DBI_Morocco by Rohit Juneja

doing business in

Leading research, exploration and exploitation of hydrocarbons and mines. Promoting the oil, gas and mineral resources of Morocco. Developing meaningful partnerships with international investors. Strengthening links with the world market. Contributing to economic and environmentally sustainable development.

Contents

doing business in

Morocco

2012

Top 7 Reasons �� 4

Top 80 companies (Center Gatefold) ��38

Country Overview �� 6

Banking Penetration �� 40

AMDI – Our services �� 8

Banking �� 42

Investing in Morocco �� 10

Capital Markets �� 48

Economic Outlook �� 12

Insurance �� 50

Starting a Business �� 14

Transport �� 52

Taxation �� 18

Infrastructure �� 56

Offshoring �� 20

Mining �� 58

Aeronautics �� 22

Agriculture �� 60

Automotive �� 24

Fisheries �� 62

Energy �� 26

Pharmaceuticals �� 64

Information Technology �� 30

Consumer Behavior �� 66

Telecoms �� 32

Tourism �� 68

Textiles �� 34

Practical Information �� 72

Corporate Finance �� 37

Sectors qualifying for Moroccan government incentives.

Dear reader: Since you have this publication in hand, the chances are that you and your company are considering Morocco as your next investment destination. Believe me, Morocco offers numerous reasons to invest, and we provide some overview of these in the following pages. Morocco is politically stable, has an excellent growth pedigree, enlightened governance, extraordinary infrastructure, and offers a range of incentives for foreign investors, namely in government-designated priority areas. With such strengths, it will come as no surprise that leading companies such as Renault, CapGemini,

Bombardier, and Li & Fung, just to mention a few, have chosen Morocco. Last but not least, my entire team and myself are at your disposal to help you prepare your Moroccan entry. Please turn to pages 8 and 9. We look forward to greeting you in Morocco.

Ahmed

ihri Fassi F

Ahmed Fassi Fihri, Director, AMDI, Morocco Investment Development Agency

Top 7 reasons to invest in Morocco

Stable political environment Morocco is the safest and most stable country in the Middle East and North Africa region for investors. Morocco is a democratic and social constitutional monarchy. Since coming to the throne in 1999, King Mohamed VI has pursued many democratic reforms. The King appoints the prime minister who then appoints a cabinet of 22 ministers. The Parliament consists of the Chamber of Counselors (the upper house) and the Chamber of Representatives (the lower house). The 270 counselors are elected indirectly by local councils, professional organizations, and labor syndicates to serve nine-year terms. Onethird of the upper house is elected every three years. The 395 representatives are elected by popular vote to serve five-year terms.

The Occident of the Orient Strategically positioned on both the Atlantic Ocean and the Mediterranean Sea, less than 14 kilometers from Europe, Morocco is a regional center for trade, manufacturing, warehousing, redistribution, sales, call centers, and an array of IT services reaching Europe, Africa, the Middle East, and the Americas. It is ideally positioned for shipping goods between the Americas, Africa and the Mediterranean. The massive harbor at Tangier provides much of the infrastructure for this. In addition, Morocco is party to trade agreements that allow it to reach a billion consumers duty-free. Morocco has a free market economy and one of the regionâ&#x20AC;&#x2122;s lowest corruption levels. Due to its international nature, Morocco retains Western customs in food, drink and clothing. French language and culture is commonplace and the use of English is being widely adopted.

Strong growth Moroccoâ&#x20AC;&#x2122;s economy boasted an average growth rate of 5.1% between 2001 and 2010 despite the international financial and economic crisis. GDP grew 4.9% in 2009, the largest increase across the Mediterranean region. During the same period, inflation increased less than 2%, the lowest rate in the region. Overall treasury debt declined from 73% to 50% of GDP between 2000 and 2010. Strong domestic demand and public investment have contributed to the countryâ&#x20AC;&#x2122;s growth. Household consumption grew by an average 8% per year between 2004 and 2010 to $52 billion (MAD 442 billion), while public investment nearly tripled during the same period to reach $20 billion (MAD 167 billion).

Proven returns on investment Morocco has a consistent track record in gathering Foreign Direct Investment (FDI). Among the 22 countries of North and Western Africa, it is one of the largest recipients of foreign direct investment with more than $1.2 billion of inward FDI in 2010, as tracked by the World Bank.

Doing Business in Morocco | 2012 Edition

Top 7 Reasons

Enlightened government support The Moroccan government stimulates or directs economic activity in strategic areas, including aeronautics, automotive, offshoring and tourism. In addition, incentives provide selected sectors (mining, export industries, tourism, real estate, handicrafts and maritime) with partial or total exemptions from VAT, income tax and import duties. Incentives are also available to businesses that invest in one of Morocco’s Free Trade Zones (FTZs). The Tangier FTZ offers incentives to investors who set up businesses on undeveloped land, including exemptions from duties and taxes associated with the acquisition of land, license and “urban taxes” for 15 years, VAT on all exported goods, and corporate taxes for five years, with a reduced 8.75% corporate tax thereafter.

Attractive business environment Morocco’s domestic market of 32 million inhabitants is the second largest in the Maghreb. It also has the best road, rail and port network in North Africa. It has a simplified tax code with tax incentives for foreign businesses and a simplified customs schedule with two flat-rate tariffs on imported goods brought into Morocco to expand a business. The country has reformed its labor laws and clarified employment rules and the government is increasing funding for vocational training. Since the 1980s, the government has privatized 114 formerly state-run enterprises. Due to the Free Trade Agreement and WTO accession process, Morocco is a secure investment with legal safeguards in the form of “sectoral codes” that regulate business sectors and are applied equally to domestic and foreign investors.

Free trade agreements In 2004, Morocco became the second Arab nation (after Jordan in 2000) to enter into a Free Trade Agreement with the US. In 2005, Morocco joined the EU Neighborhood Association for trade, and in 2008 was the first Arab country in the MENA region to be granted the coveted “Advanced Status” as a full trading partner. As a result, Morocco is the only country in North Africa to have completely free and open trade rights with the US and all the countries of the EU. Morocco has also entered into bilateral free trade agreements with most of the other countries of the MENA region and is now engaged in obtaining agreements with the rest of Africa, as well as numerous countries in the Americas, Asia, and the Pacific. As a result, Morocco today has more free and open trade agreements than any other nation in the MENA region and Africa.

2012 Edition | Doing Business in Morocco

Enlightened monarchy T

he Kingdom of Morocco is the westernmost country in North Africa. With a population of about 32 million inhabitants and an area of 710,850 square kilometers, Morocco is part of the Maghreb region, which also includes Tunisia, Algeria, Mauritania, and Libya, with which it shares cultural, historical and linguistic ties. Morocco is a constitutional monarchy with an elected parliament. Executive power is exercised by the government and King Mohamed VI. Legislative power is vested in both the government and the two chambers of parliament, the Assembly of Representatives and the Assembly of Councillors. The king can also issue decrees called dahirs having the force of law. The political capital is Rabat, but the largest city is Casablanca. Other main cities include Marrakech, Tetouan, Tangier, Salé, Fez, Agadir, Meknes, Oujda, Kenitra and Nador. In Africa, Morocco constitutes the fifth largest economy, even though it is only ranked 9th in terms of population. Morocco’s economy is free-market. Government reforms and steady yearly growth in the region of 4% to 5% since 2000 have helped to diversify and strengthen the Moroccan economic base. The major resources of the Moroccan economy are financial services, real estate and tourism, followed by agriculture and manufacturing. Economic growth drivers are diversified, with new service and industrial poles in cities such as Casablanca and Tangier. Industry and mining contribute about one-third of the annual GDP. Construction and manufacturing provide about 23%. The industries that recorded the highest growth are tourism, telecoms, information technology and textiles. Morocco is the world’s thirdlargest producer of phosphorus (after China and the US). Morocco is the world’s biggest exporter of phosphates, whether as raw material or processed as fertilizer. The services sector accounts for just over half of GDP. Morocco, however, still depends heavily on agriculture, which accounts for 14% of GDP but fully 40% to 45% of employment. Sales of fish and seafood are important as well.

Doing Business in Morocco | 2012 Edition

Tourism and workers’ remittances have played a critical role since the Kingdom’s independence. The production of textiles, clothing and leather goods is part of a growing manufacturing sector, which is also seeing higher added-value sectors having good growth: automotive, electronics and aeronautics to name a few. ●

Tétouan

Tangier

NORTH ATLANTIC OCEAN

RABAT

Kenitra

Melilla

Fez Meknés

Casablanca

Nador Oujda Bou Arfa

Safi Marrakech Ouarzazate Agadir

Algeria Tarfaya

0 0

100 200km 100 200mi

Northern portion of Morocco

Strong legs to stand on Percentage of GDP by sector of the economy, 2009 Electricity, gas, water Mining 3% 3% Other services 5% Construction 7%

Finance, real estate, business services 20%

Transport, storage communication 7%

Public admin., health, education 9%

Agriculture and fishing 16% Retail trade, tourism 14%

Manufacturing 16%

GDP 2010: $90.8 billion Source: African Development Bank, World Bank

Country Overview

North Africa comparative economies Morocco Population: 32.3 GDP 2010: 90.8 GDP per cap. 2010: 2,796 GDP growth: 4.8% FDI 2010: 1.2

Algeria Population: GDP 2010: GDP per cap. 2010: GDP growth: FDI 2010:

35.4 162 4,567 3.6% 2.3

Libya Population: GDP 2010: GDP per cap. 2010: GDP growth: FDI 2010:

Algeria

OC CO

Tunisia

Mauritania

Libya

Tunisia Population: 10.5 GDP 2010: 44.3 GDP per cap. 2010: 4,199 GDP growth: 1.3% FDI 2010: 1.4

Mali

Niger Chad

6.5 62 9,957 17.77% n.a.

Egypt

Egypt Population: GDP 2010: GDP per cap. 2010: GDP growth: FDI 2010:

84.5 219 2,698 1% 6.4

Benin Ghana Mauritania Population : 3.4 GDP: 3.6 GDP per capita: 1,044 GDP growth: 5.2% FDI: 0.014

Nigeria Sudan

Cameroon

D.R. Congo Tanzania

Population in Millions GDP 2010 $Billions (Libya 2009) GDP growth 2010-2011 GDP per capita 2010 in US$ (Libya 2009) FDI net inflows 2010 $Billions

Angola

Zambia

Source: World Bank

2012 Edition |â&#x20AC;&#x201A; Doing Business in Morocco

Opening doors for investors The Moroccan Investment Development Agency (AMDI) was completely revamped in 2009 to facilitate foreign investment into Morocco, and to launch outbound marketing using the agency’s seven foreign bureaus.

MDI’s purpose is two-fold. It provides advice and orientation for foreign investors interested in Moroccan opportunities, and promotes Moroccan interests Ahmed Fassi Fihri abroad to identify and convince Acting Director foreign investors to start businesses in Morocco. All AMDI services are free. The agency endeavours to provide the best environment for the successful development of new businesses. To do this, it provides investors with key information about: • Specific investment opportunities • Regulatory changes • Administrative procedures • Local partners AMDI is organized into three divisions. The investment division does the ground work for foreign investors who are prepared to set up a business in Morocco. It can assist them with administrative procedures, as well as market research or financing. The business development division promotes Morocco outside the country, and a third division offers support services. Different specialities Agency specialists work in several key areas the government has identified for priority development. Among these are experts in automotive, aeronautics,

AMDI is the first place to go for information about investing in Morocco.

renewable energy, offshoring and outsourcing (that is, call centers and back office operations), agroprocessing and textiles. AMDI publications cover several aspects of doing business in Morocco. These are available free for digital download at the Invest in Morocco website (www.invest.gov.ma), which is available in French and English. Choose “Our Services” in the top menu and “Publications” on the drop-down menu. The 36 publications available for download cover the legal and fiscal aspects of doing business in Morocco, the investment incentives and taxes, among other matters. Other publications analyze various economic sectors. Most publications are available in English and French, and some are translated into Spanish or Arabic. Linked to others AMDI works closely with other government agencies, such as those that operate in tourism, solar and renewable energy, agriculture and the Tanger Med Free Zone special development agency. These close ties can simplify and accelerate matters for investors. Another group of AMDI partners are the 16 Regional Investment Centers (CRI for their French abbreviation).

Ten steps to setting up a company in Morocco Step 1 Reservation of a Name

Step 2 Articles of Incorporation

Source: AMDI 8

Doing Business in Morocco | 2012 Edition

Step 3 Application Form

Step 4 Blocking of Capital

Step 5 Declarations Subscription and Payment

AMDI – Our services

automotive hub is in Tangier. Renewable energies are more dispersed but the Region de l’Orient (on the Mediterranean Sea) has developed a strong position. One-stop shop AMDI can provide answers for foreign investors on several matters, such as financing. AMDI does not provide direct financing itself, but it has privileged access to many of the top actors in the Moroccan financial sector. This includes traditional retail and investment banks, private equity players, the Casablanca Stock Exchange and several government-backed programs for which companies with Moroccan partners may qualify. Regarding setting up a company, AMDI has outlined the ten steps required (see chart below). When it comes to government aid or incentives, AMDI can help identify assistance that may be available for a specific type of project.

Navigate the Moroccan territory How AMDI can help foreign investors Upstream

Midstream

Downstream

AMDI prepares background and sales materials for prospection

AMDI provides various services: * Technical assistance * Preparation of contracts for government funding * Preparation of contracts for tax benefits

AMDI does follow-up work: * Company visits * Statistical questionnaires * Analysis of further requirements

AMDI main oﬃce Rabat

AMDI canvases diﬀerent areas for potential investors

Foreign representative oﬃces (7 oﬃces worldwide)

Source: AMDI/Invest In Morocco

These centers develop inbound foreign investment for specific regions. Some regional specialities have already taken shape. For example, the aeronautics cluster is located near Casablanca in the town of Nouaceur. The

Step 6 Constituent Acts Deposit

Step 7 Trading Tax and Fiscal ID Subscriptions

It can also provide information about government assistance for training and continuing education. This includes both upfront and ongoing training for the six sectors that Morocco has identified as Metiers Nationaux (priority professions) – offshoring, automotive, aeronautics and aerospace, electronics, textiles and leather goods, and agro-processing. The agency can also provide detailed information about the various free trade or special economic zones that Morocco has developed throughout the country. In addition, AMDI provides regular updates on the cost of key manufacturing inputs such as labor costs and utility rates. This information is available on their website under the “Invest in Morocco” tab. Lastly, via its AfterCare branch, AMDI provides followup assistance to foreign investors after their setup in Morocco. This illustrates AMDI’s commitment to longterm relationships - something that helps explain the high rate of renewal investments. ● For more information: Moroccan Investment Development Agency (AMDI) www.invest.gov.ma

Step 8 Register of Commerce Registration

Step 9 Social Security Aﬃliation

Step 10 Oﬃcial Gazette Publications

2012 Edition | Doing Business in Morocco

A tale of two investors For AMDI, all investors are created equal. Here is how AMDI helped a Spanish manufacturer (Sage Energia y Produccion) and a start-up (Elephant Vert) with their entries into Morocco.

s Ahmed Fassi-Fihri, the director of AMDI Invest in Morocco, can testify, foreign investors come in all sizes and shapes: “For Sage Energia y Produccion (SEP), Morocco was only one option on a wide palette,” he explains. “While for Elephant Vert, a Swiss start-up, we were the natural choice. But no matter what the investor’s needs, we try to help them out.” Sebastien Couasnet, the country representative of Elephant Vert in Morocco, says AMDI’s level of assistance was unexpected. “I was very pleasantly surprised,” says Couasnet. “I had been expecting administrative bureaucracy and slowness, but no, not at all. It was quite the opposite. I was assisted in a consistent and helpful way for more than two months.” Elephant Vert is not a typical foreign investor. Founded in Geneva in 2010, the company is funded by the Antenna Technologies Foundation, a non-profit organization that promotes innovative agricultural and financial solutions. Elephant Vert could be described

AMDI helps foreign investors of any size or shape enter Morocco.

as a cross between a biotech company and a microfinancier. “Despite our unusual profile we mean serious business in Morocco,” pursues Couasnet. ”We intend to invest about €25 million in Morocco from now until 2015. Most of that will be for a manufacturing facility in Meknes, located within one of the country’s agropoles (see pages 60 - 61), and then two others in Berkane and Souss. Our plants will employ 500 people and produce both bio-fertilizers and bio-pesticides.” Elephant Vert will also have an administrative office in Rabat, close to the Ministry of Agriculture, and a research and development center. One thing that Couasnet found most useful from AMDI was the profuse advice on legal and administrative procedures, and more importantly, help in understanding financing options.

Flocking to Morocco Selected recent foreign investments into Morocco Company Tekfen

Country of origin

Amount*

Turkey

600

Nature

Location

Mining-phosphates

Pipeline

RJ Corp Ltd.

India

100

Consumer goods (soft drinks)

Multi-city

Meridionale Impianti SpA

Italy

Electricity production (PV panels)

n.a.

Delphi Automotive Inc.

USA

n.a.

Automotive components (plant extensions)

Tangier

Maphar SA Li & Fung Ltd. Logica Inc.

France

Pharmaceuticals (logistics platform)

Casablanca

Hong Kong/China

300

Textiles, clothing

n.a.

Offshoring, software, cloud services

*Figures in $M

Doing Business in Morocco | 2012 Edition

Rabat (Technopolis) Source: AMDI/Invest in Morocco

Investing in Morocco

perhaps 50 employees,” explains SEP’s Rodriguez. “But we fully expect to grow over the years and perhaps then use Morocco as a regional platform for expansion to Maghreb and West African countries.” Low-cost but skilled labor was a main factor in choosing Morocco. “Accessing trained personnel, or receiving training assistance from the government, was very important for us,” says Rodriguez. “Our operation here will carry out industrial design, namely for automotive and aeronautics applications, and we need qualified engineers and programmers to do this work.”

“AMDI gave me very clear explanations on the administrative processes, and my counterpart at AMDI, Nejma, was very consistent in her follow-up to my queries,” explains Couasnet. David Rodriguez, general manager of Sage Energia y Produccion, backs up this point. “For us, the dealings with AMDI lasted for about ten months in 2011,” says Rodriguez. “AMDI helped us in four ways. The main way was an explanation of Moroccan legislation and how the Moroccan government could help my company, especially “Working in terms of incentives and grants (see pages 18-19).”

Another important attraction was domestic demand. SEP’s Moroccan subsidiary IPEM can live from its domestic contracts as well as export contracts. IPEM expects that up to 75% of its staff will be Moroccan at first, and even more later on. SEP and Elephant Vert agree that the stability of the country is another advantage. “Economic and political stability, as well as longterm personal safety were certainly factors for us, in addition to Morocco’s location,” explains Couasnet of Elephant Vert, adding that location was also a key factor for Elephant Vert.

with AMDI was a true pleasure and unexpectedly so,” says Sebastien Couasnet of Elephant Vert biotech.

SEP is a Spanish company based in Valladolid, and active in the design and manufacture of industrial processes with various applications, most notably in the automotive, aeronautics, energy and agriculture sectors. SEP’s subsidiary in Morocco, called IPEM, is to provide these services and products to clients in the EU and the USA, as well as in the Tangier Free Zones.” SEP also took advantage of AMDI assistance to identify local partners and find a suitable location. For SEP, the natural location was the Tangier Free Trade Zone, next to the large automotive cluster that has sprouted around Renault’s mammoth plant there. Elephant Vert took advantage of the Maroc Vert plan for agricultural development and its eight agropoles. “Our initial investment will be about €1.5 million with

“We did not really give much thought to other Maghreb countries,” Couasnet explains. “Morocco was the natural choice. Casablanca has very good flight connections both to Europe and to other African countries and that is important for our future development.”

AMDI’s help in explaining financing options – be it from the Moroccan government or from other local sources – was another influencing factor for both companies. Both SEP and Elephant Vert took advantage of special tax and financing incentives that apply to high-tech and to agriculture, just two of the six priority areas that the Moroccan government has defined. “Perhaps the ten-month interaction with AMDI was longer than usual,” posits SEP’s Rodriguez, “but it enabled us to go back and forth between different investment options, and different incentive packages that the government put on the table.” ● 2012 Edition | Doing Business in Morocco

Re-structured for growth Morocco continues its upward trend. This year will see challenges from ongoing efforts in the energy and extractive sectors, but the reforms that King Mohamed VI initiated after he came to the throne in 1999 are taking hold.

he basics of the Moroccan economy remain stable in spite of the crisis and the country displays a degree of resilience in the face of external shock, with a growth in gross domestic product (GDP) of 4.9% in 2009 and 3.3% in 2010. Nevertheless, the crisis has highlighted structural weaknesses, in particular in certain exportoriented sectors such as textiles and clothing. The continuation of the macroeconomic and structural reforms put in place over the past decade, combined with the revival of non-agricultural activities and demand from Moroccoâ&#x20AC;&#x2122;s partners, offer favorable prospects for growth and the economy should expand by 4.6% in 2011 and 5.0% in 2012. The Moroccan economy has been, traditionally, dependent on the agricultural sector but over the past decade has embarked upon a diversification of its structure. More and more growth comes from the secondary and tertiary sectors. The main drivers of growth in 2010 were the good performance of non-agricultural activities and a revival of the sectors most heavily hit by the crisis in 2009. Non-agricultural activities were affected by the 2009 international crisis but recovered in 2010 to reach their pre-crisis level. They recorded an improvement in added value of 5% and the trend is expected to continue in 2011, helped by growth rates in the secondary and tertiary sectors of 5% and 5.6% respectively. Extractive activities (notably phosphates) were hard hit by the crisis in 2009, with a drop in their added value of 23.8% compared with the previous year. But the mining sector met expectations in 2010 as demand picked up, in particular from the US and Brazil, and recorded growth of 10%. This trend was expected to 12

Doing Business in Morocco | 2012 Edition

The Moroccan economy is becoming less dependent on agriculture.

be confirmed in 2011 (up by 11.5%), driven by strong external demand and the major investment program of the Office Cherifien des Phosphates (OCP) which hopes to increase its production capacity in mining, chemicals and fertilizers. Production of thermal and hydraulic energy rose by 34.7% and 16.7% respectively during the first ten months of 2010, compared with the same period in 2009, and contributed to electricity production, making up for the drop in imports from Spain and Algeria and the fall in production from the Tahaddart power plant. The international crisis and its debilitating effect on the economies of Moroccoâ&#x20AC;&#x2122;s trading partners had a major impact on processing industries, which are

Recession-proof Morocco Evolution of real GDP growth rates since 2002 9%

1% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: African Development Bank

Economic Outlook

the good cereals harvest, the control of inflation, a revival in transfers from Moroccans living abroad, the availability of consumer credit (up by an annual rate of 8.7% at the end of October 2010) and steps to support household purchasing power in the 2010 budget. These include a revision of income tax rates that came into effect at the beginning of 2010 which lowered the maximum rate to 38% from 40% and raised the tax threshold from 24,000 Moroccan dirhams (MAD) to MAD 30,000 ($2,700 to $3,400). Household consumption, which accounted for an average 58% of GDP during the period 2005-09, rose by 4.1% in 2010 and should continue its strong performance in 2011, with an increase of 5.6%.

strongly oriented towards exports and account, on average, for 16.5% of the total added value of the secondary sector. But the revival in industrial activity, which began in 2009, continued in 2010, with the exception of the textile and clothing sector, in particular leather, and aeronautics, which continued to show substandard performances. Processing industries recorded progress of 3.1% in 2010 and should continue to grow at a rate of 3.6% in 2011. The international crisis affected the tertiary sector only moderately, which managed to maintain its 2009 growth rate in spite of a slight drop in tourism. In 2010 it recorded growth of around 5%, supported by the good performance of the primary and secondary sectors and healthy national and foreign demand. This progress was expected to continue in 2011 and reach 5.6%. Tourism benefited in 2010 from the recovery in global tourism. Arrivals rose by 12% in the first ten months of the year compared with the same period in 2009 with a total of 7.9 million tourists. The number of overnight stays in classified establishments also rose by 11.5%, mainly concentrated in the cities of Marrakech, Agadir and Casablanca, which between them accounted for two thirds of the extra overnight stays. Occupancy rates rose by two points during the first ten months of the year compared with same period in 2009, reaching 45%. Receipts from tourism rose by 6.6% over the period. Internal demand continues to play its role as an engine of growth. It was boosted in particular by

Investment benefited from the improvement in economic activity and the vitality of public and private investment. Gross fixed capital formation at current prices (GFCF) progressed by 6.9% in 2010, after falling back by 0.6% the previous year. Credits for equipment financing had advanced by 25.8% at the end of the first eight months of 2010 compared with the same period in 2009. Imports of capital goods, other than aircraft, saw a similar advance with an annual growth rate of 5.1%. GFCF should maintain its strong performance in 2011 with growth of 7.4% over 2010. At the same time its contribution to growth should rise from 2.3% in 2010 to 2.5% in 2011. Fiscal Policy The budget deficit increased in 2010 due to higher spending. Estimates for 2011 suggest a moderate decline due to lower spending growth which will be mainly financed by internal resources, unlike the 2010 deficit which took advantage of favorable financing on the international market. Monetary Policy Inflation as measured by the variation in the cost of living index continued to be very moderate in 2010, remaining at under 1%. The prices of food and nonfood goods rose respectively by 0.4 % and 0.9 %. ● This article was edited from the African Development Bank’s annual publication, African Economic Outlook, 2012 edition. Further information can be found at www.africaneconomicoutlook.org, or by contacting the AfDB communications department: penelope.depontet@afdb.org Note : The most recent economic forecast for Morocco from the African Development Bank is expected to be released by June 15, 2012. 2012 Edition | Doing Business in Morocco

No Byzantine complexity Setting up a company in Morocco is relatively simple and fast. Morocco also differs from its neighbors since it enables foreigners to operate without local partners.

he creation of a company in Morocco is easier than in most of the North Africa and Middle East region. Two weeks suffice for the Frederic Elbar procedures, whether one does it Managing Director independently or via one of the Maghreb Consulting Regional Investment Centers (CRI in French). The CRIs offer a “one-stopshop” window that manages all the administrative steps for creating the corporate entity. One needs to contact the regional CRI for the area where one wishes to set up.

Two weeks is all it takes to create a company in Morocco.

For light and flexible structures, this is the preferred legal form. An SARL can have one or more partners who may be individuals or legal entities, resident or not in Morocco. There is no minimum capital to set up a SARL.

Unlike other Maghreb countries, in Morocco it is not necessary to appoint a local shareholder or partner. Indeed, a foreigner can create a business without resorting to Moroccan partners.

At the more complex end of the scale is incorporation, that is setting up a company with multiple shareholders and a board of directors. In French this is a Societe Anonyme (SA). The minimum capital to set up a SA is about $35,000 (MAD 300,000).

The simplest legal form for a company is the equivalent of the limited liability company (LLC). In French this is a Société Anonyme à Responsabilité Limitée (SARL).

Registering a SARL company in Morocco involves six procedures and takes 12 days. By comparison the regional average for North Africa and the Middle East

Let us help your North African entry

Setting up a business

investors, information about the setting up of the company and about the investment of foreign funds must be given to the exchange control board office. Taxation The Moroccan tax system is codified under the General Tax Code (CGI). The main points applicable to local companies are: • Basic corporate tax rate of 30% • Exact tax base and rate depend on the type of activity • Tax exemption for the first five years of operation (for exportation or for hotels) • Value added tax (VAT) is applied at a flat rate of 20% • Tax on dividends is 10% and this excludes any further taxation.

is eight procedures and 20 days, according to the World Bank study Doing Business 2012. The first step is to obtain a “Certificat Négatif”, which registers the company name at the Intellectual Property Moroccan Office (OMPIC). Next a deposit is paid in a bank and a receipt obtained called the “attestation de depot” in French. After legalizing the company statutes at the local mayor’s office (Commune), documents must be filed with the tax office to register the company with the Ministry of Finance for obtaining tax identification numbers, and with the Tribunal of Commerce, after having published information in a local newspaper and in the official newspaper. This is the most time-consuming step taking seven days. Finally, have a company stamp made. Also, for foreign

Morocco has signed tax treaties with almost 40 countries to avoid double taxation. A full list of these countries is available on the website of the Ministry of Economy and Finance. Tax incentives (see tables on pages 18 and 19) Under Moroccan law and economic incentives, certain sectors receive tax incentives, for example for the export of goods and services or hotels. There are also export processing zones (zones franches in French) that provide specific tax and customs privileges. Taxation of individuals For individuals, whether expatriate or simply on temporary assignment, the tax code specifies that these people are liable to tax in Morocco if they have a permanent residence in Morocco or they remain in Morocco for a period of at least 183 days continuously or intermittently during the fiscal year.

We are focused on business in North Africa, a region of high growth and potential. Based in Casablanca (Morocco), we offer legal and tax advice. Our experienced staff speaks English, French and Arabic and reacts fast and realistically. Specializing in company law and taxation over all Maghreb countries, we accompany our clients in various projects: investment deals, public or private tenders, and establishing partnerships with local companies or entrepreneurs. 15

Moreover, the employer in Morocco must retain a withholding tax for the employees personal income tax. These are established on a sliding scale, with a maximum rate of 38% when the employee’s salary exceeds approximately $23,500 annually (MAD 200,000). Companies must pay the personal income tax owed by employees. Employers should note that staff expect their wages on a net basis, so companies should include these taxes in their calculations to assess total payroll costs. Social security and labor law Social security contributions are taken both from employee wages (at 8% rate) and from employers (at 16% rate). However, non-Moroccan staff assigned by their employer to Morocco from a nation which has signed a social security agreement with Morocco may be exempt from local dues if they prove they are still contributing to social security in their country of origin. The use of foreign labor is regulated in Morocco. However, a foreigner can obtain a valid work permit if they are detached by a foreign company and remain subject to social security of their country of origin. A person may also be allowed to work as the legal representative of a Moroccan corporation (for example the general manager of a SARL). On the other hand, if neither case applies, the employer must submit an application to the national employment agency (ANAPEC), which will assess if Moroccan applicants can be found to fulfill the required functions. Foreign exchange regulations Of obvious concern to foreign investors is whether one can repatriate income, dividends or interest on investments back to one’s country of origin. Because the Moroccan dirham (MAD) is not a freely convertible currency, Morocco has specific exchange

regulations. Special regulations from the central bank authority or the foreign exchange bureau (Office des Changes www.oc.gov.ma) must be fulfilled. Investments from abroad in foreign currency must first be declared to the competent authorities. The initial investments may consist of monies paid into the capital of subsidiary companies, or cash paid through bank accounts associated with the company’s operations, or payments for acquisitions of assets such as real estate. It is legal to repatriate greater funds than were imported initially. Retained profits can be transfered provided that the company has paid its taxes. Careful attention should be paid to imports of services. Indeed, although one may pay foreign services from Morocco, the type of service imported (brand or franchise royalties, technical assistance fees, management fees, etc.) must respect Moroccan foreign exchange regulations that specify the procedures for payment of each type of service. Real estate A foreigner (either individual or corporate entity) can easily acquire property (land or building) provided that it is not agricultural land. Property is subject to detailed legal and administrative processing. This guarantees security for investors but is accompanied by a relatively heavy bureaucracy. Legislation Moroccan corporate law is based on French law but with adaptations for the Moroccan economy. Laws are published in Arabic and French. ● For more information: Ministry of Economy and Finance www.finances.gov.ma Moroccan national employment agency (ANAPEC) www.anapec.org Foreign exchange bureau (Office des Changes)

The company was founded by Frederic Elbar, who benefits from almost 20 years of experience in North and Central Africa. For six years, Mr. Elbar was partner with PWC in Central Africa, and for almost nine years he was partner of French law firm CMS Bureau Francis Lefebvre in North Africa in charge of the region. Mr. Elbar provides his expertise in helping foreign companies and investors set up business in North Africa, from his base in Casablanca, the economic capital of the Kingdom of Morocco.

Maghreb Consulting & Training 16

Legal and tax advice www.maghreb-consulting.com

Moroccan taxes made easy The Moroccan tax code is quite straightforward. Here are some of the highlights. Direct taxes The Value Added Tax (VAT) in Morocco is set at a standard rate of 20%. There are three reduced rates (7%, 10% and 14%) for specific products or services. Basic food staples, books and publications, certain loans and financial services are not subject to VAT. Aside from the VAT, there are specific excise (consumption) taxes, for example on alcohol, tobacco, sugar, petrol products and others. Tax treaties Morocco has signed free trade or tax treaties with over sixty countries worldwide, and this number increases every year. The latest status can be verified on the AMDI website. Morocco applies withholding taxes at the flat rate of 10% on dividends, interest payments and royalties. When a tax treaty exists, deductions may apply and the actual rate may be lower.

Morocco offers many tax credits and subsidies to foreign companies.

Corporate Taxes Capital gains are taxed at a 30% flat rate. Foreign companies can take advantage of numerous tax credits or subsidies (see chart below). The AMDI (Invest in Morocco investment promotion agency) can provide further details. The following table summarizes the corporate tax scale: Basic rate

30% of profits

Rate applicable for financial services companies (e.g. banks, insurance, etc.)

37% of profits

Optional rate for construction or engineering companies

8% of the contract amount

Beneficiary

Tax incentives *

Companies exporting goods and /or services

First 5 years : exemption from corporate tax, pro rated based on export sales As of Year 6 : taxation at the reduced corporate tax rate of 17.5% also pro rated on export turnover

Hotels and similar

Same as for export companies ; revenues must be generated in foreign currency

Export Free Zones

Exemption from customs duties First 5 years : exemption from corporate tax As of Year 6 : taxation at the reduced corporate tax rate of 8.5% for 20 years.

Companies having â&#x20AC;&#x153;Casablanca Finance Cityâ&#x20AC;? First 5 years : exemption from corporate tax, pro rated based on export sales status ** As of Year 6 : taxation at the reduced corporate tax rate of 8.5% For employees : personal tax rate limited to 20%. Companies having signed an investment convention with the government

Exemption from customs duties on the investments Qualifying condition : investment must be above MAD 200 million (ca. $23 million)

Newly established companies

Exemption from VAT on investments for 24 months

*Information provided by Maghreb Consulting; ** Credit institutions, insurance companies and brokers, consulting firms to the financial sector

Doing Business in Morocco | 2012 Edition

Taxation

ends on December 31 of the same year. Moroccan companies are obliged to adopt IFRS accounting rules progressively. Without going into full details, Moroccan accounting rules are inspired from French rules. Companies must prepare annual summaries of their accounts on the closing of the fiscal year based on the records kept in various ledgers (livre journal, grand livre and livre d’inventaire in French). The annual summaries must include balance sheet, accounts payable and receivable, profit and loss statement, cash flow statement, and additional information or notes.

Personal income tax The table below provides the current scale applicable for personal income tax in Morocco: Income level (annual, in thousands)

Tax rate

less than 30 MAD

from 30 to 50 MAD

10%

from 50 to 60 MAD

20%

from 60 to 80 MAD

30%

from 80 to 180 MAD

34%

above 180 MAD

38%

There are several tax credits or possible deductions for foreign taxpayers in Morocco. It is best to consult with regional tax authorities or the central government for full details. For expatriates, there are no particular tax clauses, but Morocco has signed non-double taxation treaties with most countries. Accounting and reporting In Morocco, the fiscal year starts on January 1 and

“Although consolidated reporting is only mandatory for publicly-traded companies in Morocco, it is proving more and more useful for foreign companies having Moroccan subsidiaries,” explains Emmanuel Amon, managing director of Viareport, a French software company with operations in Morocco. Audit and certification The rules for auditing and auditors in Morocco were modified in 1999. External audits are required for joint stock companies (societe anonyme), for publicly listed companies and for LLCs (SARL) having annual revenues above MAD 50 million ($5.8 million). The audit must be led by a commissaire aux comptes (statutory auditors) and certain restrictions apply. For certain types of company, two statutory auditors are required. ● For more information: Moroccan Tax Ministry www.portail.tax.gov.ma Invest in Morocco Agency (AMDI) www.invest.gov.ma Ministry of Finance www.finances.gov.ma Moroccan accountants and auditors association www.acam.assoc.ma Ordre des Experts Comptables du Maroc www.oecmaroc.com

Beneficiary

Grants (subsidies) *

Export services**

Exemption from corporate tax, under the same conditions as export companies Government subsidy in order to reduce employee tax rate to a maximum of 20% Qualifying condition : company must be established in a so-called near-shoring zone

Companies having signed an investment convention with the government

Government contribution to cover certain expenses (real estate, external infrastructure, and training costs)

Companies benefitting from Hassan II funds (specific sectors)

Reimbursement of real estate acquisition and construction costs, up to a defined per cent

Any company employing staff in Morocco

Reimbursement of training expenses, within certain limits

*Information provided by Maghreb Consulting; ** Credit institutions, insurance companies and brokers, consulting firms to the financial sector

2012 Edition | Doing Business in Morocco

Low barriers to high value To improve its attractiveness in the offshoring sector, Morocco has introduced valuable incentives and developed infrastructure to accommodate technology-intensive companies. Foreign investors have started flocking.

o, offshoring in Morocco is not a high-speed boat race. It refers to a set of three key activities that European and North American companies are sub-contracting out to specialist firms in Morocco, including IT outsourcing, call centers and telemarketing. Moroccan programmers and engineers develop solutions to European software problems for CapGemini. Specialists respond to customer service or other back office tasks for WebHelp out of Casablanca call centers. And telemarketers handle outbound sales and marketing campaigns for companies such as Teleperformance. The Moroccan government seems to have hit the jackpot when it selected offshoring as one of the seven key development areas within its national industrial pact. Along with aeronautics, automotive and other sectors, offshoring is showing good results. No wonder the World Bank has chosen Morocco as the “best global reformer in 2011”. And because of the low cost of its workforce and the combined financial incentives on offer, Morocco has a strong competitive advantage for offshoring operating

Offshoring is a key area for development in Morocco’s national industrial pact.

costs. By comparison, costs between Morocco and southern Europe for certain financial services are revealing with a differential in the cost of labor of up to 50%. Offshoring, considered as a high value-added niche, has already substantially contributed to Morocco’s development. It is the most advanced of selected priority areas, with well-defined and attractive incentives (see page 18 and 19) and is backed by good training programs that provide skilled human resources. The Ministry of Industry, Trade and New Technologies has overseen the establishment of twin dedicated offshoring zones. These two platforms, called Casa Nearshore and Technopolis, are fully operational and already host over 70 companies. Next on plan are Fes Shore, Tetouan Shore and Oujda Shore, named after the cities where they are located. Construction is well-advanced and the first office spaces will be ready before the end of 2012.

Ambitious targets for IT and offshoring Current 2008

Target 2013

Employment

32,000

58,000

Offshoring revenues

$95 mill.

$700 mill.

GDP Increases

Direct

+ $820 million

Induced

+2.3 billion Source: Maroc Numeric strategic plan

Doing Business in Morocco | 2012 Edition

Offshoring

Insight

HR: 15 620 people have been trained Training is one of the main pillars of the industrial strategy Emergence. Morocco recognizes that the availability and quality of human resources helps determine its attractiveness and contributes to increased productivity and improved competitiveness. To this end, several projects have been completed or are underway in collaboration with professional associations and operators in the field of training. Since launching in 2009, the National Pact for Industrial Emergence (EINP), intended to implement the Plan Emergence, some 15,620 people were trained and placed in 217 companies operating in the global businesses of Morocco.

Morocco’s offshoring efforts are bearing fruit. In terms of numbers, the Ministry points to an export turnover of $820 million in 2011 and confirms that the target employment of 100,000 new jobs by 2015 is already halfway achieved. As for development prospects, “they are positive with 100,000 jobs created and the expectation of about $2.3 billion in offshoring revenues attained in 2015,” explains a Ministry spokesperson. That means 70,000 new jobs over the next three or four years and a fourfold increase in revenues generated. International confidence Morocco’s appeal can no longer be hidden and is becoming well known to foreign companies in search of cost-effective and nearby solutions. “Nearly a hundred international companies have placed their confidence in the sector by installing branches in Moroccan offshoring parks,” explains Abderrafie Hanouf, CEO of MedZ Sourcing, a subsidiary of Caisse de Depot et de Gestion Development. Morocco’s efforts in developing and promoting its offshoring zones have paid off. The country is now one of the world’s most sought-after destinations in the field. Proof thereof comes from A.T. Kearney’s 2011 Global Services Location Index, in which Morocco appears in the top 30 most attractive countries. A.T. Kearney ranks attractiveness based on three criteria: the banking and financial structure, the business environment, and the quality of labor available. Also playing a role for Morocco’s

attractiveness is the geographic proximity, which is a factor that weighs financially. Proximity to headquarters enables companies such as IT applications maintenance or call centers to save on management travel costs, and thus increase profitability. Low costs and high incentives For companies offshoring in Morocco, geographical proximity is certainly one factor of appeal. But this is not all. Morocco has other aces up its offshoring sleeve which means the country can boast of a unique package to interested foreign companies. Morocco offers a pool of qualified human resources and the nearshore zones all have incentives and subsidies to assist companies with training efforts on ongoing education. Morocco also offers an attractive incentive framework centered around a personal income tax rate capped at 20%. As for housing, it is diversified and in line with best international standards, including dedicated integrated industrial platforms with cabled, airconditioned and guarded offices. “Our cumulative investment over the next five years will reach one billion dollars, aiming to develop and manage competitive offshoring zones, offering client companies efficient services and infrastructure,” says Mr. Hanouf of MedZ Sourcing. ● For more information: National Pact for Industrial Emergence 2009-2015 www.emergence.gov.ma MedZ Sourcing - www.medz-sourcing.com Ministry of Industry, Trade and New Technologies www.mcinet.gov.ma

2012 Edition | Doing Business in Morocco

Aviation takes off Morocco has developed an internationally competitive aerospace platform that is already recognized worldwide.

en years ago, Morocco focused on the potential of the aeronautics and space industries. Today, aeronautics is a significant engine of growth, with annual growth prospects of 20%. The industrial base includes more than 100 companies, consisting mainly of subsidiaries of multinationals or of joint ventures between Moroccan and international operators. This cluster includes aircraft maintenance, logistics, wiring, mechanical engineering, sheet metal, assembly, surface treatment and composite materials. More than 8,000 skilled workers are currently employed in the aeronautics sector and future ambitions are big. The sector expects to reach 15,000 jobs by 2015 and 23,000 by 2020. Much of the aerospace cluster is located in the economic capital Casablanca (Aeropole Nouaceur) and, to a lesser degree, in the Tangier free trade zone. Within GIMAS (Groupement des Industries Marocaines Aéronautiques et Spatiales), the federation that covers aeronautics and space industries in Morocco, optimism about the future of the aviation industry is aplenty.

The aviation sector is attracting more foreign and Moroccan Investors.

The sector continues to attract foreign and Moroccan investors. Investments grew markedly from $34 million in 2009 to $41 million in 2010. In other words, aeronautics continues to earn its kudos as one of the key industrial priorities in Morocco’s so-called metiers mondiaux – the key professions for which the country wishes to develop world-class expertise. Still climbing Aeronautics in Morocco is still on the climb due to a combination of factors. Firstly, there is the generally positive worldwide industry outlook, with top aircraft manufacturers enjoying full order books for the next five years.

Climbing high Evolution of export earnings - key industries 5000 4500

International references include EADS, Boeing, Labinal, Snecma, Aircelle, Creuzet, Zodiac, Daher and Souriau. The sector contributes high added value, with a production value of around $665 million in 2010, against only $575 million in 2009. Thanks to export sales, it also brings in foreign currency. For the year 2010, this reached $260 million against $230 million in 2009. 22

Doing Business in Morocco | 2012 Edition

4000 3500 ($M)

“Moroccan order books are filled and the kingdom has become a globally recognized low-cost destination for aviation, offering logistical proximity and a skilled workforce,” explains GIMAS Chairman Hamid el Andaloussi. “Morocco has become the destination of choice for operators in the aerospace sector.”

3000 2500 2000 1500 1000 500 0 2004 Aeronautics

2009 Automotive

2010 Electronics

Oﬀshoring Source: UNCTAD

Aeronautics

Success Story

Bombardier lands in Morocco Canadian aircraft manufacturer Bombardier is planning its Moroccan debut in late 2013. The company has signed a letter of intent to develop an extensive manufacturing facility at the aeronautics cluster in Nouaceur near Casablanca. Although finalized discussions are still ongoing, Bombardier plans to invest $200 million for the establishment of the unit. The money will be spread over eight years beginning in 2013. Company spokesperson Haley Dunne explained: “The project will first enable Bombardier to produce simple components and structures, such as aircraft floorboards.”

Secondly, new investors are still flocking to Morocco. Large Canadian aircraft manufacturer Bombardier is the latest to announce a substantial investment (see sidebar) amounting to over $200 million. Whether via organic growth or via new joint venture openings, 2012 promises to be beneficial for local companies. Another growth factor is that Morocco is adding new capabilities and areas of expertise that integrate different technologies and add new value. The wide base of companies cover many of the links in the industrial chain: manufacturing, assembly, surface treatment, engine and fuselage maintenance, design and CAD-CAM. Morocco is fourth worldwide for the manufacture of electrical wiring. Educating the workforce According to GIMAS, the sector is liable to double in size over the coming years, taking advantage of this combination of favorable factors. But there are challenges. Chafib Khalifa, deputy CEO of Midpark, a 165-hectare industrial park near Casablanca and platform destination for aviation industries, underlines the main difficulty encountered by companies in the sector. “One of the biggest challenges faced by aerospace companies in Morocco is undoubtedly staff training,” Mr. Khalifa states. “This does not fully meet the needs of companies. New hires are often trained internally, which requires an investment in time and money. But there is a risk that trained staff will quickly abscond, attracted by better-paying offers from competitors. This can lead to a wage war and a loss of competitiveness.”

Although Bombardier has not yet divulged the names of the Moroccan management team, the local strategy remains one of strengthening the company’s position in emerging markets, notably to take advantage of substantially cheaper production costs. The new company is expected to generate 850 direct jobs and a further 4,000 indirect ones. This will be the second major accolade for the government’s Emergence plan, intended to develop a strong national industrial base. To date the prime industrial success story has been that of French auto manufacturer Renault, which has made large commitments in the Tangier area. To meet these concerns, including providing 15,000 trained staff by 2015, the Institute of Aeronautical Professions (IMA) was launched in 2010 to provide training in fitting and assembly of aircraft components, aircraft sheet metal, composite materials, CNC machining, and electrical systems. More than 300 people were trained in the first year and IMA proposes to train 1,000 people annually by 2014 instead of the 800 previously planned. IMA Director Abdelbasset Bentoumi says the length of training, tailored to each business, ranges from 23 to 42 weeks and includes core training “in French, quality control, knowledge of aeronautics and aircraft, interpersonal communications and safety. The aviation industry, where quality and reliability are the watchwords, requires a fundamental teaching of educational rigor and professional commitment.” ● For more information: GIMAS (Groupement des Industries Marocaines Aéronautiques et Spatiales) www.gimas.org National Pact for Industrial Emergence 2009-2015 www.emergence.gov.ma

2012 Edition | Doing Business in Morocco

Road to riches Morocco believes that a strong automotive manufacturing base can bring employment and export currencies. Fiat and Renault share that vision and is it now becoming a reality.

ntil recently, Morocco was like most emerging markets when it came to cars – they were mostly imported. For the kingdom, the first step towards car manufacturing came in 1960 with its first automobile assembly plant, built for Somaca near Casablanca. The going was tough for the first 35 years, until an agreement was signed with Fiat in 1995 to assemble some models. “We had to compete against a massive influx of used car imports, up to 90,000 vehicles per year,” explains Larbi Belarbi, the head of Somaca and also of the Moroccan auto federation, AMICA (L’Association Marocaine pour l’Industrie et le Commerce de l’Automobile). In 2009, fully 93% of car registrations were new vehicles, whereas that figure had only been 32% in 2001. Alas, the Italian honeymoon only lasted until 2002 when Somaca ran into difficulties. Thankfully, Renault saw an opportunity and in 2003 acquired Somaca for the assembly of its Logan model and various light commercial vehicles. The next step was Renault’s decision in September 2007 to invest on a massive plant near Tangier, capable of producing up to 400,000 vehicles per year in the near future. The investment included a first phase of €350 million ($435 million), and a second phase of €200 to €400 million ($250 million

Morocco produced €800 million ($1 billion) in car components in 2009.

to $500 million) on a massive plant near Tangier. The Moroccan government was determined not to repeat the mistakes that caused the Fiat failure. “The government realized it needed a strong auto manufacturing cluster to truly become a worldwide actor in the area,” explains Mr. Belarbi. “So the Tangier Free Zone was conceived with Renault as its queen bee and a swarm of component suppliers from all corners of the world as her attendants.” Moving up the value chain Formerly all cars assembled in Morocco were CKD (complete knock down) with parts delivered to Morocco from other countries in pieces and assembled locally. Gradually local components started to be manufactured and used, such as electric wiring and textile seats. Local factories also started to do metal stamping for the bodywork and machining for engine parts. Today, about threequarters of the cars produced in Morocco are from local content.

Ma-renault-cco Top Moroccan automotive companies Rank Company

Year Founded

Rev. 2010*

Website

Renault Maroc

1928

486.1

Jean Frederic Piotin

renault.ma

Somaca (80% Renault-owned)

1959

424.9

Larbi Belarbi

See renault website

Auto Hall

1907

330.9

Abdellatif Guerraoui

autohall.ma

Sopriam

1977

258.4

Loic Morin

sopriam.ma

Centrale Auto Cherifienne

1929

234.9

Victor el Baz

volkswagen.ma

* Figures in $M

CEO

Doing Business in Morocco | 2012 Edition

Source: Economie Entreprises “Les 500”, Mediaside analysis

Automotive

Breakdown of vehicles registered, 2009 Government Rental cars vehicles 1% 3%

Light goods vehicles 20%

Private cars 76%

Total: 1,457,000 vehicles

The country’s two assembly plants are located in Tangier, where the Renault Logan is produced, and in Casablanca, where Somaca produces various models. Some of this production is exported to Spain and other European countries, as well as to North and sub-Saharan Africa. Since 1996, the local production of automotive components has jumped from almost €200 million to over €800 million ($250 million to $1 billion) in 2009. The increasing use of local content has increased the number of component manufacturers in Morocco. These now supply both domestic and foreign markets, Spain in particular. Moroccan component manufacturers have some strong competitive advantages, for example in areas requiring intensive use of skilled labor. These include electronic components, cloth seats and electric cabling, which itself accounts for more than 50% of Morocco’s automotive exports by value. Morocco’s labor costs are highly competitive as well, about a fifth of those in Spain and less than one-tenth of those in France.

Average pay in the auto sector Country

Monthly salary ($)

Morocco

310

Spain

1,611

France*

3,985 * France based on extrapolation from OECD data Source: Ministry of Industry, OECD

Source: AMICA study

Even so, Morocco frets about the difference in levels of labor productivity and automation (i.e. robots), which are substantially higher in Spain. Moreover, local suppliers need to strengthen their steel foundry and stamping capabilities to compete in those areas. Government strategic impulse The Moroccan government has never been shy about its automotive ambitions. The sector is viewed as the top priority in the national industrial plan. Much of the funding for local and foreign investors comes from the Hassan II Fund, which provides subsidies of 50% for land acquisition, 30% for plant construction or acquisition, and 10% for equipment. For the Ministry of Industry which oversees the fund, these investments are designed to make vehicle assembly a permanent part of the Moroccan industrial landscape, as well as to upgrade component manufacturing to international standards and stimulate R&D efforts on upstream activities. The plan is for Moroccan-designed and built vehicles to start rolling off local assembly lines one day soon. Morocco has travelled a long way in the past 50 years. It now boasts 85% car ownership per capita, virtual autonomy in producing its own vehicles, and is even gaining valuable foreign currency from vehicle and component exports. ● For more information: AMICA (Moroccan Association of Auto Manufacturers and Distributors) www.amica.ma Ministry of Industry, Trade and New Technologies www.mcinet.gov.ma

2012 Edition | Doing Business in Morocco

Mixing it up Morocco is the largest energy consumer in North Africa but depends on imports for 93% of its energy needs. Good news therefore that the energy mix is shifting, as the country makes aggressive plans to diversify its energy sources.

ike many emerging markets, Morocco is energyhungry. According to the International Energy Agency, from 1999 to 2009 the country’s energy consumption leaped 46% to reach about 16,000 KTOE (kilotons of oil equivalent). This makes Morocco the largest energy consumer in the Maghreb. Alas the country needs to import almost all of its energy needs. The framework for the energy situation in Morocco is straightforward. Electricity production is open to private players. The distribution of electricity to end users is almost completely a state monopoly, with the Office National de l’Electricite (ONE) being the main public utility. Incipient privatization, however, is transforming local utilities

Prospects look good for domestic oil production.

production (oil is at 62%). Coal has witnessed the largest growth, since it represented only 8% of the thermal mix in 1980. Last in line is natural gas, a recent arrival. This can be explained by the fact that an important gas pipeline linking Algeria to Spain transits through Morocco, yielding royalty payments in kind.

In 2010, Morrocan power plants produced a total of 20,850 GwH of energy. More than 80% of this electricity came from thermal power plants (see chart). About 16% came from hydroelectric and so-called STEP plants. Renewable energy (mostly wind) accounted for the rest but that proportion is scheduled to increase significantly in the future.

Hydroelectric power production is Morocco’s second source of power. The country has 100 dams holding back a total of 15.8 billion cubic meters of water. One limit to hydroelectric power is the fluctuation of rainfall in Morocco and therefore of the dams’ electricity-generating capacity, which fluctuates from 8% to 1.6% depending on rainfall and therefore dam capacities.

For its thermal plants, Morocco relies on three combustibles. The main source is oil, which Morocco imports from Saudi Arabia (57.1%), Iraq (23.5%), Russia (15%) and Iran (4.4%), in 2010. Following oil comes coal, which now fires up 22% of power

Morocco also imports electricity from Spain, to the tune of 4,607 GwH in 2011, or about 7% of domestic needs.

Oil refining leads the business Top five energy companies in Morocco Rank Company

Activity

Founded

Samir

Oil & gas

1959

4,331.0

Jamal Baamer

samir.ma

Afriquia

Oil & gas

1959

1,637.4

Aziz Akhannouch

akwagroup.com

Website

Shell du Maroc

Oil & gas

n.a.

1,112.3

Mohammed Raihani

n.a.

Jorf Lasfar Energy Company

Electricity production

1997

572.4

Abdelmajid Iraqui Houssaini

jlec.ma

Energie Electrique de Tahaddart

Electricity production

2010

68.0

n.a.

endesa.es

* Figures in $M

2010 Rev. * CEO

Doing Business in Morocco | 2012 Edition

Note: Only top 3 oil & gas companies listed; Source: Economie Entreprises “Les 500”, Mediaside analysis

Energy

Changing the energy mix Projections for energy production by source 16000

14,580 MW

14000

14%

Solar

14%

Wind

14%

Hydro

14%

Oil

11%

Natural Gas

12000 10000 MW 8000 5,292 MW 6000 4000

2% 24%

2000

24% 7% 34%

Changes coming The profile of Moroccan energy production is expected to change drastically in forthcoming years as the government’s plans for energy independence take shape. The most notable changes concern renewable energy. Increasing the use of renewable resources to produce energy as a way of overcoming the country’s dependence on energy imports is a main focus of Moroccan government policy-making. Morocco is committed to having wind, solar and hydroelectric power represent 42% of its power generation by 2020.

0 2008

26%

Coal Nuclear

Projected 2020 Source: ONHYM

A key measure to accomplish this is the National Energy Strategy (Strategie Energetique Nationale or SEN) signed in March 2009. SEN set up three agencies: the Agency for the Development of Renewable and Efficient Energy (Agence de Developpement des Energies Renouvellables et de l’Efficacite Energetique or ADEREE); the Energy Investment Company (Societe d’Investissements Energetiques or SIE); and

Close Up

The Earth’s crust in Morocco hides untold secrets The National Bureau of Petroleum and Mines (ONHYM), which was created in 2005, is the geologist’s best friend in Morocco. This independent, self-financed public institution is in charge of contributing to the kingdom’s growth by fostering the development of its mineral riches (except phosphates, handled by OCP, see page 58). As such, ONHYM has two aces up its sleeve: petroleum and its derivatives, and minerals. The good news for Morocco is that it is about to become oil-wealthy. ONHYM, either on its own or in partnership with private foreign investors, has carried out exploratory drillings, revealing reserves both offshore in the Atlantic (TangierLarache area) and onshore (Gharb basin region). As an example of a partnership, the Ras Tafelney exploration project was conducted jointly with Vanco, based in Houston, Texas,

to explore for oil in the deep offshore block of the Essaouira basin. This work focused on 3D and 2D seismic acquisition and well drilling. The results showed 15 oil prospects. On the minerals/mining front, ONHYM’s first task was to complete proper geological mapping. These studies revealed a rich crust to be exploited: rare earth materials, niobium and its cousin tantalum (used for steel alloys), uranium and iron ore are but some of the pickings. Overall, ONHYM is working on 28 minerals projects, of which ten are in partnership with foreign investors. One example is the 2011 project with the American company Newmont in the Lesser Atlas area. Using geochemical methods, the venture seeks to assess the potential for precious and basic metals, namely using bulk leach extraction techniques.

2012 Edition | Doing Business in Morocco

the Moroccan Agency for Solar Energy (Agence Marocaine pour l’Energie Solaire or MASEN).

sites selected, four will have power generation capacities of 400 or 500 MW.

ADEREE and MASEN promote the use of renewable energy and energy efficiency by providing plans and incentive measures, overseeing development projects, identifying potential resources, and through similar actions. SIE seeks to attract and organize private funding for energy projects. A 2010 law provides the legal framework for these projects.

Ain Beni Mathar will increase ONE’s production capacity from 200 to 250 MW by 2012 and enable it to supply nearly 1590 GWh per year, of which 55 GWh will come from solar.

The target is to generate about 2,000 MW from wind by 2020. The financing for this comes from mixed public-private sources, since funding and operation of some of the wind farms is conceded to private companies. Regarding solar energy, the target also is to generate 2,000 MW by 2020, representing 14% of national electric capacity and save a million tons of oil annually. MASEN is implementing this strategy. Progress in solar energy mirrors that of wind power. A first combined cycle (mixed gas solar) at Ain Beni Mathar was inaugurated in 2010 with a capacity of 472 MW, of which about 5% is solar. A further roll-out of solar capacity is planned but with fewer, more concentrated plants than is the case for wind. Of the five solar 28

Doing Business in Morocco | 2012 Edition

The government is implementing the energy efficiency program progressively by distributing energy-saving light

Betting on natural elements Morocco’s renewable energy plans - present and future

Investment

Wind and solar A new Moroccan wind farm was inaugurated in June 2010 and represented an investment of $320 million. Located near Tangier, the wind farm has 165 units capable of producing 140 MW of electricity. Additional wind farms are in the development stage and will produce an additional 570 MW by the end of 2015.

Energy efficiency Not all of the government’s efforts are focused on energy supply. Increasing energy efficiency is another focus. Energy efficiency is being promoted as a national priority as the quickest and least expensive way to better use and save energy while reducing energy bills. Indeed, energy efficiency is a top priority in Morocco’s energy strategy with an ambition to save 12% in 2020 and 15% in 2030 of energy consumption. From this perspective, energy efficiency action plans have been implemented in all key sectors, including transportation, industry and construction. According to the government, the savings could be substantial. Almost half of the savings (48%) could come from industry, nearly a fourth (24%) from transport and 19% from housing.

New plants

Morocco is also integrating itself in the energy system of the African and Euro-Mediterranean region to strengthen energy security, reduce supply costs, expand exchanges, develop cooperation, technology transfer and solidarity. Morocco plans to integrate with Mediterranean solar energy plans and regional initiatives such as Transgreen. Transgreen was signed in July 2010 to study the feasibility of a power network between the North and South of the Mediterranean shores and to develop interconnections around the Mediterranean basin.

Although the renewable efforts are focused on solar and wind, ADEREE is also overseeing pilot projects in biomass and capturing energy from the ocean tides and currents. With Morocco’s 3,500 kilometers of Atlantic coastline, the potential for ocean-generated energy is significant.

Phase 1 2008 to 2012 $2.8 Billion Completed by 2011: * Mixed thermal-solar plant

Ain Beni Mathar

472 MW

* Wind farm

Tanger 1

140 MW

* Hydro-electric plant

Tanafuit el Borj

40 MW

* Gas turbine plant

Mohammedia

3 x 100 MW

* Diesel plant

Tan-Tan

116 MW

* Extension diesel plant Dakhla 16 MW Total = 1,084 MW Still planned for 2012: Total = ca. 600 MW

Energy

Demand Energy demand in Morocco has been growing fast, on average by 7.5% annually from 1995 to 2005. From 2008 to 2009 demand dipped a bit, with growth at only 2.5% (or 15.1 MTOE). Both 2010 and 2011 saw demand growing at rates above 5%, indicating the sustained energy hunger. 2010 had 6.7% growth to 16.1 MTOE, whereas 2011 had 5.0% at 16.9 MTOE. With Morocco determined to take its energy future in its own hands, many foreign companies are jumping on the bandwagon to help make things happen and reduce the country’s energy dependence. Energy projects have been one of the key segments for inbound FDI over the past years. ● For more information:

Solar powered villages One of the successes in Moroccan energy is the rural electrification program using solar panels. Started in 1998 by the public utility Office National de l’Electricite (ONE), the program saw access to an autonomous electric supply increase from 22% of the rural population in 1996 to almost complete coverage (96.5%) by 2009. Using an innovative financing scheme and relying on private partners, the program set about providing energy to rural villages via solar panels, which are cheaper to set up than establishing a connection to the central power grid. Each client received a solar panel, one 150 amp-hours battery, a regulator and one 12-volt outlet with two sockets. But those who were willing or able to pay for higher capacity systems were able to install more lights. The battery can store enough power to last up to five days, allowing the equipment to run year round even in bad weather. The program proved so successful that ONE has advised other sub-Saharan countries on the topic, and has even sold part of its Senegalese joint venture to the World Bank.

$8.5 billion * Clean coal thermal plant

Jorf Lasfar

2 x 350 MW

* Clean coal thermal plant

Safi

2 x 660 MW

* Solar plant

Ouarzazate

500 MW

* Wind farms

Different locations 570 MW

* Hydro-electric plant

El Menzal Mdes

550 MW

* Hydro-electric plant (STEP)

Abdelmounen

550 MW

Investment figures include rehabilitation budgets for existing plants.

Later Until 2020 n.a. MASEN - Integrated solar program * Solar plant * Solar plant * Solar plant * Solar plant * Solar plant

Phase 2 2013 to 2015

New plants

Investment

MASEN (Agence Marocaine de l’Energie Solaire) www.masen.org ADEREE (Agence Nationale por le Developpement des Energies Renouvellables et de l’Efficacite Energetique) www.aderee.ma SIE (Societe d’Investissements Energetiques) www.siem.ma ONE (Office National de l’Electricite du Maroc) www.one.org.ma Energy Ministry (Ministère de l’Energie, des Mines, de l’Eau et de l’Environnement) www.mem.gov.ma

Insight

Investment

bulbs, modifying building codes and broadcasting awareness campaigns nationwide.

Ain Beni Mathar 400 MW Sabkha Tun 500 MW Foum el Oued 500 MW Boujdour 100 MW Ouarzazate 500 MW Total = 2,000 MW

Wind program * Wind farm Turfaya 580 MW * Wind farm Akhfenir 200 MW * Wind farm Bab el Oued 50 MW * Wind farm Haouira 50 MW * Wind farm Jbel Khalladi 120 MW Total by end 2012 = 1,000 MW * Wind farm Taza 150 MW * Wind farm Tanger 2 150 MW * Wind farm Koudia el Baida 300 MW * Wind farm Tiskrad 300 MW * Wind farm Boujdour 100 MW Additional total by 2020 = 1,000 MW

2012 Edition | Doing Business in Morocco

IT sector gets a helping hand The high potential of the information technology sector has sparked so much interest on the part of government that it conceived the Digital Morocco 2013 strategy to develop the sector.

orocco is working hard to improve its ranking on the world’s connectivity stage and use the IT sector’s dynamism to generate employment and economic growth. Foreign companies are jumping on the bandwagon. “Morocco is well positioned and has great potential to become a technology and innovation hub in North Africa,” U.S. Assistant Secretary of State for Scientific Affairs, Kerri-Ann Jones stated at a recent conference in Rabat.

By 2015, Morocco’s IT sector is expected to reach $8.2 billion in revenues.

The Moroccan government could not agree more, and numerous private companies have not waited for a government invitation to set up operations in the country.

To complete the quantitative panorama, the sector counts almost 1,000 companies, with about 170 APEBI-member companies accounting for 95% of turnover. Among these heavy hitters are several multinationals and domestic companies: Capgemini, Bull Morocco, Brams Technologies, Astec, Sage Morocco, Omnidata, GFI Morocco, IWC, HP, Microsoft and Disway, just to name a few.

According to the association of information technology companies (APEBI), the aggregate revenues of local industry (in the distribution, hardware, and service segments, but excluding telecoms operators), has grown from $330 million in 1998 to $525 million in 2001 and fully $985 million in 2011. The IT sector generates close to 28,000 jobs in export-oriented IT companies (for example, BPO or

KPO centers) and about 3,000 jobs for the domestic market needs, namely systems integrators for Moroccan companies, according to APEBI.

Given the successful implementation of the various programs and strategies, the IT sector is on target to reach $8.2 billion in revenues (including telecoms) by 2015. Also expected are an aggregate 58,000 jobs in the sector.

Growing by bits Top Moroccan information technology companies Rank Company 1

Disway

Year Founded

Rev. 2010*

2010

198.1

Hakim Belmaachi

Website disway.com

Maroc Bureau

1960

91.8

Abderrahmin Zniber

marocbureau.ma

Webhelp Maroc

2000

66.0

Dirk vam Leeuwen

webhelp.fr

Bestmark

1993

55.3

Oussama Ghissassi

bestmark.ma

* Figures in $M

CEO

Doing Business in Morocco | 2012 Edition

Note: Chart does not include telecoms companies; Source: Economie Entreprises “Les 500”, Mediaside analysis

Information Technology

Success Story

Moroccan success in payment systems Founded in 1995, Hightech Payment Systems (HPS) is a Moroccan SME that has managed within less than a decade to elbow its way into the hotly-contested electronic banking segment. For the company’s entrepreneurial founder Mohamed Horani, and his partners, key success factors included an innovative corporate culture, a flexible business model that adapted to changing environments, and steady international expansion onto five continents. Currently ranked among the top ten worldwide companies in its sector, HPS’ star product is called PowerCARD, a versatile software for electronic payments. PowerCARD is used by almost 100 clients in banking, telecoms, distribution, and other sectors in 60 countries. For more information: Professor Lhacen Belhcen, ESCA School of Management Co-author of the HPS case study

But for IT to play its full role as a growth driver, two issues must be tackled. “Our corporate fabric needs to be updated, in particular entrepreneurial start-ups and SMEs need to be incubated and fostered,” says APEBI President Lakhlifi Mohammed. “And we need to improve access for citizens to computer equipment and the Internet and thus anchor the use of IT in daily life. The challenge is to act quickly and extensively.” The state’s helping hand Although the private sector carries the bulk of the IT sector’s development, the Moroccan government is not sitting by idly. King Mohamed VI has taken a personal interest in the Digital Morocco 2013 program (Plan Maroc Numerique in French), launched in 2009 by the Ministry of Industry, Trade and New Technologies. Among other priorities, Digital Morocco aims at facilitating the use of IT by the general public, computerizing SMEs, and the digitizing public administration operations. Three years on, many of these goals are well underway. For example, the Injaz program, which reached 26,000 students in 44 schools in 19 cities in two years (2009-2011), enables students to acquire a laptop and Internet access while benefiting from a state subsidy of up to 85% of the cost, capped at $425.

The ministry is proposing to extend the Injaz offer to all university master’s level students for the 2011-12 academic year. This would represent about 45,000 students in nearly 110 institutions. For small enterprises, the ministry created the Moussanada IT program and so far more than 100 companies have enrolled to improve their IT knowledge base. For micro-enterprises, the Infitah program promotes IT awareness and training. Since its inception, more than 1,400 small enterprises have taken advantage of the subsidized initiative. Another program, Rawaj, touches on retail and distribution needs. Rawaj facilitates data exchange for barcodes and inventory management and receives a 75% state subsidy. Reaching the government electronically Next in line are e-government services. “We have progressed from 104th to 56th place in the Online Service Index of the United Nations,” says Badr Boubker, director of the Digital Morocco plan. “Some e-government services have already been launched, while others are being tested, for example the Watika site, which enables downloading of standard forms or making an online appointment at a hospital.” ● For more information: APEBI (association of information technology companies) www.apebi.org.ma Ministry of Industry, Trade and New Technologies www.mcinet.gov.ma

2012 Edition | Doing Business in Morocco

Telecoms is picking up Market privatization and liberalization have ensured the development of a healthy telecoms market in Morocco. Areas of future development include mobile data flows, further fixed-line penetration and Internet access.

elecommunications is no sneezing matter in Morocco. The sector contributes about 5% of the national GDP. Morocco’s big step in preparing its telecoms industry for competition and private enterprise participation was the 1998 split of the monopoly Office National des Postes et Telecommunications (ONPT) into a postal branch (La Poste Maroc) and a telecoms branch (Maroc Telecom). Maroc Telecom was established as an independent 100% government-owned company. This scission presaged the auctioning of the second mobile license, later in 1999. The winning bid was filed by the Spanish-Portuguese duo of Telefonica and Portugal Telecom, acquiring 32.18% each. A third entrant in the mobile arena was Wana Corporate in 2009, after being granted a license for second generation mobile phone services. The Moroccan government also created the telecoms regulatory body (Agence Nationale de Regulation des Telecommunications or ANRT), in 1999, in order to regulate the nascent competitive industry, and to encourage innovation. As could be expected with three market competitors backed by deep French, Kuwaiti and Moroccan

Morocco’s low fixed-line penetration offers investment opportunities.

pockets, the market for mobile telephony is quickly reaching saturation. Mobile penetration reached the 109% penetration mark. At the end of 2011, Morocco counted about 36.5 million mobile subscribers. Maroc Telecom is market leader with 47% share, followed by Meditel at 33% and then Wana/Inwi at 20%. Mobile rates have been dropping thanks to competition. The average revenue per minute dropped 33% from 2010 to 2011, from 1.12 to 0.74 MAD/min (about 9 cents/minute). Part of the drop in charges is due to the increased interconnectability between the three mobile operators. There had been pressure from consumer groups since they claimed that Moroccan rates were among the most expensive in the region. Usage increased by 39% from 41 minutes/month to 57 minutes/month. On the other hand, in the positive spectrum, mobile operators are hoping that as smart phones become more commonplace, data exchange will take on a bigger impact. ANRT sees the need for another change in regulation as the mobile world moves to billing no longer based on time and distance of call, but on the volume of data transferred.

Moroccan troika Top three Moroccan telecoms companies Rank Company

Ownership

Website

Maroc Telecom

Vivendi (France)

1998

3,703.5

Abdeslam Ahizoune

iam.ma

Medi Telecom (Meditel)

France Telecom et al.

1999

667.0

Mohamed Elmandjra

meditel.ma

Wana Corporate (Inwi)

ONA + Zain (Kuwait)

1999

432.7

Frederic Debord

wana.ma

* Figures in $M

Founded 2010 Revenues* CEO

Doing Business in Morocco | 2012 Edition

Source: Economie Entreprises “Les 500”, Mediaside analysis

Telecoms

Analysis

Driver of foreign investment Telecoms, especially the mobile variety, have traditionally been a major engine of foreign direct investment, and Morocco is no exception to the rule. The three operators in competition nationally all have foreign shareholders, and the 20-year battle has barely begun. Morocco’s traditional main operator – what used to be ONPT until Maroc Telecom was founded by law in 1998 – is a $3.7 billion giant that is active in all telephony segments. When partially privatized by the government in 2001, 30% (now increased to 53%) of the company was acquired by Vivendi of France, while about 17% of shares are traded publicly, and the government maintained a 30% share. As Ahmed Khaouja, ANRT’s director of competition and operator surveillance has said: “Digital convergence and the increasing importance of IP (Internet Protocol) for data exchanges between parties is having an impact. Data traffic is bound to multiply 20-fold in the future.” Slow fixed-line growth Fixed-line penetration has seen recent slow growth, after a decline in the mid-2000s. Currently Morocco counts only 3.7 million landlines, or about the same level as Tunisia, a country with one-third its population. Of these landlines, many come from Wana clients who have access to wireless fixed lines using the CDMA technology. Fixed lines suffered drops on both average revenue and average usage. Rates dropped from 1.01 to 0.95

Attached to their mobiles Evolution of mobile subscribers, 2000 to 2011 40 35

Subscribers (millions)

Number two in the market is Meditel (Medi telecom), founded in 1999, based upon its capture of the second mobile telecoms license. At its inception, and for its first ten years, Meditel was a child of mixed blood: Spanish and Portuguese for about 64% (via Telefonica and Portugal Telecom), and Moroccan (government via its holding CDG) for the remainder. In 2009, Spain and Portugal divested, replaced first by Moroccan investors, who then flipped their 40% stake for €640 million to France Telecom (Orange). The third and latest entrant to the market is Wana Corporate (branded Inwi for the Moroccan masses), which has SNI and Kuwaiti ownership (31%). In 2009, the upfront investment for Zain of Kuwait was $324 million. MAD/min (2011 vs. 2010), while usage dropped from 136 minutes/month to 126 minutes/month. Internet access is faster on the pick-up. Of the 3.2 million Internet clients in 2011, more than 80% were accessing over 3G mobile access. The growth here has been much stronger than for fixed lines, with 90% increase in 3G Internet access year-on-year. The expectation is that within five years there will be five million clients. According to analysts and the ANRT, despite increasing levels of saturation, there is still a silver lining to the telecoms cloud. Aside from new services and the concomitant rise in revenues per subscriber, Morocco can count on increasing numbers of doublesubscribers. ●

25 20 15 10 5

For more information:

1 7 5 2 3 4 6 9 8 0 11 0 200 200 200 200 200 200 200 200 200 200 201 20 Source: ANRT

Agence Nationale de Regulation des Telecommunications (ANRT) www.anrt.net.ma Ministry Industry et al. www.mincom.gov.ma 2012 Edition | Doing Business in Morocco

Textiles are durable After a slump in 2009, the textile sector continues to present significant potential for development. With some state support and a reconfiguration of the international market, manufacturers are preparing for a new offensive.

epresenting nearly 12% of Moroccan exports and the top industry in terms of jobs, the Moroccan textile sector is an essential activity. Overall, textiles mean more than 1,500 factories employing over 200,000 workers throughout the kingdom. In 2009 the sector confronted two new realities that slowed the momentum. First, there was the progressive encroachment of Chinese goods into European markets, creating tough competition for incumbent suppliers, namely from North Africa and particularly Morocco. Then the economic crisis hit Europe and demand for Moroccan textiles dropped. For some analysts, this period of turbulence has been overcome. Both a recent analysis by English firm Oxford Business Group and data from the Moroccan Industrial Observatory show a 6% increase in textile exports in 2011, when Morocco exported $3.5 billion worth of textiles and leather goods despite the unfavorable context. Better yet, during the first four months of 2012, the rate of growth of the sector appears to be accelerating significantly with 13% growth in exports. The Ministry

Some foreign companies in Morocco are planning to increase local production.

of Industry and Commerce argues that the growth potential by 2015 could be as high as 60%. No wonder the government has identified textiles and leather goods as a key economic priority. “Big brands like Li & Fung and Marks & Spencer have started returning to Morocco after having left in search of better quality-price ratios in the Far East,” enthuses one government official. Other companies, like the Spanish giant Inditex of Zara fame, are strengthening their presence in Morocco and plan to increase their local production quotas. In fact, Inditex is planning to boost its Moroccan production capacity from 60 to 150 million pieces in the mid-term, making Morocco the second largest supplier to Inditex after China. Industry insiders also say that Camaieu, a major brand in women’s ready-to-wear fashion, plans to

Rich in fiber Top Moroccan textile companies Rank

Company

Activity

Website

Richbond

Furnishings

1964

82.3

Abdelaziz Tazi

richbond.fr

Softgroup Textile

Textiles & real estate

1918

79.5

Abdellatif Kabbaj

softgroup.ma

Maroc Modis

Textiles & leather

n.a.

70.2

Gregory Petit-Peucelle

n.a.

CTC Maroc

Synthetic fibers

1977

61.4

Khlaid Benjelloun

n.a.

Co. Indust. Des Fibres.

Fibers

1951

30.6

Benaissa Didouh

lacif.net

* Figures in $M

Founded 2010 Revenues* CEO

Doing Business in Morocco | 2012 Edition

Source: Economie Entreprises “Les 500”, Mediaside analysis

Textiles

“export consortia”, launched by the Ministry of Industry, in cooperation with the United Nations Industrial Development Organization (UNIDO) and the Italian government. On the competitive front, one expert at the Ministry of Industry explains that “the recovery is also due to the adjustments in sourcing policies from China.” Morocco intends to capitalize on these trends in three ways: fashion clothing (habillement mode in French) and fast fashion, home textiles, and high-tech fabrics. The first is fashion clothing, which has made its reputation with clients. Morocco intends to exploit this renown more in international markets. One way is via “fast fashion,” smaller and need-by-yesterday re-orders that offer significant growth opportunities in the current environment of tight initial orders and fast re-orders when garments fly off the shelves.

double its production in Morocco to 12 million units as a result of the the renewed attractiveness of the sector following the 2009 crisis. Reasons for recovery There are two factors that help explain the sector’s rebound in 2011. First, textile professionals say while there was an impact on the order books in 2009 it was never to the extent of full cancellations. Also Chinese suppliers were not as competitive as at first thought. What happened here? Quite simply, China suffered increased production costs and lack of flexibility. Chinese costs have exploded by more than 40% over the past three years, following increases in wages, raw materials costs and logistics. Simultaneously, there is a structural trend in Morocco towards greater sustainability, namely via closer production centers. “In the face of declining demand, retailers have chosen to rationalize their supply and minimize risk-taking,” says Mustafa Sajid, president of the Moroccan Textile Industry Federation (AMITH). A second factor that has helped the rebound is that more and more Moroccan suppliers have grouped together into export consortiums. These cooperative structures enable suppliers to share resources and thus boost productivity, and benefit from better international (outbound marketing) representation. Furthermore, the textile industry consortia now receive the support of the government initiative

Part two regards home textiles which are now closely associated with lifestyle. The third segment is the development of high-tech and “smart” textiles used in the automotive industry, agriculture or construction. Three forms of state support To promote its visibility on international markets, Morocco organized two major events in 2011: Morocco in Mode and Morocco Sourcing. These exhibits enabled 153 participants including 24 foreign companies to exhibit their products and meet international outsourcers. The government has also arranged financial subsidies for textile suppliers who supply, among others, Marwa, Paris Texas, Moda Line, Active Line, Crossing Fingers and Blue Icoma. This provides the suppliers with financial support in exchange for guarantees on increasing export quotas. Also, with attention long focused on international markets, there is now a realization that the domestic market, valued at $4.7 billion, should not be ignored. Lastly, the government is placing hope on the implementation of a program supporting investment in the upstream spinning, dyeing, finishing of fabrics (threads and yarns), since Morocco currently imports the majority of its raw material. ● For more information: Ministry of Industry and Commerce www.mcinet.gov.ma Moroccan Textile Industry Federation (AMITH) www.textile.ma/amith 2012 Edition | Doing Business in Morocco

Corporate Finance

More deals Corporate finance is still a golden fleece, although things were better two years ago.

he market for corporate finance and investment banking services in Morocco is relatively young. It started off in the mid-1990s, to Mouhssine Cherkaoui accompany privatizations and Administrateur Directeur initial public offerings on the Général, Upline Casablanca Stock Exchange. Corporate Finance Things have evolved since, and the past decade has seen a good degree of maturing, as services become more professional. A number of renown financial institutions, including Upline Group (part of Banque Centrale Populaire or BCP), have accumulated a wealth of experience via two decades of rich offerings. Within corporate finance, the Moroccan scene has been most active for the following: • Capital markets: here the twin drivers are activities on the stock market and the private debt market. For the former, the usual suspects have been IPOs, secondary market share issues, and other share-related transactions. For the latter, the market has seen the issuance of company bonds and other financing instruments • Strategic operations: these include privatizations, public-private partnerships, mergers and acquisit-ions, private placements, joint ventures, etc.

Shall we do a deal in Morocco?

Upline Group, part of BCP bank since 2008, boasts of two decades of experience in various financial services. Here is how we can help your financial needs in Morocco.

In retrospect, 2011 was characterized by an unstable regional geopolitical environment, and illiquid stock and bond markets. This made fundraising operations difficult. Nonetheless last year witnessed some sizeable operations worth mentioning: • beginning of SNI asset disposal, namely via the sale of part of food processor Lesieur-Cristal to Sofiprotéol and Moroccan institutional investors • three IPOs (Stroc Industry, Jet Alu and S2M) • capital increases (BCP and Label’Vie) • massive bond and negotiable debt security issues. The sluggish regional and international context will continue to influence market conditions in 2012. We should see a year of further consolidation and tightening liquidity. Yet this will not prevent several important corporations from raising funds for ongoing growth. For some, it will mean opening their capital to institutional investors and investment funds. For others, it will imply access to capital markets via bonds and negotiable debt securities. Lastly, some players might restructure their debt, namely overleveraged actors. Moreover, SNI will continue divesting its non-strategic assets. The Moroccan government might add extra boost to the market if it revives its privatization process, or issues tenders for expert financial support and advice. ●

private equity ventures. MAD 7.5 billion at the end of 2011. Diverse risk/return portfolio offers access to varied PE funds, including infrastructure, tourism, real estate and others.

1. Brokerage. Through personal advice and an electronic trading platform, full access to Moroccan financial exchanges. Regular research and analysis notes to guide you.

4. Corporate finance. Through a team of 15 investment bankers, we offer the gamut of investment banking services: debt and equity instruments, M&A, as well as privatizations.

2. Asset management. About MAD 20 billion under management. Winner of the coveted “Alistotmar Chaabi Treasury” award. Sole Moroccan manager of a French fund.

5. I nsurance brokerage. Our branch Chaabi Courtage offers life and non-life insurance.

3. Private equity. The leading partner in

• Fund raising: from both private and institutional investors, as well as traditional debt from banks • Financial engineering: for mega-projects, this has included cost-benefit analysis and finance structuring, as well as financial advisory and company valuation services.

Doing Business in Morocco | 2012 Edition

Our clients include Maroc Telecom, Vivendi, OCP, Label’Vie, Axa, Autoroutes Maroc, ONCF, etc. Further information on www.upline.co.ma

Morocco top 80 Rank Company

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42

Sector

OCP (Office Cherifien Phosphates) Mining, energy

SAMIR Maroc Telecom ONE (Office Nat'l Electricite) Altadis Maroc Afriquia Royal Air Maroc Shell (Maroc) Marjane Holding Total Maroc Douja Addoha Centrale Laitiere Cosumar Medi Telecom Lydec Lafarge Ciments Al Omrane Holding Jorf Lasfar Energy Label' Vie Petrole du Maghreb Renault Maroc Societe Nationale Siderurgie Libya Oil Maroc Salam Gaz Inwi Corporate (Wana) Office National Eau Potable Somaca Holcim Maroc Afriquia Gaz Lesieur Cristal CMH Ciments du Maroc Managem Redal SGTM Auto-Hall Alliances Developpement Office National Aeroports COPAG North Africa Bottling Ziz Carburants Petromin Oils Maroc

Energy Telecoms Energy Agro-food Energy Transport Energy Retail Energy Real Estate Agro-food Agro-food Telecoms Public utility Construction Real Estate Energy Retail Energy Automotive Industrial Energy Energy Telecoms Public utility Automotive Construction Energy Agro-food Energy Construction Mining, energy Public utility Construction Automotive Real Estate Transport Agro-food Agro-food Energy Energy

2010 Year revenues founded $M 1920 1959 1891 1963 1910 1959 1957 n.a. 1990 1926 1988 1929 1929 1999 1997 1928 2004 1997 1985 1945 1928 1974 1993 1991 1999 1972 1959 1972 1959 1940 1976 1952 1930 2001 1971 1907 1994 1990 1987 2003 1968 1968

2,898.45 2,467.35 2,124.53 1,390.92 932.84 932.84 862.41 633.66 587.55 515.39 505.20 544.64 387.13 380.00 378.00 356.74 332.89 326.09 325.69 279.92 277.05 274.19 272.39 255.66 246.54 242.87 255.46 236.07 229.68 229.14 226.55 198.83 191.63 189.70 175.97 175.04 174.04 173.31 173.24 171.51 170.18 155.45

2010 profits $M 586.35 55.70 662.91 n.a. n.a. n.a. n.a. 26.85 22.32 n.a. n.a. 38.45 38.45 41.51 n.a. 111.87 19.79 34.25 n.a. n.a. n.a. n.a. n.a. 8.60 n.a. 9.20 n.a. 44.58 21.92 10.19 n.a. 54.37 18.72 n.a. n.a. 12.73 n.a. 18.06 n.a. n.a. n.a. 7.60

CEO/ Managing Director Mostafa Terrab Jamal Baamer Abdeslam Ahizoune Ali Fassi Fihri Larbi Bellaha Ali Wakrim Driss Benhima Mohamed Raihani Mohamed El Amrani Eric Gosse Anas Sefrioui Driss Bencheikh Mohammed Fikrat Mr. Mohamed Elmandjra Jean-Pierre Ermenault Mohammed Kabbaj Najib Larraichi

Website

ocpgroup.ma samir.ma iam.ma one.org.ma imperial-tobacco.com afriquia.ma royalairmaroc.com shell.com marjane.co.ma total.ma groupeaddoha.com centralelaitiere.com cosumar.co.ma meditel.ma lydec.ma lafarge.ma alomrane.ma Abdelmajid Iraqui Houssaini jlec.ma Zouhair Bennani labelvie.ma Ahmed Bouaida n.a. Jean Frederic Pioti renault.ma Ayoub Azami sonasid.ma Ezzedin Manyouni oilibya.com Abdelkader Benbekhaled salamgaz.ma Mr. Karim Zaz wana.ma Ali Fassi-Fihri onep.ma Larbi Belarbi See renault website Dominique Drouet holcim.ma Mr. Aziz Akhannouch akwagroup.com Mr. Samir Oudghiri Idrissi lesieur-cristal.ma Hassan Agzenai cmh.co.ma Mohamed Chaibi cimentsdumaroc.com Mr. Abdellaziz Abarro managem-ona.com Olivier Dietsch veoliawater.com Ahmed Kabbaj sgtm-maroc.com Abdellatif Guerraoui autohall.ma Alami Lazraq alliances.co.ma Dalil Guendouz onda.ma Mr. Moulay Loulttiti n.a. Samia Bouchareb cocacola.ma Hachemi Aouni n.a. n.a. petrominoils.com

Top 80 companies

companies at a glance Sector

2010 Year revenues founded $M

2010 profits $M

Rank Company 43 Comp. Gen. Immobiliere

Real Estate

1960

Sopriam

Automotive

1977

147.19

n.a.

Brasseries du Maroc

Agro-food

1919

146.59

16.66

Univers Acier

Industrial

2002

142.32

Palmeraies Koutoubia

Agro-food

1985

Amendis

Public utility

Yazaki Maroc

50 51

148.52

25.99

CEO/ Managing Director

Website

Mohammed Ali Ghannam cgi.ma

Loic Morin

sopriam.ma

Pierre Castel

brasseries-maroc.com

n.a.

Mohammed Azmi

universacier.com

142.06

n.a.

Tahar Bimezzagh

koutoubia.net

2001

141.52

n.a.

Olivier Dietsch

veoliaeau.com

Industrial

2000

138.26

n.a.

Redouane Haribeche

yazaki.com

Marsa Maroc

Public utility

2006

139.19

27.32

Mohamed Abdeljalil

sodep.co.ma

SCBG

Agro-food

1919

136.39

n.a.

Pierre Castel

n.a.

Centr. Auto. Cherifienne

Automotive

1929

133.80

n.a.

Victor el Baz

volkswagen.ma

Acima

Retail

2002

129.40

n.a.

Mohamed Lamrani

acima.ma

Maghreb Steel

Industrial

1975

128.86

n.a.

Fadel Sekkat

maghrebsteel.com

Coficab Maroc

Automotive

2001

118.94

n.a.

coficab.com

Radeema

Public utility

1971

116.00

15.26

Mustapha El Habti

radeema.ma

Disway

Telecoms

2010

112.87

4.80

Hakim Belmaachi

disway.com

Nexans Maroc

Industrial

1947

108.74

n.a.

Frederic Vincentr

nexans.ma

Les Grands Travaux Routiers Construction

n.a.

107.14

n.a.

Jean-Yves Leborgne

colas.com

Autoroute du Maroc

Public utility

1989

105.74

n.a.

Othmane Fassi-Fihri

adm.co.ma

Global Engines (Hyundai)

Automotive

2000

93.28

7.40

Khalil al Sheikh

hyundai.ma

Cooper Pharma

Pharma

1933

87.55

n.a.

Ayman Cheikh Lahlou

cooperpharma.ma

Laprophan

Pharma

1949

86.62

n.a.

Hassan Bennis

laprophan.com

Dimagaz

Energy

n.a.

84.29

n.a.

Groupe CMCP

Pulp paper

1949

82.76

6.26

Marc van Lieshout

internationalpaper.com

Asment Temara

Construction

1976

82.36

n.a.

Brahim Laraqui

asment.co.ma

Nestle Maroc

Agro-food

1984

82.02

n.a.

David Saudan

nestlemaghreb.com

Eaux Minerales d'Oulmes

Agro-food

1933

81.02

n.a.

Mohammed Bensalah

oulmes.com

MIFA

Industrial

1947

79.96

7.13

Abdeslam Sijelmassi

mifa.ma

Jet4You (TUI)

Transport

2005

78.09

6.66

Karim Baina

jet4you.com

RADEEF

Public utility

1969

77.56

7.60

Najib Lahlou Mimi

radeef.ma

Toyota du Maroc

Automotive

n.a.

77.49

n.a.

Adil Bennani

toyota.co.ma

Maphar

Pharma

1951

76.56

n.a.

Patrice Fuster

maphar.ma

Sews Cabind Maroc

Automotive

n.a.

76.29

n.a.

sws.co.jp

Gazafric

Energy

n.a.

76.29

n.a.

gazafric.com

RISMA

Tourism

1993

75.76

n.a.

Mr. Azzedine Guessous

accor.com

Auto Nejma Maroc

Automotive

1963

74.49

7.46

Mohamed Amal Guedira autonejma.ma

IMTC

Transport

1987

73.56

n.a.

Mohamed Karia

Sanofi-Aventis Maroc

Pharma

1951

72.23

n.a.

Patrice Fuster

sanofi-aventis.ma

Comanav

Transport

1946

70.83

n.a.

Taoufik Ibrahimi

comanav-voyages.ma

Doing Business in Morocco | 2012 Edition

imtc.co.ma

2012 Edition | Doing Business in Morocco

Banking for all Much of the growth of the Moroccan banking system is due to increased access to banking services. Banque Centrale Populaire (BCP), Morocco’s second largest bank, explains their success.

everal factors contribute to increased banking penetration. The first is undeniably the densification of the banking network and its Rachid Agoumi Directeur Général, extension to remote areas that Banque Centrale had witnessed low banking usage Populaire levels. Proximity is a key lever for banking services. To increase this closeness-to-the-customer factor, several banks set up so-called lightweight agencies, to reduce investment costs, while simultaneously introducing other technology-intensive solutions. Another key growth driver was provided by changes in the regulatory environment. For a long time, the minimum income requrements set for opening an account was a major obstacle, since much of the population was excluded. The impulse given by the Moroccan Central Bank (Bank Al Maghrib) for low income banking in 2010 made access to banking services much broader.

Source: Magazine Economie Entreprises, “Les 500” Special Issue; Mediaside analysis

Banking penetration

More specifically at BCP, the emphasis has always been on increasing the number of account holders, the depth of penetration. Banking agencies have been established in far-flung, remoter areas of the country, be it in the less accessible mountainous areas of the Atlas chain or in the deep south. Unlike other banks, the BCP network is principally outside of the major urban centers. In addition to this traditional agency structure, there have been four innovative programs that have proven successful for BCP: the low income banking program dedicated to a broad segment of the population; a program of banking services for retirees, stuctured via the two largest national pension funds CNSS and CIMR; the launch of Souk Bank, a initiative of mobile branches that crisscross the souks (open-air markets) of the Kingdom for rural banking; and finally, the involvement of the Banque Populaire Foundation

Q&A What are the strengths that have made Morocco second-ranked in Africa in terms of FDI? Many factors are contributing to my country’s attractiveness. Good economic growth rates. A structured set of government initiatives that are bearing fruit. Low debt levels. The financial sector in Morocco is healthy and plays a key role in funding projects in key industries. Let me cite tourism, energy, infrastructure, manufacturing, real estate and finally agriculture as examples. What is the role of BCP within the various government sector plans? We play an important role, formalized by various conventions signed between BCP and the government, and bolstered by the fact that BCP is the only bank in Morocco to be rated “investment grade” by Standard & Poor’s. Our key role in real estate deserves mention: we were leaders in setting up “Fonciere Emergence”, an fund that owns various industrial assets and logistics platforms, and then rents them to tenant companies. This reduces their capital needs. BCP is actually part of Groupe Banque Populaire. Tell us more about the usefulness of your regional branches. Structured as a cooperative bank, we have BCP as the central hub and ten regional banks as spokes around it. This gives us a nationwide footprint, and a deep understanding of regional competitive advantages. In turn, this has helped many a foreign direct investor.

for the development of micro-credit lending, in parallel to new bank account creations. Growth from the Moroccan diaspora The Moroccan diaspora has always been an important part of the business of BCP Banque Populaire. BCP currently holds a more than 50% market share in this important banking segment, since remittances from overseas Moroccans represent almost 10% of national GDP. BCP has pioneered this field since the late 1960s, catering to the more than three million Moroccans located throughout the world (see sidebar on page 43). After obtaining a full banking license for its French subsidiary, BCP established antennae in the main EU countries. In parallel, clientele offerings were expanded to eventually encompass not only the standard portfolio (savings, investment and assistance products) but also new innovations. Islamic financial products are increasingly requested by this community abroad. ● 2012 Edition | Doing Business in Morocco

Corporate Finance

More deals Corporate finance is still a golden fleece, although things were better two years ago.

Shall we do a deal in Morocco?

Upline Group, part of BCP bank since 2008, boasts of two decades of experience in various financial services. Here is how we can help your financial needs in Morocco.

private equity ventures. MAD 7.5 billion at the end of 2011. Diverse risk/return portfolio offers access to varied PE funds, including infrastructure, tourism, real estate and others.

1. Brokerage. Through personal advice and an electronic trading platform, full access to Moroccan financial exchanges. Regular research and analysis notes to guide you.

4. Corporate finance. Through a team of 15 investment bankers, we offer the gamut of investment banking services: debt and equity instruments, M&A, as well as privatizations.

2. Asset management. About MAD 20 billion under management. Winner of the coveted “Alistotmar Chaabi Treasury” award. Sole Moroccan manager of a French fund.

5. I nsurance brokerage. Our branch Chaabi Courtage offers life and non-life insurance.

3. Private equity. The leading partner in

Doing Business in Morocco | 2012 Edition

Our clients include Maroc Telecom, Vivendi, OCP, Label’Vie, Axa, Autoroutes Maroc, ONCF, etc. Further information on www.upline.co.ma

Morocco top 80 Rank Company

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42

Sector

OCP (Office Cherifien Phosphates) Mining, energy

Website

Top 80 companies

companies at a glance Sector

2010 Year revenues founded $M

2010 profits $M

Rank Company 43 Comp. Gen. Immobiliere

Real Estate

1960

Sopriam

Automotive

1977

147.19

n.a.

Brasseries du Maroc

Agro-food

1919

146.59

16.66

Univers Acier

Industrial

2002

142.32

Palmeraies Koutoubia

Agro-food

1985

Amendis

Public utility

Yazaki Maroc

50 51

148.52

25.99

CEO/ Managing Director

Website

Mohammed Ali Ghannam cgi.ma

Loic Morin

sopriam.ma

Pierre Castel

brasseries-maroc.com

n.a.

Mohammed Azmi

universacier.com

142.06

n.a.

Tahar Bimezzagh

koutoubia.net

2001

141.52

n.a.

Olivier Dietsch

veoliaeau.com

Industrial

2000

138.26

n.a.

Redouane Haribeche

yazaki.com

Marsa Maroc

Public utility

2006

139.19

27.32

Mohamed Abdeljalil

sodep.co.ma

SCBG

Agro-food

1919

136.39

n.a.

Pierre Castel

n.a.

Centr. Auto. Cherifienne

Automotive

1929

133.80

n.a.

Victor el Baz

volkswagen.ma

Acima

Retail

2002

129.40

n.a.

Mohamed Lamrani

acima.ma

Maghreb Steel

Industrial

1975

128.86

n.a.

Fadel Sekkat

maghrebsteel.com

Coficab Maroc

Automotive

2001

118.94

n.a.

coficab.com

Radeema

Public utility

1971

116.00

15.26

Mustapha El Habti

radeema.ma

Disway

Telecoms

2010

112.87

4.80

Hakim Belmaachi

disway.com

Nexans Maroc

Industrial

1947

108.74

n.a.

Frederic Vincentr

nexans.ma

Les Grands Travaux Routiers Construction

n.a.

107.14

n.a.

Jean-Yves Leborgne

colas.com

Autoroute du Maroc

Public utility

1989

105.74

n.a.

Othmane Fassi-Fihri

adm.co.ma

Global Engines (Hyundai)

Automotive

2000

93.28

7.40

Khalil al Sheikh

hyundai.ma

Cooper Pharma

Pharma

1933

87.55

n.a.

Ayman Cheikh Lahlou

cooperpharma.ma

Laprophan

Pharma

1949

86.62

n.a.

Hassan Bennis

laprophan.com

Dimagaz

Energy

n.a.

84.29

n.a.

Groupe CMCP

Pulp paper

1949

82.76

6.26

Marc van Lieshout

internationalpaper.com

Asment Temara

Construction

1976

82.36

n.a.

Brahim Laraqui

asment.co.ma

Nestle Maroc

Agro-food

1984

82.02

n.a.

David Saudan

nestlemaghreb.com

Eaux Minerales d'Oulmes

Agro-food

1933

81.02

n.a.

Mohammed Bensalah

oulmes.com

MIFA

Industrial

1947

79.96

7.13

Abdeslam Sijelmassi

mifa.ma

Jet4You (TUI)

Transport

2005

78.09

6.66

Karim Baina

jet4you.com

RADEEF

Public utility

1969

77.56

7.60

Najib Lahlou Mimi

radeef.ma

Toyota du Maroc

Automotive

n.a.

77.49

n.a.

Adil Bennani

toyota.co.ma

Maphar

Pharma

1951

76.56

n.a.

Patrice Fuster

maphar.ma

Sews Cabind Maroc

Automotive

n.a.

76.29

n.a.

sws.co.jp

Gazafric

Energy

n.a.

76.29

n.a.

gazafric.com

RISMA

Tourism

1993

75.76

n.a.

Mr. Azzedine Guessous

accor.com

Auto Nejma Maroc

Automotive

1963

74.49

7.46

Mohamed Amal Guedira autonejma.ma

IMTC

Transport

1987

73.56

n.a.

Mohamed Karia

Sanofi-Aventis Maroc

Pharma

1951

72.23

n.a.

Patrice Fuster

sanofi-aventis.ma

Comanav

Transport

1946

70.83

n.a.

Taoufik Ibrahimi

comanav-voyages.ma

Doing Business in Morocco | 2012 Edition

imtc.co.ma

2012 Edition | Doing Business in Morocco

Source: Magazine Economie Entreprises, “Les 500” Special Issue; Mediaside analysis

Banking penetration

Corporate Finance

More deals Corporate finance is still a golden fleece, although things were better two years ago.

Shall we do a deal in Morocco?

Upline Group, part of BCP bank since 2008, boasts of two decades of experience in various financial services. Here is how we can help your financial needs in Morocco.

private equity ventures. MAD 7.5 billion at the end of 2011. Diverse risk/return portfolio offers access to varied PE funds, including infrastructure, tourism, real estate and others.

1. Brokerage. Through personal advice and an electronic trading platform, full access to Moroccan financial exchanges. Regular research and analysis notes to guide you.

4. Corporate finance. Through a team of 15 investment bankers, we offer the gamut of investment banking services: debt and equity instruments, M&A, as well as privatizations.

2. Asset management. About MAD 20 billion under management. Winner of the coveted “Alistotmar Chaabi Treasury” award. Sole Moroccan manager of a French fund.

5. I nsurance brokerage. Our branch Chaabi Courtage offers life and non-life insurance.

3. Private equity. The leading partner in

Doing Business in Morocco | 2012 Edition

Our clients include Maroc Telecom, Vivendi, OCP, Label’Vie, Axa, Autoroutes Maroc, ONCF, etc. Further information on www.upline.co.ma

Morocco top 80 Rank Company

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42

Sector

OCP (Office Cherifien Phosphates) Mining, energy

Website

Top 80 companies

companies at a glance Sector

2010 Year revenues founded $M

2010 profits $M

Rank Company 43 Comp. Gen. Immobiliere

Real Estate

1960

Sopriam

Automotive

1977

147.19

n.a.

Brasseries du Maroc

Agro-food

1919

146.59

16.66

Univers Acier

Industrial

2002

142.32

Palmeraies Koutoubia

Agro-food

1985

Amendis

Public utility

Yazaki Maroc

50 51

148.52

25.99

CEO/ Managing Director

Website

Mohammed Ali Ghannam cgi.ma

Loic Morin

sopriam.ma

Pierre Castel

brasseries-maroc.com

n.a.

Mohammed Azmi

universacier.com

142.06

n.a.

Tahar Bimezzagh

koutoubia.net

2001

141.52

n.a.

Olivier Dietsch

veoliaeau.com

Industrial

2000

138.26

n.a.

Redouane Haribeche

yazaki.com

Marsa Maroc

Public utility

2006

139.19

27.32

Mohamed Abdeljalil

sodep.co.ma

SCBG

Agro-food

1919

136.39

n.a.

Pierre Castel

n.a.

Centr. Auto. Cherifienne

Automotive

1929

133.80

n.a.

Victor el Baz

volkswagen.ma

Acima

Retail

2002

129.40

n.a.

Mohamed Lamrani

acima.ma

Maghreb Steel

Industrial

1975

128.86

n.a.

Fadel Sekkat

maghrebsteel.com

Coficab Maroc

Automotive

2001

118.94

n.a.

coficab.com

Radeema

Public utility

1971

116.00

15.26

Mustapha El Habti

radeema.ma

Disway

Telecoms

2010

112.87

4.80

Hakim Belmaachi

disway.com

Nexans Maroc

Industrial

1947

108.74

n.a.

Frederic Vincentr

nexans.ma

Les Grands Travaux Routiers Construction

n.a.

107.14

n.a.

Jean-Yves Leborgne

colas.com

Autoroute du Maroc

Public utility

1989

105.74

n.a.

Othmane Fassi-Fihri

adm.co.ma

Global Engines (Hyundai)

Automotive

2000

93.28

7.40

Khalil al Sheikh

hyundai.ma

Cooper Pharma

Pharma

1933

87.55

n.a.

Ayman Cheikh Lahlou

cooperpharma.ma

Laprophan

Pharma

1949

86.62

n.a.

Hassan Bennis

laprophan.com

Dimagaz

Energy

n.a.

84.29

n.a.

Groupe CMCP

Pulp paper

1949

82.76

6.26

Marc van Lieshout

internationalpaper.com

Asment Temara

Construction

1976

82.36

n.a.

Brahim Laraqui

asment.co.ma

Nestle Maroc

Agro-food

1984

82.02

n.a.

David Saudan

nestlemaghreb.com

Eaux Minerales d'Oulmes

Agro-food

1933

81.02

n.a.

Mohammed Bensalah

oulmes.com

MIFA

Industrial

1947

79.96

7.13

Abdeslam Sijelmassi

mifa.ma

Jet4You (TUI)

Transport

2005

78.09

6.66

Karim Baina

jet4you.com

RADEEF

Public utility

1969

77.56

7.60

Najib Lahlou Mimi

radeef.ma

Toyota du Maroc

Automotive

n.a.

77.49

n.a.

Adil Bennani

toyota.co.ma

Maphar

Pharma

1951

76.56

n.a.

Patrice Fuster

maphar.ma

Sews Cabind Maroc

Automotive

n.a.

76.29

n.a.

sws.co.jp

Gazafric

Energy

n.a.

76.29

n.a.

gazafric.com

RISMA

Tourism

1993

75.76

n.a.

Mr. Azzedine Guessous

accor.com

Auto Nejma Maroc

Automotive

1963

74.49

7.46

Mohamed Amal Guedira autonejma.ma

IMTC

Transport

1987

73.56

n.a.

Mohamed Karia

Sanofi-Aventis Maroc

Pharma

1951

72.23

n.a.

Patrice Fuster

sanofi-aventis.ma

Comanav

Transport

1946

70.83

n.a.

Taoufik Ibrahimi

comanav-voyages.ma

Doing Business in Morocco | 2012 Edition

imtc.co.ma

2012 Edition | Doing Business in Morocco

Source: Magazine Economie Entreprises, “Les 500” Special Issue; Mediaside analysis

Banking penetration

Corporate Finance

More deals Corporate finance is still a golden fleece, although things were better two years ago.

Shall we do a deal in Morocco?

Upline Group, part of BCP bank since 2008, boasts of two decades of experience in various financial services. Here is how we can help your financial needs in Morocco.

private equity ventures. MAD 7.5 billion at the end of 2011. Diverse risk/return portfolio offers access to varied PE funds, including infrastructure, tourism, real estate and others.

1. Brokerage. Through personal advice and an electronic trading platform, full access to Moroccan financial exchanges. Regular research and analysis notes to guide you.

4. Corporate finance. Through a team of 15 investment bankers, we offer the gamut of investment banking services: debt and equity instruments, M&A, as well as privatizations.

2. Asset management. About MAD 20 billion under management. Winner of the coveted “Alistotmar Chaabi Treasury” award. Sole Moroccan manager of a French fund.

5. I nsurance brokerage. Our branch Chaabi Courtage offers life and non-life insurance.

3. Private equity. The leading partner in

Doing Business in Morocco | 2012 Edition

Our clients include Maroc Telecom, Vivendi, OCP, Label’Vie, Axa, Autoroutes Maroc, ONCF, etc. Further information on www.upline.co.ma

Morocco top 80 Rank Company

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42

Sector

OCP (Office Cherifien Phosphates) Mining, energy

Website

Top 80 companies

companies at a glance Sector

2010 Year revenues founded $M

2010 profits $M

Rank Company 43 Comp. Gen. Immobiliere

Real Estate

1960

Sopriam

Automotive

1977

147.19

n.a.

Brasseries du Maroc

Agro-food

1919

146.59

16.66

Univers Acier

Industrial

2002

142.32

Palmeraies Koutoubia

Agro-food

1985

Amendis

Public utility

Yazaki Maroc

50 51

148.52

25.99

CEO/ Managing Director

Website

Mohammed Ali Ghannam cgi.ma

Loic Morin

sopriam.ma

Pierre Castel

brasseries-maroc.com

n.a.

Mohammed Azmi

universacier.com

142.06

n.a.

Tahar Bimezzagh

koutoubia.net

2001

141.52

n.a.

Olivier Dietsch

veoliaeau.com

Industrial

2000

138.26

n.a.

Redouane Haribeche

yazaki.com

Marsa Maroc

Public utility

2006

139.19

27.32

Mohamed Abdeljalil

sodep.co.ma

SCBG

Agro-food

1919

136.39

n.a.

Pierre Castel

n.a.

Centr. Auto. Cherifienne

Automotive

1929

133.80

n.a.

Victor el Baz

volkswagen.ma

Acima

Retail

2002

129.40

n.a.

Mohamed Lamrani

acima.ma

Maghreb Steel

Industrial

1975

128.86

n.a.

Fadel Sekkat

maghrebsteel.com

Coficab Maroc

Automotive

2001

118.94

n.a.

coficab.com

Radeema

Public utility

1971

116.00

15.26

Mustapha El Habti

radeema.ma

Disway

Telecoms

2010

112.87

4.80

Hakim Belmaachi

disway.com

Nexans Maroc

Industrial

1947

108.74

n.a.

Frederic Vincentr

nexans.ma

Les Grands Travaux Routiers Construction

n.a.

107.14

n.a.

Jean-Yves Leborgne

colas.com

Autoroute du Maroc

Public utility

1989

105.74

n.a.

Othmane Fassi-Fihri

adm.co.ma

Global Engines (Hyundai)

Automotive

2000

93.28

7.40

Khalil al Sheikh

hyundai.ma

Cooper Pharma

Pharma

1933

87.55

n.a.

Ayman Cheikh Lahlou

cooperpharma.ma

Laprophan

Pharma

1949

86.62

n.a.

Hassan Bennis

laprophan.com

Dimagaz

Energy

n.a.

84.29

n.a.

Groupe CMCP

Pulp paper

1949

82.76

6.26

Marc van Lieshout

internationalpaper.com

Asment Temara

Construction

1976

82.36

n.a.

Brahim Laraqui

asment.co.ma

Nestle Maroc

Agro-food

1984

82.02

n.a.

David Saudan

nestlemaghreb.com

Eaux Minerales d'Oulmes

Agro-food

1933

81.02

n.a.

Mohammed Bensalah

oulmes.com

MIFA

Industrial

1947

79.96

7.13

Abdeslam Sijelmassi

mifa.ma

Jet4You (TUI)

Transport

2005

78.09

6.66

Karim Baina

jet4you.com

RADEEF

Public utility

1969

77.56

7.60

Najib Lahlou Mimi

radeef.ma

Toyota du Maroc

Automotive

n.a.

77.49

n.a.

Adil Bennani

toyota.co.ma

Maphar

Pharma

1951

76.56

n.a.

Patrice Fuster

maphar.ma

Sews Cabind Maroc

Automotive

n.a.

76.29

n.a.

sws.co.jp

Gazafric

Energy

n.a.

76.29

n.a.

gazafric.com

RISMA

Tourism

1993

75.76

n.a.

Mr. Azzedine Guessous

accor.com

Auto Nejma Maroc

Automotive

1963

74.49

7.46

Mohamed Amal Guedira autonejma.ma

IMTC

Transport

1987

73.56

n.a.

Mohamed Karia

Sanofi-Aventis Maroc

Pharma

1951

72.23

n.a.

Patrice Fuster

sanofi-aventis.ma

Comanav

Transport

1946

70.83

n.a.

Taoufik Ibrahimi

comanav-voyages.ma

Doing Business in Morocco | 2012 Edition

imtc.co.ma

2012 Edition | Doing Business in Morocco

Source: Magazine Economie Entreprises, “Les 500” Special Issue; Mediaside analysis

Banking penetration

Fundamentally sound With more than $26 billion in assets, Morocco’s banking system is well-capitalized and growing fast. The country’s strategy is to become the dominant regional platform, thanks to conservative monetary policies and banking regulations, as well as expansive outbound tactics.

orocco has a healthy interest in its financial sector. The country’s political stability and low risk levels have meant a steady increase in the importance of the financial industries within the overall economy. In July 2011, the IMF noted that assets in the banking sector exceeded 120% of GDP, compared to 109% in 2007 and 81% in 2003. Financial services’ share of GDP has risen with overall economic growth, for example increasing from 17.5% in 2005 to 20.4% of GDP in 2009. Banking was not always such a sweet business here though. “Until 1961, banking was a controlled, statist activity, with few actors and tight regulations,” explains Hassan el Basri, president of the Moroccan Banking Federation (part of CGEM, the employers’ organization). “In 1961 a progressive restructuring was initiated. One can distinguish between three phases in banking development since then.”

Banking innovations include mobile services in open air markets and talking ATMs for the illiterate.

During phase one, from 1961 to 1993, nationalized banks were transformed to privately held ones. Phase two, from 1993 to 2006, was kicked off by a new Banking Decree (Nouvelle Loi Bancaire of 1993), that loosened banking regulation by shifting to indirect regulation. Monetary regulations were the norm, namely covering interest rates, banking ratios and monetary policy. Some banks disappeared (e.g. BNDE because of poor management). Other banks were privatized. Some small foreign banks (namely Spanish ones) disappeared. This phase also saw the introduction of universal banking rules (Basel I and II), including risk assessments and liquidity ratios. This phase also witnessed the end of mandatory employment rules, which had saddled banks with inappropriate human resources. In the 1990s, allowance was made for foreign banks to own 100% of banking assets. That is when BNP Paribas France bought its share of BMCI, Credit Agricole

Morocco’s top 8 banks by revenues Rank Name 1 Attijariwafa bank

Rev. 2010*

CEO

Website

1911

1,715.4

Mohamed El Kettani

attijariwafabank.com

BCP (Banque Centrale Populaire)

1961

1,175.3

Mohamed Benchaaboun

gbp.ma

BMCE (Banque Mar. Commerce Extérieur)

1959

883.3

Othman Benjelloun

bmcebank.ma

BMCI (Banque Mar. Commerce Industrie)

1943

464.8

Jacques Ardent

bmci.ma

Société Générale

1913

422.6

Albert Le Dirac'h

sgmaroc.com

Crédit du Maroc

1929

233.9

Pierre Louis Boissiere

cdm.co.ma

Credit Immobilier Hotelier

1920

176.1

Ahmad Rahhou

cih.co.ma

Arab Bank PLC

1961

16.1

Abdel Hamid Shoman

arabbank.ma

*Figures in $M

Founded

Doing Business in Morocco | 2012 Edition

Source: Economie Entreprises, Mediaside analysis

Banking

Insight

Stimulus from abroad With about 3.3 million Moroccans living abroad, the country can count on its diaspora for beneficial financial impact, and more. According to the government’s Office des Changes, about $6.8 billion of inward remittances from Moroccans abroad flowed into the country in 2011. Yet cold cash is not the only benefit derived from the diaspora. Moroccans residing abroad are key in transferring skills acquired through formal education, training and professional experience. The diaspora is also entrepreneurial, setting up businesses in their host countries, landing contracts and sometimes opening up subsidiaries in Morocco. There are also the homecoming microentrepreneurs, who open up often small businesses upon returning home, for retirement or other reasons. France bought its share of Credit du Maroc, and Societe Generale France bought its share of Societe Generale Maroc. Thirdly, in 2006 another banking reform law shifted all regulatory powers to the Moroccan Central Bank, or Bank Al-Maghrib, although technically the Ministry of Finance still rubber stamps their decisions. The Bank Al-Maghrib was founded in 1959 and is based in Rabat. In June 2010 (the latest figures available) it held net foreign reserves of $18 billion. In addition to currency management, the bank also supervises a number of privatized banks supplying retail services. Three majors Today the Moroccan banking sector is dominated by three major local banks: Attijariwafa bank, BCP (Banque Centrale Populaire) and Banque Marocaine du Commerce Exterieur. The three major banks held around 80% of total assets in 2011. There are 76 financial institutions in the country including 16 commercial banks, 37 financing companies, six offshore banks, and 14 micro-finance associations. Moroccan banks have kept clean balance sheets with low levels of bad debt, despite the growth in their lending portfolios. Non-performing loans represented 5% of total loans in 2011. Within the portfolios of the six publicly traded banks, on the aggregate, four categories of loans represent almost three-quarters of the total: household loans, manufacturing, construction and finance.

Through this strong network of human, cultural and economic ties, the diaspora has proven a key contributor to Morocco’s growth, and an important window onto the world. By Prof. Imane El Ghazali, ESCA School of Management

Morocco has a dense banking infrastructure with 21 commercial bank branches per 100,000 people. By comparison South Africa, which has one-and-a half-times the population of Morocco, has ten bank branches per 100,000 people. Growth factors Moroccan banking has been active, yet conservatively so, due mostly to two factors. “Firstly project finance has had an important impact on banking growth,” says Hassan El Basri. “As of the 2000s, private sector financing was introduced for large-scale projects, namely in the energy sector. These projects used to be 100% financed by foreign institutions, such as the World Bank, the European Investment Bank and the African Development Bank. Other large projects were in the areas of telephony, particularly mobile networks, as well as tourism and infrastructure.” “A second important growth factor,” proceeds Mr. El Basri, “was penetration of banking infrastructure and services among the public. In 2000, less than 40% of the population had bank accounts, now about 60% do. Accompanying and driving the account proliferation has been the opening of new bank agencies.” Another growth vector has been the development of lower-income banking, in particular the Al-Barid Bank, the banking branch of the post office. Al-Barid was launched in 2010 to provide basic banking services to 2012 Edition | Doing Business in Morocco

those with modest incomes. It has agencies in 1,800 post office branches and aims to have six million customers by 2013.

fund, Fonciere Emergence. As for retail banking, there have been many initiatives to boost account penetration (bancarisation in French) among the population. Banque Populaire (BCP) has introduced a well-received “mobile banking” unit that appears at weekly open-air markets throughout rural areas. Morocco also has “talking” ATMs, that enable illiterate customers to perform basic banking operations. A final word on Islamic banking. Although still nascent in Morocco, various new regulations should assist in its development over the next years. ●

Elsewhere, Moroccan banks are competing for the business of Moroccans living abroad, helping them transfer money to Morocco and invest in the country. France accounts for 41% of remittances from Moroccans living in Europe while Spain accounts for 10%. Deposits held in Morocco by Europe-based immigrants stood at $15 billion in 2010, about 20% of total national banking deposits.

For more information:

To foster expansion, there have been many banking innovations, such as “agences legeres”, or agencies staffed by two employees. Industrial investments are no longer subject to property purchasing taxes (charge fonciere), which are now carried by a government

Moroccan Ministry of Economy and Finance www.finances.gov.ma Bank Al Maghrib www.bkam.ma Federation of Banks - Mr Hassan El Basri www.cgem.ma (click on Federations Sectorielles)

Regional Banking Platform

Building a financial hub Capitalizing on its banking strength, Morocco’s main financial players (banks, insurance companies, the stock exchange) are now building Casablanca Finance City, a regional hub similar to financial centers in Dubai and Qatar. headquarters for financial and non-financial firms active in other countries.

Along with industrial developments, such as automotive and aeronautics, Morocco sees the potential for developing a strong regional financial platform. With launch funding of $14.1 million, the Moroccan Financial Board will manage and promote Casablanca Finance City (CFC) as a regional financial hub and gateway into the African markets, just as the Dubai International Finance Centre offers a portal for Persian Gulf financing. The venture’s shareholders include the creme de la creme of Moroccan finance, including the three leading banks, the Central Bank and CDG, several insurance companies, the stock exchange, and others. CFC will offer favorable tax advantages similar to those for the national free trade or nearshoring zones. In April 2010, the Moroccan government appointed Said Ibrahimi to head the CFC project. Although it is still early in the game, CFC has already signed its first six tenants and is in advanced discussions with another 20 partners. The types of tenants CFC is targeting are financial and professional services, as well as regional

To ensure the success of the venture, partnerships have been signed with the Singapore Cooperation Enterprise and Luxemburg for Finance. CFC wants to emulate the key success factors of the 40-year old Singaporean model. Areas of cooperation include the institutional and regulatory framework, optimizing legal frameworks for capital markets, and improving the ease of doing business. The link-up with Luxemburg for Finance, the Grand Duchy’s finance promotional arm, covers both mutual business development and training. CFC will be located on a new site covering 100 hectares on the old Anfa airport. Construction will be in phases and is expected to deliver a total of 1.4 million square meters of mixed-use space (40% office, 40% residential, 20% other), so that CFC becomes an urban destination, not a financial ghetto. CFC will also include a large park. After its success developing its industrial sector, Morocco’s financial sector ball is rolling.

Financial Center

Location

Founded

CEO

Website

CFC

Casablanca

2010

Said Ibrahimi

mfboard.com

DIFC

Dubai

2002

Addullah Saleh

difc.ae

QFC

Qatar

2005

Shashank Srivastava

qfc.com.qa

Doing Business in Morocco | 2012 Edition

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SUCCESS STORY

Attijariwafa bank heads into Africa Morocco’s top bank, Attijariwafa bank, has been following a progressive and successful southbound expansion into the heart of Africa. The bank’s director of international retail operations provides his insights.

By Mohammed Krisni Managing Director International Retail Operations Attijariwafa bank Group

Born in 2004 from the merger of Wafabank and the Commercial Bank of Morocco, Attijariwafa bank is both young and dynamic, and steeped in the traditions and business networks of its founding banks, created in 1906 and 1911 respectively.

Barely a year after the merger dust had settled, Attijariwafa embarked on its international expansion. The Moroccan borders were becoming too small for us! Our first step was in Europe, where our credentials helped us obtain a full banking license. Immediately thereafter, we set our focus on Africa – both our natural backyard of Maghreb North African countries, and the farther-flung UEMOA and CEMAC countries of West and Central Africa. Since 2005, we have grown this African foot print to cover 11 countries (out of the 19 in the zone). By the end of 2011, we employed 4,905 staff in 503 agencies, handling 1.4 million client accounts. The goals of our international development are four-fold. Firstly, we realize that the penetration of banking services in many African countries is still low. We have been a key actor in this effort in Morocco, where penetration levels rose substantially in the past ten years. Secondly, we realize that an increasing number of companies and institutions need pan-African banking services, through a broad-based network. We wish to maintain our leadership as the foremost francophone-based bank. Thirdly we have developed unique expertise in project finance, namely for infrastructure projects, and we wish to capitalize on this beyond Moroccan borders. Lastly, we see higher growth opportunities in some countries than at home. Do we grow opportunistically? Yes and no. Some of our pan-African growth has been via acquisitions. Other countries have been greenfield launches. We often operate in stages, with our growth matching the preparedness of the country, or the opportunities that appear. For example, in Mali (where I served as CEO), we acquired existing players. In Senegal, on the other hand, we progressed in phases. Phase one was the banking license. Phase two in January 2007 was the purchase of 67% of BST bank, and then 79% of CBAO bank in April 2008. We thus created the leading bank in the West African Economic and Monetary Union

Doing Business in Morocco | 2012 Edition

(UEMOA), and as a bonus landed a foothold in Guinea-Bissau. In the case of the Crédit Agricole subsidiaries, our strategic thinking was to acquire a basket of country operations, since that deal involved banks in Senegal, Cote d’Ivoire, Cameroon, Gabon and the Congo. For us, greenfield growth does also exist, for example in Burkina Faso, in Mauritania, and via our representative office in Libya. One of our key considerations in our acquisitions is to ensure smooth transitions with existing staff and managers. We transfer our best practices within our new operations – be it in the sales and marketing areas, in back office and systems, or in personnel training at our Casablanca headquarters. We also adopt relevant expertise from our local brethren. After completing a deal, we usually establish a 12- to 18-month roadmap for the integration. Attijariwafa bank in ten years? Within the realm of African banks, we are currently ranked sixth by assets, after four South African and one Egyptian bank. Our vision is ambitious and we expect to continue growing in geographic scope and in the breadth of our service offerings. We certainly look forward to accompanying the Moroccan financial authorities as they develop an African financial platform based in Morocco (Casablanca Financial Center). For more information: Ibtissam Abouharia: i.abouharia@attijariwafa.com Head of Financial Information and Investor Relations

ATTIJARIWAFA BANK ELECTED BEST BANK IN MOROCCO FOR 2011

International experts from the prestigious rating organizations : « The Banker », « Global Finance » and « Capital Finance International » have elected Attijariwafa bank as Best Bank in Morocco for 2011. AWAR D

•

The Group is thus being rewarded for its high performance and for its sound development strategy.

BES

AFRICA AWARD

While this is an umpteenth recognition for the hard work of its 15,000 employees, it is also, and above all, a demonstration of the renewed confidence of its clients and partners alike.

www.attijariwafabank.com

Casablanca bourse on the rebound Casablanca hosts Africa’s second-largest stock market after Johannesburg despite restrictions on the financial instruments it can trade. The bourse’s growth prospects are looking good.

he stock exchange in Casablanca was established in 1929. At that time, it was known as the Office de Compensation des Valeurs Mobilières, or the Office for Clearing of Transferable Securities. Until 1967, the stock market saw relatively sluggish growth due to stifling restrictions, namely on currency exchanges. To overcome such shortcomings, reforms were undertaken in that year to provide Morocco’s financial markets with a well-organized legal and technical framework. Another phase of growth occurred after Morocco completed its structural adjustment program (1986 to 1996), which consolidated macro-economic fundamentals and successfully brought under control its high level of debt and inflation. Part of this program, in 1993, laid the groundwork for the modern bourse, establishing a regulatory agency, as well as accrediting brokerage firms and creating a private company responsible for its management. This became the Casablanca Stock Exchange (CSE) in 2000.

The Casablanca Stock Exchange is now the second largest African bourse.

More recently, improvements have included the reduction of the trade settlement period from T+5 to T+3 (May 2001); the relocation of electronic-based trading to brokerage firms’ trading rooms (January 2001); the introduction of new indices and weighting methods; and the establishment of five different types of quotation markets, including three equity markets, the bond market and the funds market (April 2004). Lastly, new listing requirements were introduced in January 2005. Ownership and governance The CSE is a joint stock company (société anonyme) with a board of directors and a supervisory board. CSE reports to the Ministry of Finance and Privatization, and operates under well-defined terms of reference while complying with a set of rules known as General Rules. CSE is jointly owned by the 17 brokerage firms operating in the marketplace, and has a share capital of $2.2 million. There are currently 81 companies listed on the CSE, representing a market capitalization of $67.7 billion at the end of 2010. In 2010 two new companies were listed, and in 2011 the number rose to four companies. Traditionally, banking and telecoms have

Trading in African equities Comparison of top African stock exchanges Year Founded

Co’s listed

CEO

Website

Casablanca stock exchange

1929

Karim Hajji

casablanca-bourse.com

Johannesburg Stock Exchange

1887

410

Nicky Newton-King

jse.co.za

The Egyptian Exchange (Cairo)

1883

214

Mohamed Omran

egx.com.eg

Stock market name

Source: Mediaside analysis

Doing Business in Morocco | 2012 Edition

Capital Markets

To attain this goal, the CSE management is on continuous road shows throughout the kingdom, meeting with companies to present the advantages of the stock exchange. Mr. Hajji’s schedule includes meetings with at least half a dozen companies each week around Caravane de la Bourse. Another goal for the CSE is to reach half a million investors (i.e. individuals holding shares, as opposed to institutional investors) by 2015. To meet this goal, the CSE team is holding seminars and classes, either for a general public or for targeted financial actors. Until that target is reached, the CSE relies predominantly on institutional investors (70%) for its trading activity. Individual investors and foreigners contribute about 15% of market volume each. been the strongest equity sectors on the market. Recently, companies in the infrastructure activities, such as housing, construction and real estate, have made strong showings, reflecting the country’s heavy investment priority for infrastructure. “Here, the companies are often more recent creations, with more open-minded managers having larger capital needs, so the CSE is a natural source of funds for their investments,” explains CSE President Karim Hajji. Most of the trading is of shares (equity markets), which represents 91% of the volume. The remainder of the trading is in the bond market. CSE does not yet offer currency trading, mostly because the Moroccan dirham is not freely exchangeable. Growth by several means The number of companies listed on the CSE has seen relatively slow growth. “In Morocco we face several difficulties in convincing companies to list their shares publicly,” as explains Mr. Hajji. “Foremost is probably the fact that top management is not yet used to the loss of confidentiality, and some sharing of decisionmaking. Many old school owners are control freaks who do not wish to share.” Nonetheless, CSE’s ambitious growth target is to have 150 companies listed by 2015. Given recent performance, the CSE management is confident. In 2010, the MASI index, one of two stock indices that track companies listed on the CSE, rose by 21%, and the volume of transactions rose by 65%, reaching $14 billion over the year. This means that after the 2009 slump, the CSE is almost back to its pre-crisis level.

Aside from new listings, the CSE growth comes from additional cross-listings between countries. For example in 2010 Tunisian car distributor Ennakl Automobiles listed on both the Tunis and Casablanca exchanges. There is similar interest from companies south of Morocco with less developed equity markets, for example Senegal or Guinea. CSE can also count on secondary listings from already-traded companies to raise additional financing from the stock market. Obstacles to growth The CSE does face some obstacles on its path to growth. “Morocco weathered the 2008 financial storm quite well since it had little exposure to the risk-laden instruments, but there is wariness vis-a-vis more sophisticated instruments,” explains Mr. Hajji. “But there is a desire to start trading currencies and develop the bond market.” One of the nagging issues for the CSE is that of liquidity. “There is pent-up demand for further trading capabilities, yet we are bound by tight regulations and are hampered by high P/E ratios for our Moroccan equities,” laments Mr. Hajji. “This discourages many investors. With not enough paper to go around, prices on the stock market are quite high.” Another restriction is that Moroccan pension funds can only invest up to 10% of their holdings abroad, adding to upward pressure on domestic equity pricing. But this may be resolved when changes to the financial rules take effect in 2014 or 2015. ● For more information: Casablanca Stock Exch. www.casablanca-bourse.com (Full digital annual report available to download) Economy and Finance Ministry www.finances.gov.ma 2012 Edition | Doing Business in Morocco

Insurance faces bright prospects Moroccan insurance has plenty of domestic potential, namely because of a new government framework regarding health coverage. The non-life sector leads but the much smaller life insurance sector presents opportunities as well.

Indeed, automotive insurance is the driver of the Moroccan insurance sector.

2011 revenues of $1.9 billion, up from $1.77 billion the year before.

espite the global economic downturn, the Moroccan insurance sector is performing well. At the end of 2011, private insurance companies earned $2.8 billion in revenues from customer premiums, an increase of 9.2% over 2010. Nevertheless, the growth rate was lower than that prior to the recession.

Within non-life, automotive is by far the largest segment, accounting for 47% of premium revenues ($875 million in 2011), up 6.4% over 2010. The remainder of non-life is split between casualty and fire premiums, representing shares in the non-life sector of 16.9% and 11.9% respectively.

“We are the largest Arab market, with the greatest degree of sophistication and maturity,” explains Bashir Baddou, managing director of the National Insurance Federation (Federation Nationale de l’Assurance). “We even have a re-insurance company and quality offerings.”

Life insurance booms Although the life insurance sector and related capital products is much smaller than non-life, it is showing promising signs. Life and capital posted double-digit growth between 2010 and 2011, after poor performance in 2009-2010. The 15.9% boost in 2011 means the segment now totals premium revenues of $890 million.

Non-life carries the sector The current growth in insurance comes primarily from the non-life segment, which includes automotive, fire and casualty. Almost 70% of insurance premium revenues comes from the non-life sector, representing

Life insurance has significant future potential. For the past two years, Morocco has committed itself to a policy of revitalizing its long-term savings. New financial products have been introduced and

Public insurance at the top Top Moroccan insurance companies Rank Company

Year Founded

Rev. 2010*

CEO

Website

CNSS (social security)

1959

2,008.8

Said Ahmidouch

cnss.ma

RCAR

1977

1,098.0

Moulay Cherkaoui

rcar.ma

CIMR

1949

573.9

Khalid Cheddadi

cimr.ma

Wafa Assurances

1972

526.2

Mohammed Arroub

wafaassurance.ma

RMA Watanya

1949

520.2

Zouheir Bensaid

rmawatanya.com

* Figures in $M

Doing Business in Morocco | 2012 Edition

Source: Economie Entreprises “Les 500”, Mediaside analysis

Insurance

government and public and private insurance sector actors. According to the objectives of the partnership agreement, 90% of the population will be subject to compulsory health insurance and 50% will require independent health care insurance.

innovative tax incentives are on offer. Never before has so much interest been given to encourage savings. These are fertile waters for both life insurance and financial capitalization products. The market leader for life insurance in Morocco is Wafa Insurance, owned by Morocco’s largest bank, Attijariwafa bank. Wafa Insurance dominates the life and capitalization segment, with 36.7% market share, claiming premium revenue of $325 million in 2011, up 25.1% over 2010. This performance was driven by increased demand for the savings products offered by the so-called “bancassurance” companies. These are financial companies allowed to sell both banking and insurance services to their clientele. In this case Wafa Insurance used the much bigger Attijariwafa bank’s extensive network of agencies and sales representatives to market their bancassurance products. Alas, life and capitalization insurance seems to be a zero-sum game. Wafa Insurance’s double-digit growth is offset by declines at competing insurers such as RMA Watanya or CNIA Saada. The decline in bancassurance premium revenues for some players is explained by their decisions to exit insurance-assavings products in favor of non-life products whose performance is steady. Program contract Not only was 2011 marked by financial growth for the 17 companies active in the private insurance sector, but also by the implementation of the Program Contract, signed in 2010 by the Moroccan

The agreement is expected to provide an additional boost to the insurance sector. It involves extending the coverage of people and goods, improving the quality of services and services, contributing more to the financing of economic activity, strengthening the sector’s presence abroad, and consolidating the insurance companies’ financial basics. In all, no less than 70 measures were defined in the contractual framework between business operators and the nine ministries involved in creating the program contract. Among these measures, the extension of minimum coverage for people and property and the improvement of the quality of benefits and services are key elements for insurance companies. Foreign markets Through its major shareholder group Saham, CNIA Saada has expanded its presence to 11 African countries after the takeover of Collina. Wafa Insurance has obtained the necessary permits to operate in Tunisia. In 2011, Wafa created a joint venture with French company Inter Mutuelles Assistance to create a pilot project that could open the African gates. Societe d’Assistance Maroc, the joint venture vehicle, targets non-resident Moroccans and African expatriates. With a target potential representing several hundred million dollars, it is also considering options in the Algerian market as well as several sub-Saharan countries, where it could benefit from the presence of Attijariwafa bank. Market threats also exist for Moroccan insurance. According to some professionals, these threats include increased competition as new entrants arrive, as well as the implications of the Solvency II Directive on the use of retained earnings to reduce the risk of insolvency. Nonetheless, the overall prospects seem bright as the market expands and additional services are introduced. ● For more information: Moroccan insurance federation (Fédération Marocaine des Sociétés d’Assurances et de Réassurance) www.fmsar.org.ma Caisse Nationale de Sécurité Sociale www.cnss.ma

2012 Edition | Doing Business in Morocco

Moving the goods Economic growth means more freight traffic. But while Morocco’s shipping and rail sectors are up to the task, its road sector has a way to go before it can meet the country’s growing transport demands.

orocco’s freight needs are met primarily by road and sea. The country’s harbors are key to the import and export of manufactured goods, whereas the roads are vital Omar El Kadiri for domestic demand and for certain CEO, Globex/Fedex exports such as agricultural produce.

Most Moroccan trucks are a bit older than this one.

But Morocco’s inefficient allocation of transport resources makes for excessive transport costs. According to the Moroccan road transport association (FNTR), these costs account for an estimated 20% of GDP. With more efficient logistics and warehousing, the cost of logistics could drop to 15% of GDP by 2015.

The remaining 27,000 kilometers of roads are mostly unpaved. The transport ministry, however, has embarked on a paving program partly linked to the development of agricultural clusters (agropoles) requiring an efficient connection to the supply chain.

Fortunately Morocco recognizes the importance of having a good transport infrastructure for economic development. This is shown in its five-year national plan for 2008-2012 which calls for investments of $18 billion. The next five-year plan will continue that effort.

Morocco’s road transport industry is fractionalized. According to the transport ministry, nearly 837,000 commercial vehicles were registered in 2011. The road haulers association (FNTR) states that 56,600 vehicles are registered with their members but most of these are more than 14 years old and 90% of their member companies have three or fewer vehicles.

Roads According to the Ministry of Equipment and Transport, Morocco has 60,000 kilometers of roads, of which 33,000 are paved. It has increased the network of

divided highways from 600 kilometers in 2005 to 1,400 in 2010. This has been financed via public-private partnerships and toll systems for intercity stretches.

Morocco plans to make the sector more efficient by re-structuring the larger professional entities, the small and mid-sized entities, and the informal

Leaders of the pack Top Moroccan transport companies in comparison Rank Company

Founded

Revenues $M

Royal Air Maroc

Airline

Activity

1957

1,513.7

Jet4You

Airline

2005

137.1

CEO

Website

Driss Benhima

royalairmaroc.com

Karim Baina

jet4you.com

IMTC

Sea freight

1987

129.1

Karia Mohamed

imtc.co.ma

Comanav (CMA-CGM)

Sea

1946

124.3

Taoufik Ibrahimi

cma-cgm.com

SNTL

Logistics

2007

94.5

Oussama Loudghiri

sntl.ma

Note: All financial data is for 2011 unless otherwise stated, Source: Federation of Banks, Al-Maghrib Bank

Doing Business in Morocco | 2012 Edition

Transport

Insight

Rationalizing transport The Moroccan Agency for the Development of Logistics (Agence Marocaine de Developpement de la Logistique or AMDL) was initiated in 2011 as a semi-independent agency of the Ministry of Transport. AMDL coordinates different companies in the transport and logistics sectors: warehousing owners, freight forwarders, transport companies, and owner-operators. By 2015, AMDL plans to make available total warehousing and logistics platform space of 2,080 hectares (eventually 3,300 ha) and 70 logistics platforms in 18 cities nationwide. The objective is to rationalize the road freight transport segment, which is currently inefficient. The new measures of efficiency include a lowering of transport costs as a portion of GDP, meaning lower prices and greater competitive advantage for export goods, as well as lower CO2 emissions. owner-operator entities that operate at a loss by offering below-operating cost services. Rail In contrast to the road system, Morocco has the most extensive rail network in the Maghreb. Approximately 1,900 kilometers of track (of which 20% are dual tracks) are operated by the state-owned ONCF. In 2011, ONCF carried 28 million passengers and 32 million tons of freight. However, 70% of the freight ONCF carries is phosphates, which will soon be transported by more efficient pipelines. ONCF is seeking replacement goods, including cereals and other agricultural produce, perhaps in containerized forms. But ONCF faces an uphill battle since the country’s geographic disposition is not as conducive to rail freight as to road freight. The distance from Tangier to Casablanca, for example, is only 350 kilometers. ONCF is also focused on increasing ridership. Morocco has invested heavily in upgrading its rail infrastructure, improving rail beds and rolling stock and installing electrified overhead catenaries. These improvements have increased passenger traffic. In 2010, ONCF carried about 30 million passengers compared to 20 million in 2005. Morocco is also soon to be the first African country to have a high-speed rail connection, linking Tangier in the north to Marrakech in the center of the country, about 750 kilometers.

Ports With about 3,500 kilometers of coastline on the Mediterranean Sea and Atlantic Ocean, Morocco has 26 harbors, of which 11 are for mixed commercial use, another 11 are for fishing and the remainder are for yachting. The port of Casablanca on the Atlantic is the main maritime entry point for Morocco, with more than 26 million tons of freight transiting annually. Casablanca has two container terminals and a third is being completed. It handles much of the country’s container traffic, but this is down from previous years due to competition from Tangier-Med. Tangier-Med is a mega-project that aims to become one of the largest ports on the Mediterranean. First opened in July 2007, the port now has two container terminals and the capacity to handle over 8 million TEUs (twenty-foot equivalent units). On the horizon is another Mediterranean port, Nador West Med, which will focus on the hydrocarbon sector and offer transhipment options for Atlantic-toMediterranean freight flows. ● For more information: Ministry of Equipment and Transport www.mtpnet.gov.ma La Fédération Nationale du Transport Routier au Maroc (road haulers) www.fntr.ma ONCF (Moroccan railways) www.oncf.ma

2012 Edition | Doing Business in Morocco

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Building boom Morocco’s infrastructure boom is turning investors’ heads. Each new government budget includes more infrastructure projects, attracting bidders from Spain, Turkey, Portugal and elsewhere.

orocco is investing heavily on infrastructure to boost economic development. Cranes are omnipresent. Earth-moving equipment rumbles throughout the kingdom. There are so many road, rail, harbor and industrial infrastructure projects going on that Morocco has earned the moniker “country under construction.” Morocco is investing heavily in infrastructure to boost economic growth.

Infrastructure is always in top position in the national budget. Such investment directly impacts the country’s economic growth which increases its transport requirements. Thus, major international operators who are facing dropping demand elsewhere due to the global economic slow-down are heading to Morocco and its resilient economy. Spanish operators are among the most prominent. Companies such as Copisa, BSA, Ecisa and engineering firm Cido Consult all developed a Moroccan presence in 2011. The beginning of 2012 has seen the Spanish rush continue with the arrival of Grupo Mecanotubo, a construction company, and Euro Geotecnica, an engineering company specialized in geotechnical services. Turkish firms, such as Makyol, for the widening of the Rabat-Casablanca super highway, or Yapi Merkezi, for the building the Casablanca tramway, have practically become household words in Morocco with their high visibility and big budgets.

All this foreign interest has ruffled some local feathers. Moroccan construction firms (BTP or Batiments et Travaux Publics in French) want their share of projects too. The National Federation of BTP companies (FNBTP) is successfully lobbying to ensure they get them. The Ministry of Equipment and Transport has reserved at least 15% of projects for Moroccan BTP firms. Housing Despite the international crisis, Moroccan infrastructure is proving resilient. According to the High Commission for Planning (HCP) in early 2012, construction activities continued to strengthen following the trend that started in mid-2011. Social housing is one of the main drivers of this. The 37% increase in new projects, designed to house hundreds of thousands of low income families, reflects the effect of incentives over the past two years that have revitalized real estate activity. Add to this a 26% increase in residential housing starts.

Built from cement Top Moroccan infrastructure companies Rank 1

Company Lafarge Ciments

Year Founded

Rev. 2010*

1928

626.2

Mohammed Kabbaj

lafarge.ma

Website

Holcim Maroc

1972

414.4

Dominique Drouet

holcim.ma

Ciments du Maroc

1952

349.0

Mohamed Chaibi

cimentsdumaroc.com

SGTM (Soc Gen Travaux Maroc)

1971

332.3

Messrs Kabbaj

sgtm-maroc.com

* Figures in $M

CEO

Doing Business in Morocco | 2012 Edition

Source: Economie Entreprises “Les 500”, Mediaside analysis

Infrastructure

Success Story

Warehouses sprout like mushrooms For the past two years, French company GSE has been busy designing and building some of the largest warehouses and logistics platforms in Morocco. After successful forays in other emerging markets, what attracted GSE to Morocco was the ease of doing business and the important market potential, due to the country’s emphasis on infrastructure development and the ambitious supply chain efficiency program (see page 53, sidebar on AMDL). GSE was assisted by Maghreb Consulting for its market entry. GSE’s main projects in Morocco have included vast warehouses for two top big box retailers Marjane and Label’Vie as well as a logistics platform for major trucking company SNTL. GSE is now preparing further projects with the French Chamber of Commerce. The results of an HCP business survey among BTP professionals points to a continued improvement in outlook for construction activity, underpinned by increased demand from private households. Other sector indicators confirm this outlook. Cement sales, for instance, rose 2.3% in the first quarter of 2012, beating the average trend for the second successive quarter. HCP estimates that value added of the construction sector should increase by 6% and 6.5% respectively during the first two quarters of 2012. “In terms of employment, the BTP sector employed nearly 1,059,000 people in 2011, up from 1,029,000 people the year before, representing 9.18% of the employed population aged 15 and over,” says Fatna Shihab, head of social housing for the Ministry of Housing. Highways But the best is yet to come, foremost because Morocco’s highway construction program is far from complete. “The additional program for 2015 includes another 384 kilometers, representing a total investment of around $1.75 billion,” discloses Othman Fassi-Fihri, Director General of Moroccan Highways (Autoroutes du Maroc) or ADM, the stateowned operator of divided toll highways. ADM’s action plan includes widening to six lanes the Casablanca-Rabat highway (60 kilometers, $150 million) by 2012, and the Rabat road bypass to be completed in 2014 (41 kilometers, $330 million). Other projects should also follow in 2015, including

the Beni Mellal to Berrechid highway (172 kilometers, $705 million), and the Tit-Mellil to Berrechid highway (30 kilometers, $150 million). Railways Morocco’s railway program includes significant structural investments, within the framework of general agreements between the railway operator ONCF and both the government and the Hassan II Fund for Social and Economic Development. This covers the financing of the mega-project for Africa’s first high-speed train (Train à Grande Vitesse or TGV), linking Tangier and Casablanca. The total budget for this is about $3.9 billion, of which about $2.3 billion is for the TGV and the remainder for modernizing existing railway assets. And ports Harbors have not been forgotten in Morocco’s infrastructure master plan for 2010-2030. Increasing international trade has meant an explosion in shipping. Government plans include continuing work at the major project of Tangier Med II harbor to increase the capacity to 8 million TEU (twenty-foot equivalent units). The port extension will add two new deep-water container terminals, providing 5 million TEUs of additional capacity. ● For more information: Ministry of Equipment and Transport www.mtpnet.gov.ma Autoroutes du Maroc www.adm.co.ma FNBTP (construction federation) www.fnbtp.ma 2012 Edition | Doing Business in Morocco

Phosphates and more The Moroccan government recently kickstarted the exploration and exploitation of other minerals in order to bring diversity to the country’s mining sector.

lthough Morocco relies more on its brains than its earthen sub-strata, mining does represent an important component for the economy. In 2010 the mining sector represented 6% of the country’s GDP, about 27% of the national export earnings, and provided employment to roughly 35,000 people. Like many other countries, Morocco is basically a one-commodity show, with phosphates being the Moroccan bread-winner. Used mostly for agricultural fertilizers, phosphates represent about 94% of total mining output by volume. Morocco is believed to hold the bulk of global phosphates reserves. The country is the world’s third-largest producer of phosphates and accounts for around 17% of global output. Due to strong international demand and tight supply, prices are expected to remain high in 2012. The Phosphates Company (OCP) is one of the world’s biggest exporters of phosphates. It has a monopoly on phosphate mining in Morocco and plans to double annual production capacity by 2020 to 50 million tons a year. OCP employs almost 20,000 people.

Phosphates are key for national exports and crucial for worldwide food security.

The company is solely responsible for the production and sale of Moroccan phosphate resources, mined at the Benguérir, Khouribga, Youssoufia mines in central Morocco, and the Boucraa mine in southern Morocco. Altogether these sites represent about 86 billion cubic meters of reserves. OCP is a stateowned company created in 1920. Other minerals Morocco recognizes its mining sector is overly dependent on phosphates and needs to diversify. Therefore it has started mapping out its geological resources under the National Geological Mapping Plan and is actively leveraging private investors to help develop alternative minerals. Although still small by international standards, Morocco is an active producer of precious metals (silver and gold) and of other ores (iron, lead, zinc,

OCP on a cloud of its own Top five companies in the mining sector Rank Company 1

OCP

Founded 1920

5,200

Employees CEO 19,044

Mostafa Terrab

Website ocpgroup.ma

Managem

1930

336.4

Abdellaziz Abarro

managem-ona.com

CMG Co. Miniere Guermassa

1988

102.0

597

Abdellaziz Abarro

managem-ona.com

Soc. Metallurgique d’Imiter

1969

86.5

n.a.

Abdellaziz Abarro

managem-ona.com

Comp. Tifnout Tiranimine

n.a.

80.6

n.a.

*Figures in $M

2010 Rev.*

Doing Business in Morocco | 2012 Edition

Source: Economie Entreprises “Les 500”, Mediaside analysis

Mining

Insight

Grand Central Phosphate OCP, Morocco’s largest company with $5.2 billion in 2010 revenues, is helping move the country up the phosphate value chain. Why settle for the export of raw phosphates when one can produce finished or semi-finished products locally and export those? With this vision in mind, OCP is developing Jorf Phosphate Hub (JPH) in Jorf Lasfar, a coastal town about 125 kms southwest of Casablanca. JPH is no small project: the total investment is set for $1.17 billion, in two phases. Over 300 acres have been set aside for factories, storage warehouses, materials handling equipment, and of course new harbor facilities to export the products (chemicals, fertilizers, and other phosphate-based products).

copper). In 2010 these latter four racked up production volumes of about 50,000 tons each. Mineral deposits have been found throughout the country. Lead, fluorine and antimony are found in the center of the country. The Anti-Atlas Mountains contain copper, manganese, gold and silver deposits, as well as strategic metals such as cobalt, tin and wolfram. The High Atlas range has deposits of lead, zinc, copper, manganese, iron and barite, while the eastern part of the country has reserves of lead, zinc and coal. To attract foreign attention to the country’s mining opportunities, Morocco has substantially changed the legal framework for mining. “Mining companies that export from Morocco have the advantage of a lower 17.5% corporate tax rate as do mineral producers who sell on to value-added transforming companies for export,” explains Julien David of French law firm Gide GLN. Hydrocarbon search Oil and gas exploration and research in Morocco is spearheaded by the National Hydrocarbons and Mines Office (Office National des Hydrocarbures et des Mines or ONHYM). Compared to its neighbors (Algeria, Mauritania and Libya) which have vast proven reserves, Morocco’s petroleum potential is still largely unknown. But geologic research carried out from 2000 to 2011 shows a glimmer of hope. According to ONHYM:

“The principle of JPH is to offer ‘plug-and-play’ options to companies wishing to develop downstream phosphate activities,” explains the JPH Project Manager at OCP. The hub will provide its industrial tenants with all the required infrastructure: water, electricity, waste treatment, pipelines, security, and of course roads and bridges to connect to the domestic and export supply chains. JPH will open in phases, with its first phase of four industrial plants opening in 2013, and the remainder in 2015. “Several viable petroleum systems, with good hydrocarbon potential, exist in Moroccan sedimentary basins.” ONHYM has carried out exploratory drillings, either on its own or via licenses granted to foreign companies, and has identified 26 sites as promising for future exploitation. Morocco currently counts only 18 active sites. Investment prospects The strategic potential for phosphates is downstream in added-value activities, such as in the production of phosphoric acid, ready-made fertilizers and other chemical derivatives. The Moroccan chemical industry is growing rapidly as new compounds are being produced locally. Elsewhere, the emphasis is on finding and developing new minerals production, in partnership with qualified foreign partners. Another area that offers future growth potential is quarrying, namely for marble and granite. ● For more information: ONHYM www.onhym.com OCP www.ocpgroup.ma Ministry of Energy, Mines, Water and the Environment www.mem.gov.ma 2012 Edition | Doing Business in Morocco

Growing agriculture Morocco’s agricultural sector has doubled in a decade. Now the country is developing high value added products for export while covering domestic needs.

n 2010, the agricultural sector amounted to $8.5 billion or 14% of Morocco’s GDP, according to the Ministry of Agriculture. This is almost twice the contribution of a decade ago. And agriculture is one of Morocco’s largest employers, with four million people active in the sector. The Moroccan rural population is estimated to total 18 million, or about 49% of all households. “Morocco can still count on the bounty of its land and the diligence of its farmers for a substantial part of the country’s wealth,” explains explains Pascale Nejjar, director of FENAGRI, the federation of agricultural processors and manufacturers. “Agriculture remains a pillar of our economy and will become more so as the government enforces plans to increase productivity and re-orient output to richer seams.” Morocco has about 8.7 million hectares of fertile soil and another 20 million hectares of semi-arid land. Its fertile land is located in temperate areas where fruits and vegetables grow abundantly. The majority of the fertile land (67%) is devoted to the cultivation of cereals. The Atlantic coast and the Mediterranean climates are both conducive to good harvests. Arid areas are more suited to low-density ranching and olive groves.

Olives on their way to becoming tapenade.

Moroccan agriculture is globalized. Although the country satisfies full domestic demand for many crops, (e.g. meat, fruits and vegetables) and even exports many of these items, Morocco also imports a variety of foods. Green Morocco Morocco introduced the Plan Maroc Vert (Green Morocco Plan) to increase the proportion of land devoted to higher valued products, increase the amount of irrigated land, develop a series of six agropoles (concentrated areas of fully integrated production zones), and to expand agricultural exports. “Part of our emphasis is to increase our share of higher value-added processed foods, both for domestic consumption and for export,” explains Ms. Nejjar. “In our strategic plan we have targeted sectors like olive oil, dairy products, ready-made foods such as tajines or couscous.”

Big Food Top five agro-processing companies in Morocco Rank Company 1

Altadis Maroc

Centrale Laitiere

Cosumar

Lesieur Cristal

Copag

Activity

Founded

2010 Rev.*

CEO

Website

Tobacco

1910

1,637.4

Larbi Bellaha

altadis-maroc.ma

Milk, dairy products

1940

956.0

Driss Bencheikh

centralelaitiere.com

Sugar

1929

679.6

Mohammed Fikrat

cosumar.co.ma

Oils

1940

402.3

Samir Oudghiri Idrissi

lesieur-cristal.ma

Diversified cooperative

1987

304.2

Moulay Loulttiti

n.a.

*Figures in $M

Doing Business in Morocco | 2012 Edition

Source: Economie Entreprises “Les 500”, Mediaside analysis

Agro-processing

Olive production Morocco is located in the Mediterranean olive belt, yet its production of olive oil is only 3% of the world total, compared to Spain’s 36% and Italy’s 25%. To increase Morocco’s share of world olive production, the government implemented programs to improve the quality of the oil produced, increase domestic and foreign demand, and double the area dedicated to olive groves. With almost $75 million in financing available to develop the olive oil industry, Olea Capital seeks to increase production capacity to 30,000 tons of olive oil. Most of the new prodution capacity is aimed at foreign markets.

Irrigation has shown excellent promise. In 2003 only about 100,000 hectares were irrigated, or less than 0.1% of the country’s total land. In 2010, the number of irrigated hectares had more than doubled to about 250,000. The goal of Plan Maroc Vert is to reach 550,000 hectares under irrigation by 2020 and to shift from gravity irrigation to drip irrigation. The government is subsidizing drip irrigation investments for farms of less than five hectares when these are created through aggregation of smaller landholdings.

Fruit out, cereal in Values of agricultural imports and exports in 2010 ($M) Imports

Cereals $1,274.9

Exports Milk and dairy products $245.6 Citrus fruits $327.5

Vegetables (fresh, frozen or preserved) $222.2 Tomatoes (fresh) $198.8 Fruits (fresh, frozen or preserved) $175.4 Vegetables (canned) $175.4

Sugar $386.0 Oils $538.0

Other $1,625.7

Processed foods The main area of focus for the producers’ federation, FENAGRI, is increasing the foreign demand for Moroccan processed foods. But this is proving difficult despite the government assistance. “The Moroccan government provides active support, for example in helping us with sales and marketing efforts abroad,” says Nadia Mabrouk, founder of Saleva, an Agadir-based manufacturer of ready-made dishes such as tajine and tapenade, an olive-based appetizer. “Landing international distributors is our main difficulty, second is increasing awareness of our excellent products.” Some Moroccan food processors have been successful capturing foreign markets, such Venezia Ice, an ice cream maker. Certain food segments have started using creative Moroccan branding. Tangerines from the northern Berkaane region have obtained an appellation d’origine controlée. Olive oil and other commodities are soon to follow. ● For more information:

Other $748.5

Total = $1.9 Billion

Milk products is another target of the agricultural development plan and resources have been allocated to the segment’s development. Morocco only counts 50 production units, of which 26 are cooperatives. The government program is focused on improving cattle races, reinforcing milk collection and treatment facilities, and on diversifying cattle feeding methods.

Total = $4.1 Billion Source: Ministry of Agriculture and Fishing

Ministry of Agriculture www.agriculture.gov.ma FENAGRI (Fédération Nationale de l’Agroalimentaire) www.fenagri.org 2012 Edition | Doing Business in Morocco

Oceans of fish Representing almost two thirds of food exports from Morocco, the fishing sector has traditionally been an economic mainstay. Despite some obstacles, the sector is growing by capturing higher value-added activities.

ndowed with a 3,500 kilometer coastline, Morocco is considered a world leader for certain seafoods. Fishing provides the kingdom with jobs, food security and foreign currency. In 2011, revenues from fishing amounted to $1.4 billion, or 1.5% of Morocco’s GDP. According to the UN’s Food and Agriculture Organization, Morocco accounts for nearly 1% of global production, amounting to more than a million tons a year. This may seem tiny compared to China’s 15 million tons or Indonesia’s six million tons, but it still places the country at the head of all other Mediterranean countries. Morocco can thank the little sardine for its good fortune. It is the world’s largest producer of sardines, accounting for nearly half of the world’s catch, followed by Spain. Alas, almost three-quarters of sardine production ends up in industrial byproducts, such as fish meal or oil. Canned sardines remain the lesser portion of the catch, and the export of fresh sardines for human consumption remains small, although it is growing. “Canned sardines are the flagship product that makes Morocco a world leader and justifies our large share in world seafood exports,” explains Hassan Sentissi, head of the Moroccan fish federation FENIP, one of many fish federations in Morocco. Fish exports Morocco exports three categories of marine products. Topping the list is frozen fish, representing 39% of exports. Next is canned and semi-preserved fish with a 42% share. Fresh produce accounts for only 8%. Other marine products, such as fish meal or fish oil, make up much smaller percentages.

Doing Business in Morocco | 2012 Edition

The fishing sector is being reformed for higher productivity.

Although Moroccan waters conceal hundreds of fish species, four varieties account for 77% of exports: frozen cephalopods such as octopus (27%); canned fish mainly sardines (37%); fresh fish (8%); and frozen crustaceans, namely peeled shrimp (6%). Approximately 70% of Moroccan fish exports end up on European tables, although exports (mostly canned fish) to other African nations tripled from 2000 to 2011, reaching $175 million. This market holds enormous potential given the fragile supply of fresh fish in many African nations.

Mostly frozen fish Breakdown of fish exports by value (2010) Flour 7% Fresh 8%

Oil 4%

Frozen 39%

Semi-preserved 9%

Canned 33 %

Source: EACCE Morocco

Fisheries

Sardines are big Breakdown of fish by catch (2010) Shrim p 1% Squid/octopus 5%

Other 1%

Molluscs 0%

White fish 9%

Sardine/anchovy 84 %

Morocco has 30 production plants for canning and preserving fish with an annual capacity of 300,000 tons and employing 21,000 people. The semipreserved processors focus on salt curing and anchovy processing as well as preserved or pickled fish via more than 20 factories employing 6,000 people. Fish processing in Morocco is the realm of SMEs but among the larger companies is La Monegasque & Vanelli, the world leader for anchovies. Challenges to growth Although the Moroccan fishing sector has been growing consistently, it still faces challenges. “On the upstream side, we have a very fragmented fishing flotilla and fluctuations in the catch,” laments Mr. Sentissi, head of FENIP. “This impacts the regularity with which we can operate our canning or preserving plants.” Another difficulty lies with the quality of conservation equipment on the ships and port infrastructure where docking facilities are a source of user complaints. A recurring problem has been the high proportion of fish that ends up in low value-added uses, namely fish meal and oil. Furthermore, a significant proportion of the catch is exported without processing. Moreover, aquaculture is under-developed. Although fish farming could increase fish supply for domestic

Source: EACCE Morocco

and export markets, as well as protein for animal feed, it confronts several obstacles, including land scarcity, rising property prices, an inadequate legal framework and reliance on imports such as fry, spat and feed. Government support The Moroccan government program called Halieutis funds personnel training and structure improvements. During 2012, four new maritime training institutes will be created and $4 million will go into harbor (docking) improvements. Further development of the fisheries sector also requires resource preservation. According to Aziz Akhenouch, Minister of Agriculture and Fisheries, the government has implemented programs to protect marine fisheries on the Mediterranean coast. “This includes plans for sustainable fisheries and the enforcement of biological recuperation periods,” Mr. Akhenouch says, adding that strict fishing quotas will be maintained to preserve fish stocks and enable reproduction for vulnerable species. ● For more information: FENIP (La Fédération des Industries de Transformation et de Valorisation des Produits de la Pêche) www.fenip.com Ministry of Agriculture and Fishing (Ministère de l’Agriculture et de la Pêche Maritime) www.mpm.gov.ma

2012 Edition | Doing Business in Morocco

Pharma eyes export market The lifting of its long-existing protectionism has made the Moroccan pharmaceutical industry nimbler and more open to foreign assistance, placing the industry in a position to export to sub-Saharan markets.

he pharmaceutical industry is a key ingredient to the Moroccan economy. In 2011, it accounted for more than $950 million in revenues (at the wholesale level) and employs about 40,000 people. Thirty-two pharmaceutical producers nationally supply the country’s 11,000 pharmacies. On average, Moroccans spend $46 a year each on pharmaceutical products. The Moroccan government has traditionally played an active role in both encouraging and regulating local pharmaceutical producers, under the tutelage of the Ministry of Health. The government has never been abashed about promoting local production, so as to insure traceability and quality control over medical products. “Among the most important aspects of the medical framework are the mandatory medical coverage programs,” explains Abdelghani el Guermai, the

More and more pills Evolution of pharma revenues (wholesale) 1,200

Revenues ($M)

founder of Galenica Pharmaceuticals and president of the Moroccan Pharmaceutical Association (Association Marocaine de l’Industrie Pharmaceutique or AMIP). In 2005 the Moroccan government approved two health insurance programs. The first is a payrollbased mandatory health insurance plan called l’Assurance Maladie Obligatoire (AMO) for all working people. The second is the Regime d’Assistance Medicale (RAMED) which finances health services for 8.5 million Moroccans living below the poverty line, about 30% of the population. As a result of these programs, between 2008 and 2010 the Ministry of Health increased its pharmaceuticals procurement budget from $5.7 million to $160 million. Pharmaceutical products benefit from the absence of VAT on many important classes of medications, such as those for hepatitis and chronic diseases. The government also regulates pricing.

1,000 800 600 400 200 0

7 5 2 4 3 9 10 11 6 9 8 0 01 199 200 20 200 200 200 200 200 200 200 200 20 20 Source: IMS Health (via AMIP)

The Moroccan pharmaceutical industry also produces for export.

Doing Business in Morocco | 2012 Edition

Control and distribution The government is active in checking product quality at several levels. Upstream, the National Laboratory for the Control of Medical Products (Laboratoire National de Controle de Medicaments or LNCM) is the controlling laboratory, whereas downstream the Health Ministry controls at the pharmacy outlet level on an ad hoc basis.

Pharmaceuticals

Like many emerging markets, Morocco puts particular emphasis on the development of less expensive generic drugs. This reduces costs while increasing access to a larger population. It also creates export potential to neighboring countries. According to AMIP, generics represented about 30% of drug sales in 2011 versus 70% for patented products. “We see strong growth for generics in the Moroccan market due to government pressure to reduce health expenditures,” explains El Guermai, AMIP president. “However certain areas such as cancer and biotechrelated products will remain green pastures for patented drugs.” Local manufacturing, which is typically done under a licensing contract with a foreign patent-holder or by a local generic producer, accounts for 70% of domestic demand. Imports cover the remaining 30%. Approximately 8% of domestic production is sold as exports, mostly to sub-Saharan countries and to neighboring Maghreb countries. This represented almost $60 million in 2010. According to the pharmaceutical association, on an aggregate basis, Moroccan pharmaceutical producers spend about $34 million annually on quality control measures. The proof of the production quality lies with the World Health Organization, which has classified Morocco as “Europe-zone”, implying that the quality controls are at European levels. The distribution of medical products in Morocco is done mainly via a network of 40 wholesalers that reach out to the country’s pharmacies and hospitals. Wholesalers account for 80% of the flow, while 20% goes directly from manufacturers to pharmacies or hospitals. State hospitals are supplied via the staterun Pharmacie Centrale de Berrechid. Industry profile The pharmaceutical industry in Morocco has seen consistent growth by many benchmarks. The number of manufacturing facilities has grown from 22 in 2000 to 32 in 2011. Over the same period, the total units produced jumped from 178 million to 293 million. This growth has come from a mixture of domestic companies focusing on generic products (such as Galenica or Cooper Pharma), and the entrance of foreign companies, either via joint ventures or via wholly-owned subsidiaries. There are no restrictions on foreign direct investment in the pharmaceutical sector, which may have been part of the appeal for such recent entrants as Ranbaxy of India or Sanofi-Aventis of France.

Framework for international entrance Morocco offers many opportunities for foreign investors due to strong market growth and good export potential from a Moroccan regional platform. The extension of generics to 50% or even 70% of the market value is one opportunity. Another is the local production of active pharmaceutical ingredients (APIs), which is where Ranbaxy of India has found a place. Another opportunity may arise over the next decade as qualified locally-educated researchers and scientists enter the workforce and R&D focuses on specific sub-Saharan diseases. “Several measures exist to stimulate FDI in our sector,” says El Guermai. “And the fact that perhaps 40% of production capacity sits idle in Morocco means that foreign companies can take advantage of market opportunities at lower risk levels than elsewhere.” Moreover, because of new government insurance schemes such as AMO for middle-class workers and RAMED for low-income Moroccans, healthcare in Morocco is expanding rapidly, creating new opportunities for foreign investors in the sector. ● For more information: Moroccan Pharma Assoc (AMIP) www.amip.ma Moroccan Health Ministry www.sante.gov.ma Directory of Moroccan pharmacies www.pharmacies.ma 2012 Edition | Doing Business in Morocco

Moroccoâ&#x20AC;&#x2122;s new consumer society With increasing wealth and exposure to global trade, the Moroccan lifestyle is slowly being transformed. An expert at Moroccoâ&#x20AC;&#x2122;s leading business school gives some pointers on understanding the changes.

By Imane El Ghazali Professor of Economics ESCA School of Management

ccording to the Moroccan High Planning Commission, my country is a balanced mix of classes. The middle class is 53%, while the lower class is 34% and the upper class has 13%. The majority (44.5%) of the middle class is salaried, while 30% are self-employed. Monthly earnings range from $320 to $765 (MAD 2,800 to MAD 6,736).

Moroccans are hard-working and thrifty. On average, in 2011 we saved about 18% of our disposable income. Yet, we also know how to spend our hardearned dirhams. Real consumption per capita increased by 4.1% in 2011 to $1,760 (MAD 15,500). According to Euromonitor, disposable income per capita has increased annually since 2004 and was about $2,000 (MAD 16,831) in 2011. The increase in disposable income has enabled Moroccans to acquire products that were once considered luxuries. This increase is due to the significant wave of investment carried out in recent years on infrastructure and projects with strategic impact. Traditionally Moroccan society consisted of large families living under one roof. This culture has changed to more individualistic habits. The family unit is more fragmented with households of two to three people becoming more numerous. Marriage has also changed. In the 1960s, most women married at 17 and men at 24 years. Today the average age of marriage is 29 and 32 years, respectively. 66

Doing Business in Morocco | 2012 Edition

Shoppers at a recently opened hypermarket in the Mall of Morocco.

Consumption patterns have also changed. Smaller households seek easy-of-use and time-saving products and services. This means a greater demand for appliances, frozen food and ready-made meals. The workday has also changed with longer working and more irregular working hours and shorter lunch breaks. This may explain the explosion of home delivery and fast food. With spending on basics (housing, food, health) now covered, Moroccans are free to splurge on communication, entertainment and travel. This means distribution channels have changed as well. Corner grocery stores and traditional open air markets are giving way to supermarkets and hypermarkets (Marjane, Acima, Carrefour, Labelâ&#x20AC;&#x2122;Vie and BIM), particularly in urban areas. Women are taking on greater responsibility in spending decisions, whereas this task was traditionally the purview of the male head of household. Spending on healthcare has experienced strong growth since the government decreed wider access to medical care (RAMED). As for education, the growth of private schools shows that Moroccans have lost some of their faith in public schooling, and that they have greater disposable income available for education. Nonetheless, these expenditures remain small at only 2.4% of household spending in 2010. Although the majority of travel is by taxi or bus (a city bus ticket costs $0.40), access to private vehicles is growing fast. Some of us prefer to use scooters or small motorbikes because of urban congestion.

Consumer Behavior

Dress habits follow the urban-rural divide. Rural areas (and the poor) tend to stick to traditional garb (such as the djellaba). Residents of big cities follow and purchase the latest fashions, especially younger people which explains the presence of different international brands (Zara, Mango, Diesel, Massimo Dutti, Celio, H & M) and strong national brands, such as Marwa. In poor neighborhoods and rural areas, traditional markets are still the main place of purchase. They offer low prices and the possibility of bargaining, an entrenched habit among most Moroccans. Online shopping is still nascent. Most Moroccan consumers prefer personal contact because shopping is considered entertaining but also because they are wary of giving credit card numbers online. But since Moroccans are very price-sensitive and good deals are sometimes to be had online, we expect e-shopping to grow. Formal and informal retail co-exist in Morocco. Increasing wealth stimulates formal retail, the new Morocco Mall in Casablanca being a prime example. Opened in December 2011, this is the biggest mall in Africa with 600 major brands and an enormous indoor aquarium. Yet Casablanca also hosts traditional markets for food, clothing and other basic necessities. Cafés play an important part in our lives as popular meeting places, especially for men, and particularly for lower income people. The arrival of various chains (such as Paul, Starbucks and Venezia Ice) has changed the landscape. Women and couples now flock to these trendy places, which are very popular on weekends.

Information technology and telecoms have also helped revolutionize the communication habits of Moroccans. Three telephony and Internet operators (Maroc Telecom, Meditel and INWI) compete for business and almost two million households have Internet access. The Moroccan economy is evolving rapidly, becoming one of the most dynamic in the MENA region and an attractive destination for international investors. ● For more information: ESCA School of Management www.esca.ma

2012 Edition | Doing Business in Morocco

Tuned in to tourism Strategies to increase bed capacity and visitor numbers have given Morocco’s tourism sector, one of the country’s largest GDP contributors, a real shot in the arm despite economic and political troubles elsewhere.

he Moroccan government commissioned its Vision 2010 strategy in 2001. Between then and 2010 the number of visitors to Morocco more than doubled from 4.2 to 9.4 million, according to Morocco’s National Tourism Federation. Part of the Vision 2010 strategy, called Plan Azur, was to build six new resort cities on the Atlantic and Mediterranean coasts. By 2010, two of the cities were already funded and being built, while the other four were being put out to bid. The success of Vision 2010 prompted King Mohamed VI to launch Vision 2020 in November 2010. This aims at raising tourist arrivals to 20 million by 2020 and adding four additional cities to Plan Azur. Tourism currently accounts for 9.6% of national GDP, and fully 20% of foreign currency receipts. Banks and private investors continue to plow funds into new projects. According to a 2009 McKinsey study of the sector, tourism accounts for about $600 to $700 million in annual real estate investments (land and buildings)

The recently completed Mazagan resort on the coast southwest of Casablanca.

and employs 420,000 people, not including indirect employment. About 26% of international visitors are on package tours and about the same proportion are individual travellers. The largest segment of international travellers, fully 46%, are Moroccans residing abroad. Despite the country’s potential for conventions and exhibitions, only 2% are business travelers. So the Ministry of Tourism is studying the potential of business tourism and is launching a promotional campaign to attract business. “Marrakech and Agadir remain the principal tourism magnets, while Casablanca, Tangier and Rabat are mostly for business with some pleasure mixed in,” says Said Tahiri, president of the National Tourism Federation. Expanding capacity One of the difficulties Morocco is having because of

Top Moroccan tourism companies Rank Company

Activity

CEO

Website

RISMA (Accor)

Hotels

1993

133.2

Azzedine Guessous

accor.com

Resort Co. (Mazagan)

Beach resort

2008

105.3

Stephan Killinger

mazaganbeachresort.com

Atlas Voyages

Online travel

1964

63.2

Othman Cherif Alami

atlasvoyages.com

Newrest Maroc Services

Kenzi Hotels

Catering

1985

56.1

Karim Rahal

n.a.

Hotels

1988

53.7

n.a.

kenzi-hotels.com

*Figures in $M

Founded 2010 Revenues*

Doing Business in Morocco | 2012 Edition

Source: Economie Entreprises “Les 500”, Mediaside analysis

Novotel Casa City Center Le Novotel Casa City Center est un hôtel 4 étoiles, situé en plein coeur de Casablanca, riche d’un emplacement idéal, au centre du quartier d’affaires, à quelques minutes de la médina et de la mosquée Hassan II. L’hôtel répond parfaitement aux exigences d’une clientèle d’affaires et de loisirs.

Novotel Casa City Center Angle rue Zaid Ou Hmad Sidi Belyout - Casablanca - Maroc Tél. : (+212) 22 46 65 00 - Fax : (+212) 22 46 65 01 E-mail : H6572@accor.com *Conçu comme un espace naturel.

Novotel Casa City Center is a 4-star hotel located in the heart of the city, between the old medina and Hassan II mosque. The hotel meets the expectations of both businessmen and tourists.

Designed for natural living*

Tourism

and Marrakech airports seeing over 1,000 flights a week, as compared to 200 flights weekly in the 1990s. Morocco positions itself as a more upscale tourism destination than other Mediterranean basin countries such as Tunisia and Turkey, which tend to focus more on the mass market. Average spending for a tourist in Morocco is around $800 while in Tunisia it is $250. “Tunisia emphasizes vacation clubs and mass tourism, which we are trying to avoid,” explains Mr. Tahiri. Outlook and threats Given the importance of tourism on the balance of payments (foreign currency revenues), which is higher for tourism than phosphate exports and remittances from Moroccans living abroad, the sector is bound for further growth. But where will future growth come from?

its success is matching hotel capacity with demand. Currently some locations have an oversupply of beds while others lack capacity. However, this is being addressed under Vision 2020 in which the government plans to have 375,000 beds by 2020 compared to 178,000 in 2010 and 97,000 beds in 2001. The Open Skies Agreement with the EU signed in 2005 has made Morocco much more accessible to tourists, namely via low-cost operators from Europe (Ryanair, EasyJet), from the Middle East (Air Arabia), and even locally-developed alternatives (Jet4You). The number of flights has increased drastically with Casablanca

The open skies eﬀect Tourist arrivals since 2004 10 9

Millions of tourists

“For Morocco, there are two niches that we are looking at,” says Imad Barakad, director general of SMIT (Societe Marocaine d’Ingenierie Touristique, or Moroccan Company for Tourism Engineering), an autonomous entity that assists the Moroccan Tourism Board in planning and aligning investors for largescale projects. “Firstly, there is potential in the ocean cruise market. Morocco currently has only a small share of cruises as opposed to the Greek islands,” Mr. Barakad explains. “A second avenue for us to explore are niche vacations that are built around a specific interest or hobby. Here we are thinking of golfing, eco-tourism and cultural adventuring.” To grow, Morocco’s tourism sector will need to counter competition from other Mediterranean countries with strong tourism sectors. However, last year’s unrest in two of those countries, Egypt and Tunisia, increased tourism in Morocco. For instance, in February 2011 after the events in Egypt, Morocco saw a 17% increase in international tourists. Another challenge is the economic recession hitting the pocketbooks of Europeans who make up 80% to 85% of Morocco’s visitors. But despite the expected decline, tourism increased 2% in 2011 compared to 2010 and is showing signs of continuing to expand in 2012, according to the Ministry of Tourism. ●

7 6 5 4 3 2

For more information:

1 0

2004

2005

2006

2007

2008

2009

2010

Source: Federation Nationale du Tourisme

Doing Business in Morocco | 2012 Edition

Office National du Tourisme du Maroc www.tourisme.gov.ma Federation Nationale du Tourisme www.fnt.ma

S'informer

Se développer

Se former

S'implanter

Speed up your international development A network of 3,700 affiliated companies A bicultural team of 110 employees Business building missions in Morocco and abroad / Media monitoring and calls for tenders / Customized market research / B to B match making / Economic and regulatory information / Selection of contact persons / Thematic repor ts CFCIM Fairs and UBIFRANCE Pavillions in Morocco / Strategic Partnership with the French network of Chambers of Commerce and Industry (ACFCI) and of the foreign-based French Chambers of Commerce and Industry (UCCIFE) network Public service delegation contract for UBIFRANCE in Morocco / Representation offices in Paris, Agadir, Fez, Marrakech, Meknes, Oujda, Rabat and Tangier Organization of your trade and business events Support and advisory services for investors / Business opportunities Recruitment assistance / Provision of postal address / Business and V.I.E. hosting (Business Center) / Industrial parks / Mediation center / Social protection and sanitary repatriation coverage French Business School (EFA) / ESC Toulouse program, from Bachelor to MBA ESC Casablanca “Grande Ecole” Program / inter and intra-company training

www.cfcim.org

Practical Info

Practical information for

visitors to Morocco

OFFICIAL LANGUAGES: • Arabic and the Amazigh (Berber) language are the official languages of Morocco but French is widely taught and serves as Morocco’s primary language of commerce and economics. It also is widely used in education and government. Spanish is spoken by some Moroccans, especially in the northern regions, but a boost is being given to Englishlanguage training.

are turned forward one hour on the last Sunday in April and turned back again on the last Sunday in September. • There is no DST during Ramadan. The dates of Ramadan change from year to year. In 2012 it is from July 20 to August 19. Clocks are turned back to Standard Time during Ramadan to make it easier for Muslims to observe the Ramadan fast during daylight hours.

CLIMATE:

COMMUNICATIONS:

• Morocco’s climate is moderate and subtropical, cooled by breezes off the Mediterranean Sea and Atlantic Ocean. In the interior the temperatures are more extreme, winters can be fairly cold and the summers very hot. Marrakech has an average winter temperature of 21°C (70°F) and summer temperature of 38°C (100°F). In the Atlas Mountains temperatures can drop below zero and mountain peaks are snow-capped throughout most of the year. The winter in the north of the country is wet and rainy, while in the south, at the edge of the Moroccan Sahara, it is dry and bitterly cold at night.

• Internet country code: .ma • Telephone country code: 212

CURRENCY: • The national currency is the Dirham (MAD), which is subdivided into 100 santimat (singular: santim). Banknotes are issued in denominations of 20, 50, 100 and 200 Dirham. Coins are issued in 10, 20 and 50 santimat, and in 1, 2, 5 and 10 Dirham. The Dirham is fully convertible but export is prohibited.

TIME ZONE: • Morocco Standard Time is GMT. Morocco started using Daylight Saving Time (DST) in 2012. Clocks 72

Doing Business in Morocco | 2012 Edition

HOURS: • Businesses: 9 a.m. to 6 p.m. Monday to Friday • Government offices: 8:30 a.m. to 4:30 p.m., Monday to Friday • Post offices: 8 a.m. to 6 p.m. Monday to Friday and Saturday mornings. • Banks in Morocco are generally open from 9 a.m. to 3 p.m. in summer. In winter these times change to 8:30 a.m. to 11:30 a.m. and from 2:30 p.m. to 4 p.m. During the month of Ramadan (in July-August 2012), banks are open from 9:30 a.m. to 2 p.m. • Morocco offers informal and formal retail. Informal retail includes open air markets (usually mornings) and street vendors (including night markets). Every day except Sunday. • Stores and shopping malls are open Monday through Saturday, typically 9 a.m. or 10 a.m. to 6 a.m. or 7 p.m. Mall of Morocco is open Sundays. • Souvenir shopping (ceramics, leather goods, brass, clothing, etc.) is typically available every day, including Sunday.

Practical Info ELECTRICITY:

SITES:

• Electrical current is 220 volts, 50Hz . Two-pin round plugs are used.

• Three imperial cities are essential to visit during a stay in Morocco. Marrakech is the tourism capital of Morocco with its many palaces, parks and minarets. Fez is the cultural capital and boasts many ramparts and a large medina. Not to be missed either are the walls and the door of the Kasbah of the Udayas in Rabat, the capital of Morocco. Other jewels of Morocco include the mausoleum of Ismail I and the door of Bab al-Mansour Meknes. Other towns in Morocco worth a visit are Casablanca, home of the great mosque Hassan II, and Tangier, notable for its large medina.

TRANSPORTATION: Casablanca airport: • Mohamed V airport is located 30km from Casablanca. Taxis are available outside the airport terminal and have set fares to Casablanca, which is MAD 250 (about $30). Trains also run from the airport to Casablanca and Rabat. A first class ticket to Casablanca costs MAD 50 (about $5.75) and MAD 100 (about $11.60) to Rabat.

Taxis • There are two categories of taxis in Morocco. Petits taxis are small- to medium-sized cars that travel a limited range within a town or city. Officially they use a meter and charge an initial fare followed by distance-based increments. However some taxis are not metered. Confirm whether or not a taxi has a meter before getting in, and if not arrange the fare in advance. • The other category is the grands taxi. These are long-distance taxis that use fixed routes between cities and towns. They charge a fixed amount for specific routes and wait until they are full with other travelers before they set off (they can take up to six persons per car). It is possible to arrange a fare for sole occupancy.

Trains • Morocco has a vastly improving train network particularly between the major cities. Tourists often use the trains, which are quite comfortable. Consult the Moroccan national train service ONCF for times and fares.

This publication was produced by Mediaside SARL. The publishers thank the African Development Bank for their input. Unless otherwise specified, all currencies are in US dollars. Publisher: Medaside SARL (Christopher Fodor and Dany Laloum) Editor-in-chief: Christopher Fodor Art director: Rohit Juneja Contributors: Robert Goldsmith, Hayat Gharbaoui, Younes Tantaoui, Nora Guessoum Photography: AMDI, Federation Nationale Tourisme, FENAGRI Advertising sales: Dany Laloum, Nora Guessoum, Stephane Benhaim Government/institutional relations: Hanane Baala

FOOD AND DRINK: • Coffee/tea: MAD 10-15 (about $1 to $1.70) • Sandwich: MAD 30-50 (about $3.50 to $5.70) • Bottle of water: MAD 10-15 (about $1 to $1.70) • Beer: MAD 30-100 (about $3.50 to $11.50) • Glass of wine: MAD 50-200 (about $5.70 to $23)

RELIGION: • Sunni Islam is the predominant religion in Morocco. There are also about 100,000 Christians mostly of French descent, along with a reported 8,000 Jews who mainly live in Casablanca and Marrakech.

ALCOHOL: • Alcohol is forbidden in Islam but it is widely available in Casablanca and other Moroccan cities. In fact, Morocco produces two brands of beer and half a dozen wines.

Entertainment: • Cinemas: General entry MAD 35 to 60 (about $4 to $7), 3D films MAD 49 to 60 (about $5.65 to $7). Mediaside recommends and thanks the bookstore Carrefour des Livres in Casablanca for their assistance.

Mediaside SARL 77 rue du Faubourg St Denis 75010 Paris Tel +33 1 4483 9337 contact@mediaside.biz www.mediaside.biz Agence Marocaine du Developpement des Investissements (AMDI) Director: Ahmed Fassi-Fahri Marketing coordinator: Ilham Doghmi Editorial and reseach coordinator: Ali El Yaacoubi 32, rue Honaine (angle avenue Michlifen Agdal), Rabat Tel: + 212 537 67 34 20/21 Fax: +212 537 67 34 17 www.invest.gov.ma

Doing Business in Morocco | 2012 Edition

Copyright 2012 Mediaside SARL All efforts have been made to insure accuracy of information provided. The publishers are not held responsible for mistakes. The opinions expressed in the articles, including the sponsored statements, are those of the authors and interviewees and do not necessarily represent the opinion of the Moroccon government. A standard exchange rate of 8.55 MAD-per-USD was applied.

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