Jean R. AbiNader
July 17, 2018
To encourage greater industrial investment in the country, the Ministry of Finance and Economy has announced a new five-year corporate tax exemption for new industrial investments. According to a Reuters story, subsequently reported in a number of outlets, the incentive will apply to companies created since the publication of the June 2017 budget.
Among the 24 sectors targeted for the tax break are automotive, aeronautical, textile, manufacturing, food, and the pharmaceutical industries, which currently are the backbone of industrial manufacturing but are in need of a boost to reach the next level of development. “The decision shows that the Moroccan economy is unable in the current conditions and under the current tax system to promote industrial investments,” Rachid Aourrazz at the Moroccan Institute for Policy Analysis told Reuters. He said that “There is a need for an overall review the Moroccan tax system to make it conducive to industrial development.”
The tax holiday comes on the heels of a negative forecast of a further drop in foreign direct investment in 2019, after it plunged to 17.2% in five months in May 2018 compared to the same period last year.
The Observer Research Foundation recently wrote about the competition to become the “preferred” business gateway to Africa. It compared the overall attractiveness of South Africa, Morocco, Mauritius, and Dubai in their efforts to become centers for transactions on the continent. With regard to Morocco, it pointed out that although it is the most recent entrant, under the leadership of King Mohamed VI, it has made great strides in a few years, pointing to its investments in francophone Africa, its extensive insurance and banking presence in the region, and the significance of the Nigerian gas pipeline project.
Royal Air Maroc (RAM) has announced its expansion to another five African countries, and overall trade has increased an average of 9.1% of the past five years.
As a major conference center on development issues, its leadership in the African Union on the environment and migration, and numerous bilateral agreements, Morocco has shown that it is a serious contender for becoming a regional leader. As the article noted, “The country has attempted to display its business-friendly nature, whilst the King has exercised soft power and built strategic ties through various state visits. With comparative advantages in Islamic finance, agriculture, renewable energy, and digital infrastructure, the country is now betting on increased activity south of its borders as an economic catalyst.”
On the negative side of the ledger, the article noted that the country faces some lingering mistrust between itself and several African nations due to opposition decades ago “to decolonization of South Africa, Mozambique, and Angola. In 1987, Morocco quit the African Union and applied to join the European Union — a bid that was rejected. More recently, in 2014, Morocco refused to host the 2015 AFCON over Ebola fears, while it hosted the Club World Cup that year.” It also mentioned that 11 African countries did not support Morocco’s World Cup bid. Add to this the disagreement over the Sahara issue, and the article concluded that “becoming Africa’s gateway is an uphill task.”
Morocco among trailblazers in Global Innovation, according to the Morocco World News analysis of the “Global Innovation Index 2018 – Energizing the World with Innovation.” The analysis summarized that “Despite some structural setbacks, especially regarding institutional hurdles sustained by a political culture still–to a considerable degree–unwelcoming of unorthodox ways of creation wealth or capital, Morocco is among the innovation and information technology trailblazers of North Africa and the Arab World.”
The Index, published by Cornell University, takes into consideration factors driving innovation, sustainable and efficient energy-driven development with a special focus on renewable energy, inputs in knowledge production, competitive businesses, and the place of smart energy in the future of economic development, and scientific breakthroughs.
Morocco ranked 8th in the Arab world behind the Gulf states and Tunisia, and ahead of Lebanon, Egypt, and Algeria. It did well in specific metrics and its overall performance. According to the article “Morocco has an overall efficiency ratio of 65 and the country fared relatively well in some sub-disciplines, especially in infrastructure (50th), institutions (75th), knowledge and technology outputs (78th), and creative outputs (70th).”
Its weaknesses are in business sophistication (115th), market sophistication (93th), and human capital and research (84th). This highlights the need to continue modernizing its industrial and information sectors, and increase investments in knowledge creation and impactful research projects. Yet the data also shows that only South Africa and Tunisia lead Morocco in terms of investments in education, knowledge creation, and information technology-centered businesses.
Mobile banking coming to Morocco, as AttijariwafaBank launches JIBI, or ‘pocket’ in the local dialect. It is a project of Wafacash, its financial services subsidiary. The announcement from the bank noted that Wafacash is “the first payment institution in Morocco to market such an offer, which is part of the company’s development strategy for digital innovation and quality of service.” Primarily aimed to serve individual customers, it will enable them, beginning next September to open a payment account, pay bills, send money to another mobile or a business, receive money, and view one’s activities.
For its business clients, Wafacash will offer ‘JIBI PRO’ that includes opening a merchant payment account, receive payments, send money to a bank account, pay other merchants, recharge a mobile phone, pay invoices, review its transactions, and locate addresses of companies. Samira Khamlichi, CEO of Wafacash, noted that “With JIBI, Wafacash continues its historic mission for high-tech services that improve the daily lives of Moroccans. JIBI, our payment account allows us to maintain our role of “disruptor” in the national market and to facilitate access to basic financial services to the widest segment of the population. All of this is in line with the national goals for the fight against the informal economy, improving the financial inclusion and economic and social development of our country.”