The Story of Al Amana: Morocco

Dr. Monique Cohen, a member of USAID's Microenterprise Development Team, which supported the creation of the Moroccan MFI, Al Amana, recounts the institution's development and USAID's microfinance work in the country. Al Amana, which was launched in 1997, reached the following benchmarks by its sixth year of operation:

• Operational sustainability in 2000;
• Financial sustainability in 2002 (two years before projection);
• 125 branches, more than 100,000 Moroccan clients, and a 8.1 million portfolio;
• outstanding by year-end 2003.

As sector-wide progress, USAID contributed to the establishment of a microfinance law in 1999, which, according to Al Amana's CEO, helped establish a competitive microfinance market and the provision of high-quality microcredit services.

USAID's experience brought out the following lessons:

• In very young microfinance sectors, unregulated NGO MFIs should be permitted to operate;
• Discussion between microfinance practitioners and the government is necessary so as to establish:
  • Associations for legal microfinance operations;
  • Freedom from interest rate caps;
  • Permission to charge fees to clients;
  • Delayed value-added taxes;
  • Requirements for separating microfinance from other NGO development activities, and allowing microcredit services to be provided only to productive activities;
  • A five year maximum time period for MFIs to become financially viable.
• Sustained high-quality technical assistance is necessary for the growth of young MFIs;
• There needs to be a market facilitator that disseminates industry knowledge and standards.