The Challenges Facing Moroccan Entrepreneurs
Mohamed Khalouqi, the owner of a small business specializing in traditional Moroccan wooden furniture and home decor, found himself compelled to shut down his venture after approximately four years of operation. This decision stemmed from a combination of inadequate funding, diminishing profits, and a steep rise in taxes relative to his earnings. Khalouqi, who launched his project in 2022, initially benefited from Morocco's 'Entika' program, designed to support small and micro-entrepreneurs, also known as self-employed individuals. He secured a loan of 200,000 dirhams (around $20,000) from the bank, supplemented by his personal savings. With this capital, he rented a shop and hired workers to assist him.
In an interview with Reuters, Khalouqi expressed that the beginning of his business was filled with ambition and promise. However, he lamented the significant price increases over the past two years, particularly in the current year, coupled with a decline in demand, which presented numerous challenges for his venture. Additionally, he mentioned the financial responsibility he faced due to his partners and workers, emphasizing that the tax, which initially seemed manageable at 1%, skyrocketed to 30% in 2023 for those whose annual profits exceed 80,000 dirhams (approximately $8,000). Khalouqi stated, "This situation is unsustainable, pushing me to the brink of bankruptcy amidst weak demand."
Government Initiatives and Their Impact
Khalouqi's plight is not an isolated case; he represents a broader trend among entrepreneurs who have struggled under Morocco's initiative launched in 2015 to integrate the informal economy, which constitutes an estimated 30 to 33% of the country's GDP. The central bank of Morocco previously reported that the added value of the informal economy accounts for about one-third of the nation's wealth. In response to high unemployment rates, particularly among youth, the government introduced several programs to encourage self-employment. These initiatives allow young individuals to engage in commercial, industrial, or artisanal activities independently, without the need to establish a formal company, aiming to mitigate rising unemployment and foster innovation.
As of 2025, Morocco's unemployment rate stood at 13%, a slight decrease from 13.3% in 2024, with the total number of unemployed individuals reaching around 1.621 million. Despite the initial low tax rates for the self-employed, which started at 1% for services and 0.5% for trade, many entrepreneurs cited bureaucratic hurdles and financing difficulties as significant obstacles. Abdullah, a traditional leather goods manufacturer in the city of Ouezzane, noted that he faced mandatory health insurance expenses as a contributor to the Ministry of Handicrafts, as well as another insurance as a self-employed individual, creating a financial burden.
Experts have raised concerns regarding the 'self-employed' program's effectiveness, highlighting the absence of a dedicated entity to address the grievances of entrepreneurs. Despite multiple attempts, the Moroccan government has declined to comment on these issues. Business consultant Adel Muftah pointed out that the government’s system, initially intended to assist the informal sector, has become a trap due to tax and funding challenges, compounded by systemic issues. He emphasized the need for a dedicated administrative entity to support these businesses and address their concerns.
Abdallah Afraki, president of the Moroccan Confederation of Very Small, Small and Medium Enterprises, echoed these sentiments, asserting that the current resources are insufficient and do not meet the aspirations of the youth or the government's outlined programs. Afraki insisted that young entrepreneurs require a comprehensive ecosystem that includes mentoring, training, streamlined administrative processes, market access, and tax incentives during the early years of their businesses, as most startups struggle to generate profits initially. He expressed concern that the government and relevant public institutions often adopt an incomplete understanding of the support needed, typically offering brief training sessions without long-term follow-up, leaving young entrepreneurs to navigate market challenges alone.
In a troubling trend, experts have sounded alarms as 170,000 self-employed individuals declared bankruptcy and withdrew from the program within a year, out of approximately 440,000 participants. Afraki, who has monitored this project since its inception, remarked that while they viewed it as a crucial tool for integrating youth and informal workers, significant shortcomings became apparent upon implementation. He noted that the program was not adequately supported, and its launch fell short of the expectations for a national initiative of such magnitude.
Despite the existing challenges, some believe that the situation can be rectified. Rashid El Wardighi, president of the Moroccan Network of Small Enterprises, highlighted the need for a profound review of the program to develop its various aspects. He pointed out that countries such as France, Spain, and Italy successfully support small businesses by providing a comprehensive system that encompasses financing, mentoring, training, and representation in decision-making bodies. El Wardighi emphasized that the focus should not be on launching new programs but rather on building a national framework that learns from successful international experiences and recognizes small businesses as essential partners in economic development and decision-making.
As reported by aljazeera.net.
