|25 July, 2016

The bridge into Africa

Morocco's young financial zone has the potential to be a hub for Africa

The high Atlas are seen from the city of Marrakech December 8, 2014. Picture taken on December 8, 2014. REUTERS/Youssef Boudlal

The high Atlas are seen from the city of Marrakech December 8, 2014. Picture taken on December 8, 2014. REUTERS/Youssef Boudlal

Youssef Boudlal

Najwa El Iraki, Head of Business Development at Casablanca Finance City, discusses why Morocco's young financial zone has the potential to be a hub for Africa
The Casablanca Finance City (CFC) was first established through a directive of Morocco's King Mohammed VI in 2010, making it a relatively young but fast growing gateway into African markets. Through aggressive business development and key partnerships with financial centres across the world--including Mauritius, Paris, Singapore, London, Luxembourg and Montreal--the City now boasts just over 100 companies operating under its umbrella.

Sitting on 100 hectares in the new Casablanca-Anfa city centre, the City now hosts several international banks, insurance companies and advisory groups--but has ambitions for much more. Najwa El Iraki, Head of Business Development, sat down with Banker Africa's Isla Macfarlane at the Africa Financial Services Investment Conference to discuss.

What makes Casablanca Finance City a hub for the African region?

Looking at Morocco's assets, they basically represent the key success factors for building an internationally recognised financial centre. First, there are several strategic advantages--this includes ongoing political stability and Morocco's strategic geographical position between Africa, the Arab world, Europe and the Americas. We also have world-class infrastructure, which includes the largest airport in the West Africa region--we have 33 air connections from Casablanca into other African cities, we are the number one air hub between Europe and Africa...We also have world-class highways, ports, speed rails and networks, making Morocco's infrastructure stand out compared to the rest of the continent.

The second key advantage is a sound regulatory framework; we actually have the second-most developed financial sector in Africa, and a regulatory framework which is recognised as a benchmark in the region according to the IMF, not just in terms of banking but also in terms of insurance.

Thirdly, there is a strong presence of Moroccan champions in Africa. Our companies accounted for about nine per cent of business transactions in Africa last year. Our banks and insurance companies are present in over 30 African countries. Morocco is also the second African investor in the region after South Africa. In terms of being a regional hub, we have very strong cultural, historic, and economic ties with our African neighbours.

Finally, I will add the whole macro-economic environment as one of Morocco's key assets. We are an open economy with strong fundamentals and with free trade agreements that give us access to markets [with a combined total] of one billion customers. This has contributed to improving our rank in the Global Financial Centers Index to become Africa's first financial centre as of April 2016.

All these elements and more give us the ability to be a pan-African hub. Under this context, Casablanca Finance City was set up as Morocco's business and financial heart at the initiative of His Majesty the King in 2010, and we've gone a long way towards having a specific value proposition for companies with the CFC status, granting them a number of advantages to operate in the region. CFC is today an operational reality with over 100 member companies.

In terms of new financial companies coming in, where have you seen the biggest growth areas?

Before all, we should look at the kind of companies that we are targeting. We are interested in companies across the services spectrum within four main categories that together constitute the CFC ecosystem: first, financial institutions such as corporate investment banks, re/insurance firms, asset managers and so on; second, regional headquarters of international corporates in all kinds of industries; third, holding companies and fourth, professional service firms --lawyers, management and strategy consultants and so on.

So where we've seen the most growth looking specifically at the first category i.e. financial institutions: we can see a growing interest from GPs/financial advisory firms in the private equity and investment funds industry. There is also the reinsurance sector that has seen significant growth--just in the last year or so, we've had about 10 companies from this sector, which have come on board.

As far as regions, companies from Europe and North America are most common, since today we are functioning as their North West hub to North and West Africa. But we are also seeing companies from Asia joining our ecosystem more and more, mainly Chinese companies.

How do you support small businesses?

Our offer caters to both larger and smaller businesses; if they are smaller businesses, they want to be part of CFC because firstly 'Casablanca Finance City' is a label--a quality label. So just being part of CFC gives them in a way a certain natural marketing [angle]. We support smaller businesses through our comprehensive ecosystem, with over 100 financial and non-financial companies that can help generate business for them, either directly 
or indirectly.

We also have a strong value proposition for both large and small businesses, which includes fast-tracking administrative operations (ex: only 48 hours for company setup). So even if a company is a small business, it will still benefit from a dedicated desk and a team of professionals within CFC to help it navigate and accelerate its legal and administrative procedures. In addition, there are simplified processes for business visas, foreign employment contracts, residence permits, and facilitated exchange control with no restrictions on the management of foreign currency assets from foreign sources. This could otherwise be difficult for small businesses, if they do not have specific agreements and partnerships in place. There are also some tax incentives for both the CFC companies and their employees.

All this is essential for small businesses; they want to start doing business quickly, be less burdened by administrative procedures, and pay less taxes - all so that they can grow more quickly and efficiently.

What effect does this have on Morocco's domestic economy?

Generally speaking, having a financial centre in a country does create value. It creates wealth for our city, country, and continent; we are creating jobs, both direct and indirect. We are bringing expertise to the markets, because we are looking at value-added service jobs. On a regional level, we are contributing to increasing business and investments opportunities from Morocco into Africa. Today, 38 per cent of Morocco's investments in the continent come from CFC companies. This, in the long-run, obviously means we will contribute to the GDP growth of the country.

We are also working on the training and talent pool side; we brought in specific qualifications and examination centres in Morocco like the CFA (Chartered Financial Analyst), the CISI (Chartered Institution of Security Investments), and the CII (Chartered Insurance Institute). Thus we're training people on the ground, helping companies within the CFC ecosystem and beyond to better their employees' skills, and to have a good talent pool to hire from.

What would you say CFC's biggest goals are?

There is a vast working field ahead for CFC to strengthen its position as a global financial centre.

We wish to strategically position ourselves on key business lines and attract companies in specialised fields, thereby generating more growth notably in the corporate and investment banking sector. At its basis, CFC is a promoter of African 
investment opportunities.

CFC also has a role to play in improving wider financial regulation. The role of CFC here is to be a facilitator and an accelerator of reforms at the national and regional levels. We are a financial centre that is in constant evolution, and we seek to continuously enhance our competitiveness, the same as even the most advanced financial centres aim to do.

In the longer run, we want to promote regional financial integration. This is really our ultimate end: to make South-South cooperation even stronger with a focus on GNWA [Greater Northwest Africa region] countries, so as to consolidate our position as a pan-African business and financial hub and to represent a well-integrated region having achieved critical mass.

With CFC growing as a financial beacon in the region, what are your biggest challenges?

A global financial centre builds itself over time. There are certain components of our hub which can be improved and which require a strong and sustained mobilisation of multiple public and private stakeholders. I suppose it all comes back to the question about our goals and specifically on the longer-term as I previously mentioned--regional financial integration, which remains the biggest challenge. African states will have to work hand in hand in order to overcome outstanding financial and economic barriers, resulting in an integrated and well regulated market that will increase the attractiveness of the region even further for investors.

© Banker Africa 2016

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