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Politics

Morocco's Central Bank Spearheads Initiative to Curb Cash Dominance

Wednesday 26 June 2024 - 15:50

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In a bold move to address Morocco's burgeoning cash economy, the country's central bank, Bank Al-Maghrib (BAM), has established a high-level committee tasked with tackling the unprecedented surge in cash circulation. This initiative comes as Morocco grapples with a staggering MAD 430 billion in circulating cash, representing nearly 30% of the nation's GDP, a figure that places the North African kingdom among the world's most cash-reliant economies.

During a press conference on Tuesday, BAM Governor Abdellatif Jouahri did not mince words about the gravity of the situation. "This is unacceptable," he declared, emphasizing the urgency of the matter. "What matters to us now is the problem of cash in Morocco. We cannot continue in this direction."

The newly formed committee, chaired by the central bank, brings together a diverse group of stakeholders, including representatives from banks, the finance ministry, and academic researchers. Their mandate is twofold: to produce a comprehensive analysis of the root causes behind the cash surplus and to propose actionable solutions to mitigate this pressing issue.

Morocco's reliance on cash transactions is stark when compared to global trends. As of 2022, the country topped the list of the world's 20 most cash-dependent nations, with an estimated 74% of transactions conducted in cash. This statistic underscores the magnitude of the challenge facing the committee and the broader financial sector.

Jouahri's frustration was palpable as he highlighted Morocco's lag in modernizing its financial transactions. "It is inconceivable that at a time when countries like Kenya or Jordan have advanced in these matters, we are still struggling," he remarked. Drawing a stark contrast with more advanced economies, he added, "In China now, if you go to buy anything, there is no cash. You have a card code that you use, and that's it, you pay what you want and go."

Despite the urgency, Jouahri advocated for a measured approach to reducing cash dependency and promoting digital transactions. "We need to take a reasonable approach, a gradual approach," he stated, emphasizing the importance of fostering a cultural shift towards digital banking.

A key focus of the initiative will be on financial inclusion, particularly for vulnerable populations. "We should also promote a certain type of culture," Jouahri noted. "The approach should include citizens and especially vulnerable populations who should gain access to banking services."

The challenge is further compounded by the significant portion of Morocco's population that remains unbanked or underbanked. A 2022 World Bank report revealed that only 44% of Morocco's adult population possess bank accounts. The disparity is even more pronounced among the country's poor and female populations, with bank account ownership dropping to 34% and 33% respectively.

As Morocco embarks on this ambitious journey to modernize its financial ecosystem, the success of this initiative will hinge on the committee's ability to navigate complex socio-economic factors and implement strategies that resonate with all segments of society. The outcome of this endeavor could potentially reshape Morocco's financial landscape, propelling the nation towards a more digitally inclusive economy.