Interview: Said Ibrahimi
What are the key assets supporting Morocco’s conversion into a regional financial services centre?
SAID IBRAHIMI: Developing a regional hub for business and financial services relies on four major prerequisites: stability, regulation, infrastructure, and connectivity. Morocco is able to provide all of these conditions. The country enjoys political stability thanks to its government system, which combines a constitutional monarchy, a parliament and an elected executive branch. This democratic system was also reinforced by a new constitution, adopted in July 2011, which places Morocco as an example of progress and openness in the region.
The macroeconomic environment is also very steady, as inflation has been kept under 2% over the past decade, which represents a distinctive factor for Morocco in comparison with the majority of African countries. Even though public finances have reached a critical point after three years of rising state expenditure,the debt-to-GDP ratio has been kept around 60% .
In terms of regulations, the country relies on an advanced regulatory framework that is up to international standards. Banking sector regulations comply with the latest international standards and Moroccan banks have gone through the global economic downturn without any major issues. Regulation of the stock market has recently been reinforced by the creation of an independent capital market regulatory authority with extended prerogatives and a view to improving the compliance to international standards. A new insurance regulatory authority will be created to better monitor insurance and pension fund operations.
During the last decade, Morocco has also experienced major improvements to its infrastructure. The country built the largest port on the continent, the Tanger Med, and Morocco also benefits from efficient and well-connected airports alongside an extensive road network. In terms of regional connections, Casablanca has become an important airport hub.
As for financial connectivity, Casablanca Finance City has established international partnerships with major financial centres such as Singapore to improve regulation and the way of doing business; Luxembourg to develop a framework for African-oriented investment funds and private banking; and London to boost derivatives, re-insurance products and financial qualifications.
Morocco is also taking part in the development of South-South partnerships with regulating authorities and central banks among members of the West African Economic and Monetary Union and the Economic Community of Central African States to streamline regulations, foster cross-country flows of investments and determine the easiest critical path for regional investors.
Where should the main sources of growth for the country’s local capital markets come from?
IBRAHIMI: Casablanca Stock Exchange is currently suffering from a temporary shortage of liquidity, although the upcoming development of derivative products will provide the necessary tools for improving the situation. The required legal frameworks are already in place and are now being implemented. Extending the array of activities in which investors can engage will allow the stock exchange to move either upwards or downwards without losing drastic volumes and draw more interest from institutional operators and foreign investors. According to analysts, stock exchange assets enjoy very interesting valuations for investors; however, it is necessary to provide new opportunities in order to generate more momentum for the exchange, increase the available float of shares and extend the base of listed companies to launch a new process of growth in 2014.
For the private debt sector to keep growing, there is a need for a better evaluation of private debt issuers by reliable rating agencies. This would enable investors to make decisions with full knowledge about the scope of their investments. The potential for participative finance over the world is very important. It is crucial to build a framework which would allow participative banking to develop here, so it can meet the demand for Islamic bonds that will emerge as a funding tool.
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