Contracted growth is expected to be short lived, however, as the IMF anticipates the economy will grow by 4.1% in 2017 and 5% by 2020.
New investment code
While numerous countries in the region experienced falls in foreign direct investment (FDI) between 2010 and 2015, Morocco saw an increase of 11%, reaching Dh39bn (€3.6bn). Authorities are also looking to capitalise on and attract further FDI through a new investment law introduced in July.
The new legislation, which replaces a previous law implemented in 1995, creates free zones in each of the country’s 12 regions, recognises indirect exporter status, creates incentives for export-oriented and industrial companies, and restructures investment promotion activities under the centralised Moroccan Agency for Investment Development and Export.
Efforts to boost investment have garnered significant interest. Immediately after the new law was implemented, Morocco signed a total of 30 contracts totalling Dh7.5bn (€688.7m) worth of international investment agreements with companies from the UK, Canada, Brazil, China, India and Russia, including UK-based automotive manufacturer Delphi and Canadian manufacturer Linamar.
Boosting the financial sector
The new investment law complements efforts to enhance the stock exchange and introduce new banking products targeting previously unbanked groups. Moves to increase financial inclusion dovetail with the overall goal of raising liquidity and improving the competitiveness of the local financial sector at the international level.
In late June the government carried out its first privatisation through the capital markets, floating a 40% stake in state-owned port operator Marsa Maroc on the Casablanca Stock Exchange.
The initial public offering, Morocco’s largest in eight years and the only one of the year, was part of a wider effort to modernise the stock exchange and boost liquidity. It was valued at Dh1.94bn (€177.9m), of which Dh600m (€55m) came from individual investors.
These developments follow the creation of the Moroccan Capital Market Authority (Autorité Marocaine du Marches des Capitaux, AMMC) in February. The new body took over regulation of the stock market from the Securities Ethics Council, which had operated under the Ministry of Economy and Finance. The most significant difference between the AMMC and its predecessor is that the new body is independent from the government.
In the banking sector, authorities announced plans to introduce both Islamic banking and mobile-to-mobile payments to extend banking coverage to the previously unbanked.
After the central bank, Banque Al Maghrib (BAM), announced in July it would begin licensing Islamic banks, Moroccan authorities received seven requests to open Islamic banks and three applications to open windows for Islamic products by the end of the year. BAM aims to have Islamic banks start operations in 2017, with Qatar International Islamic Bank announcing earlier this month that it had received authorisation establish a bank in Morocco.
Moroccan finance officials also released plans to introduce mobile-to-mobile payments. According to BAM, new regulations will allow non-bank entities and individuals to open accounts and expand mobile payments to transactions such as retail and utilities payments, and topping up mobile phones.
Casablanca Development Plan
Beyond the financial sector, upgrades in urban infrastructure are being eyed to improve connectivity and accommodate rapid urbanisation.
Casablanca, the country’s largest city and its commercial capital, is at the centre of these efforts. In the previous year, King Mohamed VI rolled out the 2015-20 Casablanca Strategic Development Plan, which aims to boost socioeconomic inclusion, connectivity and mobility while encouraging the development of the city as an international financial centre.
Almost Dh27bn (€2.5bn) of the five-year plan’s total budget of Dh33.6bn (€3.1bn) has been set aside for projects such as the creation of a second tramline, the upgrade of at least 32 km of Casablanca’s roads, improved pedestrian access, and increased security through better lighting and surveillance.
The development of renewable energy sources is a key government priority to offset the country’s dependence on imported fossil fuels and its rising electricity consumption.
Morocco aims to increase the share of renewable energy to 42% by 2020 and 52% by 2030, and hopes to leverage its role as host for the 22nd Conference of the Parties climate change event to bring this goal closer to fruition.
To this end, in February 2016 the first concentrated solar power (CSP) facility, dubbed Noor, was launched in Ouarzazate. Noor, which will occupy an area of around 2500 ha, will be Africa’s largest solar plant and the world’s biggest CSP facility.
The power plant is being constructed in three stages, with the 160-MW Noor I launched in February, and the 200-MW Noor II and 150-MW Noor III set to go on-line in 2017 and achieve full operational status in 2019.
© Oxford Business Group 2017