Why you should care
Already an important economic hub on the African continent, Morocco is now preparing to go global. And it’s way more than camels and casbahs.
The word “Casablanca” evokes ancient souks and bazaars, maybe Rick’s Café Américain — not so much “modern financial hub.” Yet, Morocco’s bustling commercial capital is becoming just that. And now, this centuries-old desert kingdom is positioning itself as the Western gateway to Africa’s fast-emerging markets. With the potential to connect its own Western-friendly business climate with a growing commercial footprint south of the Sahara, Morocco’s got a pretty strong pitch.
Or as Karim Hajji, the debonair CEO of the Casablanca Stock Exchange, put it at an event in Washington, D.C., this month: Investing in Morocco’s stock market means “investing in the potential growth of the continent.”
Indeed, a host of Moroccan companies are starting to penetrate economies on the other side of the Sahara in a way the camel caravans of yore only dreamed of. In that, Morocco is defying the geopolitical and ethnic divides that have long carved the continent into “North” and “sub-Saharan” Africa. All that regional integration could make the kingdom even more alluring for Western investors eager to get in on Africa’s emerging-market economic action, but queasy about coups, corruption and power outages.
Morocco offers the kind of political and economic stability the private sector craves, but is oh-so-elusive on this continent.
The market capitalization of the Casablanca Stock Exchange, for example, is $60 billion — one of the continent’s largest. Though it doesn’t yet list any sub-Saharan firms, Hajji is intent on finding some, part of his broader Pan-African vision.
Other Moroccan financial institutions are already well-established south of the Sahara, their investments concentrated in fellow former French colonies. Together, the country’s two main banks, Attijariwafa and BMCE, have one of the continent’s largest networks of retail banking holdings; their branches dot countries like Mali, Senegal and Ivory Coast. Economic forecasters are betting banking will go gangbusters as more and more Africans move into the middle class and seek out services to manage newfound income. Maroc Telecom, meanwhile, is the market leader for cell phone service in French-speaking Africa, according to a new report by the Atlantic Council.
Morocco’s trade with sub-Saharan Africa still constitutes a small margin of the kingdom’s total exports, roughly 5 percent. But it’s grown over the last decade. The Moroccan government has negotiated a number of trade agreements on the continent, and has pacts with three of the continent’s major trade blocs in the works, says Peter Pham, the director of the Africa Center at the Atlantic Council, a D.C.-based think tank.
Commercial ties with the West, particularly Europe, are more established and extensive. The main lures for Western business are Morocco’s prime location, along both the Atlantic Ocean and the Mediterranean Sea; cheap labor; and liberal economic policies. The country recently created several customs-free manufacturing clusters and an expanding deep-sea port at Tanger Med, which lies across the Strait of Gibraltar from Spain.
Morocco has no oil wealth to fund handouts. It has instead turned to foreign investment and trade to buoy its economy and create jobs.
As important, Morocco offers the kind of political and economic stability the private sector craves, but is oh-so-elusive on this continent. Democracy advocates argue that stability has been achieved via repression. But like it or not, Morocco’s King Mohammed VI, who assumed the throne when his father died in 1999, has been fairly masterful at managing the blowback from the Arab Spring (unlike his counterparts in Tunisia and Libya).
Baby-step democratic reforms have kept unrest at a manageable level, and so has economic growth. Unlike other countries in the region, Morocco has no oil or gas wealth to fund handouts. It has instead turned to foreign investment and trade to buoy its economy and create jobs for the bulging youth population.
That all helped Morocco secure formal trade deals with both the European Union and the United States — the only free-trade pact Washington has inked on the continent. As Pham points out, that means “we can get our goods into Morocco” in a way the U.S. can’t anywhere else in Africa. As Moroccan firms knit a web of commercial channels across the rest of the continent, it means the West should be able to get more goods from the kingdom into sub-Saharan Africa, as well.
Big foreign firms are certainly coming. French automaker Renault-Nissan opened the first phase of a planned $1.5 billion auto plant near Tangier last year. The Canadian aircraft and train manufacturer Bombardier is building a $200 million manufacturing facility in the Casablanca industrial zone, due to open by year’s end.
Still, in 2014, the dream of Morocco as an investment gateway to Africa remains more vision than reality — almost akin to the mirage one might spot after a few days wandering the Sahara. The markets are still emerging. And innumerable logistical challenges make it difficult to move Western products southward through the continent. Geopolitical and cultural barriers between North Africa’s Arabs and what is often known as “black Africa” have to be taken into consideration, as well.
Pham, however, suggests that the notion of continental divides is the legacy of “old textbooks and old mentalities.” With hopes high for the emergence of a modern, integrated, 21st-century Africa, Morocco is out to prove him right.