2021 Entrepreneurial Activity Review

Can entrepreneurship help Morocco improve its high unemployment situation? It is to be hoped the answer is “yes”, after the Moroccan finance bill signed in November 2021 allocated $331 million to entrepreneurship initiatives with the goal of creating 250,000 jobs within two years. This bill was the most recent effort by Moroccan officials to spur entrepreneurship, with several agreements signed aimed at integrating financial support between government, large financial institutions and new entrepreneurial ventures.

It is still too early to determine the impact of these policies. According to GEM data, the Moroccan entrepreneurial sector is currently under stress. However, the conditions necessary for starting a new business are improving. This suggests that, while the Morocco entrepreneurial sector may have shrunk during the pandemic, it should improve in the future if policy support continues.

Macroeconomic conditions in Morocco can explain part of the entrepreneurial slump. The number of Moroccan households reporting that their income either strongly or somewhat decreased in 2021 was higher than in 2020, meaning more households lost income. This could be expected as national unemployment levels also increased in 2021 compared to 2020, from 12.3% to 12.8%. As Moroccan finance officials recognize, entrepreneurs will need to create jobs to help relieve the economy’s employment issue.

Yet, unfortunately, both TEA rates and EBO rates declined in 2021. TEA fell from 7.1% in 2020 to 6.1% in 2021, while EBO declined to 4.9% in 2021 from 6.8% in 2020. Additionally, the rate of TEA respondents who saw more opportunities as a result of a pandemic was quite low at 26.3%, least among GEM Level C economies, and just 16.8% among EBO respondents — second lowest among GEM Level C economies. However, despite these lower rates of entrepreneurial activity, there appears to be some acknowledgement among Moroccan entrepreneurs that the worst of the downturn may be over. The rate of TEA respondents who stated that it was more difficult to start a business this year compared to the previous year decreased to 52% (second among Level C economies) — a vast improvement from 72.9% of Moroccan TEA respondents in 2020.

2021 Framework Conditions Review

Further evidence that conditions for entrepreneurship in Morocco may have hit a low point, but is now gradually improving, can be found in the GEM NES survey responses. The entrepreneurial support offered by the Moroccan government in 2021 was noted, with the three government-related framework conditions of Government Policy: Support and Relevance, Government Policy: Taxes and Bureaucracy and Government Entrepreneurial Programs all improving in 2021 compared to 2020. Particular improvements were made on the condition Government Policy: Taxes and Bureaucracy, where a 2021 score of 4.5, although second among GEM Level C economies, was a marked improvement from 3.6 in 2020. 

However, one area of weakness in Morocco’s framework conditions is education. Both Entrepreneurial Education at School and Entrepreneurial Education Post-School saw declines in their scores in 2021, and were towards the bottom of GEM Level C economies overall. However, the condition of Commercial and Professional Infrastructure score improved to 5.1 in 2021, fourth among GEM Level C economies, from 4.7 in 2020. Overall, these scores reflect an improvement in the baseline conditions for Morocco’s entrepreneurs. If the Moroccan government can continue its support, entrepreneurial activity should bounce back in 2022.