Two males cross a road in Casablanca. Photograph by: Hassan Chabbi / IFC
By Olivier Monnier
This text was first printed by the International Finance Corporation.
Moroccan funding in Africa has risen sharply over the previous 20 years, laying the groundwork for elevated trans-regional commerce.
In 2020, Morocco’s third-largest financial institution, BMCE, determined to vary its identify to Financial institution of Africa, matching that of the sub-Saharan African subsidiary it acquired 15 years earlier.
The change was way over a rebrand – it was an announcement of how the corporate, based as a state-owned financial institution within the Fifties, has emerged as a significant participant within the African financial services sector with a presence in practically 20 international locations as we speak.
“It was a daring determination that shocked our Moroccan clients, who had been accustomed to our historic identify for many years,” says Amine Bouabid, chief govt officer of Financial institution of Africa Group. “But it surely was a transparent need from the group to ascertain a single model throughout the entire of Africa.”
Financial institution of Africa’s profitable enlargement south of Morocco’s borders isn’t a novel story. Over the previous 20 years, a rising variety of Moroccan corporations have sought to strengthen their ties with the remainder of the continent, main the Kingdom’s international direct funding into Africa to develop eightfold between 2014 and 2021, in line with the finance ministry.
“Morocco occupies a really distinctive place in Africa,” says Thomas Pellerin, IFC’s lead for the manufacturing and providers sectors for the Maghreb and West Africa, based mostly in Rabat.
“For a lot of worldwide buyers, particularly these from Europe, the Kingdom’s geographic location and stage of improvement make it a gateway to the African continent. On the identical time, as Morocco has constructed a stable industrial and providers base, Moroccan corporations at the moment are wanting abroad, notably to Africa, to increase.”
Change in mindset
Moroccan buyers have lengthy seen sub-Saharan Africa as a “troublesome area to entry, however because the early 2000s we’ve seen a paradigm shift,” says Abdou Diop, who heads up the African Fee at CGEM, Morocco’s main enterprise affiliation, and can also be a managing companion of Mazars in Morocco, an audit, tax and consulting agency.
“We’ve noticed an essential shift when it comes to mindset as rising Moroccan champions started to hunt out new markets to increase their operations. The non-public sector has then reassessed the dangers to regulate to the brand new state of affairs and seize extra alternatives,” says Diop, who has suggested lots of the Kingdom’s corporations, together with Attijariwafa Financial institution, on their first steps within the area.
Led by the nation’s high banks – BMCE, Attijariwafa Financial institution, and Banque Centrale Populaire (BCP) – and telecommunications firm Maroc Telecom, the 2000s ushered in a primary wave of funding, centered on French-speaking West Africa, which shares a language (French) and historic ties with Morocco.
The 2010s noticed a diversification of funding flows to different sectors, with the likes of phosphate supplier OCP Group, actual property developer Addoha, and pharmaceutical firm Cooper Pharma all increasing their operations within the area.
A subsidiary of OCP Group, the world’s largest phosphate-based fertiliser producer, OCP Africa was established in 2016 to offer fertiliser options tailor-made to native situations and crop wants within the area. Headquartered in Morocco, OCP Africa now operates in 16 international locations, together with Cameroon, Rwanda and Zambia.
Financing the continent
With international direct investments reaching over $800 million in 2021, in line with the finance ministry, Morocco has change into the second largest African investor on the continent, after South Africa – and the most important in West Africa.
“Moroccan corporations have realised that their future lies extra within the south than within the north. Our ambition is to accompany them on this dynamic and contribute to the financing of African economies, specifically the non-public sector,” says Bouabid from Financial institution of Africa. “We imagine Morocco has a card to play in financing the continent and performing as an middleman between Europe and Africa.”
Wanting forward, Financial institution of Africa plans to proceed its enlargement technique and goals to extend its variety of branches from the present 19 to 25 by 2030, says Bouabid. Specific consideration can be paid to Central Africa, the place the lender nonetheless has a comparatively small presence, and to lending to small and medium-sized enterprises, the spine of the continent’s economies, he says.
As a part of its mandate to assist non-public sector development and trans-regional enterprise improvement in Africa, the Worldwide Finance Company (IFC) has helped Moroccan corporations strengthen their footprint within the area.
For the reason that early 2000s, IFC has supported the enlargement of main Moroccan banking and insurance coverage teams comparable to BCP, Attijariwafa Financial institution, BOA, Saham Group, and Holmarcom throughout Africa to speed up entry to finance.
IFC has additionally partnered with Ciments de l’Afrique (CIMAF), a cement maker owned by Morocco’s Omnium des Industries et de la Promotion (OIP), to spice up cement manufacturing in West Africa; with OCP Africa to assist meals safety on the continent; and with Dolidol, the Kingdom’s main bedding producer, to increase manufacturing and distribution in Nigeria.
‘Sharing our know-how’
In Casablanca, Morocco’s largest metropolis and its major enterprise hub, furnishings retailer KITEA is without doubt one of the Moroccan corporations betting on Africa. From a small 300m2 store that first opened for enterprise in 1993, the group has grown to 31 shops in 17 Moroccan cities, promoting dwelling, ornamental, out of doors and workplace furnishings to the mass market.
The corporate has simply begun to increase within the area. Final yr, it opened a 12,000m2 mall in Accra, Ghana, and purchased a majority stake in Furnishings Palace, Kenya’s main furnishings retailer. It goals to increase to 4 different African international locations by 2025, together with Senegal and Côte d’Ivoire.
“Africa is a logical extension of our operations in Morocco,” says its CEO Othman Benkirane. “We see loads of market alternatives on the continent, and we’ve shut ties with a few of its international locations, notably in West Africa, so it’s solely pure for us to construct our presence there.”
Increasing in Africa can also be a matter of regional integration, enabling the switch of abilities and the creation of synergies, says Benkirane.
“As Moroccans, we’re proud to contribute to the event of Africa by sharing our know-how and expertise,” he says. “And we include quite a lot of humility. Not so way back, Morocco confronted comparable challenges to these of many African international locations, together with on the logistics entrance, and whereas we haven’t solved all our issues, we do have some keys to success to share.”
This sharing of information, sources, and technology between growing international locations – known as South-South cooperation – is enjoying an more and more essential function within the worldwide improvement panorama, together with in areas comparable to food safety, sustainable agriculture, and local weather adaptation.
This momentum has been accompanied by the speedy enlargement of South-South commerce, which has soared through the years to achieve $5.3 trillion globally in 2021 , exceeding the commerce quantity between growing and developed international locations, in line with the United Nations Convention on Commerce and Improvement (UNCTAD).
King Mohamed VI
One man who has been instrumental in selling better South-South collaboration and influencing how Moroccan corporations take a look at Africa is its King. Since ascending the throne in 1999, Mohammed VI has actively promoted an African agenda, each diplomatically and economically, making quite a few visits all through the area.
In a landmark speech delivered in Abidjan on the opening of a Morocco-Côte d’Ivoire financial discussion board in 2014, the King mentioned: “The wealth of our continent ought to profit, at first, the folks of Africa. This requires that South-South cooperation be on the coronary heart of their financial partnerships.”
With a rising variety of Moroccan corporations gaining in maturity and capability for worldwide enlargement, Moroccan funding in Africa is about to speed up within the coming years.
“Moroccan corporations have constructed up experience in quite a lot of sectors and may convey finest practices and assist elevate productiveness within the area,” says IFC’s Pellerin. “They’ve additionally developed threat urge for food, agility and resilience in difficult environments, and are positioning themselves as long-term buyers in Africa.”
In the meantime, some African gamers are beginning to present curiosity in investing within the Kingdom. In 2018, for instance, South African monetary providers group Sanlam acquired a majority stake in Moroccan insurance coverage firm Saham, extending its attain to greater than 30 African international locations and making it Africa’s largest insurer.
Diop from Morocco’s enterprise affiliation additionally sees important potential for bolstering Morocco’s ties with Africa because the African Continental Free Commerce Space (AfCFTA) is carried out. In accordance with the World Financial institution, Moroccan exports to sub-Saharan Africa accounted for less than 6% of the Kingdom’s whole exports in 2021.
Established in 2018 to create a single continental marketplace for Africa’s 1.3 billion folks, AfCFTA is the world’s largest free commerce zone when it comes to the variety of taking part international locations.
Morocco’s automotive business, for instance, generally is a catalyst for the event of industries in a number of African international locations, from pure rubber in Ghana and Côte d’Ivoire to lithium within the Democratic Republic of Congo, he says.
“The AfCFTA provides an ideal alternative for the continent to strengthen the complementarity of its worth chains,” Diop says. “And international locations like Morocco, which have already linked their worth chains to the worldwide economic system, generally is a driving power on this regard.”