Moroccan diaspora's billions: Lifeline for families, game-changer for the economy

Remittances from Moroccans living abroad are a true cornerstone of Morocco’s economy. This steady flow of foreign currency covers 35% of the trade gap and contributes around 8% to Morocco’s overall economic output. 

By the end of March 2024, remittances from Moroccans living abroad amounted to the equivalent of MAD 27.44 billion. 

In 2023, Moroccans living abroad sent home a staggering $11.5 billion, making Morocco the second-largest recipient in the MENA region.  

This influx of cash, exceeding 8% of Morocco’s GDP, has proven to be a vital source of income for families and a trusted lubricant for the domestic economy in times of crisis.

A World Bank report published in December 2023 said that remittances to Morocco had been steadily increasing for seven years. 

This flow was an essential source of support for Moroccan families during difficult times in the COVID-19 pandemic for instance, when MRE’s transfers to the Kingdom broke records. Even in 2023, after the devastating September earthquake, remittance inflows remained strong.

Remittances from Moroccan expatriates have consistently ranked as the second-largest source of foreign currency for Morocco following merchandise exports.

This remarkable progress is not by accident. Morocco has made significant strides in recent years to improve remittance channels, financial inclusion, and access to digital transfers. 

These efforts align perfectly with the implementation of the country’s New Development Model, aiming to strengthen the role of remittances in driving economic and social development.

The story behind these remittances lies with Morocco’s vast diaspora – over 5 million migrants, primarily residing in the European Union. Their hard work translates into crucial support for their families back home. 

However, money sent home by Moroccans abroad doesn’t flow at a steady pace throughout the year. Instead, it tends to peak during specific times. 

The biggest surge happens in July and August, which coincides with the holiday season for many Moroccans living overseas. 

This is when they visit family and often bring gifts and other items – a significant but hard-to-measure contribution to the Moroccan economy.

Religious holidays like Eid also see a rise in remittances. These donations, often sent through religious groups or migrant associations, directly support local communities in Morocco.  The exact amount of these transfers is difficult to track because they often happen outside formal channels.

Remittances reach Morocco through two main channels: banks and social networks. The growth of Morocco’s banking system is believed to have significantly boosted the amount of officially recorded remittances.

These remittances, often flowing through family and village networks, have demonstrably boosted local economies. 

In areas like the Rif region, this has fueled construction and the creation of small and medium businesses, transforming once-marginalized rural communities.

In this context, the National Financial Inclusion Strategy spearheaded by the Ministry of Economy and Finance and Bank Al-Maghrib, made sure that these remittances reach underserved segments of the population.  

The strategy emphasizes digitization as a cornerstone for achieving sustainable development goals. Morocco’s regulatory framework for remittances is clear and encourages digital transfers. 

The national retail payment system, traditionally reliant on bank cards, now seamlessly integrates with mobile payment solutions. This paves the way for a more digitized remittance landscape.

Morocco also enforces stringent anti-money laundering and anti-terrorism financing regulations within the money transfer sector. 

The new electronic national identity card streamlines identification processes and facilitates the opening of low-risk accounts. 

Regulatory advancements like the status of payment institutions, introduced by the 2016 banking law, pave the way for the development of electronic money in Morocco.

Looking ahead, mobile phone penetration presents a real opportunity to expand financial inclusion.  The Moroccan government actively promotes MarocPay, a mobile payment solution, and fosters collaboration among key players in the financial ecosystem.

Despite these advancements, challenges remain.  

Despite Morocco boasting lower than average remittance costs (5.5% in Q1 2023 compared to the global average of 6.2% in Q2 2023), there’s still significant space for improvement to reach the UN’s Sustainable Development Goal target of bringing costs below 3%. 

Digital remittances offer a cost advantage, with the average cost of sending money to a mobile wallet in Morocco from a developed country sitting at only 2.64% in Q4 2021. 

However, widespread adoption remains a hurdle. Limited awareness and challenges in adopting digital remittance methods exist for both senders and recipients.

Furthermore, access points are scarce in rural areas. By the end of 2021, only 32.9% of rural communes had a financial services access point, leaving 4.1 million people more than 10 kilometers from a remittance access point. 

While the number of electronic wallets in Morocco has grown to 3.2 million by the end of 2021, this figure remains modest for a population of 27 million adults. The development of the retail network for digital transactions requires further expansion.