress over the past 15 years due to large public investments and political, institutional and sector reforms, along with measures to ensure macroeconomic stability.Yet, despite these achievements, as stressed in the June 2018 Systematic Country Diagnostic (SCD), Morocco continues to face development challenges, and the aspirations of its citizens for a better life remain unmet.The contribution of the private sector to growth has been impeded by the lack of a level playing field, constrained access to finance, and limited technology.This reflects the limitations of Morocco’s current growth model which relies on high levels of publicly-financed investment that does not translate into productivity growth and is not fiscally sustainable.Morocco needs a new growth model and reform pathway to move closer to its efficiency frontier. Government of Morocco (GOM) has outlined a new vision for economic growth and social inclusion in its five-year Government Program (2017–2021), which is reinforced by national strategies on the digital development and financial inclusion.The five main pillars are governance, youth employment, climate change, human capital, and social cohesion.The GOM has finalized a National Financial Inclusion Strategy (NFIS) based on the growing body of evidence that better access to finance for firms and households leads to more inclusive development outcomes.The proposed USD 700 million Financial Inclusion and Digital Economy Development Policy Financing (FIDE DPF) is part of a longstanding programmatic and multisectoral engagement in Morocco.As part of this comprehensive and de facto programmatic agenda, the overarching development objective of the proposed DPF is to foster financial inclusion and contribute to digital transformation for individuals, enterprises, and entrepreneurs.Each of the pillars of the DPF is supported through the ongoing and planned engagements by the World Bank Group, as outlined here: Pillar 1, Enhancing financial inclusion for individuals and MSMEs, will be achieved by diversification of financial instruments and sources through extending the regulatory and institutional framework for microfinance, agricultural finance, insurance coverage and other classic and alternative finance products. Pillar 2, Supporting the development of digital platforms and digital infrastructure, supports reforms needed to develop digital platforms with a focus on financial market infrastructure (financial management information system) and mobile payments.Pillar 3, Enhancing support to digital entrepreneurs, addresses inclusive private sector growth through enterprise creation and access to finance for start-ups.All measures supported by the proposed DPF aim to transform Morocco’s economy into a private sector-driven growth model that can create opportunities for all Moroccans.The GOM is committed to this programmatic approach, as evidenced by its significant efforts at the national level to translate proactive public policies into meaningful outcomes for its citizens.The expansion of digital infrastructure also raises several social and political economy challenges.The evolution of the current political and social context will depend on the effectiveness of new development measures.