In recent years, Moroccan authorities have been successful in attracting a relatively consistent flow of foreign capital, mainly relying on the national privatisation programme, the conversion of foreign debt into investments and the operations of public services concessions. Other sectors have been dominated by foreign investment, including banking, tourism, energy and industry. However, the level of FDI remains modest and could make a stronger contribution to the economic take-off. The country has also been pursuing a policy of foreign investment, which is mainly targeting the countries of sub-Saharan Africa.
After a decline during the global recession, FDI flows to Morocco increased in 2014 and 2015, exceeding USD 3 billion. After falling by 29% to USD 2.32 billion, FDI inflows picked up in 2017 to USD 2.66 billion (15.4% y-o-y increase) (UNCTAD World Investment Report 2018). Nonetheless, FDI inflows fell again by 10% (y-o-y) in the first two months of 2018 to USD 340 million (Moroccan Foreign Exchange Office). Morocco has launched a vast project of economic modernisation to attract more FDI. Casablanca in particular aims to become an international financial centre. The construction of Ouarzazate Solar Power Station is expected to cost a total of EUR 2 billion. In 2016, a new investment charter was adopted to help restructure investment promotion activities under the auspices of a centralised agency and to develop free-trade zones in each of the 12 regions of the country. Morocco is ranked 69th out of 190 economies by the World Bank in its Doing Business 2018 report, dropping one spot compared to 2017.
Traditionally, France, Saudi Arabia and United Arab Emirates have been the three main investors. FDI is mainly concentrated in the real estate sector (more than half of total inflow), retail and manufacturing.
Regulatory Framework
Investing in a Moroccan commercial company does not require a foreign investor to partner with a local shareholder. There are zero restrictions in the percentage of share capital it can hold. A local wholly-owned subsidiary of a foreign investor is a possible structuring option. Whereas in specific activities (such as phosphate), a partial or full state ownership may be maintained, a trend towards a liberalised economy can be observed over the recent years.
If the contemplated investment falls within the scope of a regulated activity, its completion will be conditional upon the authorisation of the relevant regulator (prior authorisation of the Ministry of Economy may also be required when the seller is a state-owned entity). Any foreign investment project is likely to be notified to the Competition Council prior to its completion if one of the following conditions is fulfilled:
- The total global turnover (excluding tax) of all the companies or groups of legal entities that are party to the contemplated transaction is in excess of MAD750 million
- The total global turnover (excluding tax) generated in Morocco by at least two of the companies or groups of legal entities concerned is in excess of MAD250 million
- The companies who are involved in the contemplated transaction are generating together more than 40 percent of a given market or a substantial part of it.
Acquisition of a stake in a listed company is subject to specific takeover regulations. Specifically, if an investor acquires, alone or in concert, directly or indirectly, over 40 percent of an issuer’s voting rights, a public takeover bid on all the share capital and voting rights of the target company may be triggered.
Government Strategy
The government’s long-term economic and political strategies have helped the country to achieve many objectives, such as the development of new industries . These include clean energy both in solar and wind power.
In addition the growth of the automotive and aeronautic industries has improved dramatically while new large road and port infrastructures have opened up also.
In addition numerous important agreements have been done with most of the continent’s countries. These developments have made Morocco an African hub for numerous economic activities.
Attraction
Morocco has been successful in attracting international investors to its borders especially in areas of tourism, energy and industry.
In spite of the improvements to oil production and prices, African economies are turning their attention towards diversification to stimulate industrial development, and to attract investments in non-oil strategic sectors. Morocco has been consistent in attracting an inward flow of foreign capital, specifically in banking, tourism and energy sectors and through the development of industry.
Europe remains Morocco’s biggest trade partner, but trade with Africa, while still low, has been growing at a yearly rate of 12.8 per cent. Attijariwafa, one of Morocco’s biggest banks, started its expansion in sub-Saharan Africa in 2004 at a time when the banking industry was already consolidated and had little room to grow domestically, according to general manager Ismail Douiri.
He says the five top banks controlled 80 per cent of banking assets, which left little room for growth beyond the single-digit growth rate of the wider economy. The king’s policy to push into Africa created an added incentive. “We were in a country where our larger corporate clients were already becoming more international and the policy of our king was to push strongly to develop investment and trade with sub-Saharan countries,” he says. “Like any other company we wanted to continue to deploy capital in the thing we know how to do where we see opportunities for profitability and growth.
Also, it was a defensive move to stay close to our biggest clients.” According to Moody’s Investor Services, the rating agency, the largest three Moroccan banks have increased their presence in Africa to around 23 per cent of their loans.
Mr Douiri says, 22 per cent of Attijariwafa’s profit comes from sub-Saharan markets. Morocco has also been positioning itself as a base for European companies seeking to do business with sub-Saharan Africa. To that end, it has launched Casablanca Finance City, a special zone offering tax and other incentives. Mehdi El Idrissi, an executive at Eurosearch & Associés, a Paris-based recruitment company, says 80 per cent of his firm’s business involved recruiting senior level employees and board members for international companies choosing to base themselves in Morocco for ease of access to African markets.
