Interview: Mohamed Boussaid
What role does infrastructure development play in attracting private investment?
MOHAMED BOUSSAID: Morocco, from its independence onwards, has principally made structural choices to liberalise and diversify its economy, and to encourage private initiatives. Since 1999 Morocco has signed free trade agreements with 55 nations, connecting the country to a global market of 1bn consumers.
Foreign investors essentially opt for Morocco for three reasons: political and economic stability; quality infrastructure and logistical cost reduction; and human capital. At around 30%, Morocco boasts one of the highest public investment rates in the world. Despite this significant effort, the link with and impact on growth and employment is relatively limited, because these investments are mainly infrastructure-related. Over the last 15 years Morocco has invested Dh180bn-Dh190bn (€16.7bn-€17.6bn) in modern, competitive infrastructure. Not only do we have an extremely well-developed motorway network connecting major cities, but also about 30 ports, including Tanger-Med.
The nature of these public investments is generally capital intensive and does not boast immediate financial profitability. Take renewable energies as an example; public investment in solar and wind plants is equal to around Dh30bn (€2.8bn), and will generate jobs. More importantly, however, private investors are encouraged to take advantage of existing infrastructure to invest in the industrial services sector. In fact, Morocco’s infrastructure constitutes the basis for attracting private investment that, in return, will generate growth and add value through job creation.
How much importance is placed on the growth of small and medium-sized enterprises (SMEs)?
BOUSSAID: SMEs are the backbone of the economy, but unfortunately they also comprise a large part of the informal economy. However, encouraging private investment requires the formal integration of the informal sector. By informal, we principally refer to small or very small companies that are not registered with the authorities. Consequently we have undertaken a number of initiatives, with mixed results. First, we sought to ease the bureaucratic workload of company registration. Second, Law 114-13 – which relates to the status of self-contractors – was passed, outlining the long-term benefits of registering a business. Today we have more than 55,000 registered entrepreneurs, and our goal is to reach 100,000 by 2020. In 2016 we introduced an SME-adapted tax system, which contained an adjusted 10% tax rate for businesses with annual net revenues of less than Dh300,000 (€27,780), and a 20% rate for SMEs earning less than Dh1m (€92,600).
Another major obstacle for SMEs is access to finance. The Central Guarantee Fund assists SMEs in this area. In 2015 we also took the initiative to reserve 20% of public procurement contracts for SMEs. However, this is not enough. Small enterprises must be taken more into account in public and economic policy. The Finance Law of 2017 budgeted Dh500m (€46.3m) for start-up financing, and we are in the final stage of establishing a fund for small businesses that aims to encourage innovation in new technologies and renewable energy.
What impact will the new floating exchange regime have on the broader economy?
BOUSSAID: In search of greater economic competitiveness and resilience, Morocco has undertaken a range of reforms to strengthen its central bank. In light of external shocks and natural repercussions, we were led to reform our fixed exchange regime. While it has been of great use during difficult times, the regime does not align with Morocco’s aspirations of a progressive, prudent and flexible exchange system. Various analyses indicate that Morocco is ready for this gradual change, which will make our industries more competitive. At the same time, we remain cautious that it will not negatively affect our social equilibrium and purchasing power.
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