With successive governments expanding the role that the ICT industry can play in economic development, Morocco’s efforts to develop the sector have produced noticeable results. Growing ICT and telecoms usage and a domestic cluster of offshoring firms have allowed the sector to create employment and make a larger contribution to exports. Government policy has also focused on increasing the role of ICT to bridge existing gaps between the state and citizens by establishing a series of e-government policies that have eased the way for business and citizens alike to interact with the state.
Despite the growing role of ICT in many Moroccans’ daily lives, challenges remain. Internet access for some segments of the rural population is still a problem, and high prices for broadband internet slow progress in raising penetration rates. Improving the way that Moroccan small and medium-sized enterprises (SMEs) use ICT and fostering a more favourable environment for ICT-based entrepreneurship will also be critical to ensuring that the development of the sector benefits the Moroccan economy more broadly.
EXPANSION POLICY: Sector oversight rests on the Ministry of Industry, Commerce, Investment and Digital Economy (Ministère de l’Industrie, du Commerce, de l’Investissement et de l’Economie Numérique, MICIEN), which is charged with developing industry policies and establishing incentives for market players. Regulation of the competitive environment is overseen by the National Telecommunications Regulatory Agency (Agence Nationale de Réglementation des Télé communications, ANRT), which establishes operational guidelines for operators and enforces penalties.
Much of what the ICT sector has been able to achieve thus far has been focused on setting up a favourable regulatory environment. The promulgation of Law No. 24-96 of 1997 allowed for a more competitive sector by putting an end to the monopoly of state-owned Maroc Telecom, which had hitherto been the sole provider of telecoms services in the kingdom. Along with liberalisation, the authorities also began to implement programmes aimed at attracting investment, improving the provision of ICT services and expanding employment opportunities through sector development. The resulting growth that took place went hand-in-hand with telecoms services expansion. Mobile penetration, for example, rose from 8% in 2000 to 127% in the third quarter of 2017, according to ANRT figures.
PLANNING STAGE: The overall approach to developing the sector came through the Morocco 1999-2003 five-year plan, which first underscored the role that ICT development should play in the country’s economy and society. Later, the e-Maroc 2010 programme, for the 2005-10 period, focused on improving digital inclusion and fostering a more competitive ICT market. Another important step was the launch of Digital Morocco 2013, with a budget of Dh5.19bn (€480.6m). The plan established its strategy across four main axes: social transformation, digitalisation of public services, rising ICT usage among SMEs and development of the ICT industry overall. While several of the projects included in Digital Morocco 2013 experienced implementation delays, the plan was key to ensuring sector improvement remained a government priority. Another sign of ICT’s importance was its inclusion in the 2009-15 National Pact for Industrial Emergence, which was developed to accelerate growth of exports through the allocation of fiscal and financial incentives, as well as the development of human resources.
NEW STRATEGY: In 2016 the authorities established a new plan for the industry, the Digital Morocco Plan 2020, which aims to build on many of the achievements of previous strategies, focusing on improving ICT usage. Estimated to cost Dh16bn (€1.5bn), according to the World Bank, the plan is set to focus on reducing the digital divide through measures such as the continued digitalisation of administrative services. Another key goal is to bring a larger portion of the population into the digital economy by providing free access to Wi-Fi in public areas and programmes to improve ICT literacy. Related to this, the authorities want to extend ICT education at the primary school level, which will be essential to improving the country’s competitiveness over the long run. Morocco ranked 111th out of 137 countries for internet access in schools in the World Economic Forum’s “Global Competitiveness Report 2017-2018”. This was higher than all its neighbours, with Tunisia ranked 112th, Algeria 124th and Egypt 133rd.
Another important objective is connecting at least 20% of Moroccan SMEs to the internet. The Digital Morocco Plan 2020 will also include liberalisation measures for the telecoms sector that are expected to improve growth rates. Overall, the plan aims to have ICT contribute as much as 11% to GDP and create 125,000 new jobs by 2020, according to the World Bank. In order to reach these goals, extensive human resources training and education will be required. Under the Digital Morocco Plan 2020 the government aims to increase the number of trained ICT graduates to 30,000 per year.
AIMING HIGH: In order to improve implementation of government policies, in July 2016 Moulay Hafid Elalamy, minister of industry, commerce, investment and digital economy, announced the creation of a special agency that will focus on the ambitions of the Digital Morocco Plan 2020. The Agency for Digital Development is expected to accelerate implementation of sector policy. The government also wants to position Morocco as a regional centre for ICT, following the kingdom’s ongoing strategy of establishing itself as a business platform between Europe and Africa.
According to local media, the agency will oversee a dozen projects that should be finalised in 2018. These initiatives include Chikaya, a portal that will offer Moroccans the opportunity to file an online complaint against public authorities, and the interdepartmental portal that will enable Moroccans to renew their identity documents, and pay invoices and taxes.
Moroccan internet users have also been asked to contribute to the development of the digital economy. In early 2018 Othman El Ferdaous, the secretary of state for investment and assistant to the minister of industry, investment, trade and digital economy, launched DigitalFikra, an initiative that ran until January 14, 2018. The project was launched on social media for the e-community to propose ideas and projects that can accelerate digital transformation at the national level.
El Ferdaous told OBG that by January 14, 2018 more than 650 ideas from 183 participants had been received including the launch of an annual innovation contest, the development of a new educational model for new technologies to teach children computer security, electronics, 3D drawing and printing, and the establishment of a quality-excellence label for universities and engineering schools. The best proposals will be presented to the board of directors of the agency.
Furthermore, the country is implementing its National Broadband Strategy, the initial aims of which are to connect 65% of Moroccans and 100% of public buildings to high-speed broadband internet by 2020 and 2018, respectively. Another element that is set to come out of the current digital strategy is the use of public-private partnerships to expand modern ICT infrastructure in rural areas, where operators find it commercially unattractive to operate. Bringing modern infrastructure to smaller towns will be critical to bridging the digital gap, as 42% of Morocco’s population still lives in rural areas, according to the World Bank.
INTERNET: Internet penetration continues to expand. According to the ANRT, the number of internet users grew by 24% year-on-year, reaching 22.6m and a penetration rate of 65% in September 2017. Sector ambitions have underlined the need to expand broadband internet. According to a 2016 study by the World Bank, raising the availability of broadband would allow Morocco to add more value to its offerings and bring in more revenue from its participation in international supply chains. The bank contends that this is due to its positive impact on productivity, which can increase by 10% in the services sector and 5% in industry with the expansion of broadband internet access. However, accessing broadband can be expensive. The World Bank estimated that 60% of the poorest households would have to allocate 26% of their monthly disposable income to be able to afford a fixed broadband internet subscription and 23% to pay for a mobile broadband one.
HARDWARE: Accounting for a representative slice of the ICT market, hardware sales, especially those of PCs and laptops, have declined over the past few years. According to December 2016 figures from the International Data Corporation (IDC), PC sales in Morocco decreased by 9% in 2016 to 102,882 units and turnover of $54.5m. Laptop sales saw a 9% reduction to 129,873 units sold, representing $75m in turnover. Hardware sales were also likely affected by the reduction of ICT equipment acquisition by government bodies in the second quarter of 2016. The government accounts for as much as 40% of early hardware sales.
The country’s small domestic assembly industry has become increasingly competitive with international brands such as Dell and HP, which remain popular in Morocco. Two domestic firms control local production. Data Plus produces tablets and computers to be sold in the kingdom and the regional market, and Accent assembles mobile phones, tablets and computers.
OFFSHORING: Its proximity to European markets has helped Morocco establish itself as a key offshoring destination. The sector is mainly made up of call centre activity and business process outsourcing (BPO), which account for 66% of the kingdom’s offshoring business, according to figures from the Office des Changes. Lower demand from France did affect the industry’s expansion in 2014 and 2015. However, a reverse of this trend seems to have improved performance in 2016, with preliminary figures from April 2017 showing a 10% increase in activity, according to local media reports.
Overall, the industry is making gradual progress. For example, between 2011 and 2015 sector turnover rose at an average rate of 2.4% per year, from Dh6.8bn (€629.7m) to Dh7.5bn (€694.5m), according to a June 2016 report from the Exchange Office. The sector has faced increasing competition from other French-speaking countries in sub-Saharan Africa, which has pushed some domestic offshoring providers to explore opportunities for supplying their customers from abroad and expanding their presence into emerging offshoring destinations with lower costs. In 2015 Moroccan offshoring provider Outsourcia opened an office in Madagascar to complement its facilities in Morocco and France. A similar move was made by Saham Services, part of Saham Group, which in 2015 acquired a majority stake in Egypt-based Ecco Outsourcing as a way of expanding its presence among English-speaking customers in the Middle East, Europe and the US.
“The Moroccan and French outsourcing segments are complimentary in terms of nearshoring and knowledge transfer,” Youssef Chraibi, co-founder and CEO of Outsourcia, told OBG. “Although French demand is less dynamic, nearshoring in Morocco enables client proximity, whereas francophone sub-Saharan countries have become more competitive in the offshoring segment, notably in BPO,” he added.
Due to its importance as a source of employment, MICIEN has set ambitious goals for the segment. In May 2016 Elalamy announced that offshoring activities were expected to create an additional 60,000 jobs, generate Dh18bn (€1.7bn) in exports and attract Dh1.5bn (€138.9m) in new investments by 2020.
SPECIALISED AREAS: Expansion of offshoring operations has been sustained by the development of specialised technological parks. Although the first of these were established primarily in the major urban centres of Rabat and Casablanca, new areas focused on ICT firms and business have helped to distribute the sector’s employment potential across other regions. Through tax incentives and offshoring status, these parks have allowed domestic ICT firms to compete internationally, and attracted foreign ICT operators to service markets in Europe and Africa. Inaugurated in 2007 in Casablanca, Casanearshore Park remains the country’s largest technological park. The zone employs 20,000 people in the ICT sector and has 100 multinational firms spread over 300,000 sq metres of office space. Companies such as Dell and Accenture currently operate from the site.
“Casanearshore boasts an occupancy rate of 100%. Its geographic location enabled the creation of a professional ecosystem, where those employed by companies operating in the park prefer to live,” Rachid El Alaoui, CEO of Casanearschore, told OBG. “The creation of the park has helped Casablanca establish itself as a regional office hub for reshoring, and replicating this model is likely to significantly boost employment figures in Morocco’s regions in the long term.”
Casanearshore Park was built by state-owned MEDZ Sourcing, which has since replicated the concept in other locations. In 2008 the developer inaugurated Rabat Technopolis, which now hosts 76 ICT services firms and employs 30,000 people. Close to the centre of Fès, MedZ Sourcing opened another ICT-dedicated park in 2012. Fès Shore aims to attract ICT services firms looking to take advantage of lower operating costs compared to other areas of the kingdom. MedZ Sourcing is also working on a similar project in the eastern city of Oujda, near the border with Algeria.
DATA CENTRES & CLOUD COMPUTING: New local data centre projects are also coming on-line, supporting the government’s digital agenda. In September 2017 local firm MEDASYS opened the first Moroccan independent data centre near Rabat. Covering an area of 2000 sq metres, the 100% local project is part of the company’s strategy to develop data centres across Africa. The new data centre – the first cloud computing platform in francophone Africa – will boost Morocco’s cloud capabilities, as spending on the technology has remained limited until recently. On the sidelines of the centre’s inauguration MEDASYS also signed a partnership with UK-based Zircom for the opening of new data centres, with an investment of Dh800m (€74.1m).
“There has been strong growth in demand for data centres with higher storage capacity,” Mohammed Benmira, deputy director-general of MEDASYS, told OBG. “Regulations introduced in 2014 and 2015 mandated large corporations to back up their data, which consequently increased demand for services,” he added.
E-COMMERCE: A strong banking sector, coupled with increases in internet usage and rising smartphone penetration, are setting the right environment for the growth of e-commerce. Online transactions rose by 32% in terms of value in 2016 to reach Dh1.8bn (€166.7m), according to the Interbank Monetary Centre, an industry body tasked with managing electronic payment systems. Over the long haul, the rate at which e-commerce expands within the kingdom will also likely be dependent on raising the level of public trust in such transactions. The General Confederation for Enterprise in Morocco recently created the e-thiq@ label as part of a rating system for e-commerce sites based on factors, such as security and protection of information.
E-GOVERNMENT: State-led e-government initiatives have experienced faster adoption rates. Moving citizen-state interaction online has been a key component of the country’s ICT sector development programmes. According to the UN’s 2016 E-Government Survey, Morocco ranked 85th out of 193 countries for the progress it has made on online government. In terms of overall e-participation, it ranked much higher at 17th.
One of Digital Morocco 2013’s priorities has been to accelerate implementation of e-government tools in key areas such as health care, the legal system, tax administration and Customs. Although some e-government programmes included in the sector strategy are taking some time to be fully implemented, successes have been achieved. The ongoing implementation of Portnet, an online platform designed to ease foreign trade operations, has made documentation processing simpler. In September 2016 Portnet connected all ports that fall under the authority of the National Ports Agency with 26,000 subscribers. By allowing online access to documentation such as import and export licences, Portnet lowers operational costs for Moroccan firms involved in foreign trade. Jalal Benhayoun, Portnet’s CEO, told local press that the system has helped reduce the average time it takes to process a container from 13 days to 5.7 days. The service is also set to launch an online payment system, and plans are under way to extend its usage to air freight in the short term.
GADGET FRIENDLY: E-government systems are also taking advantage of rising smartphone usage, with a host of apps launched. The government’s Mawiidi platform came on-line in 2016 and was in use at all hospitals. Mawiidi allows citizens to book doctor’s appointments at any Moroccan hospital using their phones. Another government mobile app launched in 2016 was Autoroutes du Maroc, which allows drivers to interactively plan their trips. In addition, in May 2016 the Ministry of Equipment, Transport and Logistics launched an app that allows Moroccan drivers to access information on any traffic fines they may have received, as well as offering payment methods, and information on how to contest fines and any follow-up procedures. Both Mawiidi and Autoroutes du Maroc won awards at the 2016 edition of Dubai’s World Government Summit. Health care provision in particular could benefit greatly from the current state of ICT penetration in the kingdom. “The fact that almost all Moroccan citizens own a mobile phone is a great opportunity for government to address some of the weaknesses of the public health system by improving the quality of services provided,” the World Bank stated in its 2016 report.
The Digital Morocco Plan 2020 has established objectives to further enhance online interaction between citizen and state. The growing experience in advancing digital government services has become an increasingly attractive specialisation that it can sell to other economies on the continent. “Morocco is leading the way in some of these e-government platforms, and will be able to export services to African countries with strong demand for these services, and those which face serious challenges in corruption and social trust,” Tarik Fadli, president and CEO of Algo Consulting Group, told OBG.
OUTLOOK: ICT has become an integral part of Moroccan society, but despite the advantages that have already resulted from an increasingly connected population, more effort is needed to increase uptake by Moroccan SMEs. Systems like Portnet, for example, have already shown how digital adoption can reduce the cost of doing business. Issues relating to distribution also need to be addressed. “Morocco faces a number of challenges concerning distribution of IT solutions,” Abdelilah Nejjari, general manager Maghreb, West and Central Africa at Cisco, told OBG. “These principally relate to credit facilities and payment delays, counterfeit products and fast-moving technologies.”
Although it is still uncertain to what extent the government will pursue increased liberalisation in the ICT sector, it is essential to address the cost of broadband internet access. Regulation can help keep prices down, but improving competition will be critical to achieving affordability. As francophone nations in sub-Saharan Africa become increasingly competitive, Moroccan offshoring providers will need to expand their service offerings further up the value chain and create international operations in countries with lower operating costs so as to occupy other segments of the market.