These are tough times for business. This year, insolvencies could affect 16,400 businesses, a figure that would increase by 15% compared to 2023. Inforisk’s forecast is based on several factors.
«Firstly, the expected growth rate in 2024 corresponds to the annual average over the last 10 years. Secondly, the macroeconomic outlook for this year remains mixed: economic growth is expected to be around 3%, and will depend largely on the level of rainfall», says Amine Diouri, Director of Research & Communication. If this forecast comes true, it would translate into a new record.
In 2023, business failures reached 14,245 compared with 12,397 in 2022, an increase of 15% and 69% compared with 2019. Difficult economic conditions, high inflation, falling consumer spending, cash-flow problems...: VSEs, SMEs and large companies have been dealing with a high-risk cocktail.
It’s not enough to analyze business failures through the prism of economic conditions alone. Failure can also be attributed to endogenous factors, not just exogenous ones. In addition to cash flow problems, our businesses - particularly small and mediumsized ones - suffer from a lack of internal organization, incompetent management, inexperienced managers and even a lack of skills. Vulnerable companies are those that have not yet been in business for more than 5 years. In fact, Inforisk found that the median age of a failing business is 4.5 years!
These insolvencies are mainly concentrated among very small businesses: 98.7%, compared with 1.26% for SMEs and 0.06% for large companies. Inforisk notes a 150% rise in insolvencies among SMEs that are legal entities. And, as in the case of payment terms, companies with sales of over 10 million dirhams (USD 1 million) are also beginning to be affected.
For a long time, payment deadlines were the cause of the demise of a whole range of small and mediumsized businesses. Law 69-21 should gradually put things right. Business failures have mainly affected companies operating in the trade sector. Next in line are real estate and construction and public works. The year 2023 was characterized by the tightening of credit conditions, the deterioration in household purchasing power, the rise in construction costs and the difficulties encountered by property developers in accessing financing.
Khadija MASMOUDI
