Morocco, Tunisia set to allow direct currency exchange

2009-06-07

Tunisia and Morocco are moving forward with plans to ease currency exchanges, while the Union of Maghreb Banks is considering a region-wide credit card. Maghreb co-operation – at least in the financial sector – appears to be making progress.

By Mawassi Lahcen for Magharebia in Casablanca – 07/06/09

[Mawassi Lahcen] Moroccans and Tunisians may no longer need euros or US dollars to travel between the two countries.

Morocco and Tunisia are expected to sign an agreement facilitating conversion between the Moroccan dirham and the Tunisian dinar, thereby allowing citizens of both countries to directly exchange currencies.

Central Bank of Tunisia Governor Taoufik Baccar proposed the idea to his Moroccan counterpart Abdelatif Jouhari on May 30th in Marrakesh. Baccar was in Morocco to commemorate the 50th anniversary of the Central Bank of Morocco, a few weeks after Tunisia's central bank celebrated its own 50th anniversary.

"I am happy about the understanding and acceptance I sensed in Morocco," Baccar told Magharebia, adding that Tunisia "signed a similar agreement with Libya".

At present, there is no mechanism for direct currency conversion. Under the current system, every time Moroccan citizens visit another Maghreb country, they must first exchange their Moroccan dirhams into euros or US dollars before converting the money into the local currency. On their way home, Moroccans have to change their money back into dirhams.

Central Bank of Morocco Governor Abdelatif Jouhari said that while technical solutions are quite easy, political problems between Maghreb states have slowed the formation of the Maghreb Union – a key measure to smoothing the currency exchange process.

"I believe we should discuss everything that can be done on the level of bi-lateral and tri-lateral relation among Maghreb states, in order to achieve progress in developing co-operation, exchange and economic integration. It is then that others can join us, when they feel prepared," Jouhari said.

"If we continue to wait till all five countries of us are ready to unite at one time, we will remain shackled by the manacles of politics and will not be able to accomplish anything."

Maghreb central banks first gathered to mount a co-ordination programme in 2005, at a meeting conducted in Algeria under the auspices of the IMF. The initiative sought to enhance co-operation among Maghreb states. Over the course of several subsequent sessions in Morocco and Tunisia, the banks discussed how to best effect trade exchange and financial integration among Maghreb countries, particularly in the private sector.

The bi-lateral strategy meetings yielded important progress; Maghreb financial institutions began to open branches in other Maghreb states. Tunisia allowed a Moroccan bank to purchase and control a Tunisian bank and Morocco licensed a Tunisian stock exchange company. Moroccan banks have also invested in branches in Mauritania and opened representation offices in Libya, while preparations are under way for a joint Tunisian-Libyan bank.

In the same vein, the Union of Maghreb Banks, at its annual meeting June 18th in Tunis, will discuss issuance of a Maghreb credit card to facilitate both personal travel and business opportunities across the entire region. The Union, which has grown to 60 banks since its 1990 inception, targets venues of co-operation among Maghreb states.

"Maghreb banks are efficiently functioning in Tunisia, Mauritania, Libya and Morocco," noted Union President and Moroccan Bank for External Commerce (BMCE) chief Othman Benjelloun.

"They still encounter a few obstacles in Algeria, However, we are optimistic and believe that those obstacles will be ironed out," he said.