Author: IFAD

This year’s IDFR observance in Morocco, which took place on 12 June acknowledged the contribution of remittances to the millions of family members, rural communities and the country. The event highlighted the importance of digitalizing remittances towards financial inclusion and cost reduction, and to leave no one behind.

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The International Day of Family Remittances (IDFR) is a universally-recognized observance adopted by the United Nations General Assembly (Resolution A/RES/72/281) and marked every year on 16 June.

Every year, the IDFR highlights the significant contribution of over 200 million migrants, through the remittances they send home, to improve the lives of over 800 million family members. This Day draws our attention to the economic impact of these money flows nations, and recognises the sacrifice, separation and generosity of migrants.

By 2030, it is projected that globally US$5 trillion will have been sent home by migrants to lower- and middle- income countries. Much of this money goes directly to rural areas where 80 per cent of the world’s poor live, face food shortages, and the impacts of climate change are the most pronounced.

Remittances, sent by migrants and diaspora communities, directly support millions of families to achieve their own Sustainable Development Goals (SDGs). They contribute directly to poverty alleviation, education, healthcare, small business development, gender equality, and rural economic growth.

IDFR 2024 Morocco

The 2024 edition of the International Day of Family Remittances will be held in Rabat on June 12. This day aims to highlight and commend the crucial role that remittances from Moroccans residing abroad (MRE) play in supporting families, rural communities, and the national economy.

Remittances by Moroccans living abroad saw significant growth in 2023, surpassing $11.5 billion, which is more than 8 per cent of the GDP. These remittances have consistently exceeded foreign direct investment (FDI) flows, providing a vital source of income for Moroccan families, especially during the COVID-19 pandemic. In this regard, Morocco stands out in the Middle East and North Africa region in terms of remittances. In sum, MRE remittances play an essential role in the Moroccan economy and continue to grow, contributing to the well-being of families in Morocco.

Celebrating Successes

In recent years, Morocco has made remarkable progress in remittances, financial inclusion, and access to digital transfers. This progress aligns with the implementation of Morocco’s New Development Model, further strengthening the role of MRE in the country’s economic and social development.

In 2023, remittances from the Moroccan diaspora, which comprises over 3 million migrants (8.5 per cent of the population) primarily residing in the European Union, reached $11.5 billion. This represents 8 per cent of GDP, making Morocco the second-largest recipient in the MENA region and the third in Africa.

Despite health crises, inflation, and recurrent droughts, Moroccan authorities have continued structural reforms and household support measures. Efforts have focused on social development, reducing inequalities, and creating favourable conditions for economic growth.

The National Financial Inclusion Strategy, led by the Ministry of Economy and Finance and Bank Al-Maghrib, achieved significant progress with a 66% implementation rate in 2022, focusing on the most disadvantaged segments. The digitization of the economy and payments is at the heart of this strategy to achieve sustainable development goals.

Morocco’s regulatory framework for remittances clearly defines partnership options and promotes digital transfers. The national retail payment system, historically based on payment cards and managed by banks, is now interoperable with mobile payment systems, allowing increased digitization of remittances.

Money transfer companies in Morocco adhere to high standards for anti-money laundering and combating the financing of terrorism. The new electronic national identity card facilitates the identification process and opening low-risk accounts. Introduced by the new banking law of 2016, the status of payment institution represents a major innovation in the financial sector’s regulatory environment, paving the way for the development of electronic money in Morocco. Among the payment instruments that can be distributed by payment institutions, mobile phone-activated digital payment accounts present a real opportunity given the high mobile phone penetration rate among Moroccan adults. The law also created a new category of agents – retail agents – who can handle cash-in and cash-out operations on payment accounts. The objective is to expand existing remittance payment networks to reach underserved areas and populations, offering lower costs and greater convenience.

Significant efforts have been made to expand the mobile and digital payment network, with active promotion of MarocPay and better coordination among ecosystem actors. Banking and payment institutions have expanded financial inclusion for individuals and very small businesses, continuously adjusting their strategies to adapt to the evolving context. The Moroccan Foundation for Financial Education has continued to develop its programs, supporting the sector and the most vulnerable through various partnerships. These initiatives have contributed to a more inclusive financial system, supporting equitable economic growth and improving living conditions for Moroccans.

Leave No One Behind

The aforementioned achievements provide the foundation for continuing efforts to fully realize the goal of leaving no one behind.

Sending money to Morocco costs an average of 5.5 per cent (Q1 2023), slightly below the global average (6.2 per cent Q2 2023), with room for further reduction through online methods to reach the SDG target 10.c of bringing costs below 3 per cent.

However, the average cost of sending digital remittances to a mobile wallet in Morocco from a developed country was only 2.64 per cent in Q4 2021. Despite this significant cost difference, the use of digital remittances remains limited and requires multiple interventions to raise awareness and remove adoption barriers for both senders and recipients. Notably, access points are mainly concentrated in the most populated urban and rural areas. At the end of 2021, only 32.9 per cent of rural communes had a financial services access point (BAM 2021), and 4.1 million people were more than 10 km from a remittance access point (IFAD, RemitSCOPE 2022). To date, the development of the retail network and the adoption of mobile payment accounts remain limited, with only 3.2 million electronic wallets at the end of 2021 (HPSS 2022) for an adult population estimated at 27 million (GSMA 2022).

In this context, Morocco is experiencing a slow increase in digital remittances, representing a latent opportunity to further reduce costs and improve access to remittances and associated financial services, particularly in rural areas. This is mainly due to a combination of factors affecting both supply and demand, such as historically cash-based remittance models, the reluctance of payment institutions to change their business model from cash remittances to digital transfers, and a lack of digital and financial literacy among the population to balance the risks and benefits of adopting digital remittance and receipt methods.

On the other hand, financial inclusion in Morocco remains low compared to North African and especially Sub-Saharan African countries. It is marked by a significant gender gap, especially in rural areas. Unlike many Sub-Saharan African countries, the use of electronic money and mobile wallets remains limited, partially explaining this differential. This opens opportunities to leverage digital remittances received in electronic accounts to promote financial and digital inclusion, particularly for women. With 44 per cent in 2021 (Findex 2021), financial inclusion levels in Morocco show room for improvement compared to the LMIC average (71 per cent). The gender gap in financial access is particularly pronounced, with a difference of 23 per cent (Findex 2021). More than 50 per cent of remittance recipients are women, with migrants’ mothers representing 38 per cent of recipients and migrants’ wives over 15 per cent (High Commission for Planning, Morocco, 2020). International remittances can facilitate women’s access to formal financial services. However, a marked preference for cash hinders the adoption of digital payment methods and the digitization of remittances, along with existing social norms that impede women’s access to and use of accounts.

It is also important to note that current remittances are primarily focused on basic needs, effectively mitigating short-term shocks, particularly for rural populations. However, envisioning the implementation of financial education and tailored financial services through better consumer protection, private sector involvement, and supporting a multi-stakeholder approach, it is possible to transition from short-term survival response to true long-term resilience.

Celebrating this day is a key step to acknowledge all that has been achieved and further mobilize stakeholders to leave no one behind.

Provisional agenda