Responsible Finance Forum

Enhancing Financial Capability and Inclusion in Morocco

01 February 2015
Source:  International Bank for Reconstruction and Development / The World Bank

Financial capability, as defined by the World Bank and in this report, is the internal capacity to act in one’s best financial interest, given socioeconomic and environmental conditions. It encompasses knowledge (literacy), attitudes, skills and behavior of consumers with respect to understanding, selecting, and using financial services, and the ability to access financial services that fit their needs (World Bank 2013d).

Financial capability has become a policy priority for policy makers seeking to promote beneficial financial inclusion and to ensure financial stability and functioning financial markets. Today people are required to take increasing responsibility for managing a variety of risks over the life cycle. People who make sound financial decisions and who effectively interact with financial service providers are more likely to achieve their financial goals, hedge again financial and economic risks, improve their household’s welfare, and support economic growth. Boosting financial capability has therefore emerged as a policy objective that complements governments’ financial inclusion and consumer protection agendas. To this end, policy makers are increasingly using surveys as diagnostic tools to identify financial capability areas that need improvement and vulnerable segments of the population which could be targeted with specific interventions.

In response to a request of the Bank Al Maghrib (BAM), the World Bank has implemented a financial capability survey. Financial inclusion, financial literacy and consumer protection are high on the agenda of the BAM and the Ministry of Finance. The BAM has in particular implemented many initiatives in this area in recent years (from the promotion of a modern credit bureau helping prevent over-indebtedness to specific measures designed to promote transparency in bank services, e.g. minimum disclosure requirements following standardized templates); BAM is keen to initiate the preparation of a national financial capability strategy (an initiative also supported by the Ministry of Finance). The proposed survey constitutes a key diagnostic tool to prepare such a strategy, to set quantifiable and concrete targets, and to assess the effectiveness of future financial capability enhancing programs. So far, no financial capability surveys have been conducted in Morocco and it is one of the very first such experiences in the Middle East and North Africa (MENA) region.

The key findings and recommendations presented in this report cover 4 main areas: 1. Financial Inclusion, 2. Financial Capability, 3. Relationship between Financial Inclusion and Capability, and 4. Financial Consumer Protection. The remaining chapters are structured as follows. Chapter 1 explores the financial inclusion landscape in Morocco. Chapter 2 gives an overview of Moroccans’ levels of financial capability, in particular about their financial knowledge, attitudes and behaviors. The relationship between financial capability and inclusion is discussed in chapter 3. The last chapter investigates if the products which financially included individuals use are effectively meeting their needs.