Jean R. AbiNader
August 1, 2019
For two weeks, international media have been commenting on the 20th anniversary of the accession of King Mohammed VI to the throne in Morocco. Both laudatory and cautionary perspectives are included with there being no conclusive trend apparent in Morocco’s future, but all acknowledge the pivotal role of the king.
So rather than review what others are saying, this blog takes a look at some of the concrete steps taken by Morocco to establish itself as a leader in Africa, in issues affecting the environment, banking, and investments.
The first challenge is that Morocco has grown from around 5 million people at the beginning of the 20th century to more than 33 million at the beginning of the 21st! This reality underscores Morocco’s commitment to COP22 and global efforts to both reduce carbon emissions and enhance the quality of life for citizens through better stewardship of nature. Although this exponential demographic growth characterizes much of the MENA region and Africa, the big difference is that Morocco is doing something about it, despite its limited resources.
As an article in La Tribune Afrique commented, “The strong demographic growth of the Continent has been accompanied by a strong pressure on water resources, forest heritage, coastlines, and the balance of natural environments. Far from weakening over the coming decades, these prospects are a source of concern for the sustainability of the Moroccan growth model.” In response, Morocco has developed national strategies in agriculture, water resources, fishing, land use, and coastal development to help protect the environment while increasing opportunities to promote sustainable practices.
While the components of the various plans vary, each sector is charged with three requirements: good data, accessible technology, and inclusive growth. These conditions are at the heart of the government’s efforts with the private sector, including NGOs, to improve the quality of life throughout the country. CSOs are encouraged to participate through educational outreach and assistance programs that target poverty, jobs and skills training, environmental degradation, wastewater management, and other factors that affect society on a daily basis.
These efforts extend as well to the private sector through the promotion of Corporate Social Responsibility (CSR), one of the key themes promoted by the General Confederation of Moroccan Enterprises (CGEM), the leading business association in the country. As the country does not as yet have oil and gas resources as an additional income stream, it is the goal of the country to have 30% of its energy supplied by renewable sources by 2030.
Morocco’s environmental activities do not stop at its borders. The Tribune article points out that “In order to contribute to the emergence of a South-South cooperation dynamic on environmental issues, Morocco has offered to share with its continental partners, faced with similar issues, its know-how and best practices in conducting and steering sustainable projects, as was the case in the agricultural and energy sectors.” This also includes its expertise in the experience of building vast solar and wind-powered projects to further deepen Morocco and Africa’s commitment to a green economy.
The Moroccan banking sector is another arena in which the country is building its African profile and closely linking the economies of the continent. The so-called “internationalization” of Moroccan banks was not always a given. But as the country’s air carrier Royal Air Maroc and some of its key companies expanded initially in francophone Africa, banks realized that they could both serve existing Moroccan businesses in Africa while acting as an anchor for others interested in expanding on the continent.
According to the banking commission of the West African Economic and Monetary Union (UEMOA), in 2018 Moroccan banks had 27.8% of the market share in WAEMU, and more than 30% of the share of the net profit in the region. As noted, this is not a casual approach but a dedicated strategy that now supports the king’s economic diplomacy initiatives in Africa. For maps that illustrate the growth of Moroccan banking in Africa, click here.
With a strong base in West Africa, the banks are moving on to Central and East Africa, a strategy that is “mainly justified by five key factors: the need to support Morocco’s new strategy of economic refocus on the continent; imperfections in the [Moroccan and host country] markets; the potential of the location markets characterized by a low rate of banking; the need for these banks to support their industrial group clients already present in Africa; the spectacular growth of Africa, which is unquestionably the continent of the twenty-first century.”
As privately-owned banks, they have to succeed in very competitive environments, and it is the experience of modernizing over the past 20 years to compete in their home markets that has enabled Morocco’s financial sector to be effective as it is expanding. With BMCE Bank of Africa “already present in East Africa, Attijariwafa bank is eyeing new acquisitions in this region…” in 2019, starting with Rwanda, Kenya, and Ethiopia. “The experience in West Africa could be a source of inspiration for duplicating financial influence in Morocco in the eastern region of the continent,” the Tribune article concluded.
In line with the growth of the banking sector on the African continent, it has become the first stop for the country’s investment abroad. In just 14 years, between 2003 and 2017, Moroccan companies have invested more than $3.8 billion, or 60% of outward FDI, in Africa. “Through its private sector, the Kingdom has established itself as a key investor. Morocco is the African country whose amount of investment in the continent is the largest,” said Bouchra Bayed, consultant and president of Maroc Entrepreneurs, in an interview with La Tribune.
According to a study conducted by the French Agency for Development Promotion, 55% of these investments are in West Africa, while the north (25%), the center (15%), and sub-Saharan Africa (5%) are among the destinations on the investment radar. The lineup during the period analyzed, includes Egypt (20%) as the largest beneficiary of funds injected by Moroccan companies in Africa. Next come Côte d’Ivoire (19%), Mali (13%), Burkina Faso (7%), Senegal (7%) and Gabon (6%).
According to a study by the French Agency for Development, “While banks have been the locomotives of this African offensive, an intense diversification of Moroccan investments is underway across the rest of the continent since the last decade. Today, almost all key sectors of the economy are represented: agribusiness, telecoms, ICT, industry, energy, health, and construction.”
“Moroccan companies have realized that the economic and commercial stakes of our country will be played out in Africa. They are embarking on sectors that have already been successful in Morocco, and that are finding a new breath on the Continent, which, remember, still has huge needs, unlike Europe, now saturated in terms of investment “, says Laaziz Kadiri, President of the Commission dedicated to economic diplomacy, to Africa and South-South cooperation at the General Confederation of Enterprises of Morocco (CGEM).
The article goes on to say that “Morocco is positioning itself today as a leader in strategic investment on its Continent. Indeed, over the last 20 years, Moroccan FDI in Africa has increased considerably thanks to investments in the financial sector, banking, and insurance in particular. These are important investments in terms of capital that also have a real strategic vision, that of contributing to the development of the continent.”
What is increasingly clear is that Moroccan companies in Africa do not come just become exporters of local goods, but rather producers who are contributing to sustainable and long-term growth in the countries, or as the article puts it, “but Moroccan companies have made the choice to stay on their continent and build inclusive and win-win partnerships with African countries.” Building local industries, providing employment, and linking local and regional markets to the international marketplace contribute to the long-term growth of the sectors and countries that are hosting Moroccan investments.
Morocco is well-positioned to be both a clearinghouse for investments in Africa and an engine that builds the local economies for regional and international success.