51 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE 40 individuals were involved in its first instance. Also, even though mass media campaigns reach larger audiences, they lose capacity for details in the financial information provided. Fostering inclusion via formalizing the informal Aside from high-level public solutions limited in reach and funding, the financial sector can also be made more inclusive by leveraging the comfort the unbanked have with informal financial mechanisms and systems through two mechanisms. The first involves digital formalization of widely used informal mechanisms like rotating savings and credit associations (ROSCAs), which take inspiration from how ROSCAs were formalized to create the booming microfinance industry. Second, the small retail shops economically critical for Moroccan daily commerce may be formalized to perpetuate inclusion on a large, familiar scale. A key to both these informal financial systems to bolster inclusion is leveraging Morocco’s extensive yet underutilized mobile financial infrastructure. The European Bank for Reconstruction and Development (2021) reports that Morocco’s financial sector “lacks strong diversification in instruments and products.” That market narrowness provides fintechs and other firms the opportunity to diversify the mix of available financial services by offering digital products rooted in these informal systems. The UN Development Programme also states that while the innovation environment for Moroccan fintech has improved, with an escalating number of players and increased access to financing, fintech services are almost entirely limited to payments services (Priollaud & Saudi, 2023). Presenting financial products to the unbanked that appeal to their comfort and familiarity with informal systems has higher potential for enabling individuals to see how formal services can fit into their livelihoods and facilitate meaningful usage of these services. Digital ROSCA platforms The formalization of informal financial mechanisms contributing to the expansion of financial inclusion is best exemplified by the rise of the modern microfinance industry. The lending model at the center of many microfinance institutions is the ROSCA, an informal financial mechanism that has thrived in variations across the world for thousands of years (BNP Paribas, 2017; Cull & Moruch, 2017; Krieger, n.d.). ROSCAs, known as Daret in Morocco, are traditional savings clubs for saving money for education or life cycle events, which can be readily digitized (World Savings and Retail Banking Institute, 2020). Microfinance institutions have exploded in global presence since pioneers of the modern service, Accion founder Joseph Blatchford and Bangladeshi economist Muhammad Yunus, began to formalize the solidarity group lending model for microloans in the 1970s (Krieger, n.d.). These strides have led to 140 million borrowers served by microfinance institutions globally in 2018 (Stephens and Khemar, 2018). Although microfinance relies on “consistent, on-the-ground programs” for loan officers to oversee payments and educate participants, digital ROSCA platforms have potential to leverage the low-cost, low-travel benefits associated with mobile money for the unbanked (Krieger, n.d.). Digital ROSCA platforms address all three phenomena discussed that hinder the usage of formal financial services in Morocco. Informality and cash reliance are addressed because the ROSCA is supported by a digital platform managed by a fintech or financial institution. Outside of digital possibilities, Abadou and Goldemberg (2018) also designed a formal ROSCA model to be adopted by banks that allows those with free accounts to make payments and withdrawals via prepaid bank cards, while allowing the ROSCA organizer to collect and manage payments. Formality is further enhanced through the potential for credit histories based on ROSCA payments, making participants more bankable for other financial products (Murray, 2023). Financial literacy gaps may also be narrowed because the Moroccan population has a strong familiarity with ROSCA mechanisms. The 2014 financial capability survey indicated that 89% of Moroccans are familiar with informal savings groups, and in 2021, the Findex reported that of those who saved money, 36% used informal savings clubs and a lesser 21% saved at formal financial institutions (World Bank, 2021). Conveying how ROSCA products fit into the livelihoods of the unbanked is more straightforward than for standard bank accounts, which are generally unfamiliar and less used in this population. Although offered by private financial institutions often negatively perceived by the unbanked in Morocco, formal ROSCA products may improve perceptions due the communal trust in the informal versions. Abadou and Goldemberg (2018) explain that a primary reason Moroccans join ROSCAs is to assist family members and friends in need, combined with high personal trust in the organizer of the group. Formal institutions giving trusted groups the platform to host their own ROSCAs and enabling the organizer to maintain control over the money may instill con-
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