FRONTIER MARKETS REPORT | MOROCCO
Morocco boasts solid outward FDI, geopolitical stability and proximity to key markets, but corruption is commonplace.
Moroccan companies aggressively invest in neighboring countries. This investment is led by banks such as Attijariwafa and BMCE Bank, mining companies such as Managem and OCP Group, telecommunications companies such as Maroc Telecom and real estate companies such as Addoha and Alliances Group.
According to Morocco’s Exchange Office, a trade-facilitating body, these and other firms have been increasing their investments in sub-Saharan Africa—which has received 51% of the country’s total outward foreign direct investment (FDI). The main beneficiaries are Mali (34%), Gabon (15%), Senegal (15%), Côte D’Ivoire (13.5%), Burkina Faso (9.5%) and the Congo (5%).
Africa consultant Aubrey Hruby explains that directing foreign investment into sub-Saharan Africa builds business ties and extends Morocco’s political influence, an important strategy as it is the only African state that is not a member of the African Union.
For investors, Morocco provides strong potential benefits, none of them fully exploited, according to Hruby. It gives Moroccan companies access to international banking relationships and Morocco is physically and commercially close to Europe. Youssef Lahlou, senior portfolio manager, MENA region, for investment firm Silk Invest, cites political stability before and after the Arab Spring. “We haven’t seen people in the streets as much as in Tunisia and Egypt,” he says in an interview from Casablanca. Some protests occurred, but King Mohammed VI preempted problems by instituting populist reforms—including new a constitution allowing more power to government.
Anthony Kim, a senior policy analyst at Washington-based think tank Heritage Foundation, explains that Morocco has trade agreements that offer incentives and preferential trade arrangements with 55 countries. It has excellent ports at Tangier and Casablanca and has expedited development by simplifying procedures such as applications for construction permits.
Those factors—combined with a plentiful, educated labor force working at a lower cost than those of European and other countries in the region—attracted $3.7 billion in FDI during 2012. American multinationals, such as Coca-Cola, McDonald’s, Colgate-Palmolive and Dell, and European multinationals, such as Sanofi-Aventis and Renault, all have large stakes in Morocco. As well as auto manufacturing, other FDI opportunities include aerospace, information technology, infrastructure and tourism, according to Lahlou.
But corruption is prevalent at most levels of government—including the executive
branch, police and judiciary, according to the State Department. It says that the Central Authority for the Prevention of Corruption lacks “authority to require responses from government institutions.”
In addition, policy implementation can be slow and uneven. Kim says: “Opportunity will be greater if the kingdom can fix their [rigid] labor market…and finish their ongoing reform process.”
