Business Brief: Major 3D Printing Facility Launched; Islamic Banking Expands, and Housing Developers Make Money by Doing Good in Social Housing; Casablanca Finance City Adds Well-known Tenant

Jean R. AbiNaderMATIC
September 14, 2017

Jean R. AbiNader, Exec. Dir., Moroccan American Trade and Investment Center

Jean R. AbiNader, Exec. Dir., Moroccan American Trade and Investment Center

Great news for Moroccan manufacturing as it adds a cross-sector capability in 3D printing. Bahrain’s Al Baraka sets its sights on Morocco’s Islamic banking sector, while the impact of social housing construction benefits both companies and needy families, thanks to government incentives.

Thales makes an impression. Thales, a leading French electronics, technology, and IT corporation released information on the inauguration of its first industrial competence center for metallic printing outside of France. Well known for its on-board aircraft entertainment centers, Thales will supply its own units as well as its clients in the aerospace, automotive, and medical sectors. The Group, which opened its local office in Rabat in 2006, is present in Morocco in the fields of defense, aerospace, transport. and security, and currently has about 45 employees.

Pierre Prigent, Country Director for Morocco, said that “This competence center will give us access to a highly capable ecosystem of industrial suppliers specializing in mechanical parts; helping us meet all our requirements in terms of material, performance, and reproducibility for the aerospace and space markets.” The Industrial Competence Center is an integrated technology platform that Thales utilizes as the core of its Industry 4.0 strategy to meet international customer needs.

Overall investment in the Casablanca facility is estimated at $16-22 million and includes real estate development, machinery, tools, and training, among other start-up costs. Currently the facility has two machines, and Thales is planning to install 10 larger units with a team of 20-25 engineers. Five Moroccan engineers have already undergone training in Belgium as part of the operations team.

Its location, near Casablanca’s international airport and seaport facilities, “Makes it possible to produce better, at a lower cost, and in a more eco-responsibly way,” according to Mr. Prigent. He noted that the existence of an aeronautical subcontracting ecosystem in the country in as asset in making Thales’s global center of expertise in 3D printing.

Its website points out that “3D printing will reduce the time it takes to develop and manufacture high-value parts in complex metal alloys for aerospace and space applications. Thales’s expertise in the materials, processes, and requirements specific to the aerospace and space sectors will enable the technology to reach maturity more quickly. With its proven industrial processes and manufacturing capabilities, the new competence centre is a further step in Thales’s ongoing pre-product investment program designed to promote the use of this innovative technology…”

Bahrain’s Al Baraka Banking Group sees Morocco as target of opportunity. In an effort to diversify assets and revenues, Al Baraka, one of the global leaders in Islamic finance with operations in Asia, Africa, and the Middle East, has its sights set on Morocco. A Reuters story explained that Morocco’s recent opening to Islamic banking, and a large population underserved by non-Islamic commercial banks, as well as Bahrain’s long-standing commitment to economic ties with Morocco make this a natural progression.

“We feel that since the country is not overbanked, there is room for more players to come in and play a positive role in supporting the growth targets of the Moroccan economy,” said Chief Executive Adnan Ahmed Yousif. The Reuters story noted, “There are 19 banks in Morocco with the top three accounting for two-thirds of total assets, while offshore banks represent less than 5 percent of total assets, according to an IMF report. The country also has a large pool of companies seeking financing. The number of small businesses with access to bank credit has doubled since 2007, the IMF said.”

Al Baraka has partnered with BMCE, Morocco’s third largest lender by revenue, to launch an Islamic bank under the name BTI Bank and is awaiting regulatory approvals to start operations. There are business opportunities for Islamic banks in the SME and trade finance sectors, while project finance, leasing, Islamic insurance and sukuk (Islamic bonds) are also importance, Yousif told Reuters. He also noted that Islamic finance would help diversify the balance sheet and revenue sources for the lender.

Making money, doing good. One of the more successful social housing programs in developing countries is in Morocco. Although there is always a need for more price-conscious housing due to the growth of the single families and overall youthful population, Morocco has an extensive set of incentives to make the private sector the core of the housing solution for answering the demand.

An article in the Daily Star described the program. Removing slums in urban areas was one of King Mohammed VI’s first priorities in the early 2000s. “The government put in place a number of initiatives, including loan guarantees for the poor and tax rebates for developers, making the social housing sector a popular investment.” The government launched an ambitious “cities without slums” program in 2004. It has since re-housed some 1.3m people at estimated cost of some $3.4 billion. 52 cities and towns have been declared “slum free.” Even so, in 2015 around 2.6 million, or 13% of urban Moroccans, still lived in urban slums, according to the UN.

There is a downside to the success of the program, since developers receive rebates for selling price-capped homes and are rewarded with set profits for each unit. “Ten years ago, social housing was the best asset to invest in because there was a need and there was still land,” says Faycal Temsamani, a property expert now employed by OCP, the Moroccan industrial group. “Today the price of the land is getting higher and it’s becoming more difficult to get a good yield.”

The article points out that, ”As more builders have joined the sector, increased competition has forced them to up their game and in some cases, reduce their margins to guarantee sales. Five or seven years ago, whatever was built would sell, says an employee of one large developer. Now some units are empty because they weren’t well built or were not properly marketed, while others have started to offer lifts and swimming pools to attract people.”

The article describes an emerging trend: “Some investors spy new opportunities in the space between the urban slums or bidonvilles and gated communities. They point to an under-served middle market of buyers on modest incomes who do not qualify for social housing but struggle to find affordable homes, especially in Casablanca where demand is highest. Although the city’s property market has stuttered since the financial crisis, prices are rising again. Sales volumes of residential units jumped by 7 percent in the second quarter of 2017 compared with the first, according to the central bank’s Real Estate Price index.”

Mr. Temsamani agrees there is latent demand in this segment: “It’s a specific market.

You need a particular layout and a location close to the center of the city but the price cannot be above a certain limit. If you can find this formula, you can be very successful.”

Allianz joins Casablanca Finance City. Looking at how it can best access the African market, German insurer Allianz decided to join other major companies, banks, and financial services firm in CFC.  According to a company press release, “Obtaining this status underlines the strategic vision of Allianz to increase its presence in the Moroccan market and more widely across the African continent through Marofinac, its financial services company in Africa.”

“We are pleased to have joined CFC, Africa’s leading financial center. With Marofinac’s CFC status, which will facilitate the development of Allianz in the region, our regional hub in Casablanca becomes truly operational,” said Coenraad Vrolijk, Allianz’s managing director for Africa. The Allianz group has been present in Morocco since the end of January 2017 after the acquisition of Zurich Morocco. Allianz is also present in Morocco via its credit insurance subsidiary, Euler Hermes Acmar.

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