As the government evaluates the initial results of the Maroc Numeric 2013 plan, improved access is pushing the sector to expand. Benefitting from steady economic growth as well as a countrywide strategy to increase information technology (IT) usage, Morocco’s IT sector has seen stable expansion. Governmental policy has been framed under the Maroc Numeric 2013 strategy, which has had an immense impact in all areas of communications technology usage and provision. Increased use of mobile phones and improved access to 3G has meant a rise in penetration rates.
There is still much to do in terms of expanding digital content and improving availability in rural and low-income areas, but e-government platforms are being rolled out, and the use of computers has become more prevalent in companies, public institutions, schools and homes. The government has been evaluating the results of its Dh5.2bn (€462.28m) Maroc Numeric 2013 expenditures, with the results of the first official assessment of the programme released in late 2012. Using this as a base, Moroccan authorities will adjust their policy priorities and execution in order to increase the multiplier effect of technology use across the kingdom.
TECHNOLOGY ACCESS: The expansion of IT in Morocco has long been on an upward trend. According to a 2012 report by the National Telecommunications Regulatory Agency (ANRT), 39% of Moroccan homes had a computer in 2011, a considerable increase over 11% in 2004. Similarly, internet access has jumped from 2% in Moroccan homes in 2004 to 35% in 2011. However, there is still a big gap between urban areas, where 53% of homes have access, and rural areas, where only 14% of homes had computers in 2011.
The ANRT is now looking into the deployment of fibre optic cable throughout the country, but while a key part of the Maroc Numeric 2013 agenda includes increasing access to IT at all levels of society, which translates to increased internet access in all Moroccan homes, a number of component programmes specifically target students, teachers and educational institutions.
IN THE CLASSROOM: Under the Genie programme Morocco was able to equip around 10,000 schools with IT equipment and establish over 2838 new internet connections. An additional 7800 schools are expected to be equipped from 2013 onwards. The Injaz programme was established to provide students with affordable, subsidised laptops as well as access to the internet. As part of the programme’s fourth phase, launched in November 2012, the target is to reach 83,000 students.
On the other side of the education spectrum, the Nafid programme is intended to equip 150,000 Moroccan teachers with computers. The government has also provided more IT services to isolated communities by opening 76 Centres d’Accès Communautaires Public, or Community Public Access Centres, which allow for easy access to computers and internet, according to 2012 figures. However, this is still far behind the goal of 400 centres, and the economic model used to finance the centres is currently being reviewed in order to enhance the programmes performance in 2013.
IN THE WORKPLACE: The ANRT report also states that 96.4% of all Moroccan companies with more than 10 employees are connected to the web. The figure is slightly lower, at 91%, for small and micro-enterprises with more than four employees. The report also stated that Moroccan companies spent roughly 4% of their budget on IT in 2011, half of what they spent in 2010.
A possible explanation for this is that the current economic difficulties in Europe might have made Moroccan businesses more cautious and reluctant to invest.
Another initiative to strengthen the use of IT in Moroccan businesses, the Moussanada programme will equip small and medium-sized enterprises (SMEs) in the textiles, agriculture and construction sectors with computer networking systems and promote the digitalisation of business processes. The government has committed to financing 60% of the cost of setting up a network per company, up to a maximum of Dh400,000 (€35,560). According to November 2012 figures, roughly 282 SMEs had benefitted from the programme. A further 868 companies were being considered for eligibility to join the scheme.
SMEs are also benefitting from electronic transaction. Mohamed Horani, the PDG of Moroccan IT company HPS, told OBG, “SMEs could benefit from making electronic transactions because it helps facilitate payment of taxes, bills and to keep better tabs on income and expenses. It also allows third parties to better assess the creditworthiness of SMEs.” Morocco has shown a strong capacity in this segment, with financial transactions via bankcards and ATM withdrawals reaching €16bn in 2012, according to the Centre Moné- tique Interbancaire, Morocco’s interbank payment system, representing a 16.3% increase over 2011. “As a new and innovative industry, electronic payments in Morocco have grown exponentially,” said Mehdi Kettani, the president of the Maroc Numeric Cluster.
STAYING CONNECTED: Internet access continues to grow at a fast pace. According to figures from the ANRT, in 2012 the number of internet subscriptions reached 3.9m by December. This is a 24.3% increase over figures for December 2011, putting paid internet penetration in the country at 12.7% – usage figures tend to be higher due to multiple users on a single account. Much of the growth in internet penetration has come from the impressive growth of 3G internet access, either through mobile phone subscriptions or mobile internet using a USB access stick, which grew from 2.5m subscribers in December 2011 to 3.2m in December 2012 and now accounts for 82.7% of total internet access in the country, according to the agency.
MOBILE AND FIXED-LINE: “The expansion of internet in Morocco over the next couple of years will most likely continue to come from 3G and mobile internet,” said Karim Gharbi, the director of corporate finance at investment bank CFG Group. The 3G internet market is divided amongst three operators, with Maroc Telecom accounting for almost half of subscriptions, with a 47.22% market share, followed by Méditel with 36.68% and Wana with 18.1%. Much of the expansion in 3G is now being driven by rising penetration of smartphones and is getting an increased boost from the increasing number of more affordable handsets from lower-end Asian hardware manufacturers. “There is much room for expanding the market for smartphones, given that penetration is now around 10-15%,” Abdellah Idrissi, the general manager of Sicotel Nokia, told OBG.
Maroc Telecom continues to dominate the fixed-line ADSL internet market, with a total market share of 99.92% in December 2012. Wana saw its presence in the ADSL market shrink from a 0.13% market share for December 2011 to 0.08% in December 2012. The majority of ADSL connections, or 65.15%, are classified as 4 megabytes per second (mbps), followed by 8 Mbps at 18.57% and 12 Mbps with 14.19% of the market.
CHANGING PATTERNS: Increased competition amongst internet providers has brought prices down. The average monthly bill has decreased by 21% from Dh53 (€4.71) in December 2011 to Dh42 (€3.73) as of December 2012. The average price of 3G subscriptions saw the biggest change, falling 27% from Dh37 (€3.29) to Dh27 (€2.40). On average, ADSL bills decreased 4% in Morocco, falling from Dh116 (€10.31) to Dh111 (€9.86), as of December 2012.
Internet consumption patterns are changing as well. A study by Averty Market Research & Intelligence in partnership with Maroc Numeric 2013 found that 57.4% of respondents spent on average four hours a day on the internet. The study also found that personal computers remain the principal way of accessing the web for 88% of respondents, while mobile phones are used by 55% of users and work computers by 41%. Internet consumption by Moroccans is primarily driven by access to social networks, followed by search engines, news platforms and video-sharing websites. Only 7% of respondents said they used the internet for online shopping.
In an encouraging sign for the country’s expansion of its e-government platforms, 47% of respondents said they had already used the biometric passport website. About 28% reported having used the website of the National Agency for Promotion of Employment and Skills (ANAPEC), another e-government site.
The rise in 3G availability prompted the ANRT to implement its first study of the quality of mobile internet access in Morocco. In mid-2012 the results were published and showed encouraging signs with regard to the reliability of 3G services. Maroc Telecom customers were able to establish 98.21% of attempted connections to the 3G network using smartphones, and 95.85% of these were connected in less than 10 seconds. Customers using Méditel 3G mobile phone services were able to connect in 98.83% of the time and 97.38% of those were in less than 10 seconds. Wana proved to have the most reliable 3G internet service, succeeding in 99.69% of attempted connections, 99.27% of which were established in less than 10 seconds. Internet access and data transfer speeds will be enhanced with the arrival of 4G in early 2014.
OFFSHORING: A major factor in Morocco’s fairly solid performance in IT is due to robust growth in one of the sector’s sub-segments: offshoring. Morocco’s offshoring segment received global recognition in 2012 with the award from the European Outsourcing Association for “2012 Offshoring Destination of the Year”.
Latifa Elbouabdellaoui, the head of offshoring at the Ministry of Industry, Trade and New Technologies in Rabat, said the sector’s turnover for 2012 was around Dh7.3bn (€648.9m). Offshoring has been going through a period of continuous expansion since it was highlighted as a strategic priority for development under the National Pact for Industrial Emergence. Offshoring currently employs around 55,000 people, which is half of the government’s goal of 100,000 jobs by 2015.
Growth has been largely driven by the creation of IT outsourcing zones, which have attracted call centres, IT and business process outsourcing companies. The first two zones, Casanearshore in Casablanca and Technopolis in Rabat, now host around 80 companies. The Casanearshore park occupies an area of 53 ha and represents a total investment of Dh2.5bn (€222.25m). The Rabat Technopolis was built with a Dh3.2bn (€284.48m) investment and is set on 107 ha of land.
ATTRACTIVE OPTIONS: The government is hoping to replicate the model used in Morocco’s two main cities in other parts of the kingdom. For instance, Fez Shore opened in mid-2012 on a 20-ha plot of land, and already has 140,000 sq metres of office space.
At a total investment of Dh210m (€18.66m), the first section of Tetouan Shore opened up in mid-2012 with 22,000 sq meters of ready-to-use office space. The Ministry of Industry, Commerce and New Technologies expects it will host 1500 jobs in an initial phase. But if all goes well, Tetouan shore will create 10,000 positions in the offshoring sector by 2020. Some of the advantages expected to follow include reduced labour costs, which can be 30% lower away from the country’s two main cities. Furthermore, the pool of graduates in Fez and Tetouan might prove an advantage for companies wanting to do offshoring for European customers. “Tetouan Shore was built with the Spanish-speaking skills of the region in mind,” Elbouabdellaoui told OBG.
Incentives for firms that open shop in the offshoring areas benefit from state contributions, so income tax does not exceed 20% of taxable gross income. Companies exporting products or services are exempt from corporate taxes on turnover generated by exports for a period of five consecutive years from the first year of operations, and subject to a corporate tax rate of 17.5% after that. ANAPEC also subsidises training programmes with a value of up to €5800 per employee. Additional tax benefits are set to be implemented.
TAKING A CHANCE: Although the policy to decentralise offshoring zones makes sense as way to expand job creation away from more affluent coastal cities, it remains unclear how many firms would prefer to set up outsourcing operations in Fez or Tetouan, as opposed to being close to the country’s economic and political spheres. “The main human resource pool is still located in Casablanca and Rabat, and it remains to be seen whether the regions will have enough people with an equal level of qualifications to justify expansion into those areas,” said Chafik Sabiry, the managing director of HP-CDG IT Services Maroc. “In terms of finding qualified IT staff, it is difficult to find people with IT skills who also speak multiple languages. Usually it is one or the other, not both.”
Nonetheless, the government remains bullish about the development of the sector. A fifth offshoring zone called Oujda Shore will open at the new Oujda technopark in the Oriental Region’s capital city in 2013. Other areas such as Marrakech and Agadir are being considered for potential development of future call centres, namely because of the large of pool human resources with foreign language skills due to long-established tourist industries in those two cities.
It is not yet clear to what extent the offshoring sector will be affected by the current economic situation in Europe. “The crisis in Europe can have either good or bad consequences for the sector. It can either make companies want to save and outsource, or make them not want to risk expanding into overseas operations,” said Elbouabdellaoui. But whether or not the crisis in Europe will reduce the number of firms that expand IT outsourcing into Morocco, the crisis might create some unexpected competition. In June 2012 French Minister for Industrial Renewal Arnaud Montebourg hinted at the French government’s intention to repatriate at least a part of the call centre activities. This would be a bad sign for Morocco’s plans to increase call centre and other IT outsourcing activities. According to figures from the Association Marocaine de la Relation Client (AMRC), call centres employed around 42,000 Moroccans in 2012 and represented Dh5.2bn (€462.28m) in turnover. French telecoms firms account for about 30% of Morocco’s call centre business. “More than competition from countries in the Maghreb or sub-Saharan Africa, Morocco might start facing competition from French regions, where local authorities are considering financial incentives to create jobs,” said Sabiry. Unemployment in France and Spain could bring costs down, and generate the availability of IT engineers. This might create competition with Morocco for some outsourcing activities.
Morocco is now considered a middle-cost outsourcing destination. This could be a challenge as more competitive call centre destinations emerge. Long-term growth of the sector will most likely be sustained by available language skills. “Outsourcing can be a very language-sensitive activity, so a certain premium is accepted on the fact that Morocco has the French-speaking human resource pool,” Sabiry told OBG.
Another challenge might come from the government’s intention to progressively move up in the outsourcing value chain. However, moving to higher-end outsourcing activities also means less job creation as the number of necessary human resources is reduced. After the Arab Spring and the resulting instability in two of Morocco’s North African competitors, Tunisia and Egypt, the country should be able to take advantage of its value-offer for firms wanting to outsource.
HUMAN RESOURCES: Human resource development is becoming increasingly synonymous with technological proficiency. The Maroc Numeric 2013 plan has staked a lot on increasing computer availability and internet access in schools. Training programmes have also been receiving more support, and the Moroccan government offers grants for human resource training for firms that establish themselves in any of the country’s technological and offshore centres. In early 2012 IT firm Huawei opened a Dh60m (€5.33m) training and certification centre in Rabat, hoping to attract Moroccans and other francophone students wanting to enhance their IT capabilities. The centre will provide certification for all areas of the IT sector, with courses that last anywhere from five to 19 days. Further annual funding amounting to Dh4m (€355,600) will be used to pay 10 full-time staff and 20 part-time instructors.
The industry is hoping that increased growth will attract Moroccans living overseas to move back. “Because of the European crisis, a lot of Moroccans living abroad are coming back home, and this can be a great opportunity for the IT sector to get additional, well-trained human resources,” said Horani of HPS.
ONLINE GOVERNMENT: The expansion of e-government platforms was one of the strategic objectives prioritised by the Maroc Numeric 2013 plan. According to the “UN E-government Survey 2012”, which compares the establishment of electronic administration services in several countries on a bi-annual basis, Morocco was ranked overall 120 out of 193 countries. This was an improvement over 2010, when it came in at 126. More than 22 government services are now available online, facilitating communication flows. An additional 14 online government services are being prepared to go online, including the possibility to access and prepare all the necessary documentation to create new companies.
OUTLOOK: Increased IT proficiency has been one of the most relevant consequences of the Maroc Numeric 2013 programme. However, the first official evaluation of the national strategy will also serve to redirect governmental efforts to develop the sector post-2013. Private investment from Moroccan companies in IT was halved between 2010 and 2011, which could be an indication of unstable economic times, rather than any structural move away from the sector itself.
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