Promoting accessible rural agribusiness on sustainable terms and in the context of global markets, CAM is cultivating a virtuous circle

CAM is enabling farming communities to implement long-term financial strategies.

arek Sijilmassi, the President of Crédit Agricole du Maroc (CAM), has long faced a paradox of public service. His institution’s forerunner, the Crédit du Maroc, was founded with a mission to promote rural development. To that end, it possessed a large network of branches that divvied out credit to smallholder farmers. That was before the reality check of the 1980s.

“In the 1980s, Morocco went through five consecutive droughts and the whole system collapsed. The customers could not honor their debts anymore,” says Mr. Sijilmassi. As a result, CAM began to diversify its loan portfolio and started lending to other sectors with which it had little experience. The institution kept losing money until Mr. Sijilmassi engineered a bail-out four years ago. He hired qualified staff and returned to the bank’s core sector, while keeping it open to other profitable industries. What could be done to help farmers? Was giving grants more efficient than soft loans?

The answer was to create a virtuous circle out of the bank’s fundamentals. Mr. Sijilmassi’s mission is now to promote agribusiness on sustainable terms and within the context of globalization. Ultimately, the bank is supposed to make a profit. This financial symmetry has relieved CAM of its paradox by realigning its core sector with existing market demand.

Balancing the money flows can be very creative, according to the president. He points at sectors in Morocco with great potential, such as construction, as leverage to extend financial credit to less glamorous farming projects. “In the world of globalization, agribusiness is one of Morocco’s truly added-value industries,” he says.

CAM will eventually branch into two businesses: retail banking and trade finance for agribusiness. But in the meantime, total deposits have gone from 10 billion dirhams ($1.24 billion) in 2003, to 40 billion ($5 billion) this year. CAM now has the third-largest banking network in Morocco, opening 50 new branches per year. Mr. Sijilmassi is a stickler for detail and has adopted strict prudential standards from the central bank regulator. CAM also adheres to Basel II guidelines and corollary standards such as IFRS and IAS. Mr. Sijilmassi says he applies the same financial principles to himself as he does to his customers.

TAREK SIJILMASSI President of Crédit Agricole du Maroc

“In financial terms, we’ve emerged from an overdrawn situation to an extremely positive one. We’ve created about 7 billion dirhams ($873 million) of wealth in the last four to five years,” he says. CAM has instituted management controls and data systems that help maximize profits. It no longer extends credit without a profit criteria attached to it. The new motto is that CAM does in fact have a public mission—but it only extends the funds if the spread is profitable for the bank. After all, CAM is now freely floated and its shareholders have a right to dividends.

Slowly but surely, CAM is working as a mentality changer for Moroccan agriculture. Smallholder farmers are learning how private banks operate, including their net results and check mechanisms such as transparency. According to Mr. Sijilmassi, one of the best things to come out of the whole restructuring was the long-term strategies that farming communities are beginning to implement. Approximately 48 percent of the recipients of loans in the agricultural sector are women. The men may be at work tilling fields, but it is the women who deal with the budget. This financial education has empowered many to improve their social status.

Financial literacy can be compared to the electrification of remote Berber villages years ago, Mr. Sijilmassi argues. Once a village installed public lighting, the economic activity soared. “When the village was electrified, the first thing we noticed was that villagers electrified their well so it didn’t depend on diesel oil. Each time this happened, we had to open a new window for microfinance,” he remarks. The impact on development in Morocco has never been as clear.