Introduction
In the post-COVID-19 era, Morocco has launched several programs aimed at financing entrepreneurship projects to address the youth unemployment crisis, contribute to economic growth, and mitigate the impact of the drought years. In 2020, the government launched the “Intilaka” program, which has been renewed annually, followed by another program, Forsa, in its two iterations in 2022 and 2023. Prior to this, the National Agency for the Promotion of Employment and Skills (ANAPEC) had launched its “Vision 2020” in 2015, with the aim of expanding the agency's scope to include unskilled job seekers. This initiative led to the creation of three active action programs. The Integration Program provides wage subsidies to employers so that the unemployed can gain experience. The Rehabilitation Program is designed for youth training, while the Moqawalati program promotes entrepreneurship through training and financial assistance. A World Bank report had previously recommended the creation of “a supportive environment (macroeconomic stability, ease of doing business, and the rule of law) conducive to business growth and job creation. However, since its inception in 2000, the ANAPEC has focused more on unemployed graduates and youth in vocational training.
In parallel with the post-COVID-19 context, the Mohammed VI Investment Fund was established in 2020, as a state-owned joint stock company with a capital of 15 billion dirhams, governed by Law No. 20.76. The Fund’s objectives include contributing to the development of small and medium-sized enterprises and job creation. In addition, a new investment law was ratified in December 2022.
These initiatives and programs were launched to address unemployment in Morocco. However, they do not differ much in terms of principles, foundations, and outcomes. Their inability to create sustainable employment for the youth has resulted in the reproduction of spatial, economic, and social inequality and injustice. The prevalence of a rentier economy, which has its origins in the early years of independence, and the inability of small and medium enterprises to grow and create jobs, have contributed to the weakening of the culture of entrepreneurship. These initiatives did nothing to decrease the unemployment rates in Morocco. Despite the improved participation of entrepreneurs from rural areas and small towns, which reached 60%, the Forsa program, for example, did not overcome the geographical inequality in the distribution of beneficiaries, as the regions of Casablanca-Settat, Rabat-Salé-Kenitra, and Marrakesh-Asfi had included the highest number of successful applicants, compared to other regions known for their high unemployment rates, such as Draa-Tafilalet and the East.
The closure of numerous small and medium-sized enterprises , that were supported by these initiatives, coupled with the absence of an entrepreneurial culture among these young entrepreneurs, has created an opportunity for many young participants to benefit from financial support, especially after they acquired the skills to design and submit entrepreneurial projects. This paper reviews the evolution of youth entrepreneurship financing programs aimed at reducing unemployment. It argues that the prevalence of a rentier economy and a fragile business environment, together with the absence of entrepreneurial education, pose significant challenges to the success of these programs and contribute to the failure to achieve the stated goals.
The Historical Evolution of Policies Aimed at Financing Youth Entrepreneurship and Reducing Unemployment.
The Moroccan state began to withdraw slowly from its role as a key actor in employment policy after the structural adjustment program of 1983, which led to an increase in unemployment, especially among young graduates. To stimulate the creation of businesses, Morocco launched the Young Entrepreneurs Program (Law 36.87) in 1987 to grant loans with a 65% contribution from the state and 25% from banks, and an interest rate ranging between 7% and 8%, with the entrepreneurs' contribution not exceeding 10%. However, despite all the facilities and amendments to the terms of the loans, the results up to 2000 were disappointing: 10,613 entrepreneurs benefited from the loans and only 41,330 jobs were created between 1988 and 2000, far below the initial expectation of 2,000 to 3,000 jobs each year. It was clear then that the target of these programs was the youth in higher and vocational education.
The promotion of new businesses continued between 2000 and 2004 through the partial exemption of businesses from the National Social Security Fund's fees on wages paid to young people new to these businesses, the contribution to the preparation of private infrastructure and real estate for the establishment of businesses, the adoption of the Law on the Creation and Revitalization of Small and Medium Enterprises, the adoption of the Labor Code, and the increased importance of the National Agency for the Employment of Talent (ANEP). While these measures helped to reduce the unemployment rate during this period from 13% to 10.8%, the unemployment rate of university graduates remained high, and obstacles and difficulties in accessing the banking system continued. The self-employment support program enabled the creation of 750 small enterprises and 2,185 jobs between 2001 and 2004.
In 2005, the Moqawalati program was launched to support young people with an entrepreneurial spirit. However, its results were also lackluster: only 5,000 enterprises were established instead of the 30,000 announced in 2009, while 3,746 candidates completed training, 836 projects were funded, and 603 businesses were created, offering 2,650 jobs. This failure of the Moqawalati program is due to the poor coordination and lack of a clearer definition of responsibilities and objectives for the institutions involved, the non-activation of regional committees, the absence of follow-up and effective tracking and monitoring of individual project holders, and difficulties related to real estate and access to shops for economic activities. In addition, banks grew reluctant to finance projects, and the promised preferential interest rates slowly disappeared.
However, the main factor in the failure of the Moqawalati program remains the weakness of entrepreneurial thinking of those responsible, their lack of competencies, the inadequate level of coordination, and technical and computer skills to process and manage data of Moqawalati, especially in preparing loan files and at the financing phase. On the other hand, many entrepreneurs viewed the program as some sort of social support, which explains why many beneficiaries of Moqawalati ended up in prison, committed suicide, or incurred debts. The Moqawalati program did not provide them with quality training, aftercare, or flexible interest rates, the latter were applied regardless of the experience of the entrepreneur. Beneficiaries were directed to create limited liability companies without the necessary accounting and legal training to run such companies. The five-week training they received focused on business creation, preparing the financial files, and submitting the application to the bank for study and possible financing. A training certificate was given to all those who followed all the stages of the training.
After the Moqawalati program, the self-employment and entrepreneurship support programs saw a new sectoral intervention and monitoring. This time it was the turn of the Social Development Agency, which since 2008 has been developing the Entrepreneurship Support Program with several institutional partners, including the private sector, local authorities, the National Agency for the Promotion of Employment, and Skills, regional investment centers, and vocational training offices. This program, also known as the “Morocco Initiatives” program, aims to provide financial support, training, and support to entrepreneurs, with the technical assistance of the France Initiative, at a time when unemployment rates were at 10.5%. This was the same program that exists in France. It aims at creating a space to receive and support entrepreneurs, provides financial support in the form of a repayable, interest-free, and unsecured loan, and integrates young people into the business world by spreading a culture of entrepreneurship based on creativity, innovation, independence and responsibility, and the technical and remote accompaniment of entrepreneurs.
However, the Morocco Initiatives Program, like other programs before and after it, did not overcome regional disparities. The Souss-Massa region dominated the number of the projects financed with 599 projects, followed by the Laayoune-Sakia El-Hamra region with 212 projects, due to the fact that the first associations in this program were established in the Souss-Massa region in 2008, compared to newly established associations in other regions, such as the Oued Noun Initiatives Association, which funded only 25 projects. Moreover, young entrepreneurs in the Morocco Initiatives program face difficulty in accessing funding sources and banks, which impose prohibitive conditions, and often consider that financial support is more important than follow-up, incubation, and training. The weak participation of women in the program was also highlighted as most women participated in the program only at the project development stage and benefited from expert opinion but did not submit full projects as they preferred to work on their projects according to their own capabilities or with the help of their family environment.
In Morocco, there are many startup support programs aimed at youth employment, launched by the government or overseen by international cooperation programs. This has created job opportunities for many unemployed youth, albeit modest and short of the numbers announced at the beginning of these programs. At the same time, this has led some young people to exploit the program to obtain support and funding, similar to benefiting from entrepreneurial rents.
These programs cannot be viewed in isolation from the broader economic development agenda. The Ministry of Industry, Investment, Trade, and Digital Economy is responsible for overseeing SME policy and developing and implementing two industrial development strategies: The National Charter for Industrial Emergence (PNEI) for 2009-2015; and the Industrial Acceleration Plan for 2014-2020, the current strategic framework that has driven industrial policy, including SME policy. This plan aimed to increase the competitiveness of SMEs and promote high-impact entrepreneurship, as well as increase national competitiveness to absorb job seekers, through the development of industrial activities and the integration of small enterprises into the industrial plan. It should be noted that during this phase, several accompanying programs were launched, such as the Moqawalati program in a second version, as well as Infitiah (openness), Imtiyaz (Excellence), Mosanada (Support), Rawaj (Boom) and Daman (Guarantee) Express programs.
In this context, the Self-Entrepreneur System was introduced in 2015 to address informal self-employment by facilitating self-employment and the transition of workers from the informal to the formal sector, while benefiting from social security services and tax incentives. This system’s simple procedures made it possible to apply for entrepreneurship programs, such as the Forsa program. However, the activities of most of the entrepreneurs have been concentrated in social and solidarity economy activities, most of which depend on the support of the National Initiative for Human Development, in the agricultural and service sector activities, that is, activities that are economically unproductive in Morocco, are mostly temporary and day-to-day. Many young entrepreneurs have encountered difficulties in paying social security contributions, and many have been quick to abandon self-employment.
The National Initiative for Human Development, launched in 2005, focused on income-generating programs, especially those in the framework of the solidarity and social economy. Its third phase, 2019-2023, has allocated an estimated budget of 4 billion dirhams for youth entrepreneurship projects. The aim is to increase employment opportunities for youth, develop their professional skills, adapt them to the needs of the labor market, facilitate their access to financing resources, and ensure the sustainability of their projects. The implementation of the NHDI program is carried out by the Ministry of Interior and followed up by the governorates and regions, through what is known today as the Youth Platform for Accompaniment, Guidance, and Financing.[29] As a result, 4,867 projects and activities have been implemented with a budget of 741 million dirhams.
In addition, the Entrepreneurship Support Fund, known as “Intilaka”, was launched in 2020, under the supervision of the Ministry of Economy, Finance and Administrative Reform, in partnership with the National Social Security Fund, Banque du Maroc, and the Professional Group of Banks of Morocco. It mainly targets small and medium-sized enterprises (SMEs) and young entrepreneurs by providing bank loans at a low interest rate of 2%, which is the lowest rate that will be applied to the interest regime in Morocco.
At the end of April 2022, the loans granted under this program amounted to 6 billion dirhams with a total of 44,695 loans to 28,665 companies, 94% of the target (13,500 per year), contributing to the creation of 97,000 direct jobs. At the end of 2021, the contributions amounted to 4 billion dirhams divided between the state (2 billion dirhams) and the banks (2 billion dirhams), in addition to the contributions of the Hassan II Fund for Economic and Social Development, which was used at the request of the banks, amounting to 613 million dirhams. The Intilaka program has been renewed and an additional 3.3 billion dirhams allocated from the state budget in 2023 to invest in various industrial projects.
Finally, the Forsa program was launched in March 2022, and its second edition in February 2023. This program is supervised by the Ministry of Tourism, Traditional Industries, and Social and Solidarity Economy. The first edition of the program allocated 1.25 billion dirhams to support and finance 10,000 project holders, and the same for the second edition. The Forsa program was launched in the context of the post-COVID-19 labor market constraints, the continuing impact of climate change and drought on an inherently agricultural Morocco, and the global geopolitical shifts affecting the Moroccan economy and labor market. In its two editions, Forsa financed about 21,200 project holders and created 40,000 jobs, with women's participation reaching 45%, a 20% increase from the first edition. The Forsa program attracted more than 300,000 applications over the two editions. However, the Forsa program took place in the difficult context of the Banque du Maroc raising the interest rate to 3% in response to the inflation crisis, which had inevitable fallout for entrepreneurs and small and emerging businesses.
The Forsa program differs from other previous youth entrepreneurship programs because of the simplicity of the loan application and project submission as well as the simplicity of the digital online procedures, which are open to anyone over the age of 18. The program provides a support loan of 100,000 dirhams, in the form of micro-loans, which the beneficiaries are responsible for repaying over 10 years, and the state is responsible for paying the interest on the loans. In addition to free online training in entrepreneurial thinking in the form of short videos, through the Forsa Academy platform, which is open to all categories, consists of 10 modules that simplify entrepreneurship, benefiting the owners of selected files, especially in choosing the appropriate legal formula for projects, as 54,000 people benefited from this online training within two years of the Forsa program, which is accompanied by a final certification test. Successful projects from the online training were accompanied and incubated for up to two months and a half to complete the application and convince the funding committee. Finally, the program offered the opportunity to track the completion and implementation of projects for two years.
All the programs that have sought to address unemployment since the 1980s have not achieved the desired results, as unemployment rates continue to rise, especially among young people with university degrees. Every time unemployment rates rise, a new program comes out, which often renders such programs a rentier contract and a mere source of financial support. This keeps the pressure on the state to continue creating public jobs, which have become very limited. This is particularly so in the absence of entrepreneurial thinking and spirit among unemployed youth (the result of an educational system lacking programs that encourage and develop entrepreneurial spirit) and the persistence of social stereotypes that consider working in the public government sector as the best option.
How Have Entrepreneurship Programs in Morocco Failed to Solve the Unemployment Crisis?
The experience of business financing aimed at solving youth unemployment is characterized by several difficulties and obstacles for budding entrepreneurs. Such as the difficulty in accessing information about the programs, the lack of transparency, the lack of regional equity in the distribution of beneficiaries, and the difficulty for women to access support programs. This is related to structural factors that hinder the development of self-employment, such as the low participation of women in self-employment fields compared to their presence in solidarity and social economy programs, and only a limited number of regions have kept up with self-employment initiatives, as rural and urban residence affects access to self-employment programs. On the other hand, these initiatives and programs do not have a system to evaluate their impact and effectiveness in achieving their goals and focus on unemployed people with higher degrees as their main targets, without taking into account all economically inactive youth. In addition, it is difficult to assess the extent to which these initiatives integrate youth into a decent employment system with full social protection conditions that would improve the living conditions of this group and move them out of poverty, vulnerability, and social and territorial inequality. Small and medium-sized enterprises (SMEs) create few jobs compared to large, old companies and low-skill manufacturing, and most jobs are concentrated in Casablanca, accounting for about half of all jobs.
The Moroccan labor market is rigid. It is characterized by its poor integration rates of youth and women in businesses and its weakness in creating quality jobs, especially for small and medium-sized enterprises that are unable to grow due to the constraints they face, such as corruption, high cost of skilled labor and its scarcity, and their inability to compete with older enterprises and the informal sector. This is evidenced by the continued high unemployment rates among the active population, despite the adoption of these programs since the 1980s. Unemployment among young people was 13.8% in 1999 and 13.5% in 2023, and is expected to rise to rise to 15% under the current government.
Figure 1: Unemployment rates in Morocco among the active population between 1999 and 2022.
Source: High Commission for Planning
In addition, business support programs reproduce the same vulnerability that prevails in the Moroccan labor market, in terms of the target areas and sectors and the extent of their contribution to productivity. Most of the supported projects are still in the agricultural sector, as opposed to industry (including traditional industries) and the services, which makes them low-productivity and with little impact on growth, labor absorption, and job creation. The agricultural sector, for instance, is characterized by low wages, dependence on daily work, and the lack of the minimum conditions of social protection. Most of the financed projects face other difficulties related to debt repayment and dispute settlements, the persistence of administrative and bureaucratic obstacles, and access to support programs for some groups, such as uneducated youth.
Startups in Morocco face the same difficulties that hamper businesses more broadly. Corruption, poor workforce training, and the strength of the informal sector are more detrimental to entrepreneurship in Morocco than the political instability that plagues some MENA countries. Entrepreneurship programs require not only funding, but also follow-up, visits, adequate training, mentoring, advice, and connections to existing private sector services such as chambers of commerce. Entrepreneurship programs fail to highlight and address the risks and difficulties young entrepreneurs may face and only showcase the benefits of the programs. Entrepreneurship is the discovery and exploitation of available business opportunities by individuals or organizations through creativity, innovation, and the production of a valuable product that contributes to the creation of wealth and job opportunities, with the ability to bear the potential risks of adventure.
Table 1: Distribution of entrepreneurship support programs by supervision, objective, and obstacles
| Entrepreneurship Program |
Supervision |
Targets |
Obstacles |
| Young Entrepreneurs Program (Law 36.87) | 1987 to 2000
|
Banks: Banque Populaire, Moroccan Bank for Foreign Trade, and the National Fund for Agricultural Credit |
Higher and vocational education youth between the ages of 21 and 40, and later the program was amended to include youth up to 45 years old and not requiring the training to match the nature of the project. |
1. The difficulty of returning dues to the banks, which financed 80% of the projects, as 32% of these projects were the subject of disputes. |
| Entrepreneurial Nursery Program |
2000 to 2004
|
As part of the government's national strategy, led by the Ministry of Industry, Trade and Handicrafts (the name of the sector in 2000), local communities were responsible for providing real estate. |
Young entrepreneurs who do not have a workplace
|
1. Difficulty in accessing the banking system for young entrepreneurs.
2. Weak guidance during the start-up phase and the first years of activity.
Weak sponsorship of young entrepreneurs by professional associations. |
| Moqawalati Program | 2005 to 2009
|
National Employment Policy
|
Young people with an entrepreneurial spirit, especially vocational training graduates and trainees, and young people with a project of at least 50,000 dirhams and no more than 250000
|
1. Problems in follow-up and training and the poor competence of trainers.
2. Poor coordination and data processing.
3. Lack of experience in preparing loan files and financing by banks.
4. Lack of information about the program at banking agencies.
5. The lack of follow-up and effective tracking of individual entrepreneurs, before and after the creation of the business, due to the lack of expertise in some regions, and finally.
6. Banks are reluctant to finance small businesses, and the risks for small businesses, as well as the lack of preferential interest rates.
7. In addition to the difficulties associated with real estate and access to shops intended for economic activities. |
| Morocco Initiatives Program | 2008 to present
|
The program is run by the Social Development Agency and is managed by associations that include representatives from the public sector and volunteer private entrepreneurs. |
Youth with business ideas in a vulnerable situation
|
1. Difficult access to funding sources and banks, which impose onerous conditions.
2. Young entrepreneurs consider financial support to be more important than other elements, such as support, incubation, and training. |
| Entrepreneurial Capacity Support Program for Vulnerable Youth in the Informal Sector | 2013-2017 |
Government of Morocco in partnership with the World Bank
|
5000 young people (18-30 years old) in a vulnerable situation in the informal sector to strengthen their capacities and skills and support their training qualifications for a year and a half before starting a business, it is also a program that targets young people with advanced projects.[47]
|
|
| Self-Entrepreneurship Program | 2005 to present
|
Law No. 114.13
Banks
|
Self-employed persons engaged in individual activities, whether industrial, commercial, artisanal, or service activities, whose annual turnover does not exceed 500,000 dirhams for industrial, commercial and artisanal activities and 200,000 dirhams for service-providing activities
|
1. The inability of many self-employed cardholders to pay social security dues
|
| Improving the income and economic inclusion of youth | 2029 to 2023
|
National Initiative for Human Development
Under the management of the Ministry of Interior, and across communes and regions
|
Increase employment opportunities for youth, develop their professional skills, adapt them to the requirements of the labor market, facilitate their access to financial resources, and ensure the sustainability of projects.
|
1. Most of the activities within the social and solidarity economy do not allow these projects to grow and create new jobs.
|
| Intilaka program | 2020 to present |
The Ministry of Economy, Finance and Administration Reform, in partnership with the National Social Security Fund, Banque du Maroc and the Professional Group of Moroccan Banks |
SMEs and young entrepreneurs
|
1. The complexity of the loan process and the difficulty of collecting the necessary document
2. Inadequate loan repayment: 18% of enterprises benefiting from bank loans under the “Intilaka” program were unable to repay their debts.
|
| Forsa program | 2022 to 2023 |
Ministry of Tourism, Traditional Industry, and Social and Solidarity Economy
|
Youth with small business projects
|
3. Difficulty dealing with incubators, which did not provide enough time for beneficiaries to set up their businesses.
4. The imposition of rental contracts and the establishment of the legal framework, despite the uncertainty of access to funding.
|
The table highlights the difficulties in financing youth entrepreneurship projects. In addition to the fact that the programs vary according to the circumstances associated with the high unemployment rate, they differ each time in the level of supervision and management, between government sectors, civil society, and international cooperation programs. The 2016 report of the Economic, Social and Environmental Council summarizes these difficulties in terms of poor framing and accompaniment, difficulty accessing financing in the absence of guarantees, poor accounting management between personal and business accounts, lack of access to sufficient and continuous training to keep up with changes, lack of reliance on modern technology, difficulty in providing decent working conditions with regular pay, health insurance and retirement, poor competitiveness, expensive real estate and the difficulty to access public real estate for businesses. However, the failure of youth entrepreneurship financing programs is due to structural factors, such as the prevalence of the rentier economy in Morocco, the prevalence of a fragile and opaque business environment, and the absence of an entrepreneurial culture in educational programs.
A rentier economy destroys the hopes of young entrepreneurs
Morocco's economy is characterized by its rentier nature, wherein the economic activity is dominated by groups with close ties to power. This dynamic poses significant challenges to young businesses, increasing their risk of survival and limiting their ability to engage in free and fair competition. This rentier economy bestows privileges, services, and employment opportunities upon the select groups without any consideration for the implications to competition and economic efficiency. Its greatest threat lies in the fact that it is legalized. The roots of the rentier economy, which impedes the formation of a competitive economic market that would facilitate the success of entrepreneurial projects in Morocco, can be traced back to the post-independence period. In this period, the newly established authorities sought to gain the support of notables and economic and political elites by offering them several privileges, particularly in the form of agricultural land concessions. These concessions served as the foundation for the subsequent domination of the agricultural sector by a select group. Later, the rentier economy in Morocco expanded to other sectors, such as permits for transportation companies, sand quarries, government cash assistance, subsidized loans from public funds, and tax exemptions for some private projects. These exemptions were granted as part of a policy aimed at encouraging investment in sectors such as industry, agriculture, and tourism, yet the evaluation process and distribution of beneficiaries lacked transparency.
Despite the efforts of the state to eliminate this type of low-productivity economy and transition to a market economy based on free market competition and free initiative, the privatization policy has not achieved this goal. The power and monopoly of rentier economic elites have remained intact in many areas, as the privatization policy ended up transferring many public sectors into the hands of these rentier elites, who continued to benefit from public policies on a regular basis. This included the granting of import licenses and partial and total tax exemptions, in addition to receiving support through investment promotion programs.
This situation has given rise to a series of difficulties and obstacles that render a mere fantasy the sustainability of businesses and startups, in view of the rigidity of this rentier economy and the absence of institutional guarantees towards competitiveness and market transparency. This applied even to those startups that receive support and funding from youth entrepreneurship programs such as Forsa and Intilaka. It is therefore imperative to break with this type of rentier economy in order to facilitate the success of programs designed to support businesses, and startups led by unemployed youth. This can be achieved by activating the mechanisms of the absent Competition Council. Although the contribution of SMEs to GDP is limited to only about 20%, according to a World Bank report, they do not have greater potential for job creation, and access to finance remains difficult, particularly for businesses from outside Rabat and Casablanca. Additionally, public sector support has been directed towards small income-generating entrepreneurship, which is often informal.
In this regard, it is crucial to expedite the implementation of tax justice measures and put an end to the shameful practices of rentier economic elites who benefit from tax exemptions or engage in tax evasion, especially in light of the fragile business environment. Despite the legitimacy of the youth entrepreneurship support programs, as a form of social solidarity, they may paradoxically become a source of rents that benefit unemployed youth.
A Fragile Business Environment
The reasons for the failure of youth entrepreneurship programs in Morocco can also be attributed to the country’s difficult business climate. This requires a comprehensive and holistic reform of the economy based on economic growth, accompanied by the adoption of a social protection system that enables the achievement of comprehensive social and spatial justice. This system should provide earning opportunities and social mobility for all, rather than use programs to alleviate poverty in times of crisis (e.g., the youth unemployment crisis). Such programs remain only complementary initiatives during such times. The primary responsibility for this change lies with the state, while non-state actors play a secondary role. Morocco’s economic climate is characterized by a weak protection of private property, the inability of the state to effectively enforce competition and market laws, the promotion of economic liberalization, the fight against corruption and the influence of lobbies, and the prevalence of bureaucracy. This necessitates the reform of the business climate in Morocco, which should be promoted through the advancement of economic freedom, the assurance of free competition, and the establishment of good governance, including the reform of the administrative apparatus and the use of existing constitutional institutions (Competition Council, administrative judiciary, regional investment centers) that are capable of ensuring property rights are protected and guaranteeing a competitive economy based on tax justice. Furthermore, implementing Law 99 is crucial. The business climate is inadequate, with complex administrative procedures, corruption, imbalanced power relations, and a lack of competition in public procurement. This threatens the survival of micro, small, and medium-sized enterprises and elevates the risk of failure of funded youth projects.
Despite the economic growth indicated in many reports, these figures do not reflect the actual contribution to job creation and the integration of unemployed youth in the job market. The National Business Climate Committee has the objective of improving the business environment for SMEs and entrepreneurs by issuing reports that propose regulatory reforms and administrative simplification. These reports are meant to improve the country's performance on the Doing Business Index. Many reforms have been implemented in this context, such as the simplification of the procedures for establishing companies by eliminating the minimum capital requirement, streamlining of documents, and cost reduction. There has been a move towards establishing a system that allows companies to be established online, with the introduction of a single identification system (comprising tax number, commercial number, and social security number). This will facilitate the counting of the number of companies in the country. This enabled Morocco to improve its ranking in the Global Doing Business Index, from 130th in 2009 to 53rd in 2020. However, despite these improvements, Morocco did not experience an economic upturn during the same period, with an average growth rate of only 3.3%. Following the publication of the World Bank’s “Doing Business” report in September 2021 and the improvement of the index for Morocco, the debate about the business climate stopped. The most recent meeting of the National Business Climate Committee was held in June 2020.
Entrepreneurship Programs Without an Entrepreneurial Culture
Some entrepreneurship support programs initially provided entrepreneurship training before offering financial assistance. However, these trainings were often characterized by several shortcomings. For instance, the trainers were not well prepared, the training lasted only five weeks and focused only on ways to submit the financial support application, as in the case of the “Moqawalati” program. In other cases, the training was done remotely, as seen in the “Forsa” program. An entrepreneurial culture is fundamental to enabling entrepreneur to succeed in their projects. It is not enough to merely provide the financial resources or to understand the legal requirements for establishing a business. Prior knowledge of the market strategy, potential challenges, future trends, and competitiveness as well as an understanding of the nature of the rentier economy are essential. Such understanding enables the entrepreneur to anticipate and overcome potential obstacles. This requires the entrepreneur to possess a comprehensive understanding of the values and culture of entrepreneurship, as well as a familiarity with the management tools and methods to be able to succeed in his or her business or startup.
In fact, Moroccan youth are not imbued with an entrepreneurial culture, especially since education and training programs lack a culture of entrepreneurship and do not encourage an entrepreneurial mindset. The strategic vision encourages entrepreneurship in upper secondary education as well as the involvement of companies in technical and vocational training courses. The same is true of the 2021 National Strategy for Vocational Training, which was approved in 2015, as well as several entrepreneurship programs sponsored by international cooperation, civil society associations, banks, companies, and economic actors. However, for many young people, securing employment in the public sector remains more of a pressing priority than pursuing entrepreneurial endeavors. Of the total workforce 8.4% are employed in the public sector, 42% of whom possess high university degrees. The public sector offers a relatively stable environment, compared to the private sector, which is unable to absorb a significant number of highly educated individuals, despite demonstrating greater dynamism in job creation than the public sector between 2005 and 2015.
The business environment and the discrepancy between university curricula and the requirement of enterprises, particularly with regard to the utilization of contemporary technologies act as deterrents for individuals with advanced qualifications and outstanding skills to pursue self-employment. This point was also emphasized by the President of the Economic, Social, and Environmental Council, Ahmed Reda Chami, in his appeal to foster an entrepreneurial spirit among the younger generation and students in Morocco. despite the strategic vision for reforming the educational system, which calls for training in entrepreneurship and encouraging the participation of companies in vocational training courses, this vision was adopted by the Higher Council for Education, Training and Scientific Research, the constitutional body representing all stakeholders. Similarly, the 2021 National Vocational Training Strategy highlights the promotion and development of entrepreneurial and financial education. The issue of nurturing entrepreneurship and financial education is therefore a key concern.
It is, therefore, crucial to integrate entrepreneurship into the Moroccan educational programs in order to ensure the success of programs and initiatives designed to support emerging SMEs. It is evident that countries that adopt this type of public policy to address the issue of unemployment and foster a culture of entrepreneurship have achieved notable success in this regard. This is reflected in the quality of educational programs. This prevents Morocco from capitalizing on the demographic dividend of its youth population, which could potentially drive growth and prosperity for the country. Despite the advancement in the educational attainment of this group, it has instead become a challenge and an impediment, rather than an opportunity. The low level of education directly affects the labor market and impedes the achievement of significant structural change. Furthermore, the high percentage of youth who are neither employed nor in education and training (NEET), at 27.9%, represents approximately 1.73 million Moroccans.
Conclusion and Recommendations
Morocco has accumulated four decades of experience in supporting entrepreneurship programs aimed at solving youth unemployment, from the “Young Entrepreneurs” program in 1987 to the “Forsa” programs in its 2022 and 2023 iterations. These programs had different supervisors from various government sectors, non-governmental organizations, and banks and were contingent on the economic conditions. Whenever youth unemployment rates rose, programs supporting their integration through self-employment and entrepreneurship emerged. However, one constant has been the inability of these programs to absorb and integrate youth into the job market. On the other hand, these programs have had little impact, especially in terms of creating opportunities for women and unemployed youth in different regions of Morocco. Most of the beneficiaries were concentrated in central regions such as Rabat, Casablanca, and Tangier. This perpetuates the existing dichotomy between center and periphery, without addressing the issue of spatial and social justice. Moreover, as the programs are contingent upon the prevailing circumstances of the unemployment crisis, they fail to prioritize the creation of sustainable job opportunities that adhere to the standards of decent work, the conditions of well-being, and comprehensive social protection, including social security, and retirement. These programs also lack a monitoring and evaluation system to assess their effectiveness, repeat past mistakes in terms of funding, monitoring, and tracking, and do not effectively benefit from lessons learned from previous programs.
It is clear that youth entrepreneurship projects are unable to provide employment for all the unemployed, due to their inability to stimulate economic growth and job creation. Many of these venture projects ultimately result in bankruptcy, leading to significant financial and psychological distress for the young entrepreneur, including debts, mental illnesses, prosecutions, and legal disputes. This is due to the inherent challenges associated with competing with large companies and the informal sector, compounded by pervasive corruption, bureaucracy, and an acute shortage of skilled labor. Youth entrepreneurial activities tend to be concentrated in sectors that do not generate growth and high-quality employment opportunities. These include projects within the social and solidarity economy as well as the agricultural sector, which continue to employ a significant number of low-skilled workers, where daily work often lacks social protection conditions. A key limitation of entrepreneurship programs is their failure to adequately address the risks and challenges faced by young entrepreneurs. Instead, these programs tend to present the advantages and benefits of the programs without fully acknowledging the potential difficulties.
The fundamental obstacles to the success of youth entrepreneurship financing programs are due to structural factors, including the prevalence of the rentier economy in Morocco, the prevailing fragile and uncertain business environment, and the absence of an entrepreneurial culture in educational programs. The rentier economy undermines the aspirations of young entrepreneurs by precluding the formation of a competitive economic market and the working of the principles of free market, free initiative, and market transparency. Furthermore, the business climate is not sufficiently conducive to entrepreneurship, despite the reforms that have been undertaken to simplify administrative procedures, reform the administration and institutions, and protect private property. The state is still unable to ensure the prevalence of the law of competition and free market rules. This results in the transformation of youth from a demographic advantage that would contribute to economic growth and progress into a challenge, especially given the lack of adequate reflection of an entrepreneurial culture in educational programs. It is not sufficient to reform educational programs and the business climate; a structural reform at the macro level must also be implemented, in parallel with a comprehensive reform at the level of social protection. These reforms can achieve social and spatial justice, including the right to decent work for all.
To this end, this paper puts forward the following recommendations
- Consolidate entrepreneurship support programs in one government sector or public institution. Such consolidation would allow for post-funding follow-up of entrepreneurial projects, enable the establishment of evaluation and monitoring systems for these programs, and facilitate access to new funding for startups to help them grow and absorb job seekers. Consequently, self-employment programs can be subsequently turned into small, medium, and large enterprises that employ other individuals. On the other hand, this option mitigates the risk of entrepreneurial support programs becoming rentier programs.
- Adopting a policy of structural and holistic economic reform to eliminate the rentier economy and the unfavorable business climate for entrepreneurship programs. This could be achieved by increasing the volume of institutional reforms that support free competition, the free market, and free initiative. However, it is important to ensure that these programs become options in times of crisis and not a permanent strategic and urgent solution to the issue of youth unemployment. In addition, this reform should be accompanied by a social protection reform program that guarantees social and spatial justice.
- Focusing entrepreneurship support programs more on industrial and technological projects, which have the potential to create wealth, stimulate economic growth, generate decent job opportunities (with social security, retirement, and sickness compensation), and enhance the competitiveness of the national economy.
- Reforming educational programs to instill an entrepreneurial spirit as a parallel objective to the creation of entrepreneurship support programs as a solution for youth employment. The urgent need for the state to continue the creation of public jobs, which have become very scarce, is evident, particularly in light of the absence of entrepreneurial thinking and entrepreneurship among unemployed youth.
The views represented in this paper are those of the author(s) and do not necessarily reflect the views of the Arab Reform Initiative, its staff, or its board.
