Currency: cash continues to rise, at the expense of mobile and electronic payments

Nothing seems to be stopping the increase in the amount of cash circulating in the Moroccan economy. In the first two months of this year, fiat currency circulation increased by 10.2% compared to the corresponding period in 2023, to 394.82 billion dirhams, according to the latest figures released by Bank Al Maghrib (BAM). .

A development concerning the Central Bank and the players of the payments ecosystem. “Cash worries us. It is increasing from year to year. When it was growing at a rate of 6 to 7% over the long term, we thought that was acceptable, especially considering population growth. But when it started moving at a rate of 11-11.50%, we say it's too muchAbdellatif Jouahri, wali of BAM, commented during a press conference following the quarterly meeting of the central bank's board on March 19.

Cash accounts for almost 40% of GDP

Currency circulation accounts for nearly 40% of the country's GDP, a level that is perhaps the highest in the world, he estimates, noting that “even Egypt, where cash circulation is ubiquitous, does not reach such a level, being limited to a ratio of around 18 to 20%.».

By mechanical effect, this dominance of cash in current transactions is hindering the development of electronic means of payment in Morocco, as Lotfi Sekkat, president and CEO of CIH Bank, acknowledged during the presentation of the bank's results on 23 February. “We must all recognize this. Not a big hit. The tool was not adopted as much as we had hoped,” he responded to a question about mobile payments, asking for help from the government, especially through the digitization of its direct assistance transfer.

Incentives without results

Awareness of the problems created by the mass of cash in circulation is not recent, but the measures taken to address them, especially by encouraging mobile or electronic payments, have not produced the expected results.

This applies to the 25% reduction applied to the taxable base corresponding to the turnover achieved through mobile payment by persons with professional income determined according to the simplified net result (RNS) or the flat rate regime. This incentive, which was introduced with the financial law of 2020, was practically ineffective, nor were the various awareness campaigns aimed at spreading financial culture among traders.

Observers and actors largely attribute this failure to the burden of the informal sector on the Moroccan economy, but also to a lack of trust in new technologies, reflected in fears about business security and privacy.

Jouahri vows to go 'all the way'

Nothing deterred the central bank governor, who said he was determined to “let's go all the way“. Therefore, he asked his teams to look further into the matter and knock on all the doors to understand as well as possible the factors that explain this phenomenon.

Abdellatif Jouahri also took advantage of his media outlet to appeal again to the state to impose electronic payment on the transfer of its immediate aid. “If a country like India, with a population of over 1.3 billion, has done it, why can't we?“, he insisted, admitting that an effort was made for the first immediate aid disbursed in December 2023.

The cash is worth more than 10 billion dirhams

The stakes are high. In addition to saving time, mobile or electronic payment makes it possible to reduce transaction costs, both for users and for the national economy. Including in particular the costs corresponding to the manufacture of coins and banknotes, the design, research and development of security features, as well as logistics and distribution, this cost is estimated to be BAM, at more than 10 billion dirhams per year, or about 0 .8% of GDP. We understand even more the desire of the head of the central bank to reduce, as much as possible and as quickly as possible, the circulation of cash in the economy. All that remains is to find a way to achieve it…

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