Report No. 1505a-MOR Appraisal of Banque Nationale pour le Developpement Economique (Including a Small- scale Industry Component) Morocco April 25, 1977 Industrial Development and Finance Division Projects Department Europe, Middle East and North Africa Regional Office FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Dirhams per U.S. Dollars) End of Period Period Period Average (DH) 1973 4.290 4.107 1974 4.155 4.370 1975 4.184 4.053 1976 4.484 4.507 'Source: IMF, International Financial Statistics - February 1977. ABBREVIATIONS BAII Banque Arabe Internationale d'Investissement BCM Banque Commerciale du Maroc BCP Banque Centrale Populaire BNDE Banque Nationale pour le Dgveloppement Economique BRP Banque Regionale Populaire CCG Caisse Centrale de Garantie CDG Caisse de Dep8t et de Gestion CIH Credit Immobilier et H^otelier CNCA Caisse Nationale de Credit Agricole DFC Development Finance Company LIBOR London Inter-Bank Offered Rate OCP Office Chgrifien des Phosphates ODI Office pour le Dgveloppement Industriel SSI Small-Scale Industries FISCAL YEAR January 1 - December 31 FOR OFFICIAL USE ONLY APPRAISAL OF BANQUE NATIONALE POUR LE DEVELOPPEMENT ECONOMIQUE (INCLUDING A SMALL-SCALE INDUSTRY COMPONENT) MOROCCO TABLE OF CONTENTS PaRe No. SUMMARY AND CONCLUSIONS .............................. i-.i I. INTRODUCTION ..................... @ ............... .. I II. THE ENVIRONMENT .2.... ......... 2 A. Economic Situation ... . ................. 2 B. Manufacturing Sector ... .................... 2 C. Financial Community .. ............... . ... 3 D. Interest Rates . . .................. 3 III. BNDE'S ORGANIZATION AND POLICIES. . . 4 IV. BNDE'S OPERATIONS. . . 7 A. Characteristics of Operations 7 B. Evaluation of Performance 9 C. Impact of BNDE's Operations . 9 V. BNDE'S FINANCIAL STRUCTURE . . .10 A. Resource Position ... 10 B. Financial Position and Performance ............ 11 C. Audit .................. ..o13 VI. SMALL SCALE INDUSTRY (SSI) ..................... 13 VII. PROSPECTS ............................................. 16 A. The Environment . ................... ..... 16 B. Operations .. .................. ............ 16 C. Financial Prospects ................. . 16 VIII. THE LOAN - OBJECTIVES AND JUSTIFICATION .............. 18 IX. RECOMMENDATIONS ..19 This report was prepared by Messrs. J.M. Robert Feige, Jacques Coudol, Mohamadou Diop, Jose Mombru (SSI consultant) and Dieter Unverzagt (SSI consultant), based on a mission which took place during the first half of December, 1976. This document has a restricted distribution and may be used by recipients only in the performance of their oMcial duties. Its contents may not otherwise be disclosed without World Beak authorization. ANNEXES 1. Actual Investments in Industry and Transport 2. Structure of Interest Rates 3. Shareholders and Ownership Structure 4. Board and Executive Committee 5. Organization Chart 6. Investment Approvals Under Morocco Investment Codes 7. Analysis of Investments Approved - 1959-1976 8. Loan 890-MOR - Analysis of Projects Financed 9. Loan 1061-MOR - Analysis of Projects Financed 10. Resource Position as of December 31, 1976 11. Audited Income Statements 1973-76 12. Audited Cash-Flow Statements 1973-76 13. Audited Balance Sheets 1973-76 14. Analysis of Financial Data 1973-76 15. Small Scale Industry (SSI) Component 16. Major Assumptions for BNDE's Five-Year Operational and Financial Forecasts 17. Past Operations (1973-1976) and Forecast (1977-1981) 18. Projected Commitments and Resource Needs (Commitment Basis) 19. Projected Income Statements 1976-1981 20. Projected Source and Application of Funds 1976-1981 21. Projected Balance Sheets 1976-1981 22. Estimated Disbursement Schedule for the Proposed Loan APPRAISAL OF BANQUE NATIONALE POUR LE DEVELOPPEMENT ECONOMIQUE (INCLUDING A SMALL-SCALE INDUSTRY COMPONENT) MOROCCO SUMMARY AND CONCLUSIONS i. Banque Nationale pour le Developpement Economique (BNDE) is a mature DFC, and has so far received seven Bank loans totalling $141 million. BNDE plays a key role in the financing of industrial development in Morocco, both in the private and public sector, and has been entrusted by the Government to evaluate and advise on all industrial loans requiring term financing under the provision of the Industrial Code. ii. During 1973-1976, Morocco achieved a 6% growth rate of GDP in real terms. The average growth of the whole industrial sector during 1973-76 is estimated at 10% p.a., in line with the 1973-77 Plan targets. Private invest- ment in manufacturing and the processing industry (excluding construction and transport) increased from about DH 754 million in 1973 to over DH 1,300 mil- lion in 1976. Public investment in the sector increased even more dramatic- ally, from DH 77 million in 1973 to DR 712 million in 1976, reflecting the increased importance of such investments in the sector. iii. BNDE's operations have reflected the general upsurge in industrial investments, and its direct loan approvals have more than quadrupled in the last three years, increasing from DH 147 million in 1973 to DH 696 million in 1976. Privately sponsored projects, although they increased in absolute terms, decreased in relative terms to 45% during 1974-76, compared to 75% of total approvals during 1959-73. iv. BNDE's adherence to undertakings agreed with the Bank under previous loans has been satisfactory. Operationally BNDE has also performed generally well, and the quality of its appraisals has continued to improve and is satis- factory. Commitments and disbursements of the last two Bank loans are in line with expectations at the time of their appraisals. v. The staffing of BNDE, under capable management, is considered satis- factory. BNDE has increased its staff to cope with the increased workload, but a further increase will be necessary. The appraisal of large, complex projects has posed new demands, particularly also for technical expertise. vi. BNDE is actively seeking new shareholders interested in playing an active role in developing the Moroccan economy, and prepared to assist in for- eign equity and loan investments in the country. This initiative is welcomed, as is BNDE's increasing emphasis on promotion inside the country. vii. A significant new activity of BNDE will be its leading role in the promotion of small scale industries (SSI), in cooperation with a commercial bank, and using up to $5 million in Bank funds. The SSI have a high employment - ii - potential, but in the past have not been very actively promoted, or supported. A pilot project to be initiated and supervised by BNDE will not only help SSI development, but also may provide the experimental basis required for preparing a much larger project in this field. The pilot project will be supported by a sector study of SSI. viii. BNDE has been quite successful in mobilizing and diversifying the resources required by its increased volume of activities during 1974-75. However, in 1976, as Morocco ran into unforeseen balance of payments problems, BNDE was unable to meet its resource commitments, and ended 1976 with a re- source gap of DH 168 million. The Bank has urged BNDE to accelerate its resource mobilization, and BNDE has since prepared a balanced resource mobili- zation plan covering the period 1977 to mid-1979. ix. While BNDE's financial position and performance in the last three years have, in general, been satisfactory, the increased volume of business and related borrowing needs have affected BNDE's term debt/equity ratio which has increased to 10.5:1 at end 1976. As previously agreed with the Bank, BNDE should maintain a conventional debt/equity ratio below 10:1 from 1978 onwards. In order to achieve this, BNDE will double its capital in 1977; this is a condition of effectiveness of the proposed loan. x. In order to remunerate the increased share capital, BNDE will im- prove its profits by increasing its nominal interest rate from 10% to 11% on its long-term loans. This will increase the effective cost of BNDE funds to subborrowers from 9% to 10%, taking into account the Government rebate of two points on industrial term loans and various fees and charges of 1% p.a. xi. BNDE expects to maintain its future business in real terms at about the 1976 level, and to continue providing its financing for both private and public projects. BNDE's expected commitments would amount to DH 2.8 billion in 1977-80, and its projected resource requirements would amount to DH 2.2 billion through December 31, 1979. Based on BNDE's financing plan for the period covered by the proposed loan (1977-mid-1979) a resource gap of DH 216 million remains to be filled; the proposed Bank loan would reduce the resource gap to DH 13 million. The Bank would be providing about 10% of BNDE's projected resource needs in 1977-mid-1979 (commitment basis). The proportion of Bank funds in BNDE's outstanding borrowings,which was 42% in 1974 and 20% in 1976, would decline further to 13% by the end of 1979. xii. The projected financial position and performance, which are based on conservative assumptions, show an improving situation. BNDE's profit before taxes, provisions and reserves would more than quadruple in 1977-81, yielding 28% on average equity in 1981 compared to 23% in 1975. BNDE would have no problem in maintaining or even increasing its present 8% dividend rate. The resulting reserve build-up coupled with a doubling of the share capital would help maintain a sound financial structure, well within the agreed term debt/equity ratio of 10:1. xiii. BNDE continues to remain a suitable recipient for the proposed Bank loan of $45 million; up to $5 million would be allocated to an SSI pilot project. The proposed loan would have a flexible amortization schedule, with subloans not to exceed 15 years, including three years of grace. APPRAISAL OF BANQUE NATIONALE POUR LE DEVELOPPEMENT ECONOMIQUE (INCLUDING A SMALL-SCALE INDUSTRY COMPONENT) MOROCCO I. INTRODUCTION 1.01 The Banque Nationale pour le Developpement Economique (BNDE) was established in 1959, and received its first loan from the World Bank in 1962. BNDE has so far received seven Bank loans totalling $141 million 1/. The most recent Bank loan, 1061-MOR, was signed in December, 1974 2/, and was fully committed in October, 1976. 1.02 Although BNDE has been successful in mobilizing substantial addi- tional resources from diverse sources, it needs further funds to fulfill its role in the expanding Moroccan economy. This report appraises BNDE for an eighth loan of $45 million, which includes a $5 million component for a pilot project for the promotion of small-scale industries. 1.03 Through the proposed loan, the Bank will assist BNDE in: (i) providing continuing support for the development of the industrial sector in Morocco, both with respect to the private and public sector; (ii) expanding its promotional and development efforts, with emphasis on labor-intensive small-scale industries (SSI) for which a pilot project will be created; (iii) mobilizing additional resources, particularly in the international market; (iv) strengthening its institutional appraisal capabilities, particularly with respect to larger and more complex projects, in line with the demands made on BNDE by the evolving trend of industrial development in Morocco. 1.04 The proposed loan of $45 million equivalent would meet 10% of the additional resources required by BNDE (commitment basis) for the period 1977-1979. 1/ Net of cancellations. 2/ See Bank Report No. 585-MOR: "Appraisal of Banque Nationale pour le Developpement Economique, Morocco", dated November 7, 1974. - 2 - II. THE ENVIRONMENT A. Economic Situation 2.01 A report entitled "Current Economic Position and Prospects of Morocco" (1021-MOR, dated January 26, 1976) was distributed to the Executive Directors on February 13, 1976. An updating economic mission visited Morocco in June 1976, and the report is to be issued in June, 1977. B. Manufacturing Sector 2.02 The Third Plan 1973-77 aimed at a growth rate of the manufacturing and the processing industry of about 10% through an acceleration of industrial exports, and also through continued import substitution in the food processing, textile, metal working and chemical industries. The Government sought to at- tain these objectives by providing additional stimuli for the private industry (such as the new Industrial Investment Code promulgated in 1973, granting industrial investors a 2 point interest rebate, tax exemptions, etc.), and by developing public and semi-public enterprises, which were expected to absorb up to 70% of total investment during the Third Plan period. The Government investment strategy was made possible by increased phosphate revenues which permitted more ambitious public investment programs, and was prompted by the limited investment potential of the private sector in comparison to Government development objectives. 2.03 The objective of reviving private investment has been largely achieved. Private investment in manufacturing and processing industry (ex- cluding construction and transport) increased from about DH 754 million in 1973 to over DH 1,300 million in 1976. Public investment in the sector increased even more dramatically, from DH 77 million in 1973 to about 712 million in 1976. Total industrial investment (public and private), is currently estimated at DH 8 billion for the 1973-77 Third Plan period. To stimulate capacity utilization, exports were promoted; as a result, the ex- ports of finished products increased from DH 426 million in 1972 to DH 563 million in 1973, and to DH 795 million in 1975. An increase of 10% in these exports is estimated for 1976. 2.04 Policies and measures to sustain and expand industrial growth in general since 1973 have so far been effective, since the 10% p.a. growth target of the Third Plan is being achieved. The growth of the manufacturing sector alone has been somewhat less than expected, since its growth averaged only about 7% p.a. during the 1973-76 period; its share in GDP remained at about 13% throughout the period. The prospects for 1977, and for the Fourth Plan period (1978-82), are discussed in Chapter VII. - 3 - C. Financial Community 2.05 Morocco's institutional finance system comprises (i) 15 commercial banks with extensive regional coverage through a combined network of nearly 400 branches; (ii) 5 specialized institutions, including BNDE; and (iii) 2 savings banks. Long-term finance is provided to private investors principally through three institutions, the agricultural bank (CNCA), the housing and tourism bank (CIH), and the industrial bank (BNDE), each of which services its respective sectors and has received Bank loans. The Banque du Maroc is Morocco's Central Bank. Morocco has a relatively developed capital market centered at the Casablanca stock exchange, where gold, bonds, shares and government securities are traded. There is also an active inter-bank market, which is free of Central Bank control. 2.06 BNDE derives its key position from being the only financial insti- tution authorized to provide industrial projects, broadly defined 1/, with contractual long-term financing under the 1973 Industrial Investment Code. In addition, BNDE plays a major role in the distribution of medium-term loans by commercial banks to the industrial sector, especially for the benefit of smaller industrial enterprises. Medium-term loans for industry, initially extended by commercial banks, may be rediscounted with the Central Bank only if appraised and approved by BNDE. These loans have terms up to five years, and bear an effective interest of 8.0% to the final borrower. The Central Bank's rediscount rate is currently 4.5%, and BNDE's commission for processing and approving rediscounted loans is 0.75%. The primary risk of default is borne by the commercial bank, with BNDE guaranteeing only against the risk that the commercial bank may fail to pay the Central Bank. Since the possi- bility of such defaults is remote, BNDE bears practically no risk. D. Interest Rates 2.07 The Government continues to strictly control the institutional in- terest rates in Morocco. There has been upward movement of the interest rates in the 1970's, including rates in the active bond market and increases in BNDE's long-term lending rate from 7% to 10%. The lending interest rate structure in Morocco is shown in Annex 3, and ranges from 4.5% (special export credits) to 11% (for certain non-rediscountable medium and long-term credits). 2.08 The interest rate charged by BNDE consists of a nominal rate, 10% at present, to which must be added various annual charges equivalent to about 1% of the outstanding loan amount. Since industrial borrowers receive a direct rebate of 2% per year from the Government, the effective rate is thus 1/ Including transportation (shipping and airlines), ocean fishing and mining, but excluding energy. - 4 - 9%. It should be noted that the effective rate (including charges) was only 8Z until July 1975, when the rate was raised to 9% as agreed with the Bank at the time of the seventh loan negotiations. 2.09 BNDE and the Government have agreed during negotiations to an increase in BNDE's nominal interest rate from 10% to 11% on new long-term loans (i.e. loans with maturities over seven years), thereby bringing the effective rate to 10%. Such an increase in interest rate would help to improve the profitability of BNDE, as is required in view of the agreed increase in the share capital (para 5.06), and as an inducement to attract more foreign capital. In line with the explanation given in para 2.08, and taking into account the existing and projected inflation rate 1/, this would ensure that subborrowers pay a positive interest rate of about 3%. Medium- term loans will continue to carry a lower effective interest rate of 9% so as to maintain comparable, competitive rates with other commercial banks; less than 20% of BNDE's projected loan commitments would be in the form of medium-term loans so defined. 2.10 In reviewing BNDE's interest rate structure, the justification of the 2% rebate and the Government carrying the foreign exchange risk were also questioned. The Government views the rebate (together with other incentives under the Industrial Code) as well as protection of investors from foreign exchange risks as indispensable for maintaining a favorable investment climate in Morocco. It is not prepared to pass on the foreign exchange risk to subborrowers, nor to abolish the rebate at this time, as these measures appear to help investments to expand at the desired rate. The Government is nevertheless concerned with the cost and effecttlbeness of rebates, and is from time to time reviewing these (e.g. Maritime Code); however, it does not consider that a downward adjustment of the rebate would be appropriate. The questions of interest rate, rebates and foreign exchange risk have been points of discussion with the Bank for years. The agreed in- crease to 11% in BNDE's long-term lending rate is a significant step, - the only one the Government will consider at this time -, and seems sufficient at this stage to help prevent misallocation of BNDE's long-term resources. III. BNDE'S ORGANIZATION AND POLICIES Organization 3.01 BNDE has its headquarters in Rabat, and a small regional office in Casablanca for promotional purposes. BNDE is strengthening its Casablanca office and establishing two additional promotional offices, in Agadir and Oujda, for closer contacts with local entrepreneurs. 1/ Inflation in Morocco was running at a modest 2.4% p.a. average over the period 1968-72, but is expected to average 8.2% for the period 1973-77, and 7.2% p.a. for 1978-82. 3.02 A list of BNDE's shareholders as of January 1, 1977, is given in Annex 3. In 1975, and in line with an agreement reached with the Bank, BNDE increased its share capital from DH 32.4 million to DH 70 million. The share capital issue was well received, and shares available to domestic investors were oversubscribed. No major changes in institutions represented on the Board (Annex 4) have taken place since the last appraisal in 1974, although there have been changes in personalities. The Board has continued to dis- play a considerable amount of initiative, and is active in policy anid invest- ment matters. The Executive Committee meets once a month and has received authority from the Board to approve loans up to DH 4 million. IFC is represented on both the Board and the Executive Committee. 3.03 There has been remarkable stability in BNDE's senior management and organisation since the last Bank appraisal in 1974 (Annex 5). Credit must be given to the President and General Manager, Mr. Faris, for keeping a capable management team together. 3.04 In line with the growth in operations, BNDE's staff has expanded from 48 professionals in 1974 to 60 professionals by end 1976, including four young engineers. A further strengthening of BNDE's staff is required to improve quality standards under increased workloads. BNDE has agreed to recruit five more financial analysts/economists, and a further three--hopefully experienced--engineers; the latter are required to further improve the tech- nical appraisal work, and assist with more frequent supervision of'projects. Operational Policies 3.05 BNDE's Policy Statement has not changed since the last appraisal, and is still considered satisfactory. The appraisals prepared by BNDE are, in general, of good quality. BNDE calculates the effective rate of protec- tion, as well as the economic rate of return for projects with more than 50% effective protection rate or for which BNDE's financing exceeds DH 5 million. For the proposed loan, BNDE has agreed to calculate the economic tate of return for all projects financed with Bank funds (except for SSI sub-loans, see Chapter VI), but will no longer be required to calculate the effective rate of protection separately. For other projects, BNDE will also calculate the economic rate of return for loans above DH 5 million. BNDE's Role in Financing Large-Scale Enterprises 3.06 The appraisals of large-scale projects recently completed by BNDE have been closely checked. A few of these projects, in the public sector, were rejected by BNDE because of insufficient profitability, and in one case a Government subsidy was eliminated on the basis of BNDE's appraisal. In the other projects, BNDE participated in various degrees during the formulation of the project, often in close cooperation with Office de Developpement Industriel (ODI) and other Government agencies. In a few cases BNDE's appraisal of large-scale projects has been less than satisfactory, mainly due to staff constraints and inexperience and, more importantly, to the fact that its assistance has been requested at times when all key decisions in a project had already been taken. - 6 - 3.07 To play a useful role in evaluating large-scale projects, and con- tribute financial, economic and technical expertise, BNDE must be involved at the earliest possible stage of project formulation. BNDE has now decided that it will not normally consider financing of large-cale projects brought to BNDE's attention after the engineering contract has been completed, or the construction contract has been signed. Fishing Industry and Merchant Marine 3.08 BNDE has been officially designated to act as the sole long-term financing agency for the fishing industry and merchant marine. Due to the favorable incentives granted by the Government for the purchase of ships (subsidy in investment cost of up to 30%, and a combined rebate of 6% on the 10% BNDE interest rate) coupled with apparently profitable prospects, BNDE is receiving a rapidly increasing number of applications for such financing, particularly for the purchase of fishing vessels. 3.09 Expansion of Morocco's fishing fleet, particularly in view of the increase in the territorial fishing rights to 200 miles, and the fishing potential thereof, is considered reasonable. However, the impact fishing loans may have on BNDE's portfolio quality must be further evaluated before larger commitments in this rapidly expanding sector are undertaken, especially as the generous incentives may be attracting some inexperienced investors; under the proposed loan, Bank funds will, therefore, not be used for the purchase of fishing vessels. Use of Bank Funds 3.10 Taking account of the quality of BNDE's appraisal work, of infla- tion which has raised the cost of all projects, and the fact that the Bank would like to concentrate its supervision on large projects, it was agreed to raise the free limit from US$0.9 million (DH 4 million) to US$2 million (DH 9 million), with no aggregate free limit. 3.11 Under the condition of the seventh loan, the use of Bank funds in any single enterprise was limited to US$4 million, and the aggregate use of Bank funds for investment projects owned to the extent of 50% or Tore by the Government was restricted to 40% of the total loan proceeds. In view of the price inflation which has taken place since 1974, and taking accoWnt of BNDE's increased outstanding loan portfolio (Annex 13), it was agreed to increase the exposure limit to $6 million. However, the amount of any single sub-project commitment under the proposed eighth loan would still be limited to $4 million. The limitation of 40% on investments in public sector projects with Bank funds, as stipulated in the previous loan agreement, is maintained. 3.12 Supervision. BNDE's supervision reports have improved since the last appraisal, but the technical supervision has been somewhat limited due to staff constraints. The newly-hired four engineers, as well as the pro- posed further increases in staff, should enable future supervisions to be more frequent and the reports to be more complete. 3.13 Procurement and Disbursement. BNDE does not normally insist on international competitive bidding procedures, but its procurement policy has been satisfactory and in line with that of other Bank-supported development banks. Equipment supplies for projects are procured from a wide variety of suppliers and countries. Disbursement procedures are satisfactory. 3.14 Sector Work. BNDE's Economic Studies Department (Annex 5) not only supports the appraisal work, but also undertakes and publishes industrial product and sector studies. In 1975 a total of 53 such studies were published; a sample survey of these indicated professionally competent work. 3.15 Promotional Activities. BNDE's promotional activities are through (i) sector studies; (ii) publication of brochures and other documentation to assist local entrepreneurs; (iii) assisting in establishing a capital market by participating in equity investment; and (iv) promotion of Moroccan industry, and investment opportunities therein, abroad. In respect to the last point, BNDE places great emphasis on the role its own foreign shareholders could per- form. BNDE intends to further expand its promotional role by establishing two new regional offices, and by assisting in the development of SSI. Considering these efforts, the promotional work done by BNDE is considered satisfactory and of importance for the industrial sector. IV. BNDE'S OPERATIONS 4.01 In line with its Policy Statement, BNDE's operations consist of direct medium- and long-term loans, rediscounted medium-term loans, and equity investments. The following analysis of BNDE's operations is based on Annexes 6-9. A. Characteristics of Operations 4.02 BNDE's direct loan approvals have more than quadrupled since 1973 and reached DH 696 million for 1976. Rediscounted loan approvals have increased five-fold since 1973, representing 35% of BNDE's 1976 total opera- tions, compared to 29% in 1973. 1973 1974 1975 1976 No. Amount No. Amount No. Amount No. Amount (DH Millions) Direct Loans Approvals 47 147.0 48 436.4 65 734.8 85 695.5 Commitments 38 144.0 50 360.0 52 611.0 75 617.6 Disbursements 117.6 120.0 453.1 509.0 Investments Commitments 10 8.0 9 11.6 9 13.4 10 8.5 Disbursements 7.3 5.4 11.6 9.0 Rediscounted Loans 122 70.7 159 181.7 257 293.4 268 375.0 - 8 - 4.03 The fast growth of BNDE's operations during 1974-76 is in line with the growth of gross fixed investment, particularly in the industrial sector (para 2.03). The investment codes of August 1973 gave further impetus to industrial investments as reflected by industrial investment approvals by the Ministry of Industry (Annex 6). 4.04 The average size of direct loans reached DH 9 million during the 1974-76 period. Whereas most of BNDE's loans to medium-sized industry averaged 7 years, the large-size projects require longer terms (Annex 7). The general increase in the size and terms of BNDE's direct loan volume partly reflects Morocco's industrial investment strategy, which increasingly emphasizes, projects based on domestic raw materials (e.g. chemicals and cement), many of which are capital intensive. 4.05 Rediscounted loans are at present limited by law to a maximum five-year duration. BNDE cannot discount its own medium-term loans. For approving, and guaranteeing medium-term loans offered by the commercial banks for rediscounting to the Central Bank, BNDE collects a 0.75% fee. 4.06 During the period 1959 1/-73, about 75% of the amount of BNDE's approvals were in the private sector. However, during the 1974-76 period private sector approvals decreased to 45% as publicly sponsored projects, in line with corresponding upward revisions in the Development Plan, became increasingly more prominent. Nevertheless, there has not been a slow down in the absolute level of private loan approvals, which grew from DH 307 million in 1974 to DH 559 million in 1976, an increase of 82%. Following the Moroccanization laws of 1973, loan approvals for foreign-controlled enterprises, which accounted for 38% of total approvals during 1959/73, have dwindled to insignificant levels (7% in 1974, and 1.4% in 1976). 4.07 During the period 1974-76, a total of 67% of BNDE's approvals was for loans to the manufacturing industry (chemicals 15%, food processing 11%, textiles 10%, cement 7%, others 24%). Transport accounted for 29%, and fishing for 4%. 4.08 The geographic distribution of BNDE's loans reflects the concentra- tion of industries in the Casablanca-Mohammedia area. This area was on the average the beneficiary of 59% of all BNDE's loan and equity investment approvals during the 1974-76 period (compared to 36% in 1959-73). The balance of approvals during 1974-1976 was generally well spread over other major urban centers (i.e. Rabat, Marrakesh, Agadir, Fes, Tanger, etc.). 4.09 During the period 1974-76, BNDE approved 28 new equity investments for DH 33 million, compared to 54 investments for DH 55 million during the whole period 1959-73. As of December 31, 1976, BNDE held participations in 33 industrial enterprises, accounting for 66% of total outstanding equity investments of DH 84 million; in 8 tourism enterprises (15% of total); and 6 financial institutions (19% of total). 1/ BNDE was created in 1959. - 9 - B. Evaluation of Performance under Loan 1061-MOR 4.10 During the appraisal of the seventh loan to BNDE (1061-MOR), BNDE undertook to implement certain steps to meet the objectives of the Bank loan. As agreed, BNDE doubled its share capital to maintain a strong equity base in the face of anticipated growth of lendings, and increased its nominal lending rate by 1% to make sub-borrowers pay an effective rate of 9% 1/, a coat which was considered at the time to better approximate the real cost of funds. Per- formance with regard to appraisal and supervision procedures, management and staffing has been reviewed earlier (Chapter III) and found to be generally satisfactory. 4.11 Commitments and disbursements of Loan 1061-MOR have overall been in line with appraisal estimates. Due to the financing of a large number of medium-sized enterprises (i.e. loans under the individual free limit of $900,000), BNDE rapidly reached the aggregate free limit of $7 million set at the time of appraisal of loan 1061-MOR. In view of the improving quality of BNDE's appraisal reports, and in order to avoid a cumbersome review of every project presented to the Bank for financing, the Bank agreed to remove the aggregate free limit on October 23, 1975. C. Impact of BNDE's Operations 4.12 During the 1974-76 period, the total investment cost of projects approved by BNDE amounted to an estimated DH 6.4 billion. BNDE's direct loan and equity approvals, amounting to DH 1.9 billion, are expected to contribute 30%, and rediscounted loan approvals to provide 13.3% of the total estimated funds required; the balance was to be provided from equity funds, Government grants, and other loan financing mostly in the form of suppliers' credits. 4.13 A summary of the operations financed under the last two Bank loans (890-MOR and 1061-MOR - Annexes 8 and 9) is given below. 890-MOR 1061-MOR Totals No. of Projects 23 43 66 Capital Cost (DH million) 328.4 513.3 841.7 No. of Jobs 2,401 2,288 4,689 Cost per Job ($) /1 27,100 41,400 34,100 /1 Calculated where employment figures available. 1/ After paying fees and charges and receiving a Government rebate. - 10 - Export-oriented projects 1/ financed from the above Bank loans, mostly in the textile and food processing sectors, accounted for some DH 87.7 million or 10% of the estimated total capital cost, and for 13% of Bank ftnds. Fourteen projects were expected to export between 27% and 100% of their output. The relatively high cost per job is due to a substantial number of expansions financed by BNDE, often in capital-intensive industries, which create little additional employment. V. BNDE'S FINANCIAL STRUCTURE A. Resource Position 5.01 Since the previous appraisal, BNDE's resource mobilization efforts have continued to bear significant results. At the end of 1976, total out- standing resources had increased by 124% to DH 1,763 million, from DH 786 million in mid-1974. Total resources mobilized during 1975 amounted to DH 682 million, of which DH 34.4 million through new subscribed shares 2/; DH 474 million in foreign currency loans; DH 100 million in new local (7.5%, 15-year) bonds; a 30-year loan of DH 50 million at 6.5% from the Treasury; and a DH 20 million 5-year, 6.5% loan from CDG. BNDE resorted successfully for the first time to an internationally subscribed (8.5%, 8-year) bond issue guaranteed by the Moroccan Government, and denominated in Saudi Rials (SR 100 million, equivalent to DH 116 million). 5.02 In 1976, however, the resource mobilization momentum was not main- tained by BNDE for reasons in large part beyond its control; BNDE contracted only DH 313 million in new resources (of which DH 273 million in foreign exchange), less than half the amount mobilized in 1975, and wound up the year with a resource gap of DH 168 million (Annex 10). 5.03 The problems faced by BNDE were many and varied. In order to meet expenditures, the Government resorted to a national bond issue of DH 1,000 million, which reduced the capacity of the domestic financial market for additional commitments. BNDE entered the Euro-dollar market early in 1976 for $40 million (DH 180 million), and was about to launch another $100 million borrowing when it was preempted by a major borrowing by the Office Cherifien des Phosphates (OCP). 5.04 Some of the objectives pursued by the Bank have been to encourage BNDE not only to diversify its sources of funds, and thereby decrease its reliance on Bank funds, but also to assist in increasing the general flow of 1/ Over 25% of output exported. 2/ BNDE distributed DH 3.2 million from reserves as stock dividend, thus bringing the total issued share capital to DH 70 million. - 11 - foreign capital into Morocco, and to mobilize domestic savings and strength- ening the local capital market. These objectives are progressively being achieved. The proportion of Bank funds decreased from 42% of total resources outstanding in mid-1974, to 20% at the end of 1976. Borrowings from institu- tions in capital surplus Arab countries, which accounted for only 1.4% of total resources outstanding in July 1974, made up 18% of such resources at end 1976, having increased from DH 11.2 million to DH 318.2 million. B. Financial Position and Performance Financial Position 5.05 BNDE's income statements, cash flow, and balance sheets for the period 1973-1976, are detailed in Annexes 11, 12 and 13. (Audited statements for 1976 are not yet available.) During the period 1973-1976, BNDE has more than doubled its total assets with a net increase of DH 976 million in its loan and equity portfolio outstanding. A major increase in term borrowings brought BNDE's term debt to equity ratio to 9.0:1 at December 31, 1975 and to 10.5:1 at end 1976. The term debt/equity ratio calculated on the basis agreed with the Bank, where equity includes DH 63.5 million in quasi-equity, 1/ was 6.4:1 compared to the maximum allowable limit of 7:1. In line with the 1061-MOR Bank Loan Agreement the term debt/equity ratio, excluding any refer- ence to quasi-equity, will be limited to 10:1 from January 1978 onwards. 5.06 This limit is considered acceptable because of the quality of BNDE's portfolio and the guarantees which the Government provides. This limit has already been reached, and in order to comply with this agreement a share capital increase of DH 70 million (i.e. a doubling of the existing capital) has been agreed to by BNDE. The doubling of the share capital is a condition of effectiveness of the proposed loan. Current Position 5.07 At end 1975 BNDE's current ratio stood at 1.5:1 providing it with a satisfactory current position; the share capital increase in 1975 and the increase of term debts helped improve the current position (Annex 12). The resource mobilization constraints of 1976 strained BNDE's current position at the end of that year, and BNDE had to resort to substantial short-term borrow- ings to meet its commitments. BNDE's debt service ratio was satisfactory at 1.2:1 at end 1976, but had ranged between 1.5:1 and 0.7:1 in the period 1973-1975; interest coverage during the same period was between 1.4 and 1.5 (Annex 14). BNDE realizes that it must keep a balanced debt service ratio. During negotiations BNDE agreed to endeavor to maintain at all times a debt service ratio above 1:1. 1/ The quasi-equity is defined as that portion of DH 90 million subordinated Government loans which matures after repayment of Bank loan (890-MOR) to BNDE. - 12 - Profitability 5.08 Although BNDE's average interest spread was reduced from 2.8% in 1975 to 2.5% in 1976 due to the higher cost of borrowings, profits have increased. The increase in share capital and continued plow-back into re- serves of a major part of earnings have helped BNDE reduce the average cost of total resources. Administrative expenses, although having increased in absolute terms by 12% in 1975 due to the hiring of 12 additional professionals, remain low in relative terms and have decreased from 1.2% to 0.7% of average total assets over the same period. Average income from loans has increased from 8.2% in 1973 to 9.1% in 1976, reflecting the impact of the increase in BNDE's nominal lending rate from 8% to 9% in 1972, and from 9% to 10% in 1975. As a result, profits before taxes, and allocation to reserves and provisions, increased by 70% in 1975 to reach DH 17.5 million, and increased further to DH 23 million in 1976. Net profits have increased from DH 3.9 million in 1974 to DH 7.2 million in 1976. 1/ 5.09 Net profit on average equity has dropped from 8.9% in 1975 to 6.9% in 1976, owing to the doubling of the share capital which took place in 1975. BNDE distributed DH 3.2 million from reserves in share dividends at the time of the last capital increase; consequently the average yield on originally subscribed BNDE shares exceeded the 8% paid in cash. The book value of shares amounted to 157% of par value at end 1976. Quality of Equity Portfolio 5.10 BNDE's total equity portfolio of DH 71.5 million at December 31, 1975, consisted of investments in 42 companies. Only 10 companies, which accounted for 21% of total investments, were in financial difficulties; four of these companies (DH 783,100 investment) are in liquidation. Provisions amounting to DH 5.3 million are adequate to cover risk of loss in BNDE's equity portfolio. BNDE's portfolio grew in 1976 to reach DH 84 million; accordingly BNDE increased its provisions for losses to DH 6.6 million. BNDE's provisions remained conservative, amounting to 7.8% of the equity portfolio. 5.11 Dividend income and capital gains on BNDE's investments have increased from DH 2.7 million in 1973 to reach DH 3.5 million in 1976, yielding 5.3% and 4.5% in those years respectively. These yields would have been higher were it not for the addition of new, as yet unprofitable ventures. Quality of Loan Portfolio 5.12 As of December 31, 1975, BNDE's portfolio comprised 63 medium-term 2/ and 180 long-term loans for a total of 243 loans outstanding, compared to 221 1/ Net profits do not reflect BNDE's true profitability as tax deductible allocations (up to one-seventh of interest earned)to a special reserve, as well as other deductions reduce taxable income, but not profits (Annex 11). 2/ As currently defined by the Banque du Maroc, 5 years or less. - 13 - loans in 1974. Medium-term loans outstanding make up 17% of the total port- folio outstanding at end 1975, compared to 16% in 1974. In 1975, loans amount- ing to DH 477 million or 52% of total loan portfolio were guaranteed by the Government through the Caisse Centrale de Garantie (CCG), compared to 38% in 1974. These guarantees and other banking consortium guarantees (e.g. for leasing companies) are required by BNDE's Policy Statement in cases where BNDE's financial exposure exceeds 15% of its unimpaired equity. The guar- antees have been extensively reviewed and found to be satisfactory, and are additional to normal securities taken by BNDE (such as mortgages). 5.13 As of December 31, 1975, total arrears of principal and interest in excess of three months amounted to DH 44.6 million. Total portfolio outstand- ing affected by arrears amounted to DH 110.5 million, i.e., 12.2% of total portfolio outstanding at end 1975, compared to 9.3% in 1974. There has been a small deterioration of the loan arrears situation; however, in the opinion of the auditors provisions for losses 1/ of DH 12 million, as provided by BNDE are adequate. BNDE's loan portfolio can be considered of reasonably sound quality. C. Audit 5.14 BNDE's financial statements are audited by Price Waterhouse & Co., an internationally reputed firm of public accountants. The quality of the audit report, and supplementary information provided, are considered satis- factory. VI. SMALL SCALE INDUSTRY (SSI) 6.01 According to the 1969 industrial census, SSI in Morocco 2/ accounted for 75% of total industrial employment and over 40% of industrial value added. The Government is increasingly interested in developing this sector of industry, which is of prime importance for employment creation, and has asked the Bank to assist. A consultant's report, transmitted by the Bank to the Government in November 1975, suggested three types of action (i) administrative, in order to provide the small industry with the required legal and administrative frame- work; (ii) technical, to improve the efficiency of SSI management, technology, labor training, procurement and sales; and (iii) financial, to provide credit and other financial services to the SSI. Because information on SSE is sparse, the report also stressed the need to undertake a sector study. 6.02 The Bank's association with the Government to assist SSI is envi- saged as a series of steps. The first one would consist of providing a rela- tively small amount of financing ($5.0 million) under the proposed loan to 1/ Provisions for risk on individual direct loans are considered case by case. Total provisions are deducted from the special reserve for loan risk, the balance of which is considered part of the equity. 2/ Defined as enterprises employing between 10 and 50 workers, with annual turnover under DH 7.5 million and total gross assets under DH 5.0 million. - 14 - enable BNDE to channel resources to SSI, and to be associated with a limited SSI sector study to be undertaken in 1977. Based on the experience gained, a larger SSI project could be developed in the future. The first steps, to be taken under the BNDE loan, are described in Annex 15 and summarized below. 6.03 SSI component. BNDE has acquired some experience in SSI under the medium-term rediscountable procedure (para 2.06). Under the proposed $5 million pilot SSI scheme, BNDE will associate itself with the major commercial bank in Morocco, Banque Centrale Populaire (BCP), to provide funds to BCP ($3 million) to finance SSI projects which require medium-term loans. On its own, BNDE will also provide long-term loans (over 5 years) to SSI projects which otherwise would not have access to such funds. BNDE will also be prepared to take equity participation in SSI which have not sufficient equity to become eligible for commercial bank credits. In view of the current definition of SSI in Morocco, the Bank would ask BNDE to focus its promotional effort on a number of aspects, as outlined in paras 6.04-6.07. 6.04 Financing will be to selected, representative urban centers and subsectors which have the larger concentration of SSI enterprises, and where the growth potential is considered to be good. The target group should be one where employment creation benefits primarily the urban poor. By setting maxi- mum investment cost per job created of DH 25,000, the project seems likely to meet the Bank's guidelines for the urban poor. To the extent possible, the Bank, through BCP, will try to provide funds, in terms of equity participa- tion and in longer-term financing, which are not otherwise available for SSI entrepreneurs. 6.05 Extensive discussions took place in Morocco on the interest rate to be charged to SSI enterprises for the financing envisaged under the pro- posed pilot project. Medium-term loans (up to 7 years) to SSI are currently made at an 8% p.a. interest rate. In comparison, long-term loans from BNDE to medium and large industry are currently available at an effective interest of 9% p.a.; when BNDE raises its interest rate (para 2.09), the effective cost will be 10%. The interest rate differential between SSI loans and other industrial loans seems reasonable, since the terms are different, and as there is a promotion element in SSI financing. Even at an interest of 8%, the maxi- mum investment cost per job of DH 25,000 prevents any risk of Bank funds being used for capital intensive SSI projects. SSI loans at an effective interest rate of 8% p.a. can, therefore, be supported. The authorities have also argued that (i) the pilot project will only affect a segment of SSI enterprises and within that segment only the borrowers of BCP/BNDE; if under the proposed loan higher interest rates were required, an unbalanced situation between BNDE/BCP borrowers and other borrowers would be created; (ii) the Government first wants to study the outcome of the pilot project and sub- sector study before taking any action on interest rates which would have wide implications for industry. 6.06 To make Bank funds available to BCP and BNDE at an effective rate consistent with the 8% rate to the end-user, it was therefore agreed that the Government would offset BNDE's and BCP's higher administrative expenses and special risks, and permit them to earn a very modest margin on these - 15 - operations. For this purpose, the Treasury will provide funds to reduce to 5% the cost of Bank funds for the BNDE/BCP portion of the component. BNDE would then relend Bank funds to BCP at 6% p.a. This would leave BNDE with a 1% and BCP with a 2% gross margin. The subsidy for direct BNDE loans will be 2% p.a. There will be no subsidy for equity participations. In all cases, the foreign exchange risk will be assumed, as in the past, by the Treasury, at no cost to BNDE. Because this project is basically experimental and does not imply an endorsement by the Bank of the Government interest rate policy, it is proposed to accept the subsidy arrangement. 6.07 As also described in Annex 15, BNDE and BCP have agreed to organize appraisal and supervision capabilities for the SSI scheme which would, for the first time in Morocco, attempt to provide SSI entrepreneurs with assistance especially with regards to technical aspects of SSI projects and technical needs of SSI enterprises. In spite of its relatively small amount of finan- cing, the SSI project component should provide some 1,500 jobs. Sector Study 6.08 In the same subsectors and urban centers selected for the SSI loan component, a study will be commissioned by BNDE in mid-1977 whose main objec- tives will be: (i) to make an inventory of the characteristics, economic needs and growth potential of SSI; (ii) to define SSI rationally; and (iii) to propose an action and implementation program of technical assistance to SSI in three areas, (i) administration and legal; (ii) technical (technological, training, marketing); and (iii) financial (credit, guarantees, risk). 6.09 The study will be undertaken under the responsiblity of a qualified consultant and is expected to include expatriate as well as Moroccan experts (the latter from BNDE, BCP and the Ministry of Commerce and Industry). Draft Terms of Reference have been agreed with BNDE, and are shown in the Attachment to Annex 15. Monitoring of the study will be coordinated by BNDE and the Bank. The foreign cost of the study is estimated at below $200,000, and the study will be completed over a six-month period. BNDE has agreed to mobilize from its own resources, and with BCP's contribution, at least $100,000. If needed, the balance (not to exceed $100,000) will be financed from the pro- posed loan (repayment over 12 years). Consultant selection is in progress; the study report should be available in the spring of 1978. - 16 - VII. PROSPECTS A. The Environment 7.01 The industrial prospects for 1977, the last year of the third Five-Year Plan, and the early years of the 1978-82 Fourth Plan period are favorable, not only because the Government appears to be determined to main- tain a high level of industrial investment, but also because the sizeable investment undertaken in 1975 and 1976 will have an impact on manufacturing and industrial output in the years to come. No details of the next 1978-82 Development Plan are as yet available, nor will they be until the end of 1977. A levelling off in the general level of investments is expected, as the previous high growth rate cannot be maintained due to financial constraints. Nevertheless, it is expected that the Government will continue its efforts to promote development of industry in general and manufacturing in particular and would: (i) maintain incentives to encourage industrial investments, (ii) continue its efforts to develop large-scale basic industries, such as steel, chemicals, and fertilizers, primarily by public investments, and (iii) increase assistance and financing to the small-scale enterprise in order to increase employment opportunities in the manufacturing sector. B. Operations 7.02 Assumptions governing BNDE's Five-Year business and financial fore- casts are detailed in Annex 16. In the absence of firm investment targets in the 1978-82 Plan, but based on a pipeline of about 60 projects requiring DH 1.4 billion in direct term loans, BNDE expects its business as measured by volume of approvals to grow annually at a moderate (current) rate of 8% in 1978-81. For 1977 BNDE projects the same level of activities as in 1976, based largely on the projects remaining to be implemented in the 1973-77 Plan (Annex 17). The above assumptions appear valid based on BNDE's current pipeline of project. 7.03 Total loan approvals would amount to DH 3.4 billion in 1977-80, compared to DH 2.0 billion in 1973-76, a 70% increase; commitments would amount to DH 2.8 billion in 1977-80, representing a 60% increase over the period 1973-76. Equity investment approvals would total DH 55 million in 1977-80 compared to DH 42 million in 1973-76; in real terms this would represent a levelling off in BNDE's equity investments. C. Financial Prospects Resource Requirements 7.04 BNDE's projected resource requirements through 1979, and the finan- cing plan prepared by BNDE through mid-1979, are detailed in Annex 18 and summarized below: 1st half 2nd half Total Period (DH millions) 1977 1978 1979 1979 1977-1979 A. Resource Needs 778 665 358 357 2158 B. Financing Plan Firm: Equity 35 35 - - 70 Cash Generation 39 42 64 - 145 Domestic Bonds 100 100 100 - 300 Eurodollars 450 - - - 450 Spanish Credits - 270 100 - 370 Tentative/Under Discussion: Kuwait Fund - 115 - - 115 Arab Fund - - 135 - 135 Total 624 562 399 357 1585 C. Resource Gap 103 (41) 357 Accumulated Resource Gap 154 257 216 573 573 7.05 BNDE's resource mobilization strategy has been to diversify its sources, and match term loan with appropriate borrowings. In this it has generally been successful, and there is no reason to expect that BNDE will deviate from this strategy in the future. During the last six months BNDE has been aggressively seeking new, diversified resources. As a result, a balanced plan as shown above has been arrived at. A firm resource mobiliza- tion plan covering the second half of 1979 will not be prepared by BNDE until early 1978. The funds of DH 203 million (US$45 million) becoming available under the proposed Bank loan, most of which are expected to be committed by mid-1979, would reduce the resource gap at that time from DH 216 million to DH 13 million; pending preparation of BNDE's resource mobilization plan for the period after mid-1979, the resource gap at the end of 1979 would be DH 370 million. 7.06 According to the BNDE resource mobilization plan through mid-1979, floating rate (Euro-dollar) funds would be limited to one borrowing of DH 450 million in 1977. On the basis of a 9% average cost for new borrowings 1/, excluding Bank and local funds, BNDE's overall profitability would remain adequate even if LIBOR 2/ indexed Euro-dollar funds could go temporarily higher, up to an average of, say, 12% per year. Any long-lasting period of high LIBOR rates would indicate a general world-wide increase in the level of interest rates; such an increase could be expected to be followed by increases in BNDE and other bank lending rates in Morocco. 1/ Actual Euro-dollar cost to BNDE would have been about 7-1/2% in March 1977. 2/ London Inter-Bank Offered Rate. - 18 - Financial Position 7.07 BNDE's projected income statements, cash flow, and balance sheets are shown in Annexes 19, 20 and 21. As shown in Annex 20, BNDE's assets are expected to more than double during 1977-81, mainly on account of the increase in the net equity and loan portfolio which would grow by DH 1.7 billion, an increase of 120%. The projected financial position would be generally good. IBRD debts outstanding would decrease substantially from 25% in 1975 to 10% of total debt outstanding in 1981. Euro-dollar debt would decline from 37% at end 1977 to 7% of total debts outstanding in 1981 (assuming no further Euro- dollar borrowings by BNDE after 1977). The projected term debt/equity ratio would remain below 10:1, and would improve as sizeable reserves (after deducting adequate provisionq for real risks of loss on loans) are built up, primarily through the special reserve for loan risks. The debt service ratio, as indicated in BNDE'6 projections, will be 0.8:1 in 1977, and fluc- tuate between 1.1:1 and 1.5:1 in the period 1978-1981. Interest coverage will range between 1.3 and 1.4 during this period (Annex 19). Profitability Prospects 7.08 BNDE's profitability prospects are expected to remain good, assum- ing an average 9% p.a. coOt for LIBOR index"d Enro-dollar and other foreign funds other than Bank funds, and an 11% p.a. BNDE interest rate on long-term loans. Profits before taxes and allocation to reserves and provisions would quadruple, increasing from DH 23.0 million in 1975 to DH 89 million in 1981. Although BNDE's average interest spread would decrease from 2.5% in 1976 to 2.2% in 1977 owing to the projected rising trend in cost of borrowed funds, the greater volume of business, coupled with relatively low levels of adminis- trative costs (which would be below 0.6% of average assets), would contribute to the increased profitability; from 1978 onwards the interest spread starts a climbing trend from 2.4% to 2.8% as the effect of the 11% interest rate on new loans is felt. Net profits would experience a dip in 1976-78 principally due to relatively higher tax-exempt allocations to the special reserve for loan risks. While profit before taxes and allocations to reserves and provisions grow steadily, from 23.31 of average BNDE equity in 1975 to 28% in 1981, net profits decrease from 6.9% of equity in 1976 to 5.5% in 1978, due in part to the doubling of the share capital that year; from 1979 onwards net profits would grow slowly to reach 10.3% of average equity in 1981. BNDE would have no problem in maintaining an 8% dividend rate after doubling its share capital. The dividend rate could even be increased to 9-10%, provided that the alloca- tion to the special reserve be limited to about one-tenth of interest income. VIII. THE LOAN - OBJECTIVES AND JUSTIFICATION 8.01 The industrial sector of the Moroccan economy has expanded rapidly since the last Bank loan to BNDE was granted, and there has been a continuing shift towards larger project entities, often in the public sector. BNDE's operations have reflected the general upsurge in industrial activity, and BNDE has continued to be the major institution for appraising and financing indus- trial projects, both in the private and in the public sector. The main justifications for the Bank's eighth loan to BNDE are summarized below. - 19 - 8.02 Provision of Resources. Although BNDE has attracted a substantial amount of alternative resources, the expected expansion of BNDE's operations will result in a need for additional long-term funds. The proposed Bank loan would provide 10% of the additional resources required by BNDE during 1977 to mid-1979. The confidence expressed by the Bank by continued lending to BNDE should also facilitate the mobilization of other foreign resources by BNDE. 8.03 Institutional Development. The Bank's assistance, whether through the conditions included in the Loan Agreements, field and subproject supervi- sion, sharing of information, or formal instruction courses, has greatly bene- fited BNDE. Further assistance is requested by BNDE, and is justified in view of the increased levels of industrial investments in the country and the necessity to adjust BNDE's operations and procedures correspondingly. The conditions of the loan would provide the Bank an opportunity to monitor BNDE's appraisal techniques, and to guide BNDE in developing an effective system for encouraging and developing SSI. 8.04 Support for the Industrial Sector. Although the Government's in- vestment program and strategy will not be known in detail until the end of 1977, when the new Five-Year Plan is adopted, it is believed to stress con- tinued emphasis on industrial development. In the meantime a substantial number of industrial projects have already been identified by BNDE, both in the private and public sector. BNDE's assistance in the formulation, evaluation, and financing of such industrial sector projects is of crucial importance. (BNDE has been entrusted by the Government to evaluate and advise on all industrial loans requiring term financing under the provisions of the Industrial Code.) 8.05 Small-Scale Industry. The Government is placing emphasis on the expansion of industrial employment for the urban poor by strengthening its assistance to labor intensive small-scale industries (SSI). Assistance to such SSI, which create employment at relatively low cost, is also in line with the Bank's general policy in respect to the urban poor, who would be the main beneficiaries of the increased employment thus created. As BNDE has expressed interest in assisting in the development of an SSI pilot project, and can provide expertise and organizational strength, an SSI loan component has been included in the eighth loan. IX. RECOMMENDATIONS 9.01 BNDE continues to remain a suitable recipient for Bank loans. A Bank loan of $45 million, as proposed, would provide about 10% of BNDE's resource requirements during 1977-mid-1979. Of the Bank loan, up to $5 million would be allocated to an SSI pilot project. 9.02 The proposed loan should be made on the normal terms and conditions as have been applied to recent loans to development finance companies, includ- ing the commitment charge; the proposed loan would have a flexible amortiza- tion schedule, with subloans not to exceed 15 years, including three years of grace. - 20 - 9.03 To ensure a sound debt/equity structure, the capital of BNDE will be doubled, and the total term debt will not exceed ten times BNDE's equity. The interest rate on long-term loans charged by BNDE to sub-borrowers will be raised from 10% to 11%. BNDE will consult with the Bank on any possible sub- stantial changes in the resource mobilization plan shown in this report. BNDE will maintain an adequate debt service coverage. 9.04 The free limit will be raised to $2 million, with no aggregate free limit. The maximum of any credit granted to a single project by BNDE from the proposed Bank loan will be limited to $4 million, and the total exposure (including commitments) with Bank funds shall not exceed $6 million. BNDE will not normally consider financing of large-scale projects brought to its attention after the engineering contract has been completed, or the construction contract has been signed. BNDE will calculate the economic rate of return, when feasible, on all Bank-financed sub-projects, and for all other projects receiving BNDE loans above DH 5 million. Bank funds will not be used for the purchase of fishing vessels. 9.05 BNDE will execute an SSI pilot scheme, partly in cooperation with a commercial Bank (BCP), and will provide supervisory manpower. BNDE will also supervise and finance a SSI sector study. The staff of BNDE will be expanded to at least 68 professionals, including an addition of three engineers. M O R O C C O BANQUE NATIONALE POUR LE DEVELOPPEMENT ECONOMIQUE BASIC DATA Year of Establishment: 1959 II. Ownership (As of 12/31/76): * ~~~~(DH'OOO) % Moroccan Goverrnent an4 Public Institution / 34,080 48.6 Noroccan Private Institutions 2,033 2.9 Moroccan Individuals 11,968 17.0 Foreign Financial Institutions 16,659 24.0 zPC 7.5 70,000 100.0 III. Resource Position (As of 12/31/76): DR millions Equity and Retained Earnings 128.6 Government Loans 90.0 Bonds 256.7 Other local borrowings 70.8 IBRD Loans 300.5 Other foreign currency borrowings 922.0 1,768.6 Outstanding Investnents 1,435.2 Available for Disbursements 333.4 Undfsbursed Commitments 501.2 Resource Gap at December 31, 1976 (167.8) IV. Bank Lgaus (Status as of December 31, 1976): Loan No. Date Signed Interest Amount Authorized Disbursed Outstanding Rate of for Loan Withdrawal at 12/31/76 (millions of U.S.$) 329-MOR Dec. 21, 1962 5.5% 15.0 15.0 15.0 1.4 447-NOR May 13, 1966 6.0-7.0% 17.5 16.2 16.2 0.8 571-MOR Nov. 14, 1968 7.0% 15.0 11.4 11.4 6.1 660-MOR March 6, 1970 7.0% 15.0 11.5 11.5 1.9 736-MOR Oct. 20, 1971 7.25% 35.0 32.7 32.8 15.9 890-MOR May 14, 1973 7.25% 24.0 24.0 23.0 14.8 1061-MOR Dec. 30 1974 8.0 30.0 30.0 16.6 16.6 1/ CDG holds about 10.4% of the share capital on a temporary basis pending placement of these shares which are to be subscribed by foreign investors. Government ownership would fall back to 38.2% following the placement of these shares. V. IFC Investment Summary (As of September 30, 1976) Equity Date Approved (Cost in US$) No. of Shares No. 56 12/20/62 1,495,774 150,000 Stock Dividends -- -- 26,854 Sales (644,244) (66,213) Held at September 30, 1976 851,530 110,641 US$ DH Average cost per share 7.69 34.6 Par value per share 50.0 Company's Book value per share (9/30/76) 15.48 69.64 Market Price at January 14,1977 14.00 63.00 Total unrealized gain on shares held US$698,145 VI. Level of Operations 1974 1975 1976 (----------- DH million ------------) Approvals 448.0 748.2 704.0 Commitments 371.6 624.4 626.1 Disbursements 125.4 464.7 518.0 VII. Profitability Indicators (X) Profits before tax and provisions to average equity 19.9 23.3 27.2 Net Profits to: Year-end Share capital 12.0 9.5 10.3 Average equity 7.2 8.9 6.9 Dividends paid 8 8 8 VIII. Financial Position Total Debt/Equity ratio 11.2:1 9.8:1 12.3:1 Term Debt/Equity (IBRD agreement) 7.1:1 5.1:1 6.3:1 Special Reserve for loan risks as % of Loan Portfolio 5.0 3.4 3.1 EMENA IDF April 1977 ANNEX 1 M O R O C C O ACTUAL INVESTMENTS IN INDUSTRY AND TRANSPORT (DH million) Private Sector: 1973 1974 1975 1976-Y Mines and Energy 136.24 164.00 263.73 240.60 Petroleum 2.54 3.00 4.88 4.45 Textiles 77.70 93.50 150.40 137.20 Food Processing 151.38 182.16 293.12 267.30 Mechanical Industries 14.30 17.20 27.67 25.24 Chemical Industries 372.56 448.30 721.20 657.85 TOTALS 754.72 908.16 1,461.00 1,332.64 Transport 527.30 634.50 1,020.75 931.08 Growth Rates (Industry) +20.3% 4-60.8% - 8.2% Public Sector Industry2/ 77.0 223.0 465.0 712.0 Total Investment (Industry) 831.72 1,131.16 1,926.0 2,044.64 1/ From provisional data. 2/ Excluding investments by Government owned agencies for which no data are available. Sources: BNDE's Economic Department; IMF (staff preliminary estimates) EMENA IDF April 1977 ANNEX 2 MOROCCO: Structure of Interest Rates (In per cent per year) Prior to Effective Effective July 1, 1974 July 1, 1974 July 1, 1975 Bank of Morocco Basic rediscount rate 3.50 4.50 4.50 Coxmercial paper for exports 3)00-3.50 3.00 3.00 Advances to banks on six-month Treasury bills 3.53 4.04 4.04 Special advances (with penalty) - 12.75 12.75 Medium-term paper 3.625 3.625 4.00 Deposit Money banks Sight deposits 1.50 - - Time deposits 1-24 months 3.75-4.25 1/ f r e e f r e e Savings accounts (under DH 40,000) - 3.00 3.00 Sight deposits by Moroccan working abroad 3.00 3.00 3.00 Rediscountable paper 4.25-6.75 4.25-6.75 5.50-7.50 Nonrediscountable paper 6.00-8.00 6.00-8.00 8.00-10.00 Medium-term credit (rediscountable) 6.20-6.50 6.20-6.50 8.00 Treasury Six-month Treasury bills issued to the public 3.50 4.50 4.50 Treasury bills subscribed by banks (6 months-5 years) 3.50-4.60 4.00-4.60 4.00-6.50 Government bonds (15 years) 6.25 7.50 7.50 Post Office Savings accounts 3.10 3.50-/ 3.502/ Specialized credit institutions CNCA Sight deposits 1.50 1.50 1.50 Crop financing 6.00 6.00 6.00-8.50 Medium-term loans 6.50-8.00 6.50-8.00 7.00-8.50 CIH Five-year bonds 5.70 5.75 5.75 Credit for hotel construction and furnishing 3/ 8.75 8.75 8.75 Housing Construction 4/ 8.75 8.75 10.00 BNDE Certificates of deposits (3-12 months) 4.00-4.75 4.00-4.75 4.00-4.75 Fifteen-year bonds - 7.50 7.50 Medium- and long-term loans 5/ 9.00 9.00 10.00 1/ No regulation over 60 months. 2/ Excluding a fidelity premium of 0.5 per cent. 3/ Excluding a government subsidy of up to 4.25 per cent; in 1976 interest rate raised to 11 per cent, subsidy to up to 6 por cent. Excluding a government subsidy of up to 2.75 per ceint raised to up to 4.00 per cent in 1975 for small housing. 5/ Excluding a government subsidy of 2 per cent. Source: Data provided by the Moroccan authorities. EMENA IDF April 1977 ANNE 3 KOROCCO BdNQ0E NATIONALED P01e1 Lt DeV7ES.SPDDIWT BCOSOHIQUB Sharobolders nd Omnrc.hir Structure (As of Doemeber 31, 1976) Actual 1974 Amount Percent Percent (Dirbhz) A. OROCCAN 1. Goverent and Public lnntiitulos GO.Ver t 23,902,350 Societe NatioDsle d'le,etiuseeent 1,541,200 Credit 1teobilirr et Hotelier 699,000 Coium eceeetoaie den 7trchrs 104,150 Bauqur do M-aoc 1,400 Came. do Depot et do GSution 7,B22,800 Goveeoeet beard mbers 10,000 34,580,90)(0 40.67 30.17 2. Frivate Moroccan Istlteeioee Culsue Iterpref ...itenoli M-rar-ine dee Sotrutre- 313,600 Copepauir d'A..urecee et do Keaseuranc- s "Atlante" 4,100 La PaiY Africaiae 6,150 Lg Pretrid-eot Mareceife 24,600 Societe Marecaite d'Asnsrasuen 11,750 Derirte Karteioe de Depot et de Credit 801,150 h'ltuall Cireitle M-eeni-r d'A..ura c-s 675,750 Omniun Mareteiut d'ltseutisretnt 1935 000 2,032,00 2.00 2.99 3. Iu4lviduaL bm-ec-as 11,968,100 17.09 17.26 Ttlal MIoeeran 48,501,900 68.66 58.41 B. 711588N,TONAL FIP0CE COtPO0ATION 5,260,250 7.51 14.76 C. PrOiRiG Cosrulud Oen t settee Ornque Starecaine pear le Coeeerre et lIcdauatce 785,350 Cspa.gie = .acuino de Credit et do Banqte 862,500 DbDque -arocaifo du Ceen,orce Beteroiore 937,450 Societe Goee-lo Mtarocatie de BOaques 666,400 nritieh Benk ef the Middle East 82,150 DUrio Buncaric otpuno-Marrequi 288,250 Uoles KIheroin de Baaqueo 156,750 Societe Finnncirre et de Perticipetiens 49,800 Credit do Ma-C 509,630 Secoite do BOuque rt do Credit 82,200 Fondo r.ar.c.ic de Placeent 500000 4,920,500 7.03 7.04 2. F'reiuC, Cestrelled lsident 1-ra-ce Ceepusios CeoDpugoi M.r.ca-i- d'A.ueruoeu et dc Reausareeces El Wutani" 235,950 C gmpaoip d'A..arances "L'Ertette" 64,350 30O,300 0.43 0.48 3. FPruiro Fin-ncici Iostittti.ns Caisse Cstr-lc do Ceep-rrtio E-cos-eiqee 574,a50 Ceisso Noti 1nale des Marches de l'tat 205,300 Oooqar Satioonj.o do Perie h40,4UU Credit Ly-isal 308,000 1,3343550 1.90 3.74 Cer- Weetfalocback AG. 02,400 Dreadoer Bnk A4G. 245,650 Deatocbo BSak AG. 246,650 Co=crebank 246.650 821,350 1.17 2.30 Italian 1Setiteto MobiliSre Itali-o 342,750 Sacco NOtieoale del La-ere 342,500 Bauc- Coemeeciele Italiane Holding 341,700 1,026,950 1.46 2.80 UCited States Meoegs G-ceraty 8eteroatiol 021,700 1.17 2.31 Bank of Tokyo Ltd. 687,000 The Loeg Terr Credit cf Japan 6BB0000 1,375,000 1.96 3.86 Eotait K-Eit ISvoeteont Co. SAK 1,312,500 1.87 1.93 Seorceiao DEpertfi-a.s 275,000 0.39 0.77 Saudi Arabia Ceapegoie Ar-be d'Invstisese-ts 1,500,000 2.14 - Other Bznque Arobo et Ictrrnatielo d _nestleuesun e 1,510,00G 2.15 1.54 Onion do Ounq-e Arobee et Peanedanes 1.460,000 2.08 - TOTAL 70,000,000 100% 100% EMNNA IDF April 1977 ANNEX 4 Page 1 BANQUE NATIONALE POUR LE DEVELOPPEMENT ECONOMIQUE BOARD AND EXECUTIVE COMMITTEE President (Chairman of the Board) * Mr. Mustapha Faris Vice-President * Banque du Maroc (Mr. Ahmed Bennani, Governor) Directors Moroccan Government and Semi-Public Agencies * Mr. Lahlou M'Fadel Managing Director Caisse de Depots et de Gestion * Mr. M'Hamed Tazi Mezalek Director Treasury and External Finance Division Ministry of Finance Mr. Abdel Aziz Benjelloun Director General Office du Developpement Industrial * Mr. Abdellatif Moumile Director of Industry Ministry of Industry Mr. Bensalem Guessous Managing Director Societe Nationale d' investissement Mr. El-Habib El-Fihri President Directeur Credit Immobilier et General Hotelier Mr. Mohamed Bijaad Director Plan and Regional Development Moroccan Individuals Mr. M'Hamed Jilali Benani Merchant Mr. Larbi Sakkat Private Textile Manufacturer Institutions resident in Morocco but foreign controlled * Mr. Mohamed Benkirane General Manager Banque Marocaine pour le Commerce et l'Industrie ANNEX 4 Page 2 International Finance Corporation * Mr. Habib Fawzi IFC Representative Foreign Banks Mr. Paul W. Fitzpatrick Vice President Morgan Guarantee Trust Company of New York Dr. Marcello Luri Deputy Director Banca Commerciale Italiana Mr. Urich Orth Deputy Director Dtesdner Bank Mr. Shiro Yamada Director General Bank of Tokyo Paris Mr. A.M. Mohamed Moussa Kuvait Investment Co. SAK Mr. Ives Truffert President Banque Arabe Internationale d'Investissement Mr. Bernard Thiolon Director General Union des Banques Arabes et Francaises Government Commissaire (not a Board Member) ** Mr. Lotfallah Cheggour Chief Service of the Treasury Ministry of Finance * Member of the Executive Committee (established on May 31, 1968) ** Member, without a vote, of the Executive Committee EMENA IDF April 1977 BANQUE NATICNALE POUR LE DEVELOPPEiIENT ECONOMIQUE Organization Chart As of December 31, 1976 BOARDi OF DIRECTORS Pre:dent: Mustapha Faris |. Managing Director Mustapha Faris Deputy Deputy Managing Director Managing Director A. Sefrioui M. Mansouri al, Administrative Finance Deparent ror re Econnic tudies Me roc Follow-Up Dept. { M. Rhoulami Rea-osD~prretDprmn Vacant)&EutInemns A. ImagriVaatABekzzMDeer internal Control & Accounting Division Promotion & Studies Economic & Market Technical Appraisals Project Appraisals Administration (4) (5) (2) Studies ( 7 )(7) (9) Legal Affairs Division Management of Funds External Relations Statistics Division Technical Follow-Up Equity investments (3) (2) (11 (2) (2) (3) Follow-Up Division Management 7 (5) .Professionals 42 Jr. Professionals 11 Clerks 10 NOTL Numben under each Division Indicate numbers of profaisional and junor professional staff ir. er,ch Division Support staff 52 122 ENM IDF April 1977 Worid Bark -9210 MOROCCO - BANQUE NATIONALE POUR LE DEVELOPPEMENT ECONOMIQUE Investment Approvals Under Morocco Investment Codes 1/ (DH Million) 1973 1974 1975 1976 (July) No. of Employment No. of Employment No. of Employment No. of Employment Projects Amounts Creation Projects Amounts Creation Projects Amounts Creation Projects Amounts Creation Sectors Manufacturing 150 976.5 N.A. 259 860.0 11,026 413 1,428.0 16,079 308 467.0 15,915 Mining 2 66.0 - 13 237.0 1,709 6 107.0 967 1 15.0 102 Fishing 6 17.7 - 29 12.3 521 66 104.6 1,548 NA 229.5 NA Shipping 211.9 10 511.9 Tourism 23 96.7 - 20 133.0 750 21 549.6 3,257 12 43.5 1,680 Artisans 2 0.8 - 27 6.0 2,961 14 2.2 1,202 15 6.0 2.173 Total 183 1,157.7 - 348 1,460.2 16,967 530 2,703.3 23,053 336 761.0 19,870 Subsectors MANUFACTURING Electro-Mech. 21 85.0 997 40 83.0 1,594 Chemical-Const. 67 301.0 2,635 138 971.0 5,498 Textile-Leather 77 182.0 4,053 118 189.0 6,157 NA Agro-Food Prod. _ 94 292.0 3,341 117 184.0 2,830 _ Total 150 976.5 N.A. 259 860.0 11,026 413 1,428.0 16,079 308 467.0 15,915 - =. = = -_ _ 1/ Details not available for 1973 and 1976. EMENA IDF April 1977 ANNEX 7 MOROCCO - BANQUE NATIONALE POUR LE DEVELOPPEMENT ECONOMIQUE Analysis of Investments Approved - 1959-1976 (DH '000) 1959-1973 1974 1975 1976 1974-76 No. Amount Ng. Amount No. Amount No. Amount No. Amount Tvpe of Investment EE__Aon Direct long-term loans 149 174,775 45 389,072 49 600,550 68 613,380 162 1,603,002 Direct medium-term loans 282 733,744 13 47,300 16 134,295 17 82,100 46 263,695 rndirect loans 622 747,417 159 181,740 257 293,414 268 374,947 684 850,556 Equitv Investments 54 55,301 9 11,565 9 13,440 10 8,505 28 33,055 Guarantees 9 34.873 - - - - Total 1,116 1,746,110 226 629,677 331 1,041,699 363 1,078,932 920 2,750,308 Total Investment Cost of Proects 226 1,795,375 331 2,372,195 363 2,236,924 920 6,404,494 Term of Direct Loans Up to 3 years 13 7,233 - - 1 1,500 - - 1 1,500 4 to Syears 152 189,190 13 47,300 15 132,795 18 79,050 46 259,145 6 to 8 years 196 339,985 35 98,100 37 126,050 51 223,050 123 447,200 9 to 12 years 38 246,593 7 94,172 6 92,800 15 343,380 28 530,352 Over 12 years 32 125,518 3 196,800 6 381,700 1 50,000 10 628,500 Total 431 908,519 58 436,372 65 734,845 85 695,480 208 1,866,697 Size of Direct Loans Below DH 0.75 million 187 77,613 7 3,550 1 700 - - 8 4,250 DH 0.75 - 5 million 206 405,124 37 82,922 39 77,450 54 159,900 130 320,272 DH 5 - 10 million 25 182,418 7 54,600 11 78,695 15 102,600 33 235,895 Above DH 10 million 13 243,364 7 295,300 14 578,000 16 432,980 37 1,306,280 Total 431 908,519 58 436,372 65 734,845 85 695,480 208 1,866,697 Purpose of Investment New Enterprises 409 760,838 92 359,481 160 408,097 220 592,370 472 1,359,948 Extension 707 985,272 134 270,196 171 633,602 143 486,562 448 1,390,360 Total 1,116 1,746,110 226 629,677 331 1,041,699 363 1,078,932 920 2,750,308 Ownership of Roterprise Financed Majority public 54 435,016 14 322,813 36 665,721 43 520,208 93 1,508,742 Majority private 1,062 1,311.094 212 306,864 295 375,978 320 558.724 827 1,241 566 Total 1,116 1,746,110 226 629,677 331 1,041,699 363 1,078,932 920 2,750,308 Nationality of Recipient Predominantly Moroccan 794 1,089,393 215 585,092 308 1,021,627 353 1,063,011 876 2,669,730 Predominantly Foreign 322 656,717 11 44,585 23 20.072 10 15,921 44 80,578 Total 1,116 1,746,110 226 629,677 331 1,041,699 363 1,078,932 920 2,750,308 Geographical Distribution Casablanca/Mohammedia 422 635,361 75 447,887 144 677,821 179 489,757 398 1,615,465 Rabat 71 144,190 17 22,637 21 16,600 23 74,181 61 113,418 Meknes 63 121,480 9 4,389 16 22,333 8 13,E00 33 40,522 Fes 93 145,284 5 550 28 22,883 15 19,835 48 43,268 Tetouan 33 37,025 4 10,030 4 3,850 2 5,800 10 19,680 Tanger 73 68,464 6 8,920 18 14,646 28 81,264 52 104,830 Eastern Morocco 28 93,671 7 33,610 12 10,071 3 70,000 22 113,681 Tadla 14 98,800 1 50 - - _ 1 50 Marrakech 41 41,499 11 12,668 15 95,861 14 6,073 40 114,562 Agadir 73 71,718 20 33,463 18 17,883 5 9,200 43 60,546 No specific locations 205 288,618 71 55,473 55 159_751 86 309,022 212 524,26 Total 1,116 1,746,110 226 629,677 331 1,041,699 363 1,078,932 920 2,750,308 Sector Power and Mining 31 223,611 2 22,000 6 84,300 6 84,800 14 191,100 Petroleum and Derivatives 26 178,871 2 4,200 1 1,600 2 10,000 5 15,800 Textiles 186 240,869 27 55,315 32 48,157 33 166,590 92 270,062 Food and Beverages 204 357,963 53 89,808 69 93,805 58 121,289 180 303,902 Fishing - - - 42 93,230 42 93,230 Mechanical industry 55 54,330 3 440 8 8,937 21 45,750 32 55,127 Chemical industry 47 91,634 6 121,250 14 230,677 65 68,449 85 420,376 Agriculture 27 13,756 - - 5 4,162 - - 5 4,162 Transportation 62 109,797 18 250,364 28 326,602 27 230,037 73 807,002 Tourism 37 73,005 - 4 3,960 - - 4 3,960 Miscellaneous 441 402,274 115 86.300 164 239,499 1/ 109 2 1/ 388 585,587 Total 1,116 1,746,110 226 629,677 331 1,041,699 363 1,078,932 920 2,750,308 1/ Including DH 113.5 million and DH 87.7 million for cement projects, respectively. EMENA IDF April 1977 MOROCCO - BANQUE NATIONALE POUR LE DEVEIOPPEMENT WCONOK11QUE Loan 890-MOR - Analysis of Projects Financed (DH 'ooo) FOREIGN PROTECTION RATES SALE PROJECT EXCHANGE Nominal Effective BNDE IMPORT ESTIMATE Local Exportation PROJECT SECTOR COST COST BNDE LOANSV/ W ( FINANCING No.of Jobs (%L (%) MOULITEX IV TEXTILES 9,400 6,522 5,000 +21 +11.68 5,000 200 95 5 M. LEASING XII LEASING 7,358 - 3,500 - - - n.a. - - MAFER NARITIME TRANS. 14,800 12,000 7,300 - - 7,300 31 COMANAV III MARITIME TRANS. 37,380 37,250 12,000 - - 12,000 53 SPONTIS TEXTILE 5,767 3,380 3,250 -14 -20 3,250 30 100 MANUFACTURE FES TEXTILE 15,500 8,721 10,000 -12 -24.2 8,721 100 59 41 GAZAFRIC GAS 6,748 3,689 2,500 2,500 43 100 - LUXATRONIC TEXTILE 7,017 3,789 3,000 +60 +30 3,000 70 - _ GOOD YEAR TIRES 85,000 30,930 25,000 2 - 7 25,000 182 100 _ TEXTIS TEXTILE 10,500 5,358 4,000 -17 -23 4,000 625 - _ BLITA III TEXTILE 8,200 6,508 5,500 - 9 -28.6 5,500 100 100 .SMJBC CHfEMCAL 14,600 4,o96 4,000 -38 -16.8 4,000 625 - - N. LEASING XIII LEASING 15,370 10,000 n.a. SMM. DAVUM MECRANICAL 2,550 770 750 +15 +59.4 750 35 100 - DIMATIT I BUILDING MATERUIS 6,276 2,550 2,000 -21- -37 2,000 4h 73 27 INTER COMMERCE TANGEROIS TEXTILE 1,800 1,072 700 +16.6 -18.96 700 26 100 - ICOMA TEXTILE 9,457 5,850 2,000 +40.70 +36.17 2,000 n.a. 90 10 FRUSUMA VII FOOD 1,360 590 800 -10.54 597 4 100 FILTEX III TEXTILE 2,650 2,066 1,300 -22.29 1,300 460 94 6 ORBONOR X TEXTILE 3,40
Groupe de la Banque mondiale · Staff Appraisal Report
Morocco - Eighth Banque Nationale Pour Le Developpement Economique (BNDE) Project
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