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Moroccan businesses face bleak outlook in 2024 as record failures are expected

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The year 2024 brings daunting prospects for businesses across Morocco, especially for small and medium-sized enterprises (SMEs), as they brace for an alarming surge in anticipated failures, according to a recent report by Inforisk.

According to the report, nearly 16,400 business closures are forecasted, marking a troubling 15% increase compared to the previous year.

This grim projection stems from various factors, including an expected economic growth of around 3% and uncertain macroeconomic conditions, heavily influenced by unpredictable weather patterns.

The uptick in business failures follows an already concerning trend, with 14,245 cases recorded in 2023 alone. This represents a 15% rise from the previous year and a staggering 69% increase since 2019. 

Contributing to this troubling scenario are challenging economic circumstances, soaring inflation rates, dwindling consumer spending, and liquidity issues.

The report reveals that the expected growth rate for 2024 is similar to the average rate observed over the past ten years. It also points out the uncertain economic situation, emphasizing that economic growth is strongly influenced by the amount of rainfall received.

The anticipated failures disproportionately affect very small enterprises, which make up 98.7% of the impacted businesses, compared to 1.26% for SMEs and a mere 0.06% for large corporations. 

Inforisk’s report points to a 150% increase in failures among legal SMEs, and companies with turnovers exceeding MAD10 million are beginning to feel the pinch.

Sectors hit hardest by these failures include commerce, real estate, and construction. 

Despite the implementation of Law 69.21, which regulates payment deadlines and imposes fines for delays, only 39 safeguard measures were enacted in 2023. 

Despite this gloomy forecast, the first eleven months of 2023 witnessed the establishment of over 86,427 companies in Morocco, as per a report by the Moroccan Office of Industrial and Commercial Property (OMPIC).

The report indicated that among these companies, 59,334 are categorized as “legal entities,” while 27,093 are identified as “individual ventures.” 

These figures were part of OMPIC’s comprehensive business creation barometer, providing valuable insights into the country’s economic landscape.

The commerce sector emerged as the dominant force, capturing a significant portion of 35.79%, closely followed by various services at 18.65%.

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