Morocco Surges Ahead as Hub for Investment, Finance, and Trade in Africa – David S. Bloom
* “The real genius to Morocco’s strategy is that it not only looks to secure investment, but to present itself a destination market as well. In doing so, Morocco offers an ideal foothold for African expansion.” *
David S. Bloom, MATIC
March 22, 2014
In the global competition to attract investments in manufacturing and services, there are many suitors—and the stakes only seem to get higher. More and more, investment development is a keystone of any administration’s role, especially as job creation has become an existential issue for almost any government.
Businesses looking to save by overseas production have many factors to consider. Cost is obviously a principal factor, but so are efficiency, distribution infrastructure, and proximity to markets—otherwise everything would be made in Bangladesh. So how does a country stand out to potential investors looking to manufacture abroad?
Morocco has achieved important results with an inside-out strategy. Beginning with a specific vision to attract high-tech manufacturing, Morocco has positioned itself by using inherent advantages (strategic location, language diversity, and well-educated workforce), along with regulatory changes (free trade agreements, business environment reforms, specialized industrial zones) and investment (creating hubs such as Rabat Technopark and Casablanca Finance City, and investing in ports and other transportation). Yet this is only half of the story.
As Bombardier’s investment continues to move forward, we are once again reminded of the success Morocco has had in attracting manufacturing investment.
A JeuneAfrique article called it a “niche strategy”, and cited a recent World Economic Forum (WEF) report calling Morocco the “most competitive in North Africa,” and the 5th most competitive in all of Africa. Bombardier and Renault-Nissan headline Morocco’s success in drawing in major international investment.
Morocco has done well to create a manufacturing hub for international clients, and what will truly allow those industries to grow and sustain production is the development of the domestic and regional market. The growing middle class in Morocco will not only help produce items, such as cars and textiles, but will also buy them. The real genius to Morocco’s strategy is that it not only looks to secure investment, but to present itself a destination market as well. In doing so, Morocco offers an ideal foothold for African expansion.
News from the country this month shows continued emphasis on this two-pronged approach. Morocco adopted a new law which should be a game changer for venture capital in the country. Morocco has relatively high access to private credit in the region, but entrepreneurs still have trouble securing investment. The new law will better protect investors and clarify categories of investment capital to simplify regulation.
Utilizing global best practices as a model, Morocco looks to support venture capital as an industry within the country. The law will also promote foreign venture capital investment, which will likely continue to pour in from the Gulf States. Not only will the new rules improve access to credit, but it will also help to establish Morocco as a financial hub of the region.
Another boon to the domestic market was secured this week, as Morocco acquired a nearly $200 million loan from The European Investment Bank (EIB) to expand and modernize road networks throughout the country. Roads leading out of the country will also likely be targeted for investment in order to take advantage of the dozens of trade agreements signed during the recent trip by King Mohammed VI to Mali, Cote d’Ivoire, Guinea, and Gabon.
Morocco’s strategy of developing its domestic market as a key part of drawing in foreign investment will continue to support balanced and sustained economic growth in the country. As a result, Morocco will remain a strong draw for foreign investors.
David Bloom is a Research Associate at the Moroccan American Center.