Unlocking the potential of young micro-entrepreneurs in Morocco

World Bank | Arne HoelAs you walk through the ancient market in Fes or that of any other medina in Morocco, pass a vibrant hair salon in downtown Casablanca with the feel of a beauty mega-factory, or see young people on a street corner in Rabat waiting to be picked up for a day job in construction, you cannot but be impressed with the entrepreneurial spirit on display. The young people hard at work across the country are part of a huge army of Moroccan youth, many of whom have  less than secondary school degrees, stuck  in the informal sector with limited opportunities for a good, steady income.

A recent World Bank study on Promoting Youth Opportunities and Participation (2012) shows the magnitude of the social and economic exclusion of young people in Morocco. Inactivity runs high, with 51 percent of all 15-29 year-olds out of school and out of work. Moreover 69 percent of all youth have less than a middle-school degree, and 20 percent are illiterate. Girls are particularly vulnerable, with about 82 percent of those not in schools also out of the labor force either for family reasons (63 percent) or discouragement (19 percent). Equally staggering, 87 percent of employed youth in the country are working informally, without a contract.

With the limited prospects of a formal job, a growing number of young people, especially the less educated ones, are attracted to the prospects of self-employment. It is seen as a way out of inactivity, low pay, long working hours, and the hazardous work conditions often associated with the informal sector. But their lack of access to business training and finance constitute major barriers towards setting up viable micro-enterprises. According to the World Bank report, access to finance was identified as a key constraint to creating enterprises by 80 percent of youth who wanted to set up non-agricultural businesses and 70 percent considered high financial risks as the main reason for not creating them.

World Bank | Arne HoelThe identification of these constraints inspired the establishment of a US$ five million entrepreneurship grant that will fund an innovative approach to providing low-skilled youth with first time access to business skills, mentoring and financial services. The grant for Strengthening Micro-Entrepreneurship for Disadvantaged Youth in the Informal Sector was approved today (Wednesday February 20) by the Steering Committee of the MENA Transition Fund at a meeting in the Moroccan capital, Rabat. Launched by the Deauville Partnership as a response to the historical changes underway in several countries in the Middle East and North Africa (MENA) region, the Transition Fund is a broad-based partnership providing grants for technical cooperation to help transition countries strengthen both governance  and  social and economic institutions to promote  inclusive growth. Over the course of four years, the grant is expected to provide at least 5,000 disadvantaged young men and women between the ages of 15 and 29 with access to business development services. With time, strengthening the institutional capacities of national and local stakeholders will enable them to support youth micro-entrepreneurship on a much larger, national scale.

"Youth entrepreneurship supported by access to finance are critical for the successful integration of Moroccan youth into the ongoing economic development that the country has been experiencing over the past decade. This project will help bridge the existing gaps and encourage youth to be innovative and to develop viable businesses, for their own benefit but also for that of their communities" said Simon Gray, World Bank Country Director for the Maghreb.

By lowering the barriers to entrepreneurship, the project will contribute to employment generation and higher incomes, while also promoting young people’s self-confidence and greater trust in institutions.  A champion of youth self-employment opportunities, the Ministry of Youth and Sports will lead this effort with the support of the World Bank, by leveraging its local youth-targeted services, broadening its outreach to more disadvantaged segments, and contributing to more effective use of existing delivery channels to better respond to the needs of young people. The project will also introduce a new model of public, private and NGO partnerships, thereby nurturing a broader ecosystem for youth entrepreneurship support in Morocco.

For more information on Morocco: Household and Youth Survey 2009-2010, refer to: http://microdata.worldbank.org/index.php/catalog/1546