The director of EIB operations in the EU’s neighboring countries, Flavia Palanza, was the Alex Reed of the second Morocco 21 SME financing conference.
The EIB identifies three essential elements for business prosperity. These are capital, debt and technical assistance. To support them, the Bank is setting up a trade competitiveness program combining these elements in a single package. Objective: to enable banking institutions to fully play their role.
“Companies, to prosper, need three elements, namely capital to start, debt later and technical assistance at all times,” said Flavia Palanza. The director of operations of the European Investment Bank (EIB) in neighboring countries of the European Union spoke on Thursday in Casablanca, during the second Morocco 2021 conference devoted to the financing of SMEs. “The importance of external capital, in this case that of venture funds, is not only the provision of financial assistance but also expertise. When an investment fund takes a stake, it also takes part in the management of the company and can point the entrepreneur in the right direction,” she notes. Moreover, to support local banks, the EIB is currently working in partnership with the European Commission on a program dedicated to financing.
Called Trade competitiveness, it targets commercial companies entering the value line of commercial exchanges. For Morocco, three sectors have been targeted. These are agriculture, textiles and automobiles. “What we are doing is putting the loan, with advantageous conditions for the company, the guarantee and the technical assistance, both for banks and SMEs, in the same package that we offer to banking institutions. “, develops the director. A comprehensive approach that should be operational this year and over the next few years. For Flavia Palanza, the private sector must be at the heart of Morocco’s economic recovery. “The charter promulgated by His Majesty the King targets private investment which should reach two-thirds of total investment by 2035 and this objective can only be achieved with the involvement of the various players in the national economy. “, she underlines.
To do this, the EIB is committed to developing its role with banks, investment funds and microfinance institutions. Objective: to enable banks to fully play their role and contribute to the development of the country’s economic fabric. “We at the EIB do not finance businesses directly. We intervene either by taking shares in capital ventures, or by granting local banks intermediate loans and therefore lines of credit so that they can grant resources to companies,” she notes. The European Investment Bank also provides targeted support. In Morocco, the EIB’s intermediary loans represent a third of its financing, the most recent of which is that granted to CIH Bank last year. P
ur micro-finance, the EIB is present in the Kingdom with loans and technical assistance, through mentoring, in order to enable vulnerable and rural populations to enter the world of production and formal investment. On the issue of bank loans, Flavia Palanza stresses the importance of helping banks to support SMEs: “Banks must be allowed to assume the risk and this can be done in two ways. First by providing guarantees to take part of the risk and then by supporting them in understanding the sector in which the company operates”.
Finally, the director of operations of the EIB specifies that it is still necessary to be very careful with the level of the efforts of subsidies so that the banks can ensure the quality of their balance sheet and not increase the vulnerability of the banking sector.
