Date of Submission to Coordination Unit:
A.
November 6, 2013
GENERAL INFORMATION
1. Activity Name
Promoting financial inclusion via mobile financial services in the Southern and Eastern Mediterranean countries activities in Morocco
2. Requestor Information
Name: Mr. Mohamed Boussaid
Title: Minister of Economy and Finance
Organization and Address: Ministry of Economy and Finance, Mohammed V Avenue, Chellah, Rabat, Morocco
Telephone : 05 37 76 06 61
Email: [email protected]
3. Recipient Entity
Name: M. Abdellatif JOUAHRI
Title: Gouverneur
Organization and Address: Bank Al-Maghrib
Telephone: +212 (0) 537 81 81 81
Email:
4. ISASC Representative
Name: Timothy WINTERS
Title: Policy Officer
Organization and Address: European Investment Bank, 98 boulevard Konrad Adenauer, L-2950 Luxembourg
Telephone: +352 4379 88331
Email: [email protected]
5. Type of Execution (check the applicable box)
√
Type
Endorsements
Attach written endorsement
Country-Execution
from designated ISA
√ Joint Country/ISAAttach written endorsement
from designated ISA
Execution
ISA-Execution for Country
Attach written endorsement
from designated ISA
Justification
Due to its regional dimension and approach,
which includes two other countries in addition
to Morocco, the need for an ISA to execute in
coordination with the national authorities is
essential. EIB will carry out procurement and
financial management. It will also help to
coordinate between the three targeted
countries to ensure sharing of progress and
expertise. The country will be responsible for
local coordination and monitoring and
evaluation, through the project management
team within the Central Bank. The country
also directly executes the workshop
component. To ensure country ownership of
all components of the project, the ISA
execution will be closely coordinated with the
country activities.
ISA-Execution for
Parliaments
Attach written endorsements
from designated Ministry and
ISA
6. Geographic Focus
Individual country (name of country): Morocco
√
Regional or multiple countries (list countries):
This request focuses on Morocco.
This request is part of an approach which has a regional scope in the Middle East and North Africa (MENA)
region; as such the Transition Fund will also receive requests to finance related activities in Jordan and
Egypt.
The regional aspect of this project is found particularly in the potential for information sharing and common
capacity building activities across the region. Although the countries are all at different stages in developing
responses to the challenges of promoting and regulating the provision of mobile financial services, the
needs-based approach taken in each country proposal provides ample scope for regional sharing of results
and best practices in different areas of the mobile finance field. More specifically, the studies to be carried
out under some of the proposals are likely to be of use for other countries, and could form the basis for
dissemination and collaboration events (workshops, conferences) as well as ad hoc sharing. It is expected
that one aspect of this regional sharing would be implemented in the context of an umbrella project for which
a Union for the Mediterranean label is under consideration, and which would provide a framework for future
initiatives to promote other aspects of mobile financial services in the region.
7. Amount Requested (USD)
Amount Requested for direct Project Activities: (Morocco activities)
(of which Amount Requested for direct ISA-Executed Project Activities):
Amount Requested for ISA Indirect Costs1:
Total Amount Requested:
8. Expected Project Start, Closing and Final Disbursement Dates
Start Date: 1st January 2014
Closing
30th September
End Disbursement
Date:
2014
Date:
9. Pillar(s) to which Activity Responds
Pillar
Primary Secondary
(One
(All that
only)
apply)
Investing in Sustainable
Growth. This could include such
Enhancing
Economic
Governance. This could include
topics as innovation and technology
policy, enhancing the business
environment (including for small and
medium-sized enterprises as well as
for local and foreign investment
promotion),
competition
policy,
private
sector
development
areas such as transparency, anticorruption and accountability policies,
asset recovery, public financial
management and oversight, public
sector audit and evaluation, integrity,
procurement reform, regulatory quality
and
administrative
simplification,
1
√
Pillar
635,000 USD
600,000 USD
42,000 USD
677,000 USD
31st January 2015
Primary
(One
only)
Secondary
(All that
apply)
√
ISA indirect costs are for grant preparation, administration, management (implementation support/supervision) including staff time, travel,
consultant costs, etc.
strategies,
access
to
finance,
addressing urban congestion and
energy intensity.
investor and consumer protection,
access to economic data and
information,
management
of
environmental and social impacts,
capacity building for local government
and decentralization, support for the
Open
Government
Partnership,
creation of new and innovative
government agencies related to new
transitional reforms, reform of public
service delivery in the social and
infrastructure sectors, and sound
banking systems.
Inclusive Development and
Job Creation. This could include
Competitiveness
and
Integration. This could include
support of policies for integrating
lagging regions, skills and labor
market policies, increasing youth
employability, enhancing female labor
force participation, integrating people
with disabilities, vocational training,
pension reform, improving job
conditions and regulations, financial
inclusion, promoting equitable fiscal
policies and social safety net reform.
such topics as logistics, behind-theborder regulatory convergence, trade
strategy and negotiations, planning
and
facilitation
of
cross-border
infrastructure, and promoting and
facilitating
infrastructure
projects,
particularly in the areas of urban
infrastructure,
transport,
trade
facilitation
and
private
sector
development.
√
√
B. STRATEGIC CONTEXT
10. Country and Sector Issues
Country Overview
Morocco has been on a steady path of economic recovery since the stagnation of the 1990s, with sound
macroeconomic management and sustained growth in non-agricultural sectors. The economy proved relatively
resilient in the face of the recent global economic slowdown. However, in 2012, the fragility of the Moroccan
economy was exposed under the pressures from sluggish external demand, high prices of imported commodities,
and lower agricultural output, combined with significant domestic economic rigidities. The situation of public
finances also worsened in 2011 and 2012 as the government increased spending and borrowing both for social
programs and subsidies following the Arab Spring and also to mitigate the impact of the global crisis.
Consequently, the budget deficit widened to 7.6 percent of GDP in 2012, compared to an already high deficit of
6.9 percent of GDP in 2011. This higher overall investment has improved the employment rate, with the number
of jobless shrinking to 9 percent in 2012.
In the current political and economic environment, inclusive growth and job creation by the private sector
dominate the policy debates. With the government increasingly financially constrained, there are high
expectations that SMEs and micro-enterprises can contribute more via private sector job creation in Morocco. The
World Bank’s 2011 financial sector flagship report showed that access to finance is a key constraint in areas and
income levels underserved by conventional banks, such as the informal sector.
Mobile financial services in support of financial inclusion
BAM is highly aware of the importance of solving the problem of the lack of access to financial services in
Morocco. The relationship between development in the finance sector and a country’s economic development has
been empirically proven in a number of studies that show a high correlation and causality between increases in
the rate of financial deepening and increases in GDP per capita. Poor access to finance may be a factor
contributing to the slow growth of per capita incomes and the limited supply of employment and housing for
Morocco’s young and growing populations.
The ‘Mobile financial services in Mediterranean Partner Countries’ study published by the EIB2 in 2012 shows that
mobile financial services – in particular, business models based on prepaid electronic payments systems and
cellular technology – can help improve access to financial services by addressing the questions of high costs of
financial services, the scarce banking density, as well as the inappropriate risk methodologies and the inadequate
regulatory framework of the existing system. In 2011, only 39% of Morocco’s population older than 15 had an
account at a formal financial institution, while penetration of mobile telephone services stood at 114% (figures
from World Bank and Morocco’s telecom regulator, ANRT). This combination of high mobile penetration and low
access to financial services means that there is a clear opportunity for transformational mobile financial services
in Morocco.
Both the Central Bank and the Moroccan Ministry of the Economy and Finance have identified financial inclusion
as one of their primary policy goals, setting the objective of access to banking at 66% of the population of
Morocco by 2014. In order to achieve this ambitious financial inclusion goal, the authorities have made significant
efforts both to adapt the regulatory environment and to promote banking initiatives.
Physical access to financial services in Morocco is low not only compared to developed nations but also in
regional terms. To solve the problem of low physical access to financial services in Morocco, banking law enables
2
See http://www.eib.org/attachments/country/femip_study_mobile_financial_services_en.pdf
banks to outsource financial services through partnerships with commercial institutions (Intermediaire en
Opérations de Banques (IOB)). However, agent regulation hampers the use of mobile network operators’ (MNOs)
networks as agents, since agents need to be either an S.A. or S.A.R.L. and have a direct contract with the bank,
whereas not all individual stores in the network have the appropriate status and even those which do are faced
with the burden of signing two contracts, one with the operator and one with the bank. Meanwhile, the very dense
existing network of remittances services could be used for the deployment of mobile financial services.
In terms of credit information infrastructure, the Central Bank of Morocco is pioneering an effective information
sharing model. Morocco’s system, if the competition issue is resolved by promoting new competitors to offer these
services, would allow existing and potential actors in mobile financial services to access relevant information.
Information, coming from both financial and non-financial operators, should include both banked and non-banked
customers. This is an important aspect of financial inclusion, as by including all categories of consumer and types
of operator, individuals have a greater chance of developing a credit history to be used for future financial
activities.
Some of the country's leading banks, including Banque Centrale Populaire (BCP), Attijariwafa Bank and Al Barid
Bank, have already launched initiatives and service offerings using prepaid platforms to offer low cost financial
service offerings targeted to low income customers. BAM has also authorized a new player, leading payment
services provider M2M, to create an acceptance network as an alternative to the existing bank-owned network run
by CMI in order to increase competition and card usage among the unbanked.
Remittances services are a key component of the service offering that leading retail banks have designed for low
income customers and these can also benefit from innovation via mobile services. Remittances received in
Morocco are very important in macroeconomic terms due to their balance of payments impact, economic impact
for low income population and funding importance for the Moroccan Banking system. Remittances operators have
the electronic platform and the network for cash in/cash out purposes, both of which are key elements for mobile
financial services operators. All three of the most important players in the remittances market in Morocco are
banks, with approximately 30% market share each, each having a large network serving remittances receivers:
BCP (including BCP’s network of almost 1000 branches and, since January 2012, also FBPMC’s network of ~300
branches); AttijariWafa (mostly through Wafa Cash with 1550 outlets); and Al Barid Bank (through La Poste
Network with 2000 branches).
Overall, in Morocco, it seems that bank-centric business models for deployment of mobile financial services are
more likely to succeed than operator led business models. This is because banks and the post office (Al Barid
Bank) are seen as the most legitimate actors to offer mobile banking services, while mobile operators have less
credibility. On the other hand, in the context of the changes in the banking law regarding e-money issuance
(assistance was given by the EIB, the WB and AFI to develop this new law based on international best practices),
microfinance organizations could become relevant players in the mobile financial services market in Morocco by
partnering with operators holding e-money licenses in order to enhance their value proposition and credibility.
Indeed, Morocco is the regional leader in terms of the development of its micro-credit industry. However, due to
the crisis that microcredit associations faced in 2008, they are currently focused on increasing efficiency and
decreasing delinquency ratios. The use of mobile financial payments could assist them in this dual aim by
improving the efficiency of disbursements and reimbursements of micro-loans, while decreasing delinquency
ratios due to the enhanced credit controls which are inherent to the use of electronic means of payment (such as
credit and behavioral scorings).
11. Alignment with Transition Fund Objective
The objective of the Transition Fund as provided in the Operations Manual is, “to improve the lives of citizens in
transition countries, and to support the transformation currently underway in several countries in the region (the
“Transition Countries”) by providing grants for technical cooperation to strengthen governance and public
institutions, and foster sustainable and inclusive economic growth by advancing country-led policy and
institutional reforms.” Access to quality financial services - including means of payments, savings, credit,
insurance and money transfer systems - is crucial for low-income households to smooth consumption, manage
risks, invest productively, and respond to financial shocks. Morocco has made important strides in promoting
access to finance. Supporting the Central Bank of Morocco (BAM) in its effort to expand financial inclusion by
developing regulations based on best practices to allow new payment service providers to offer innovative retail
payment services such as mobile money is clearly in line with this overall objective of the Transition Fund (as well
as specifically with the pillar on improved governance).
In addition to this alignment with the general objective of the Transition Fund, this project is aligned with each of
its pillars. First, it is aligned with investing in sustainable growth since innovative retail payment solutions such as
mobile money directly relate to topics such as innovation and technology policy, enhancing the business
environment, competition policy, private sector development strategies, and in particular access to finance.
Second, the promotion of innovative retail payment solutions such as mobile money promotes inclusive
development and job creation by increasing financial inclusion. Third, this project enhances economic governance
by improving public financial management and the oversight capacity of the Central Bank, and creating a sound
and reinforced banking system. Fourth and last, the promotion of innovative retail payment solutions such as
mobile money enhances competitiveness and integration since it facilitates trade and private sector development
for the informal economy by supporting the provision of reliable payment and financial services.
12. Alignment with Country’s National Strategy
BAM estimates that, in April 2012, 52% of the population of Morocco had access to one or more financial
services, an increase of almost 18% since 2010, mostly due to the inclusion of the accounts of the newly created
postal bank (Al Barid Bank) formerly La Poste Financial Services Unit. (Figures from the World Bank give a lower
starting point of 39% of the population being having access to banking services in 2011). The Central Bank and
the Ministry of Finance have identified financial inclusion as one of their policy priorities, setting the objective of
providing access to banking services to 66% of the population of Morocco by 2014. Indeed, the importance of
financial inclusion for Morocco’s financial regulator is highlighted by the CGAP in its “Financial Access 2010
Middle East and North Africa Factsheet”, which states that BAM is one of the financial regulators in the region
with a stronger mandate to promote financial inclusion, having already produced a financial inclusion strategy
document. In terms of consumer protection, the CGAP states that BAM is the financial regulator that implements
the strongest enforcement mechanisms in the MENA region in terms of fair treatment, disclosure and recourse
mechanisms. BAM wishes to maintain and further improve on this record via the present project.
In order to achieve the objectives set in their financial inclusion strategy document (see the BAM’s ‘Plan
Stratégique 2013-2015’)3, the financial authorities of Morocco have already made significant efforts to adapt both
the regulatory environment and promotion of banking initiatives. Examples of these efforts are: the creation of Al
Barid Bank (formerly La Poste Services Financiers), which now has a particular mission to address low income
3
http://www.bkam.ma/wps/wcm/connect/resources/file/eb7c6c4f37bf1c9/PS20132015.pdf?MOD=AJPERES&attachment=true
customers; the change in the regulatory context of the microfinance sector, currently before Parliament; and the
current banking law changes allowing institutions providing payment services to issue e-money (expected to be
approved by mid-2014). Additionally, BAM has made substantial efforts to raise awareness within the banking
sector of the need to promote service offers specially dedicated to the unbanked segment.
As part of its actions in favor of mobile payments, BAM has already drafted amendments to Loi N°34-03 Relative
aux Etablissements de Crédit et Organismes Assimilés. The new regulations will allow nonbanks licensed as
payment service providers to collect funds from the public in exchange for electronic value. This is possible
because the regulations expressly exclude from the definition of ‘deposits’ funds received in exchange for
electronic value. Payment Service Provider (PSP) regulation requires PSPs to demonstrate (i) adequate financial,
human and technical resources and (ii) adequate experience and honesty of management and funders. BAM is
considering whether to require that PSPs engage only in payment services – thereby necessitating in many cases
the creation of a dedicated subsidiary. BAM wishes to continue to build on these actions by working on further
changes to the regulatory framework, which is the primary objective of this operation.
C. PROJECT DESCRIPTION
13. Project Objective
The overall objective of the project is to promote the development of innovative retail payment solutions such as
mobile financial services which will support expanded access to finance across Morocco.
This objective will be achieved through a comprehensive package of technical assistance and capacity building
aimed at supporting the new regulatory framework of payment service providers that BAM is implementing and
that was described in the previous section.
Specifically, the current project aims at helping the Central Bank of Morocco develop regulations that will allow
new payment service providers to implement alternative business models based on mobile financial
services/mobile money in order to promote financial inclusion and private sector growth. When the project is
completed, BAM will have robust and sustainable regulations, which are ready to be implemented, and also a
useful reference guide of international best practice, which could also be shared with other countries in this
regional initiative. BAM has explained that there are currently service providers which wish to develop mobile
financial service offerings but which are reticent to do so until the regulatory framework is defined. This fact
highlights the urgent need for this project and also demonstrates the direct impact which this TA operation can
have on the provision of mobile financial services in Morocco.
14. Project Components
Despite the efforts of BAM as outlined above, Morocco continues to face an important challenge in terms of
access to finance that jeopardizes the country’s economic development and equality. The specific assistance
requested by BAM includes, first, an international review of the regulatory framework for mobile financial services
in countries considered to be examples of best practices; and second, based on this international review,
assistance with producing the required regulations to be implemented for the promotion of electronic payments.
Component 1 – Capacity building for BAM via an international review of the regulatory framework for
mobile financial services in a selection of countries considered relevant and/or international best
practices (USD 400,000 – ISA executed)
In order to ensure that the regulations it defines are sufficiently strong to ensure safe functioning of mobile
financial services within the wider financial system whilst also being sufficiently flexible not to stifle the
development of innovative new products, the BAM wishes to learn from the experiences of other countries. This
is the reason for carrying out an extensive study into best practices in a selection of other countries known to
have interesting experiences in implementing mobile financial services and associated legislation.
The preliminary suggested list of countries, to be confirmed in collaboration with the selected experts once the
project is approved, is:




in Latin America: 1) Mexico and 2) Brazil;
in Africa: 3) Kenya and 4) Nigeria
in Asia: 5) the Philippines; and
in Europe, 6) Belgium, 7) France, 8) Portugal and 9) the United Kingdom.
This component will include technical assistance via an international benchmarking study and a program of
capacity building for the improvement of the regulatory and supervisory powers of BAM, and will cover at least the
following activities:
1.1 Benchmarking of international regulators in relation to:
o Registration of providers of payment services;
o The reporting and financial monitoring of providers of payment services;
o Accounting and prudential rules.
This subcomponent will include a detailed review of the retail payments systems and electronic money
issuance rules in each country. In particular each country study will include at least the following:
1.1.1 Review of the regulation of payment systems
 Regulatory definition of a “payment”
 Regulatory definition of a “payment service provider” and “money transferors”
o Status of money transferors (such as Western Union and MoneyGram) and whether or not they
are considered as payment service providers
o Types of entities that may provide money transfer services
o Types of entities that are expressly prohibited from providing payment services
o Status of government institutions (such as the postal service) permitted to provide money transfer
services
 Regulation of payment services businesses specifically regulated as such
o Body responsible for regulation/supervision of payment service businesses
o Are payment service providers subject to registration, licensing and/or supervision? If so, are
there categories of payment service providers subject to different levels of licensing, registration
or supervision?
o Requirements (in particular, prudential requirements such as minimum capital and liquidity) to
operate as a payment service provider
o Maximum time allowed before the beneficiary must receive the payment
 Review of national policy concerning the establishment of retail payment systems
o Differences between policy regarding wholesale payments and retail payments
 Entities responsible for the supervision of retail payments systems, especially the role of the central bank
 Procedures for obtaining the license or authorization for financial and non-financial institutions aiming to
provide payment services

1.1.2








Empowerment of financial regulators to:
o Require and/or enforce the interoperability of retail payments
o Require and/or enforce antitrust legislation
o Intervene on the pricing of payment services
o Act on issues related to consumer protection
Regulation of e-money/prepaid schemes
Detailed review of issuance of e-money/prepaid mechanisms
Analysis of the regulation, if any, that governs e-money
o Regulatory requirements
o Agency responsible for policy making and enforcement
o Supervision of e-money schemes
o Risks and policy issues associated with these schemes
Regulatory definition of e-money and e-money issuers
o Types of institutions that can issue e-money
o Main issuers of e-money
o Can nonbanks issue e-money? If so, under what conditions?
Is e-money issuance subject to regulation as a banking activity?
Specific regulation on prepaid cards or other prepaid schemes that are not subject to regulation as a
banking activity
o Review of such schemes
o Balance limits or other limitations on this type of service
o Other requirements such as reporting, registering or prudential requirements (e.g. minimum
capital, liquidity) for e-money issuance
Policy regarding nonbanks issuing e-money and taking low-value deposits
Illegally functioning e-money schemes in operation
Responses/policies for regulating loss of funds by consumers as a result of a prepaid/e-money scheme
(legal or illegal schemes)
1.2 Review of technical supervision of providers of payment services including best practices in
managing fraud and security standards.
This subcomponent will include a detailed review per country of electronic finance/e-commerce security
standards, data management/privacy regulation and how regulators deal with mobile money specific
risks. In particular, the study of each country will include at least the following review:
1.2.1
Electronic finance/commerce security standards
o Regulation that governs e-commerce and e-security (including e-signatures) and regulation
requirements
o Role of agency responsible for policymaking and enforcement
o Controls for ensuring adequate integrity, security and confidentiality of electronic signatures
o Conditions under which electronic signatures can have binding legal effect in lieu of physical
signatures
1.2.2 Data management/privacy regulation:
o
Regulation, if any, that governs rights to the sharing, use and storage of financial information
regarding consumers (collectively “data privacy regulation”) by banks, mobile network operators
and other commercial organizations
o
o
Institution responsible for policymaking and enforcement
Effect that data privacy regulation has on the ability of financial service providers or mobile
telephone operators to transfer information relating to their clients to domestic and/or foreign third
parties.
1.2.3 Dealing with mobile money potential frauds whether they are originated via transactions, channel or
internally, including but not limited to:
o
o
o
o
o
o
o
o
o
o
Use of phone calls or SMS to gather personal details such as account numbers, PINs or personal
identification details
Customers fraudulently persuaded to send funds
Payroll fraud
Customer requests to reverse transactions that were in fact successful
Sending fake SMS to make customers believe a transaction was successful, often accompanied
by a reversal request
Agents splitting cash-in transactions in order to earn multiple commissions (applies only to tiered
commission structure)
False transactions: Agents transferring customer funds to personal account
Registration Fraud: Creation of accounts for false, invalid or duplicated customers for the purpose
of obtaining extra registration commissions
Internal fraud: Employees colluding for unfair personal financial gain
Identity theft: Employees accessing and exploiting customer information without authorization.
1.3 Best practices of international regulators in relation to the regulation of the network of agents
 Type of institutions that can appoint/use agents
 Type of institutions that can serve as agents (retailers, financial institutions, post office, individuals, etc.)
a. requirements (such as lack of criminal record, etc.)
b. is any entity or type of entity expressly prohibited from acting as a financial services agent?
 Services which may be carried out by agents, for example:
a. accept or disburse cash
b. transfer funds electronically
c. make payments to utilities or third parties
d. conduct Know Your Customer/CDD procedures
e. is there any financial service they are expressly prohibited from providing?
 Agency/outsourcing relationship requirements and prior authorizations from regulatory bodies
a. authorization process
b. how is this process different for nonbanks appointing agents?
 Operational requirements (such as equipment specifications, transactional limits, security measures) that
the regulation and the institutions require of agents to perform any given service
a. does the regulation require transactions by agents to be settled within a specified timeframe?
b. other limitations/conditions (such as accounting, auditing, security standards) imposed on agents
 Limitations/conditions imposed on banks and nonbanks in the appointment of agents
 Inspection of agents, including what body and what is the inspection process, if any?
 Legal liability of the bank/nonbank to the customer who uses agents. What if the agent acts outside the
scope of the agreement with the bank/nonbank?
 Legal liability of agents to the customer
 Data privacy and bank secrecy regulation applicable to agents
 Transparency regulation applicable to agents

Price transparency: Are agents required to post or otherwise disclose information (such as fee structure,
banking ombudsperson telephone number or the bank’s customer service telephone number)?
 Are agents required to disclose their agent status to bank customers? If so, how?
 Evaluation of the impact of current agent regulation to expand access to financial services
 Evaluation of limitations/conditions imposed by the regulation on the use by banks of smaller independent
distributors as agents
 Number of entities wishing to appoint agents to use or provide financial services but not allowed
 Number of entities wishing to act as agents but not allowed
1.4 Solutions adopted by regulators with regard to the implementation of payment switches.
 How many and what type (public or private) of switches are in operation; if multiple switches exist, how
are payments divided between them
 How do countries ensure broad and equal access to payment switching for all types of payment service
providers (banks, non-banks, etc.)
 How is interoperability ensured
 What authorization mechanisms are required for different types of switch; which authority provides this
authorization and oversight
Obtaining sufficient, high-quality data and other types of information is at the heart of this review exercise. A wide
range of information sources should be used, including the information available in the broader payment systems
community and also other sources. It will be crucial that the experts selected to carry out this study should be able
to access information from all appropriate sources, including within the central banks of the selected countries.
The support of the EIB will be important for this.
A carefully designed strategy for the communication and dissemination of the Diagnosis Report should be
developed to provide useful feedback to the various stakeholders, including but not limited to the Central Bank.
Furthermore, it is hoped that, once completed, this international benchmarking exercise could be shared by
Morocco with other countries in the region in order to further support the development of mobile payments
services in these other countries. One potential beneficiary of such sharing could be Tunisia, as this information
would be a natural development of the country’s proposed mobile financial services program. Part of this
dissemination would be the workshop outlined in Component 3, below.
This component will be ISA-executed in close coordination with the country.
Component 2: Accompaniment for the BAM in drafting new regulations for the provision of electronic
retail payments (USD 220,000 – joint ISA and country executed)
The benchmarking exercise of Component 1 should be designed so as to enable a clear understanding of the
issues and areas of improvements required for achieving the stated public policy goals. In Component 2 of the
exercise, BAM requests an accompaniment for their own experts in implementing the findings of Component 1
through the preparation of the relevant regulations.
This accompaniment phase would begin with a presentation of the results of Component 1, highlighting how the
necessary steps required for implementing retail payments reforms have been successfully achieved in the
countries benchmarked and outlining the key aspects necessary for BAM to produce regulations which meet the
following three core goals with respect to retail payment system development:



Affordability and ease of access to payment instruments and services.
Availability of an efficient infrastructure to process electronic payment instruments.
Availability of a socially optimal mix of payment instruments.
The regulations suggested in this component should also be coherent with the guidelines for developing a
coherent retail payments strategy presented by the World Bank in 2012.
During the period while BAM will be drafting the regulations, the technical assistance would be available to
provide support and guidance. After initial drafting, the technical assistance would review the proposed
regulations to ensure that the relevant international benchmarks had been taken into consideration and that the
final product was suitable for the Moroccan situation, providing a sufficient framework without unduly stifling
creativity and innovation in the market.
This component will be ISA-executed in close coordination with the country.
Component 3: Knowledge sharing workshop (USD 35,000, country executed)
In support of the regional dimension of this program, each country will organize a workshop to share experience
and feedback from the activities it has carried out under the program. This is valuable because each country has
requested assistance with different aspects of their mobile financial services and financial inclusion programs. By
sharing this knowledge among the central banks and financial sectors of the three countries of this program, and
potentially with other interested parties and countries, the impact of the program will be heightened. In the case of
the study for BAM, the broad scope of the international study could be of particular interest to other countries.
This component will be executed by the country.
Component 4: Project Management, Coordination, Monitoring and Evaluation (USD 40,000 – countryexecuted)
BAM will house a Project Management Team for activities associated with project coordination, including
interfacing with the consultant team and implementing a comprehensive monitoring and evaluation (M&E) system.
The Project Management Team will be located at the Central Bank of Morocco.
This component will be country-executed in close coordination with the ISA
15. Key Indicators Linked to Objectives
The indicators directly linked to this TA operation are the ‘intermediate results’ while the ones linked to the PDO
are long term indicators which aim to track payments systems reform in order to measure the transformational
impact of the proposed project in Morocco.
There will be four intermediate results indicators:
 Intermediate Result One: Report detailing international review of the regulatory framework for mobile
financial services in countries considered to be best practices; to be completed six months after
commencement of the operations.
 Intermediate Result Two: Regulations to accompany the new legislation should be ready and agreed by
both BAM and the Ministry of the Economy and Finance. The consultant will also submit a report on the
assistance offered in this component to the EIB.
 Intermediate Result Three: A workshop to share the results of the study will have been organized and a
report provided to the EIB.
 Intermediate Result Four: A report detailing the functioning of the project management team will be
shared with the EIB.
Indicators linked to the PDO:
The drafting of new regulations based on international best practice is expected to have a direct impact on the
provision of mobile financial services, and hence on financial inclusion, by responding to the stated needs of
industry players for a clear regulatory framework under which to develop new services. These indicators aim to
track mobile financial services promotion and in general retail payments system reform. The progress made
needs to be assessed periodically against the vision and objectives established earlier on. The monitoring and
evaluation framework considers metrics such as those presented here to assess progress on retail payments and
mobile financial services development. The performance of the project will be assessed against the following
indicators that will also serve as project milestones.





Access metrics: This would include metrics like number of accounts per 1000 adults, number of credit and
debit cards per capita, proportion of Internet banking and mobile banking customers. This set of metrics
helps in assessing the penetration of payment services.
Per capita cashless transactions: This is the number of cashless transactions both inter-institution and
intra-institution over a year in relation to the population of the country.
Infrastructure metrics: This would include metrics like agents, ATMs and POS terminals per 1000
inhabitants. To get a more accurate assessment, metrics for specific geographic areas could also be
considered.
Transactions per acceptance infrastructure: This is the number of transactions per ATM, POS, agent,
mobile or any other acceptance infrastructure over a period of time. This serves to measure the level of
interoperability and usage of infrastructure.
Cost of using service: For example, the fees for deposit and withdrawal of a representative amount at a
representative frequency across types of institutions, channels and accounts or the cost (for the sender
and for the receiver) of making a domestic remittance between parties maintaining accounts in two
different institutions using the available payment mechanisms and channels.
D. IMPLEMENTATION
16. Partnership Arrangements (if applicable)
The Central Bank of Morocco (BAM) will jointly implement the project with the European Investment Bank (EIB).
Components 1 and 2 will be EIB executed, while Components 3 and 4 are country executed. Within BAM both the
‘Direction des Opérations Monétaires et des changes’ and the ‘Direction de la Supervision Bancaire’ will be fully
involved. Within the EIB, both the Economics department and the Policy and Business Development unit will be
involved. The Ministry of the Economy and Finance should be invited to contribute to the drafting of the terms of
reference for the study.
Stakeholders including industry players should be involved from the early stages. The project (especially
component II) will therefore be augmented by the participation of a broad based ad-hoc local advisory committee
comprising the Ministry of Economy and Finance, the Telecommunications Regulator (ANRT), and
representatives of the financial sector, payment service providers, the microfinance sector, remittances operators,
mobile operators and potentially other key stakeholders in order to provide input to the project throughout its
lifetime. This committee will be created prior to the commencement of operations, under the leadership of BAM.
17. Coordination with Country-led Mechanism/Donor Implemented Activities
The project will be implemented in coordination with complementary projects to take advantage of synergies
between different donor-funded activities. Consultations with a number of donors active in mobile financial
services and retail payments infrastructure have demonstrated that this project has strong potential
complementarities with ongoing and planned activities. The EU Commission, KFW, CPSS, IFC, CGAP, GSMA
MMU, World Bank, FOMIN (IADB) and AFI have all been analyzing mobile money initiatives in the region and
elsewhere. The fact that the Central Bank has been closely involved in creating this request for assistance means
that this proposal has been designed to fill specific gaps in the regulatory framework, rather than duplicating ongoing work.
In the case of Morocco, coordination with KFW funded assistance commissioned by the Microfinance Refinancing
Fund JAIDA to analyze the feasibility of mobile money in Morocco will allow BAM to learn more about the
operations and the risks of implementing branchless banking and mobile financial services. The links between the
Transition Fund-sponsored project on Microfinance, led by the World Bank, will also be investigated to ensure that
potential linkages are explored.The Local Capital Markets Needs Assessment, which takes place in the
framework of the Deauville partnership under the lead of EBRD and AMF (with the participation of the EIB) is also
of relevance. The idea is to identify shortcomings in the functioning of local capital markets in the Deauville
Partnership countries and to come up with measures to be implemented by governments to reach improvements
as well as to identify possible actions to be taken by IFIs and to coordinate possible IFI involvement.
Overall, the EIB will act as a facilitator to ensure that the implementation team is able to coordinate with relevant
on-going programs and initiatives led by other IFIs. In addition, the Moroccan Ministry of Finance, which has
already been consulted during the creation of this proposal, will be requested to perform this function to ensure
that synergies are sought with other country-led activities which the Ministry deems to be of relevance.
On a regional level, the involvement of the Union for the Mediterranean via the UfM label will be sought in order to
promote regional partnerships and the sharing of best practice among the countries participating in this program.
18. Institutional and Implementation Arrangements
The project will be executed under the joint responsibility of the EIB and BAM. Specifically, the EIB will procure
the services of consultants for the implementation of Components 1 and 2. The BAM will be responsible for the
implementation of Components 3 and 4. The EIB exercises oversight functions including approval of the different
sections of the studies, in consultation with BAM.
Project Team: Component 1 will be implemented by a team of international consultants, selected by and
reporting to the EIB; Component 2 will be carried out by members of this team of international consultants
supporting BAM’s in-house team.
Ad-hoc Advisory Committee: An ad-hoc advisory committee comprising representatives from the Ministry of
Economy and Finance, the telecom regulator (ANRT), the financial sector, payment service providers, the
microfinance sector, remittances operators, mobile operators and potentially other key stakeholders will meet at
least twice to provide guidance to the project throughout its lifetime.
Coordination Activities: The EIB will coordinate with other IFIs throughout the implementation of the project as
appropriate. Steps will be taken to identify synergies with other projects and to leverage linkages between them.
19. Monitoring and Evaluation of Results
The results framework for the project is centered around the PDO and specifies PDO level and intermediate
indicators which will be monitored to evaluate project performance towards the objectives (see M&E framework
below). Primary responsibility for results monitoring will be given to the Central Bank of Morocco (BAM), which will
monitor progress both during and after implementation and will present an M&E report to the EIB on an annual
basis, including after having completed the project. The EIB will be responsible for the monitoring of intermediate
indicators.
E. PROJECT BUDGETING AND FINANCING
20. Project Financing (including ISA Direct Costs 4)
4
ISA direct costs are those costs related to the ISA’s direct provision of technical assistance within the project.
Cost by Component
Transition
Fund
(USD)
Component 1: Capacity building for BAM via an
international review of the regulatory framework for
mobile financial services in a selection of countries
considered relevant and/or international best
practices (ISA-executed)
400,000
Component 2: Accompaniment for the BAM in
drafting new regulations for the provision of electronic
retail payments (ISA-executed)
200,000
Component 3: Feedback workshop (TC-executed)
Component 4: Project Management, Coordination,
Monitoring and Evaluation (TC-executed)
Total Project Cost
5
Other CoFinancing
(USD)
635,000
Total
(USD)
400,000
20,000
220,000
40,000
35,000
40,000
60,000
695,000
35,000
21. Budget Breakdown of Indirect Costs Requested (USD)
Description
For grant preparation, administration and implementation
support:
Staff time and travel
Total Indirect Costs
Country
CoFinancing
(USD)5
Amount (USD)
42,000
42,000
Costs related to the provision of BAM staff will be the in kind contribution of BAM and as a result do not require financing
F. Results Framework and Monitoring
Project Development Objective (PDO): This project’s objective is to promote access to finance through the promotion of mobile financial services.
This objective will be achieved through a comprehensive package of capacity building and technical assistance aimed at supporting the new
regulatory framework of payment service providers that BAM is implementing.
Cumulative Target Values**
PDO Level Results
Indicators*
Unit of
Measure
Baselin
e
Indicator One: Access
metrics
Number
31/12/
2013
Indicator Two:
Infrastructure metrics
Number
Indicator Three:
Transactions per
acceptance
infrastructure
Indicator Four: Cost
reduction to maintain
specific payment
product accounts by
institution type
Data
Source/
Methodolo
gy
Reporting
to BAM
Responsibili
ty for Data
Collection
YR 2
YR3
YR 4
YR5
Frequen
cy
5%
10%
15%
20%
25%
Annual
31/12/
2013
3%
6%
9%
12%
15%
Annual
Reporting
to BAM
BAM
Number
31/12/
2013
5%
10%
15%
20%
25%
Annual
Reporting
to BAM
BAM
Number
31/12/
2013
0%
5%
10%
15%
20%
Annual
Reporting
to BAM
BAM
YR 1
BAM
Description
(indicator
definition
etc.)
Number of
active
accounts per
1000 adults
Agents,
ATMs and
POS
terminals per
1000
inhabitants
Number of
transactions
per ATM,
POS, agent,
mobile or any
other
acceptance
infrastructure
over a period
of time
Cost for the
consumer to
maintain
specific
payment
product
accounts
under a given
use scenario
INTERMEDIATE RESULTS
Intermediate Result (Component One):
Intermediate Result
indicator One: Capacity
building for BAM based on
an international review of
the regulatory framework
for mobile financial services
in countries considered to
be best practices
Report
n/a
1
n/a
n/a
n/a
n/a
Once, six
months
after
project
start
Reporting
to the EIB
EIB, BAM
Report
detailing
international
review of the
regulatory
framework for
mobile
financial
services in
countries
considered to
be best
practices; to
be completed
six months
after
commencem
ent of the
operations.
n/a
1
n/a
n/a
n/a
n/a
Once, at
project
completio
n
Progress
report to
the EIB
EIB, BAM
The
consultant
will submit a
report on the
assistance
offered in this
component to
the EIB.
1
n/a
n/a
n/a
n/a
Once, at
project
completio
Intermediate Result (Component Two):
Intermediate Result
indicator Two: Regulations
to accompany the new
legislation should be ready
and agreed by both BAM
and the Ministry of the
Economy and Finance.
Report
Intermediate Result (Component Three):
Intermediate Result
indicator Three: Workshop
for information sharing will
Report
n/a
A workshop
to share the
results of the
be completed
n
study will
have been
organized
and a report
provided to
the EIB.
Twice,
once
halfway
through
project
impleme
ntation
and once
at
completio
n
A report
detailing the
activites of
the CBJ in
managing
and
implementing
the project
will be shared
with the EIB.
Intermediate Result (Component Four):
Intermediate Result
indicator Four: Project
management team will
have been operating for the
project
Report
n/a
2
n/a
n/a
n/a
n/a