Record 7,659 Businesses File for Bankruptcy in Morocco During First Half of 2024
A Wave of Business Closures: Over 7,600 Moroccan Businesses Declare Bankruptcy in First Half of 2024
The Moroccan business landscape is facing a challenging period, with a concerning number of companies declaring bankruptcy. According to the research firm Inforisk, a staggering 7,659 businesses filed for bankruptcy in the first six months of 2024. This translates to an alarming average of over 1,276 businesses shutting down every month, or 42 businesses each day. This figure represents a 14% increase compared to the same period last year, highlighting the growing pressures faced by Moroccan businesses.
Tangier Tops the List of Business Closures
The port city of Tangier witnessed the highest number of bankruptcies, with a significant 35% year-on-year increase. Following closely behind are Rabat (30% increase), Agadir (15% increase), and Marrakech (13% increase). Fez and Casablanca experienced a comparatively lower increase, remaining below 7%.
Which Sectors Are Most Affected?
The commercial sector has been hit the hardest, experiencing a 33% surge in bankruptcies. The real estate sector follows with a 20% increase, and the construction and public works sector saw a 15% rise. Worryingly, sectors like agriculture, healthcare, hospitality, and manufacturing also witnessed notable increases in closures, ranging from 18% to 24%.
Small Businesses Bear the Brunt
Unsurprisingly, very small businesses (VSBs) are the most vulnerable, accounting for a staggering 99.3% of all bankruptcies. Small and medium-sized enterprises (SMEs) represent 0.6%, while large companies make up a mere 0.1%. This highlights the specific challenges faced by smaller businesses in navigating the current economic climate.
What’s Driving This Wave of Closures?
Experts point to several contributing factors, including:
Late payments from clients: This significantly impacts cash flow, a critical lifeline for businesses, especially smaller ones.
Internal governance and organizational weaknesses: Many businesses struggle with effective management and internal processes, making them more susceptible to financial instability.
* Pressure to offer extended payment terms: To secure deals in a competitive market, businesses often agree to unfavorable payment terms, putting further strain on their finances.
A Glimmer of Hope?
While the situation is concerning, there are glimmers of hope. The newly implemented Law 69-17, which addresses payment deadlines, aims to mitigate the issue of late payments. By promoting timely payments, this law could provide much-needed relief to businesses struggling with cash flow.
Looking Ahead
The high number of bankruptcies is a stark reminder of the challenges faced by businesses in Morocco. Addressing issues like late payments, improving access to finance, and strengthening business support systems are crucial steps towards creating a more resilient and sustainable business environment.
