Crowdfunding : Implementation Details and Future Prospects

After the implementation of Law 15-18 related to collaborative financing, the Ministry of Finance has now defined the operational guidelines for specialized companies in this sector. 

In February 2021, the much-anticipated Law 15-18 on collaborative financing was unanimously approved by Parliament. According to the Ministry of Finance, this legal framework aims to bolster financial inclusion for young entrepreneurs and is expected to help mobilize new funding sources for very small, small, and medium-sized enterprises, as well as for innovative projects led by young people. The goal is also to enable potential funders to actively participate in the country’s development projects through a simple, secure, and transparent financing mechanism.

Despite the law being in force, many aspects still need clarification in future regulatory texts, particularly regarding the conditions for practicing this type of financing and issues related to « equity crowdfunding. » Eric Asmar, CEO of Happy Smala, and Salaheddine Moutacharif, co-founder of In-LabAfrica, emphasized these points in an interview with « L’Opinion. »

In this context, the Minister of Economy and Finance, Nadia Fettah Alaoui, has further detailed the operational guidelines through three orders concerning collaborative financing companies and angel investor networks. According to these orders, Collaborative Financing Companies (CFCs) must ensure principles of fairness, transparency, integrity, and client interest priority are upheld. The application for authorization must include the ancillary activities the company intends to undertake.

Additionally, the order emphasizes the necessity to inform clients about these ancillary activities, referencing them in the management system of the collaborative financing platform and in any contracts with clients. Companies engaged in multiple activities must clearly distinguish the revenues generated from these ancillary activities from those generated by their primary activity. For angel investors, specific requirements have been established to ensure the proper functioning of potential financing mechanisms.

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Like many activities enabled by technological advancements but slow to be legally regulated, several crowdfunding campaigns have been experimented with in Morocco, often through foreign platforms or Moroccan platforms based abroad. The potential of crowdfunding extends beyond simple donation-based funding, encompassing loan-based and equity-based participatory financing as well.

From 2019 to 2021, approximately 3.7 million dirhams were raised by national projects through collaborative financing platforms, according to the Moroccan Crowdfunding Barometer. This involved 171 projects funded on 13 platforms from France, the United States, Morocco, and the Middle East. The maximum amount raised per campaign reached 317,867 dirhams, with the highest number of contributors per campaign being 1,198.

Reviewing the various amendments to Law 15-18 and recent orders, it is evident that significant efforts have been made to streamline procedures governing crowdfunding practices in Morocco. Besides the creation and regulation of collaborative financing platforms, the law outlines specific rules for each of the three types of collaborative financing, obligations of the CFCs, including project verification, transfer security, contributor protection, and public information. It also sets limits on the amounts to be raised per project and per contributor for different financing forms.

In the sector of associations and startups, the implementation of this new law is highly anticipated, especially given the current economic crisis, which heightens the need for alternative financing solutions like crowdfunding. To date, Morocco is considered one of the leading countries in Africa and the MENA region to establish a legal framework regulating crowdfunding activities.