The Importance and Challenges of VSEs in the Moroccan Economy: Insights from Mehdi El Fakir, Chartered Accountant and Economist

2023-06-10 18:02:21

VSEs are massively present socio-economic players in all sectors. Their multidimensional importance is obvious. And yet, they are poorly recognized and represented. Mehdi El Fakir, Chartered Accountant and Economist, comes into contact with this category of companies on a daily basis. He was kind enough to answer our questions in order to enlighten our readers on the difficulties and obstacles encountered by VSEs.

Challenge: What is a TPE? Is there an official definition of TPE?

Mehdi El-Fakir: To my knowledge, there does not exist an official definition of the TPE, but rather categorizations according to the turnover and the number of employees, taking into account the specificity of the sector (belonging or not to a given sector). Because, in terms of size, a VSE in real estate and construction would be much larger than a VSE in the field of services. The studies carried out in particular by the corporations and the supervisory ministry have provided a definition of the TPE according to the same criteria, but without being particularly interested in the concept. Finally, from a tax point of view, VSEs would be companies with a low level of contribution from the point of view of declared turnover, but also tax on the result paid.

Challenge: What is the importance of VSEs in the Moroccan economic fabric?

M.E.F : The entrepreneurial fabric in our country is predominantly TPE. They would represent more than 90% of the overall business population in Morocco, particularly in the informal sector where VSEs are the rule. Its importance is quantitative and qualitative insofar as it contributes both to the creation of added value in almost all productive sectors and at the societal level, as the main employer with a significant impact in terms of distribution of income (reducing precariousness, providing households with a source of income and de facto boosting domestic consumption). This societal role is, in my opinion, essential for social peace. This is one of the guarantees of inclusive socio-economic development.

Challenge: What impact have recent crises (health crisis due to Covid-19, war in Ukraine, inflation, etc.) had on VSEs?

M.E.F : The recent crises, with restrictive measures in terms of mobility and creation of added value, have had a very negative impact on this economic agent (TPE). The “atrocious” repercussions led to the disappearance of a significant number of VSEs and aggravated the ills of those who managed to survive, in particular with the soaring of their debt, which remains unsustainable for some, whether vis-à-vis vis-à-vis economic agents (Corporate Credit) or vis-à-vis banks (Oxygène, Relance, etc.)

Recent crises linked to geopolitical developments such as that linked to inflation, have aggravated the difficulties of very small businesses, leading to a fall in their yield (decline in purchasing power, increase in business failures) with worrying repercussions on the societal level ( unemployment, decline in purchasing power, etc.). The lack of supervision and the absence of a culture of risk and crisis management have created an unprecedented situation where these VSEs have continued to manage “the exceptional” with a “conventional” logic, leading to a wave of bankruptcies which is confirmed. day following day.

Challenge: What would be the main structural obstacles facing VSEs?

M.E.F : In my opinion, the main structural obstacles can be summed up in the lack of support and guidance in the broad sense of the term and not just financially. Indeed, the VSE evolves on the sidelines of the accelerated changes experienced by the world in general and the local environment in particular, for lack of framework mechanisms/infrastructures that should support the rise in competitiveness/adaptability of this economic agent. Moreover, the VSE remains an under-capitalized, under-equipped, family-dominated fabric, characterized by resistance to change and development.

The difficulty of access to financing is a chronic evil which is explained by the counterparty risk that this category of companies represents in front of a referential of access to financing hardened by administrative imperatives and prudential requirements. So many obstacles that hinder the emancipation of the VSE to face the challenges of an increasingly demanding economic environment.

Challenge: What specific reforms would be likely to improve the environment and the evolution of VSEs in the economic fabric?

M.E.F : All expectations are directed towards the support mechanism for VSEs/SMEs provided for in Law 03-22 on the Investment Charter. The text presents the State’s response to the needs of VSEs/SMEs, allowing the latter to benefit from financial support from the State by fulfilling a battery of “thoughtful” conditions, like the main mechanism, strategic projects and Export/internationalization having marked a radical change in the perception of the State. Indeed, it is clear that the “Social” is erected as a priority where the VSE would be the “socio-economic” agent of choice whose support and backing would make it possible to create a big boost so that it can play, in sustainability, its role in a development model that aims to be inclusive.

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