Profile of Moroccan Borrowers: Who is in Debt, How Much, and at What Cost?

In 2024, the average debt-to-income ratio for Moroccan individuals was 34%, a slight decrease from 35% in 2023, yet still above the historical average of 31%. This indicates that, on average, one-third of borrowers' net monthly income is consumed by loan repayments. While this average may seem reasonable at first glance, it conceals significant heterogeneity, particularly regarding income levels, ages, and professions. This is where the "real cost" of debt becomes apparent. Analysis of the debt-to-income ratio reveals that the lower the income, the heavier the repayment burden. Borrowers earning: - Less than 4,000 dirhams/month face an average debt ratio of 35%, - Between 4,000 and 6,000 dirhams: 37%, - Between 6,000 and 10,000 dirhams: 35%, - While those earning above 10,000 dirhams limit their burden to 31%. In other words, modest households incur debt at a higher percentage of their income, which can diminish their ability to cope with unexpected expenses or save. Nearly one-third of borrowers exceed the critical threshold of 40%. The report also highlights a specific category of borrowers whose debt burden exceeds 40% of their income. They represent 32% of cases in 2024, a slight decrease from 35% in 2023 but significantly above the 2015-2022 average of 27%. These households allocate almost half of their net income or more to loan repayments, placing them in a financially vulnerable position. Among them: - 38% have a debt ratio between 40% and 50% of their income, - 24% between 50% and 60%, - 15% between 60% and 70%, - and 23% exceed 70%, which is generally considered a critical level of over-indebtedness. Public employees, seniors, and low-income individuals are the most exposed. Public employees are the most represented among heavily indebted borrowers, with an average debt ratio of 62% in this group, compared to 59% for retirees, 58% for professionals, and 55% for employees. Low-income households (earning less than 4,000 dirhams) reach an average debt ratio of 63% when exceeding the 40% threshold, compared to 57% to 59% for other income brackets. This means these households repay, on average, two-thirds of their income each month, a particularly heavy burden that could become unsustainable in the event of rising interest rates or declining income. In terms of age, individuals over 50 are the most constrained, with an average debt ratio of 61%, while those under 30, who borrow less frequently, limit their burden to an average of 55%. The cost of debt for Moroccan households is not only measured in percentage terms but also in residual capacity: what remains after monthly payments are made? For an increasing share of borrowers, particularly lower middle classes, public employees, and retirees, budgetary flexibility is dangerously shrinking. Notably, despite the overall decrease in the average rate, 41% of the amounts borrowed in 2024 were by households exceeding the 40% threshold, concentrating default risks on a narrow but exposed segment. The typical profile of a Moroccan borrower in 2024 is that of a public employee or worker aged 30 to 40 years, earning over 10,000 dirhams, and exhibiting a debt ratio of around 31% to 34%. For this group, the cost of debt remains manageable. However, for nearly one-third of borrowers, the cost is heavy or even alarming: up to 70% of their income is absorbed by debt servicing. This level of exposure underscores the importance of stringent regulation of consumer credit and better financial education to prevent worsening over-indebtedness situations.