Morocco - Fifth Banque Nationale Pour Le Developpement Economique (BNDE) Project

R ESTR ICTE D Report No. DB-74a This report was prepored for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report moy not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF BANQUE NATIONALE POUR LE DEVELOPPEMENT ECONOMIQUE MOROCCO May 5, 1971 Development Finance Coompanies Department  CUPRENCY EQUIVALENTS Currency = Dirham (DH) DH 5.06 US$ 1 DH 1 = US$ 0.19b DH 1,000,000 US$ 198,000  MOROCCO APPRAISAL OF BANQUE NATIONALE POUR LE DEVELOPPEENT ECONOMIQUE Table of Contents Page Paragraph B! SIC DATA i-ii SUMARY iii-iv I. INTRODUCTION 1 i IL. BNDE's ROLE IN THE ECONOMY 1 7 2 21 Private Industrial Investment 1 2 BNDE as a Source of Financing 2 -3 3- 7 BNDE as a Mobilizer of Resources 3 -5 8 -13 Project Promotion 5 1h Project Appraisal 5 -6 15 -17 Investment Supervision 6 18 -19 Characteristics of BNDE's Investments 6 - 7 20 - 21 III. INSTITUTIONAL ASPECTS 8 -12 22 - 40 Shareholders and Board 8 22 Management and Staff 8 - 9 23 - 27 Relations with Government and Business Community 9 28 - 29 Operational Policies 9 -10 30 Evaluation of Loan and Equity Portfolio 10 -11 31 - 36 Profitability and Financial Position 11 -12 37 - h0 . IV. BNDE's OUTLOOK 13 -17 1 - 56 Prospects for Industrial Investment in Morocco 13 h1 - 42 BNDE's Forecast of Operations and Finance Requirements 15 -16 43 - 49 Interest Rate and Government Subsidy 15 -16 50 - 52 Projected Profitability and Financial Position 16 -17 53 - 56 V. CONCLUSIONS AND RECOMMEIDATIONS 18 -19 57 - 65 Conclusions 18 -19 57 - 63 Recommendations 19 This report is based on the findings of a mission consisting of Messrs. Pollan and Hidalgo which visited Morocco in September 1970, and on further contacts with BNDE during 1971.  ANEXES 1. Private Investment in Manufacturing - Approvals by the Investment Commission 2. Financing of Investments in All Sectors 3. Long-term Resources as of December 31, 1970 4. Comparison of Projects Authorized under Loans 571 and 660-MOR 5. Analysis of Investments Approved 6. Shareholders and Ownership Structure 7. Board of Directors as of December 31, 1970 8. Organization Chart 9. Statement of Policy 10. Equity Portfolio as of December 31, 1970 11. Profit and Loss Statements, 1966-1970 12. Summary Balance Sheets, 1966-1970 13. Forecast of Operations, 1971-1975 14. Projected Statements of Income, 1971-1975 15. Projected Sources and Uses of Funds, 1971-1975 16. Projected Balance Sheets, 1971-1975 17. Estimated Disbursement Schedule for the Proposed Bank Loan e IBRD/DFC April 19, 1971  BANQUE NATIONALE POUR LE DEVELOPPE[NT ECONONIQUE BASIC DATA Year of Establishment: 1959 % of Ownership (September 30, 1970) No. of Shares Total (Par value DH 50) Government, direct and indirect 172,927 43.23 Moroccan private institutions 59,185 14,80 Moroccan individuals 1,582 0.39 Total I4oroccan 233,694 58.42 Foreign financial institutions 67,519 16.88 IFC 98O737 24.70 Total Foreign 166,306 41.58 Total Capital 400,000 100.00 Bank Group Financing a. IFC Invcs-t:;-;nr In Bi.5 Sre Caitea1 Investment Date Mumber of Cost per Total Investment No. Approved Shares Share at Cost (US$) U$ 56-MOR Dec. 20, 1962 150,000 10 1,495,774 Share Sales 51,213 10 501,645 Held by IFC 98,787 10 994,129 b. IBRD Loans (as of March 31. 1971, in US$000) Rate of Loan No. Date Signed Interest Net Amount Authorized Disbursed 329-MOR Dec. 21, 1962 Variable 7,580 7,580 7,580 447-MOR May 13, 1966 Variable 10,582 10,582 10,582 571-MOR Nov. 14, 1968 Variable 15,000 14,932 9,409 660-MOR March 6, 1970 7% 15,000 14,941 5,329  Operations (DH millions) Direct Loans 1967 1968 1969 1970 Net approvals 50.2 64.2 65.5 164.7 Commitments 39.6 38.4 63.5 65.0 Disbursements 47.4 32.3 42.7 61.1 EQuity Investments Approvals 2.1 - 0.1 3.0 Disbursements 2.4 2.4 0.7 1.6 Rediscounts Approved 70.6 39.2 5.4 96.7 Financial Performance (a) Total assets 195.9 214.7 226.7 260.9 of which Loan Portfolio (162.6) (172.6) (188.2) (218.9) Equity Portfolio ( 16.1) ( 18.0) ( 18.5) ( 19.3) Total Equity 39.0 30.8 32.8 36.5 Long-Term Debt 135.5 162.6 172.4 201.1 of which Bank Loans ( 89.2) (107.0) (119.6) (151.3) Long-Term Debt/Equity 3.5 5.2 5.2 5.5 Long-Term Debt/Equity as defined in Bank Loan Agreement 1.5 2.0 2.7 2.8 (b) Earnings before interest, tax and provisions as 0 of average total assets 5.0 5.2 5.6 5.8 Profit before tax as % of average equity 8.5 11.0 13.1 14.0 Profit after tax as /