Morocco’s microfinance sector is stronger today that it was before the crisis, but still has not reached its full potential, according to Joumana Cobein, IFC Country Manager for the Maghreb region.

IFC, a member of the World Bank Group, has released a new report that examines the crisis that befell Morocco’s microfinance sector from 2009 to 2011 and explores ways the country can shake off years of stagnation in the industry.

The study found the crisis was not as severe as those experienced by other developing countries in the wake of the global financial crisis.

Quick action by regulators helped stave off the collapse of the sector, which had been dogged by lax controls, poor lending practices, and excessive competition.

“Microfinance is a powerful tool supporting sustainable economic growth. By giving Moroccan microfinance companies more flexibility, we can help them extend vital financial services to more low-income families,” said Cobein.

The study also found that while the sector is now on solid footing, several regulations still impede the growth of microfinance in Morocco, long seen as vital for creating jobs and driving growth in the North African country.

The report recommended the country finalize legislation that would allow microfinance institutions to transform from non-governmental institutions into for-profit companies.

That would allow them to raise equity and reach out to more entrepreneurs.

It also recommended that microfinance organizations be able to accept deposits from clients, something they cannot do right now.

That would extend vital financial services to the 40 percent of Moroccans who don’t have traditional bank accounts.

Xavier Reille, IFC’s Financial Institutions Group Advisory Services Manager in Europe, the Middle East, and North Africa, said: “While there was a crisis in Morocco’s microfinance sector, it was nowhere near as severe as the ones that hit other developing countries in 2009 and 2010. “This study shows that Morocco’s microfinance market is stable and primed for growth.”

The report is part of a wider effort by IFC to support the expansion of Morocco’s microfinance industry and promote economic development across the country.

During fiscal year 2014, IFC invested $176m in Morocco and launched several advisory programs, helping to support smaller businesses, promote renewable energy, improve local infrastructure, and create jobs.

This project was made possible with the support of the Canadian Department of Foreign Affairs, Trade, and Development, the Danish International Development Agency, the Japanese Ministry of Finances, Switzerland’s State Secretary for Economic Affairs, and UKaid.