Noureddine Gnaou, CEO, Soremar Group: Interview

Noureddine Gnaou, CEO, Soremar Group

Interview: Noureddine Gnaou

What is your overall assessment of the regulatory and tax framework for SMEs?

NOUREDDINE GNAOU: Everything is becoming more dynamic in the kingdom. In Europe, by contrast, things have barely evolved since the industrial revolution, which was almost two centuries ago. Ambitious governmental reform programmes, such as the Industrial Acceleration Plan, the Green Morocco Plan or Vision 2020, incentivise companies to seek a leadership position in sectors as diverse as tourism, industry or agriculture. For example, maritime electronics follow the evolution of computers and electronics, areas that also change a lot. There are international regulations imposed by the International Maritime Organisation. Governmental regulations change as well, some for the better and others for the worse.

Therefore, it is pivotal that the regulatory framework, whether national or international, relies on feasibility studies that take into account the needs and challenges of local SMEs. For example, although SMEs employ the vast majority of the kingdom’s labour force, it is obvious that access to finance or payment delays make it increasingly difficult for SMEs to financially sustain themselves.

In addition to wages and taxes that have to be paid, SMEs are expected to command a fully functioning supply chain of raw materials, labour force and money recovery. A working relationship with foreign suppliers may further complicate things, as local SMEs are confronted with different regulations and, of course, different working mentalities. Moroccan legislation must be clear so that transactions with multinationals adapt to local laws, regulations and customs.

What kinds of challenges do domestic SMEs face?

GNAOU: Numerous companies face challenges when working with the government. Even those that do not cooperate with the state encounter this because their clients, who work with the state, are in a crisis. In business, a number of companies cannot be paid because their clients lack funds. Furthermore, SMEs face certain challenges that are unique to Morocco’s culture. For example, during the holy month of Ramadan, the fisheries segment more or less comes to a halt. Consequently, the month of June – when Ramadan has been observed in the last few years, according to the lunar calendar – has been catastrophic for SMEs in terms of revenue.

June, July and August bring the summer holidays, which can also slow business. Following that, Eid Al Adha, another major religious holiday, typically falls in September. Summing up, four months of the year are very challenging for SMEs, and due to these periods of volatility, many firms become financially strangled.

We also have purchases, travel, wages or corporate taxes (impôts sur les sociétés). If these taxes are not paid on September 30, companies have to pay a 13% quarterly penalty, then an additional 1% each month thereafter. The tax framework can constrain SMEs, not allowing them to reach their full potential.

To what extent are SMEs encouraged to go public?

GNAOU: Several programmes support SMEs, but one that stands out is the ELITE programme, which was launched between the Casablanca Stock Exchange and the London Stock Exchange. It assists SMEs to improve their governance, transparency and reporting procedures with the goal of introducing the company to the stock exchange, and it guarantees their durability. There are numerous family structures against initial public offerings (IPOs) and, for the sustainability of these companies, these structures must be removed. Overall, stock listings are typically not characterised by family companies going public, mainly because a lot of SMEs remain sceptical of giving up control of their company and do not see the benefits of an IPO. However, we are also associating and implementing the so-called family charter.

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Noureddine Gnaou

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The Report: Morocco 2018

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