The Morning – $ 1.1 Billion Released for Moroccan Importers in 2018

About 64% of African imports are paid in advance. The granting of a payment period of 30 days by foreign suppliers would release $ 33.5 billion for African companies, including $ 1.1 billion for Morocco, or 1% of its GDP, said Euler Hermes in a new study.

What if foreign suppliers gave African companies a 30-day turnaround time rather than asking them to pay in cash or in advance? This would free up $ 33.5 billion in additional working capital requirements (WCR) for Continental companies in 2018, according to Euler Hermes. For Moroccan companies, the freed-up WCR would be $ 1.1 billion, or 1% of the country's GDP. "A surplus that could for example be used to increase productivity," says the world leader in credit insurance, in a new study published July 31. According to Ludovic Subran, chief economist of Euler Hermes, 64% of African imports are paid in advance.
For the credit insurer, the WCR reflects the need for financing generated by the operation of a company that results from shift in cash flow between customer payment, storage cost and vendor settlement. An increase in the WCR means less cash available for the company to finance new product development, geographic expansion, external growth or debt reduction. In its latest study on the average customer payment time (DSO) in the world, published last May, Euler Hermes estimated the WCR of Moroccan companies to 57 days of turnover, against 70 days on average to the scale of the African continent.

Overall, all African countries have an interest in seeing import payment periods lengthen, particularly Algeria (a gain of 4.9 billion dollars in BFR), Egypt (4 , 6 billion), Nigeria (3 billion), Angola (2.6 billion) and Libya (2.3 billion). Morocco is in the top 10 of the potential beneficiary countries, especially with South Africa (a reduction in BFR estimated at $ 1.6 billion).

The medium-term issue remains important. For the coming years, Euler Hermes forecasts average annual growth of African imports of 8%. "If a 30-day payment period were granted to African companies on their imports, the additional BFR generated would then be 45 billion dollars in 2020. The parallel development of commercial financing, a key factor of trust between economic agents, is essential. for the African continent to seize this opportunity, "says the credit insurer. According to Stéphane Colliac, an economist in charge of Africa at Euler Hermes, while in Morocco large companies have an average payment term of 84 days, 30% of transactions involving small businesses are still paid in cash.

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