The Report: Morocco 2014
The only monarchy in North Africa, Morocco has one of the more diversified GDP mixes in the region, and the mainstays of the economy include agriculture, tourism, and the textiles industry; higher-end manufacturing, IT and communications, and outsourcing are also all becoming increasingly important. The past few years have seen some significant changes, yet the kingdom has remained stable, even amidst the broader regional turmoil.
Country Profile
The only monarchy in North Africa, Morocco contains a blend of Arab, African, indigenous Berber and European cultures. The kingdom has long maintained close diplomatic, economic and cultural ties to Europe that it continues to deepen and has a reputation as a stable and tolerant state. Morocco encompasses a landmass of 446,500 sq km and is located on the north-western tip of Africa, sitting astride both the Mediterranean Sea and Atlantic Ocean. It has one of the more diversified GDP mixes in the region, and the mainstays of the economy include agriculture, tourism, and the textiles and garments industry; higher-end manufacturing (such as the automotive and aeronautics industries), information technology and communications, and outsourcing are also all becoming increasingly important. The past few years have seen Morocco undergo some significant changes, yet the kingdom has remained stable, both socially and politically, even amidst the broader regional turmoil. This chapter contains interviews with King Mohammed VI; Abdelilah Benkirane, Head of Government; Salaheddine Mezouar, Minister of Foreign Affairs and Cooperation; Ali Bongo Ondimba, President of Gabon; and Daniel Kablan Duncan, Prime Minister of Côte d’Ivoire
Explore chapterEconomy
In 2013, Morocco rebounded from a more modest performance in 2012 to deliver 4.4% GDP growth, with the economy bolstered by a return to form in the primary sector thanks to a productive harvest. After 2.7% growth in 2012, economic activity in Morocco expanded much faster in 2013, increasing by 4.4% as GDP reached Dh864.6bn (€76.8bn). This was driven in large part by the agricultural sector, which typically represents 15-20% of GDP, and contributes significantly to both rural employment and exports. The kingdom did have to grapple with its fair share of exogenous challenges – such as low external demand and high commodity prices – as well as domestic complications including a fiscal deficit and unemployment, but following the government reshuffle in mid-2013 the prospects look far more positive. With the 2014 budget setting a more dynamic tone as the government takes steps to redress key fiscal imbalances, there are strong indicators pointing to the economy’s ability to continue to grow. This chapter contains interviews with Mohamed Boussaid, Minister of Finance; Jacques Attali, President, PlaNet Finance; Nicole Bricq, Former French Minister of Foreign Trade; and Zahra Maafiri, Director-General, Maroc Export.
Explore chapterBanking
Morocco’s banking sector remained resilient in 2013, benefitting from cash injections from Bank Al Maghrib, the central bank, and the industry is among the most sophisticated on the continent. Although liquidity is still less than ideal and non-performing loans have inched upwards, indicators have been positive for the sector, with capital adequacy requirements well above Basel III and deposits growing robustly. In what was both a local and a regional first, 2013 saw a private Moroccan financial institution turn to the international capital markets to float $300m worth of bonds. With Europe’s economy slowly seeing a much-needed improvement (the European Central Bank forecasts economic growth of 1.1% in 2014 and 1.5% in 2015 for the area) and Morocco establishing a number of partnerships with Middle Eastern, US and Asian partners, the country as a whole should benefit. This chapter contains interviews with Abdellatif Jouahri, Governor, Bank Al Maghrib, and Othman Benjelloun, President, BMCE Bank.
Explore chapterCapital Markets
The year 2013 was one of ups and downs for emerging market equities. The Moroccan All Shares Index (MASI) eased downwards in 2013 for the third consecutive year, ceding 2.6%. However, the decline was markedly slower than in 2012, when it fell 15.3%. The Casablanca Stock Exchange (CSE) certainly grappled with a number of exogenous pressures, hitting a five-year low at the end of August 2013. While overall market performance in 2013 was muted, a number of sub-segments saw prices rise over the course of the year. Performance in early 2014 has already begun to show promise, with the exchange up 3.4% year-to-date and up 6.8% year-on-year (y-o-y) as of May 2. As the year progresses, the reclassification to a frontier market by MSCI and the successful initial public offering (IPO) of the Jorf Lasfar Energy Company (JLEC) in December 2013 could continue to serve as catalysts to turn around the fortunes of the MASI. This chapter contains interviews with Said Ibrahimi, CEO, Casablanca Finance City, and Younes Benjelloun, Partner and CEO, CFG Group.
Explore chapterInsurance
Morocco’s insurance market has become more competitive in recent years. It is now Africa’s second-largest insurance market in terms of penetration after South Africa and the third-largest in the Middle East and North Africa after Saudi Arabia and the UAE. Total premiums in 2012 reached €2.3bn, up 8.9% on the previous year. Non-life premiums – thanks to automobile coverage – continued to dominate, representing some 66% of the market in 2012 at a value of Dh17.19bn (€1.5bn), compared to Dh8.84bn (€785m) for life premiums. Growth continued in 2013, with provisional data indicating that premiums for the first six months of the year totalled €1.3bn, up 3.1% over the same period in 2012. The insurance market is expected to continue to expand in the medium to long term, in line with growth in sectors such as construction, real estate and manufacturing. In the meantime, the industry will carry on developing new products and new ways to access segments of the population that are still uninsured. This chapter contains an interview with Mohamed Hassan Bensalah, President, Moroccan Federation of Insurance and Reinsurance Companies.
Explore chapterIndustry, Mining & Retail
With an increasing focus on value-added export industries in manufacturing, Morocco has become one of Africa’s leading countries for industrial FDI. The 2009 strategic plan to bolster six designated segments by investing billions of dirhams and facilitating new investments, has drawn in sizable injections of capital and seen an increase in manufactured production, due to strong performance by the automotive and aeronautics sectors. There has been a push to improve performance in the mining sector, in part by encouraging upstream and downstream activity in a variety of metals and minerals. The government rolled out a comprehensive strategy for the sector in 2013, which aims to boost investment and expand capacity, as well as introduce a new mining code. The formal retail industry remains fairly limited, but it has been gathering steam over the past three years. A growing middle class and urbanisation rate, as well as a modernisation of consumer shopping habits bode well for the sector’s future. Major international brands and franchises are increasingly entering and expanding into Morocco, taking advantage of a significant rise in dedicated retail properties. This chapter contains interviews with Moulay Hafid Elalamy, Minister of Industry, Commerce, Investment and Digital Economy, and Hamid Benbrahim El Andaloussi, Chairman, Moroccan Aerospace Industries Group (GIMAS).
Explore chapterTourism
Morocco’s tourism sector has undergone a major shift in recent years in large measure due to the implementation of the Moroccan National Tourism Office’s (ONMT) Vision 2020 programme, which seeks to attract 20m tourists by 2020. The programme also aims at raising the country’s “sun and surf” profile, boosting annual revenues to Dh140bn (€12.43bn), increasing hotel bed capacity to 375,000 and creating 9500 new jobs in the industry, all by 2020. While the economic crisis in Europe and the fallout from the Arab Spring elsewhere in North Africa have continued to impact the tourism industry in Morocco, the sector has nevertheless seen moderate expansion in activity. With 10m tourists visiting Morocco in 2013, the tourism sector is a leading contributor to the kingdom’s GDP, at around 7%. The ONMT predicts that Morocco will receive 10.7m tourists in 2014 and 12m in 2016. Tourist expenditure and nights spent at hotels, however, have decreased. Taken together, these factors have put pressure on profits and prices have been reduced in an effort to boost volumes. Efforts by both the public and private sectors mean that the industry’s long-term outlook remains robust, although things may be more volatile in the medium term. This chapter contains an interview with Lahcen Haddad, Minister of Tourism.
Explore chapterTransport
The Moroccan transport sector has made some great strides in recent years, and projects across the spectrum are ongoing and set for delivery over the next year and a half, in line with the government’s medium-term infrastructure development plans. While major events such as the 2008-09 financial crisis, the ensuing eurozone debt crisis and recent regional political instability have impacted passenger and cargo flows to and from the kingdom, investment plans in general have kept pace. As such, the first phase of SAAN, a multi-phased plan to upgrade and extend Morocco’s road network, was completed in 2012 and involved the construction of 1000 km of roads. Over the next five years substantial public funding is set to go towards revamping and expanding road, rail, maritime and air traffic infrastructure. This will consolidate Morocco’s position as a regional transit hub for both cargo and passenger traffic, while also responding to growing demand from the domestic market, where passengers are increasing in number, as well as demanding better service quality. This chapter contains interviews with Thierry de Margerie, Vice-President Africa, Alstom, and Faysal El Hajjami, President & Managing Director for Maghreb Region, DHL Express.
Explore chapterThe North
Anchored by the port city of Tangiers, Morocco’s diverse northern region has undergone a significant transformation in the past 10 years thanks in large part to efforts to decentralise governance, boost local infrastructure and encourage industrial growth. The crux of these efforts is an integrated economic development plan that aims to capitalise on the region’s location at the juncture of the Atlantic Ocean and the Mediterranean and along key maritime trade routes. In addition, a five-year urban and economic development plan, Tangiers-Metropolis, launched in September 2013, aims to invest another Dh7.66bn (€680.2m) in the greater Tangiers area between 2013 and 2017 to reinforce its position as a motor of the national economy. Today, Tangiers-Tétouan is the second-largest recipient of FDI inflows after the greater Casablanca area. While the port-industrial complex in Tangiers has been the focus of public and private investment in the past decade, the region’s growth has opened up possibilities in a number of sectors, including tourism, services, information and communications technology, offshoring and agriculture. This chapter contains interviews with Fouad Brini, President of the Supervisory Council, Tangiers Mediterranean Special Agency (TMSA), and Julianne M Furman, Founder, Tangiers Free Zone Investors Assoc.; President, Polydesign Systems; and GM, Exco Automotive Solutions Europe.
Explore chapterConstruction & Real Estate
The Moroccan construction sector witnessed a significant slowdown in 2013 due to a confluence of factors, including regional instability and a shortage of access to financing. Cement consumption, which is considered a key performance indicator, dropped from 15.87m tonnes in 2012 to 14.87m tonnes in 2013. Nevertheless, the Ministry of Habitat and Urban Planning continued to help drive sector activity and provided strong financial incentives to real estate developers to invest in social housing. The sector is expected to rebound in the medium term, with growth of 4% projected. In the longer run, it should see an uptick in growth as European economies begin to improve. Activity in the real estate sector has fallen, but stabilised, following an earlier boom between 2007 and 2008. In 2013, the sector remained stagnant, growing by 0.4% y-o-y by the third quarter, with transaction volumes down by 5.3%. The sector has been buoyed by a government-sponsored incentives aimed at attracting real estate developers and builders to the mid-range segment, where there is a housing deficit. The luxury segment has witnessed a sharp fall in demand and developers have refocused their activity away from rural areas and smaller towns and towards bigger cities. Prices are expected to remain stable for the luxury segment, while mid-range property is likely to see prices increase in 2014. In 2014, activity will be driven by a number of major mixed-use projects in Casablanca and Tangiers. This chapter contains interviews with David Toledano, President, Federation of Construction Materials Industries (FMC), and Youssef Ibn Mansour, President, National Federation of Real Estate Developers (FNPI).
Explore chapterAgriculture
Unfavourable weather conditions characterised by cold temperatures and drought took their toll on a number of key crops in 2012. However, better weather conditions and abundant rainfall in 2013 allowed for higher domestic production, particularly in the cereals segment, which produced 9.7m tonnes, up 89% compared to 2012. Morocco’s primary sector still plays a significant role in terms of job creation, trade, rural development and overall headline GDP. At present, agriculture contributes around 15% of GDP. In 2013 the sector accounted for 39.4% of total jobs and 72.7% of rural jobs. Agricultural goods represent about 12% of the overall value of exports and constitute a key source of foreign exchange earnings. The value of imported agricultural goods ranges between 14% and 24% of total imports, and key imported products include wheat, sugar and powdered milk. As the country pursues its plans to modernise agriculture and increase support to producers and small-scale farmers, production should continue to expand. Nevertheless, output, notably in cereals and fruits and vegetables, remains vulnerable to changing weather conditions, and efforts to mitigate risks will be a determining factor in securing revenues for both farmers and agribusinesses. This chapter contains interviews with Aziz Akhannouch, Minister of Agriculture, and Ali Berbich, Chairman of the Management Board, Zalagh Holding
Explore chapterOriental
The 2003-13 royal initiative, the region’s 10-year economic development programme introduced in 2003, has transformed the Oriental’s economy, placing a strong emphasis on local industry, value-added agricultural production, application of new technologies and a reduction in economic reliance on Algeria. The region has many advantages, including its Mediterranean coastline, a fertile agricultural environment in the north, diverse topography and a young population. However, the region still has a number of hurdles to overcome. The authorities still have a long way to go to reduce the role of the informal economy, for instance, and support the growth of SMEs at a local level. The region is nonetheless well positioned to see a significant increase in growth. Considerable public investment in infrastructure over the last decade has benefitted companies throughout the construction, public works and building materials sectors. With improved infrastructure, new turnkey zones for potential investors, and a spate of investments in the service and social sectors, the scope for growth in the Oriental region is significant.
Explore chapterEnergy & Environment
As a net importer of energy, Morocco is faced with the challenging proposition of satisfying rising local demand while keeping its import bill in check. As a result, energy independence is at the top of the government’s agenda, bundled with efforts to improve domestic energy infrastructure, such as refinery capacities, storage and power generation, and more efficient use of cleaner energy sources. With consumption figures and global commodity prices rising, the government’s balance sheet has been under increasing pressure. According to the Minister of Energy, Mines Water and Environment, total expenditure on energy imports – dominated by crude and refined oil products – rose from 7% of GDP in 2009 to 10.7% in 2011, when it equalled Dh85bn (€7.55bn). Bold energy policies have attracted significant investor interest in recent years, and as a result, an increasing number of players are addressing opportunities in the upstream segment. Morocco is also looking south, where promising growth in the West African market is generating interest among policymakers’ in developing grid connections. Significant challenges remain, however, in terms of funding government-owned entities and so far largely unsuccessful hydrocarbons exploration. This chapter contains interviews with Amina Benkhadra, Managing Director, National Hydrocarbons and Mining Office (ONHYM), and Ali Fassi Fihri, Managing Director, Office National de l’Electricité et de l’Eau Potable (ONEE)
Explore chapterTelecoms & IT
Following rapid growth in SIM card sales and an even faster drop in tariffs, Moroccan telecoms operators seem to have entered at the tail end of the race for a market share of the voice segment. The number of mobile customers grew by 8.73% in 2013, reaching approximately 42.4m. This far exceeded the target set under the government’s “Digital Morocco 2013” strategy. Pre-paid customers dominate the local market with 95% of total subscriptions. The post-paid segment is also on the rise, seeing a growth rate of 14.38% year-on-year in 2013. The local telecoms market it dominated by three providers each with strengths in different segments as well as operations in North and West Africa. In March 2014, the government gave the green light for the ANRT to launch the 4G licensing process. Tendering is ongoing, with licences set to be issued by the end of the year and infrastructure migration to begin before 2015. As 4G licences are waiting to be awarded, mobile data is set to attract attention in 2014 and beyond, accelerating ongoing infrastructure investment plans and giving local content developers a boost. While IT has significant growth potential, it also faces a number of challenges. Morocco’s domestic IT sector is highly fragmented. As of year-end 2013, the industry was home to more than 200 service providers, most of which are small sized and operating at the local or regional level. The sector’s gross turnover in 2013 was estimated at Dh36bn (€3.2bn). Under the €460m Digital Morocco strategy, the government is targeting a number of goals related to SMEs, including upgrading IT infrastructure, growing cooperation with state-owned entities and increasing the share of IT investment from SMEs from 0.5% to 1%. This chapter contains interviews with Azdine El Mountassir Billah, Managing Director, National Telecommunications Regulatory Agency (ANRT), and Mohamed Horani, CEO, Hightech Payment Systems.
Explore chapterHealth & Education
Significant strides have been made in improving health indicators, particularly in terms of maternal and child mortality rates. Costs, however, are likely to remain a major obstacle, with out-of-pocket expenditure accounting for approximately 53% of spending on health care. A 2011 constitutional amendment enshrined access to health care as a basic right and the authorities are working to expand coverage. The Medical Assistance Regime (Régime d’Assistance Médicale, RAMED), first launched in 2009, aims to provide 8.5m impoverished people – around 27% of the total population – with medical assistance to enhance access to medical and health care service. As of end-2013, around 7m people were benefiting from RAMED coverage. Ongoing negotiations to extend insurance coverage will be key to ensuring universal access to health care services. The expansion of rural health care, notably emergency services, should also contribute towards reducing the disparity in service provision throughout the country. The Emergency Plan 2009-12 has channeled substantial funds into the education sector, allowing better infrastructure to facilitate an increase in school enrollment rates. Nevertheless, a number of challenges still need to be addressed to improve access to education in rural areas and ensure greater gender equality. Launched five years ago, the Emergency Plan 2009-12 aims to boost schooling levels in the kingdom, enhance the quality of teaching and infrastructure, and improve higher education and scientific research. Net enrolment in primary education went up from 52.4% to 98.2% between 2005/06 and 2012/13, while middle school and secondary school also saw improved enrolment levels. The growth of private universities and the proliferation of PPPs in higher education should help Morocco absorb a rising number of prospective students, as well as allow the country to create offerings in line with the needs of the job market. This chapter contains interviews with El Houssaine Louardi, Minister of Health; Mehdi Zaghloul, President, Maroc Innovation et Santé; and Larbi Bencheikh, Managing Director, Office of Vocational Training and Employment Promotion (OFPPT).
Explore chapterTax
In conjunction with Mazars, OBG explores the taxation system, examining Morocco’s investor-friendly environment. OBG talks to Kamal Mokdad, Managing Partner, Mazars Morocco, about the evolution of the tax system.
Explore chapterLegal Framework
OBG introduces the reader to the different aspects of the legal system in Morocco, in partnership with Lefèvre Pelletier & associés. This chapter includes a viewpoint from Alain Gauvin, Partner, Lefèvre Pelletier & associés, as well as an interview with Romain Berthon and Lina Fassi Fihri, Partners, Lefèvre Pelletier & associés.
Explore chapterThe Guide
This section includes information on hotels, government and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress, business hours and electricity.
Explore chapterTable of Contents
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