49 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE A World Bank Findex 2021 survey revealed that over 40% of Moroccan workers received wages strictly in cash and 74% of utility payments were in cash. Storing cash behind walls or under floor tiles is a common household saving habit (Ababou & Goldemberg, 2018). Aside from the inherent risks of keeping piles of cash, Moroccans avoiding taxes and regulations through untraceable cash transactions hinders their taking advantage of interest and risk insurance that come with formal banking. The concept of the underbanked illustrates that high cash usage is prevalent even in formal account holders. The ways that Moroccans manage their money informally reflect familial and communal connections. Rather than relying on savings or emergency funds to meet unforeseen expenses, Moroccans frequently borrow from family. The 2021 Findex revealed that of the 57% of respondents who borrowed money in 2021, less than 10% did so through a formal financial institution and over 80% borrowed from family or friends (World Bank, 2021). Savings and borrowing clubs are more-organized systems of informal money management dependent on communal trust of members of the groups. In 2014, a World Bank financial capability survey in Morocco observed that 90% of those surveyed were familiar with bank products, and 89% also knew of the products offered by savings and credit self-help groups (Ruiz Ortega et al., 2014). Of those in the 2021 Findex who reported saving money, 36% used informal savings clubs, while only 21% took advantage of savings services at formal financial institutions (World Bank, 2021). Low levels of financial literacy A second central barrier that hinders usage of formal financial institutions in Morocco’s population, despite the increase in accessible services, is lack of financial literacy. There is a prevailing sense that it is still taking time for Moroccans to shift from familiar informal habits to new systems and tools. For example, evidence from the 2021 Greenback Initiative, a program initiated by BAM and the World Bank to reduce costs of remittance payments, shows knowledge gaps about banking services persist. Remittances in Morocco have a high capacity to be financially formalized; in-bound remittances accounted for 6.5% of Morocco’s GDP in 2020, and one in five Moroccans received or sent domestic remittances in 2017. Of international remittances, 97% were cashbased, over-the-counter transactions via payment institutions, including Wafacash, Cash Plus, and Tasshilat, which are more expensive than bank account or mobile wallet transactions. For example, a remittance sent from France via an account-backed payment card has a 2% fee versus a cash-based transfer, which costs 8% or more. Most respondents had multiple financial service providers in walkable proximity yet preferred remittance handling through payment institutions rather than banks or mobile wallets. Even those who have bank accounts prefer cashbased remittance services. The survey revealed that individuals with bank accounts were typically not sure of the features of their accounts, including the associated services, fees, and even type of account (De Vaan & Delort, 2021). Data from the International Telecommunication Union show that financial usage gaps in Morocco extend financial literacy to low digital literacy rates. The union reported that just 36% of Moroccans held basic digital skills in 2021, contributing to the explanation of low mobile money uptake event with investments in and regulatory support of digital financial infrastructure (Soudi, 2021). The substantial fraction of Moroccans who maintain accounts solely for deposits and withdrawals, thereby missing their fuller potential, for example, lower fees for remittances, raises questions about the effectiveness of how banks market and cater services to the unbanked. In 2021, a National Financial Inclusion Strategy working group concerned with the barriers and ways private sector banks interact with underserved populations simulated the customer experience at 158 institutions around Casablanca, Marrakech, Tangier, and Fez. This investigation revealed that while receptionist services were generally positive and of high quality, the bank branches were vague and not transparent about pricing, service types, and fees (BAM & MEF, 2021). Perceptions of private sector services The third usage-inhibiting phenomenon, closely linked to low financial literacy in Morocco, is the negative public perception of formal financial institutions. The unbanked perceive the services these institutions provide to be irrelevant, not meeting their needs, or unaligned with cultural or societal norms, attitudes that have been slow to adjust. Over 25% of 2021 Findex respondents attributed their lack of account ownership to having no need for the services, reflecting a common failure to recognize how formal financial services might support their livelihoods. Other reported barriers were services considered too expensive, despite cheap options, such as mobile money; payment accounts with balance ceilings rather than floors; and more traditional services being available from large financial institutions subsidized for underserved groups (World Bank, 2021).
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