Morocco acts as a stepping stone between two continents.
Location: North Africa
|Neighbors: Algeria, Mauritania, Spain|
|Capital city: Rabat|
|Population (2022): 37 million|
|Official language: Arabic and Amazigh|
|GDP per capita (2021): $3,496|
|GDP growth (2021): 7.4%|
|Inflation (2021): 1.4%|
|Unemployment rate (2021 ): 11.4%|
|Currency: Moroccan dirham|
|Investment promotion agency: Amdie|
|Ease of Doing Business rank (2019): 53|
|Corruption Perceptions Index rank (2016): 116|
|Investment incentives available: New Investment charter includes liberal reforms and mechanisms to encourage public-private partnerships and innovative financing solutions. Morocco offers tax incentives to foreign companies.|
|Political risk: The monarchy provides political stability, but social unrest is always something to factor in, especially in this volatile context of soaring prices. Morocco normalized relations with Israel in 2021 in exchange for the US to recognize the kingdom’s claim on Western Sahara.|
|Security risk: Morocco is a fairly safe country. Tensions with Algeria over Western Sahara. Social protests can erupt, but there is no immediate fear of war, terrorism or violence. Proximity to Europe makes Morocco a transit country for migrants from Africa and elsewhere. Climate change is a concern, with severe droughts hitting the country in recent years.|
|Educated, skilled labor force|
|Government pushing for reform|
|Strategic location; Morocco is a bridge between Europe and Africa. Companies operating from Morocco can run business in Europe, the Arab world and Africa|
|Strong local banks that operate abroad and support cross-border transactions. Forward-thinking central bank|
|Good overall quality of life|
|Substantial inequalities between cities and rural areas|
|Heavily dependent hydrocarbon and food imports|
|Low penetration of English language (improving)|
|Corruption and bribery, lack of transparency in public procurements|
|Weak intellectual property rights|
|Climate change is starting to affect the country, Western Sahara with potentially disastrous effects (drought)|
|Sources: World Bank, IMF, Transparency International, Central Bank of Morocco, Business Insider, UNCTAD World Investment Report.|
|For more information, check out Global Finance‘s Morocco Economic Report data page.|
For the past two decades, Morocco has enjoyed an investment rate of over 30% of GDP—one of the highest in the world. Still, most of it is directed toward small businesses with low returns and did not translate into the economic boom the country expected. Authorities are now looking to grow the share of private sector contributions to overall investment from one-third to two-thirds by 2035.
Morocco’s economy relies mainly on agriculture and tourism, representing 14% and 7% of its GDP, respectively. In the south, the country holds 75% of the world’s phosphate, a mineral used in fertilizers. After a strong post-pandemic rebound, the kingdom is now struggling with the effects of the war in Ukraine. The rise in global energy and commodity prices sent inflation soaring higher than 5%. The government had to double gas, flour and sugar subsidies to avoid social unrest. Morocco also faced a severe drought, which cut agricultural output by 17%. As a result, growth is projected to stagnate at around 1.2% in 2022.
Over the past 10 years, Morocco invested heavily in infrastructure to bring its airports, roads, water pipes, electricity supply and internet connections up to international standards.
Long-term reforms initiated last decade to diversify revenue streams and build a more sustainable economic model—including an overhaul of health-care, social welfare and industrialization plans—have yielded positive results. Morocco ranks 53rd in the World Bank’s latest Ease of Doing Business list, up 40 spots since 2012.
Morocco is particularly keen to attract capital to job-intensive sectors such as textiles, food processing, automotive, aerospace and solar energy—and it has been quite successful. Multinational companies like French carmakers Renault and Peugeot, dairy products giant Danone, US consumer-goods maker Procter & Gamble and the UK’s Unilever have opened factories, showing a long-term commitment to Morocco.
Last year, Japan became the largest foreign employer in the kingdom, with more than 50,000 jobs created since the early 2000s. Companies like Sumitomo, Fujikura and Yazaki account for most of the activity, mainly in automotive parts and cable making. Further investments are in the pipeline.
More recently, tech companies such as Amazon, Dell Technologies, IBM and Oracle also established a presence in Morocco.
Telecom companies are also seeing Morocco’s appeal. “Today, telcos are trying to save money, and outsourcing part of the production force to Morocco is a solution,” says Vincent Poujol, CEO of Sofrecom Services Maroc, the Moroccan subsidiary of the French telecom firm Orange subsidy that employs over 850 engineers working on network and IT services. “Having a team here is very interesting because Morocco has a lot of skilled engineers that are agile and engaged in their jobs, and the cost for these engineers is much lower than in France,” he adds.
Planning Pays Off
Good infrastructure, affordable skilled labor and tax incentives are among the main advantages that Morocco can offer to companies. In 2021, foreign investment increased 52% to $2.2 billion, according to the UNCTAD’s latest World Investment Report. France, Spain, the United Arab Emirates, the UK and Luxembourg were the leading investors. Agriculture received the highest share of foreign direct investment (FDI), followed by the financial sector and insurance, mining, information and communications technology and retail.
Morocco is Africa’s fifth-largest economy and one of the continent’s best places to do business. In 2022, it ranked fifth on Business Insider’s survey of top investment destinations.
With airports now offering flights to most African countries, some foreign companies are choosing to run their African continent operations from Morocco. This includes multinational firms like Orange and startups like Casablanca-based Spanish food-delivery platform Glovo in 2018.
“Our decision to invest in Morocco was a part of our broader strategy to expand to the African continent, and the choice was quite straightforward, as the country offered a strategic geographical location, a business-friendly regulatory environment, an excellent mobile penetration rate, high urbanization rates and top-notch local talent,” says Diego Nouet, Africa general manager at Glovo, which now operates in over 40 Moroccan cities and plans to expand to more.
“Morocco now serves as a bridge between our operations in Europe and Africa. Our presence here is strategic and served as a model for the launch to other countries within the same region,” adds Nouet.
E-commerce platform Jumia also chose Morocco for its first step on a journey across the continent. “Back in 2012, it seemed natural to choose Morocco along with Nigeria, South Africa and Egypt. Sellers were interested in the new type of commerce we were offering, there was significant internet penetration, a smartphone boom and a dynamic middle class,” says Sami Louali, executive vice president of Financial Services at Jumia.
By 2016, Jumia had grown into one of Africa’s first unicorn companies, valued at over a billion dollars. In 2019, it became one of the first African tech companies to list on the New York Stock Exchange, raising an additional $196 million. Since then, the company has hit a bumpy road, and its valuation has significantly dropped.
Louali agrees that operating a digital business in developing countries is challenging. Overall penetration of e-commerce remains low compared with Western markets, “gray economy” sellers can price lower since they circumvent taxes and, even though Morocco has a strong banking system, most daily transactions are still conducted in cash.
“Progress has been made on the transactions and payment side, but there is still a long way to go to reduce the share of cash settlements in our business. The transition to digital payments is lagging behind, compared to other countries. We are talking about 20% of volume in Morocco whereas in Egypt, for example, it’s already 50%,” says Louali, who still sees strong potential.
Morocco is both a place to invest in and invest from. In recent years, outbound FDIs were mainly directed toward francophone Sub-Saharan Africa, with approximately $1 billion annually flowing to financial services, insurance, construction, real estate and renewable energies.