Much of Morocco’s economy is made up of small and medium-sized enterprises (SMEs), which employ 80% of the workforce, but often have little capacity for investment and face challenges accessing initial financing – in particular for innovative business plans. Despite these challenges, several factors bode well for the development of the country’s emerging start-up ecosystem, including a supportive regulatory environment and a lowered barrier to entry for digital entrepreneurs due to improvements to digital infrastructure and a high mobile penetration rate – which increased from 67% to 73.4% between 2016 and 2017 – allowing for easy access to a large number of potential customers.
The kingdom is working to increase the impact that start-ups can have on the economy by focusing on digitalisation. The Digital Morocco Plan 2020, launched in 2016, aims to make ICT an integral part of the country’s development by transforming the economy, positioning Morocco as a digital hub between Europe and Africa, and strengthening ICT infrastructure. Additionally, the strategy aims to digitise half of the country’s administrative procedures, as well as reduce communication costs by 50% and connect 20% of SMEs to the internet.
Although the number of companies receiving financing varies by year – some 18 firms secured venture capital investment in 2016, while only six did so in 2017 – the average amount of capital invested has been rising, opening financing options for new innovative companies. While the average seed capital investment was approximately Dh7m (€630,000) between 2006 and 2011, it almost doubled to Dh13m (€1.2m) between 2012 and 2017. “Most entrepreneurs in Morocco are dependent on their own money, their family or the banking system to start their businesses,” Françoise de Donder, managing director at the Moroccan Association of Capital Investors, told OBG. “There is also not a lot of knowledge on the part of entrepreneurs about this type of investment mechanism,” she said.
In addition to venture capital, state-backed instruments are boosting the availability of seed capital. In late 2017 the Central Guarantee Fund (Caisse Centrale de Garantie, CCG), a public financing institution, launched the Innov Invest Fund to channel as much as Dh900m (€80.8m) into Moroccan start-ups over five years. The fund, in which the CCG will contribute Dh500m (€45m) of public funds, is expected to have an impact on the start-up ecosystem in the medium term.
To have a maximum impact, the fund will also work through other venture capital funds with a combined Dh292.5m (€26.3m) to be distributed through four funds in a public-private financing scheme: Azur Innovation and Seaf Morocco Growth funds will each receive approximately Dh100m (€9m), while Green Innov Invest and Morocco Numeric Fund II will receive packages of around Dh50m (€4.5m) and Dh42.5m (€3.8m), respectively. The funds will be required to match the amounts they receive from the Innov Invest Fund with additional capital raised on their own, a measure that is expected to have a lasting impact on the way start-ups access private capital for new ventures. In mid-2018 the CCG announced that a first batch of 12 Moroccan startups had secured financing under several mechanisms included in the Innov Invest Fund.
Several Moroccan start– ups have received international recognition in recent times, including Eco-dôme Maroc, which was launched to provide sustainable and affordable housing. The firm won the CleanTech Open Morocco Competition and was the kingdom’s representative at the finals of the competition in Silicon Valley. Another Moroccan Start-up, Daba Doc, was established in 2014 to democratise health care and allow for instant doctor appointment bookings, and has already expanded into Algeria, Tunisia, South Africa and Nigeria. New financing sources will likely build on recent successes in Morocco’s start-up scene in order to cement growth as well as pave the way for other companies to join the market.
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