Francisco A. Laguna & Wojciech Kornacki
Morocco’s business and foreign direct investment opportunities are red hot. The World Bank reports that in the last 5 years, Morocco has been undergoing sweeping economic reforms which are expected to generate high potential growth in the country. Most recently, Morocco was listed in the top 48 most innovative economies in the world. The UK Trade & Investment Ministry reports that Morocco has been identified as a member of a group of “fast-growing nations described as ‘African Lions’.”
Morocco is located in Northeastern Africa, between Algeria and Western Sahara. It is separated from Europe by the Mediterranean Sea. Spain and Portugal are its Northern neighbors. Its economy has been growing at the rate of approximately 4.5% since 2001. Its population of slightly over 33 million offers a qualified and relatively inexpensive labor force. Morocco also offers political and economic stability to potential investors – two key advantages – which prove elusive for other Northeastern African countries.
Strengths and Weaknesses of the Moroccan Market:
Morocco offers following strengths: (1) Strategic location between Europe and North and West Africa; (2) improving communication and transportation networks; (3) competitive labor costs; and (4) tax incentives and ease of repatriation for profits. Potential weaknesses include: (1) growing competition from non-EU countries; (2) corruption and bureaucracy; (3) informal economy; and (4) delays in implementing reforms. Despite the weaknesses, most experts agree that Morocco offers attractive growth and investment opportunities.
Free Trade Agreement
Morocco is a signatory of the U.S.-Morocco Free Trade Agreement and other free trade agreements giving potential investors access to over 1 billion consumers world-wide. For U.S. exporters, this also means that almost all goods exported to Morocco are tariff free. According to the Moroccan Investment Development Company, Morocco has lower business taxes than China and Spain and lower export costs than Turkey and Egypt. Thus, smart and well-timed investment in Morocco may be less expensive, and has the potential to offer greater return in the future.
Solar and Renewable Energy Investment Opportunities
Morocco has recently completed Stage I of one of the world’s largest solar thermal power plants located at the edge of Sahara desert, near the town of Ouarzazate. Once the project is completed, Morocco will become a major world solar power. The new design allows the plant to deliver the energy at night as well. Recently, even NASA commented on the project.
Morocco is also heavily investing in wind and water energy projects. Direct foreign investment opportunities in renewable energy in Morocco will continue to expand in the years to come as Morocco is aiming to become energy self-sufficient, and eventually sell its energy to Europe.
Infrastructure Development Project Opportunities
Infrastructure projects as another investment opportunity in Morocco. In the last several years, Morocco has been spending billions of dollars to improve its transportation infrastructure to become more attractive to international investors. This includes expanding the high speed rail system, road system and electric power grid. The Moroccan construction industry is expected to grow at the rate of over 6% per year until 2020. Its proximity to Europe and ready access to many emerging markets in Africa make the country a regional project and infrastructure powerhouse, and US investors are looking at Morocco when exploring to expand in the region. Earlier this year, Renault and its partners announced that they would invest $1 billion in Morocco. Shell Vivo Energy, GlaxoSmithKline, Unilever, and many other companies already operate in Morocco.
Investment Opportunities in other Moroccan Industries
The stock exchange in Morocco is the second largest in Africa and has recently partnered with the London Stock Exchange. This creates tremendous opportunities for banking, insurance, capital markets and public private partnerships.
The national Investment Development Agency reports that other sectors of Moroccan economy are also growing. Between 2005 and 2010, the number of tourists visiting Morocco has increased by 3 million.
The new infrastructure, renewable energy and tourism projects also offer opportunities in fire safety, border control, surveillance, cyber security and greater education and training.
If you would like more information about investment opportunities in Morocco, contract TransLegal.