The impact of the Covid-19 Lockdown on Moroccan businesses cannot be underestimated as over 80% of businesses suspended their activities but the latest report shows that more than half are expected to recover by the end of the year says the Moroccan High Commission for Planning (HCP). According to the HCP, more than half of Moroccan businesses will reach their normal activity level before the end of 2020. In a survey carried out by the Commission, 56% of Moroccan businesses believe they can reach their pre-COVID-19 level of activity in less than six months while 44% estimate that they need at least one year to recover. The rate ranges from 50% for businesses in the field of trade to 66% for companies operating in industry.
The HCP’s report examines the resumption of economic activity in Morocco after the lockdown. HCP conducted interviews with approximately 4,400 Moroccan businesses from various sectors from July 3th to 15th. It also revealed that more than four businesses out of five (83.4%) suspended their activity during the COVID-19 lockdown. Approximately 52.4% partially suspended their activity, 29.6% suspended it completely but temporarily, and 1.3% suspended it indefinitely.
The COVID-19 crisis hit micro-sized businesses the hardest. Around 86.3% of Moroccan micro-sized enterprises halted their activity. The figure includes 59.7% that suspended it completely but temporarily and 1.8% that were not able to resume after the lockdown. By activity sectors, restaurants and accommodations were the hardest hit, with 99.7% suspending their activity. The textile and leather industry came second, with 99.4% of businesses suspending activity, followed by construction (92.7%), real estate (91.9%), and metallic and mechanical industries (91.4%). Meanwhile, the least affected sectors are fishing (33.8%), energy (69.7%), and information and communication (72%).
Approximately 84.6% of Moroccan businesses that suspended their activity during the lockdown have resumed. One-third (32.4%) have already returned their normal level, while 52.2% are still recovering their rhythm. Meanwhile, 15.4% businesses have not yet resumed activities. Again, micro-sized businesses are the least concerned by recovery, with 18.5% not able to resume their activity, and only 30.9% recovering their normal level. In contrast, 39.7% of Morocco’s large businesses have gone back to their normal activity level. Only 8.1% have not yet resumed activities.
In terms of investments, two-thirds of Moroccan businesses (67%) declared not being able to invest the previously planned budgets for the year 2020. Approximately 29% of the businesses delayed the investments, 21% reduced them, and 17% cancelled them altogether. However, 28% of Moroccan businesses predict that their investments will go as planned and 5% declared increasing their investment budgets. And over 83% of companies operating in the electronics industry said their investment plans will not go ahead. Hospitality companies’ investments also significantly changed, with 75% of the businesses modifying their plans. Nearly half of Moroccan businesses (49%) declared that their funds are insufficient for proper activity resumption. The rate peaked among micro-sized businesses (50%), followed by small and mid-sized companies (48%) and large businesses (33%). By activity sector, the figure was highest for construction (55%), followed by industry (51%), services (50%), and trade (40%).
In terms of bank loans, 45% of Moroccan companies declared being in debt, including 13% with “heavy debts” and 32% with “light” ones. The most indebted companies in Morocco are large businesses, with 54% of them in debt, including 19% with “heavy debts.” Debt concerns companies in the industry sector the most, with 59% of them in debt, followed by trade (47%), services (43%), and construction (40%). More than half of the indebted businesses (51.3%) said they will not be able to pay back their loans until one year at the earliest. The rate is relatively similar among all types of businesses. It ranges from 45.8% for small and mid-sized businesses to 54.9% among micro-sized enterprises.
To avoid bankruptcy, 45% of Moroccan businesses plan to apply for external financing. Approximately 39.2% will apply for loans from their partner banks. Meanwhile, the rest will look for financing from other institutions such as participation banks and stock markets. A decrease in demand and fear from a new lockdown are the main reasons why many Moroccan businesses are lagging in terms of activity resumption.
According to the report, 76.6% of Moroccan companies witnessed a decrease in local demand. Moreover, 71.3% of the businesses fear a new lockdown and 62.3% said they suffer from financial difficulties. Other challenges include the pandemic-linked administrative restrictions (48.4%), perturbation in logistic chains (37.2%), and high production costs (26.4%).
To adapt to the COVID-19 crisis, Moroccan businesses adopted new strategies and ways of work. Approximately 28% of companies adopted remote work, 26% developed new products and services, and 24% began selling their services online. Other solutions that Moroccan companies adopted include digitizing internal and external services (20%), diversifying supply chains (17%), and recruiting information technology experts (13%).
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry