Morocco: Investing

FDI in Figures

According to UNCTAD's World Investment Report 2022, FDI flows to Morocco reached USD 2.1 billion in 2021, up by more than half compared to one year earlier. Similarly, the total stock of FDIs stood at USD 72.9 billion or around 55.5% of GDP. Morocco's FDI profile is quite diversified, with a consolidated presence of some large multinationals in manufacturing industries, including automotive, aerospace and textiles. In 2021, more than half of the FDI inflows to Morocco have been concentrated in three sectors: real estate activities (27%), manufacturing industries (17.3%) and financial and insurance activities (11.3%). The main investing countries have been France (historically the main investor), the United Arab Emirates, the UK, the U.S. and the Netherlands. In terms of stocks, agriculture has the highest share, followed by financial and insurance activities, mining and quarrying, ICT and wholesale and retail trade. According to the latest figures from the Moroccan Foreign Exchange Office, in the first eleven months of 2022, FDI flows to Morocco increased by 31.5% to MAD 35.3 billion, whereas Moroccan investments abroad reached MAD 17.3 billion, the highest level in the last five years (+7.1% y-o-y).

After the positive results of the Industrial Acceleration Plan 2014-2020, a vast project of economic modernisation to attract more FDI, the government launched a second phase for 2021-2025 focused mainly on the consolidation of the achievements made within the framework of the first phase of the plan (which, among other results, created 54 industrial systems in partnership with 32 professional associations and universities in various sectors) and their generalization to all regions, by integrating small and medium enterprises and by placing industry at the heart of technological transformations. Among the reasons to invest in Morocco, there are the relatively low cost of labour, its strategic location, between Europe and sub-Saharan Africa, good infrastructures and the stability of the country’s currency and political framework. On the other hand, Morocco still has significant social and regional disparities, weak productivity and low competitiveness and an economy heavily reliant on the price of hydrocarbons and the agricultural sector. Morocco ranks 67th out of 132 in the 2022 Global Innovation Index and 87th out of 180 in the Corruption Perception Index.

Foreign Direct Investment	2020	2021	2022
FDI Inward Flow (million USD)	1,419	2,266	2,141
FDI Stock (million USD)	71,975	72,994	63,278
Number of Greenfield Investments*	62	52	71
Value of Greenfield Investments (million USD)	2,659	3,775	15,328

Source: UNCTAD, Latest data available.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

FDI STOCKS BY COUNTRY AND INDUSTRY

Main Investing Countries	2020, in %
France	36.0
Spain	8.5
United Arab Emirates	5.6
United Kingdom	5.5
Luxembourg	4.9
Qatar	4.9
South Africa	4.7

Main Invested Sectors	2020, in %
Agriculture	31.6
Financial and insurance activities	26.4
Mining and quarrying	14.1
Information and communication	7.0
Wholesale and retail trade	6.0
Manufacturing	4.3

Source: Foreign Exchange Office of the Ministry of Finance, Latest data available.

Form of Company Preferred By Foreign Investors: S.A(public ltd. company), S.A.R.L (private ltd. company
Form of Establishment Preferred By Foreign Investors: Subsidiary
Main Foreign Companies: Telefonica, the Spanish telecommunications giant shows its presence through the Méditel mobile operator and call centers Atento. Dell completed its largest center of Europe-Africa-Middle East area.
France has nearly 500 subsidiary companies in Morocco which employ on the whole more than 65,000 people. Among the principal subsidiary companies of foreign companies based in Morocco, one can quote Total, Renault, Holcim but also STMicroelectronics, Sanofi and Nestlé.
More "success stories" can be consulted on the website of Invest in Morocco.
Sources of Statistics: Foreign exchange office (Office des Changes)

What to consider if you invest in Morocco

Strong Points

Morocco's strengths for FDI are:

A legal framework and assistance measures very favourable to investors
Relatively low labour cost
A strategic location, between Europe and sub-Saharan Africa
Robust infrastructure
A young and relatively well-trained population
Political stability encouraged by the popularity of the King, Mohammed VI

Weak Points

The main obstacles to the development of FDI in Morocco are:

A relatively small internal market
A country still highly dependent on agriculture and therefore vulnerable to natural disasters and the price of hydrocarbons
Administrative burdens slowing down, among other things, the start of business activities
Significant social disparities by region (rural vs. urban) and a high poverty rate
High unemployment rate and low productivity
Weak intellectual property rights protection
A lack of transparency in public procurement

Government Measures to Motivate or Restrict FDI

The Moroccan government actively encourages foreign investments. The "Investment Charter" of 1995 is the main legal source for FDIs. This charter mainly provides company exemptions for VAT and for corporate tax for 5 years under certain conditions.
In the industrial sector, the Industrial Acceleration Plan 2014-2020 aimed at establishing “ecosystems” that integrate value chains and supplier relationships between large companies and SMEs; and the government announced a new Acceleration Plan for the period 2021-2025.
Morocco has implemented reforms to reduce company registration fees, eliminate minimum capital requirements for limited liability companies and facilitate business registration. Companies in the “Industrial Acceleration Zones” enjoy a 15% corporate tax rate following an initial five years of exemption, whereas companies in the Casablanca Finance City (CFC) are tax exempt for the first five years, then are subject to tax at a 15% rate both on their local and export activities.
The Moroccan government can sign specific agreements and contracts with investors, providing subsidies for certain expenses, custom duty and VAT exemptions when the agreed criteria are met.
Each of the 12 regions into which the country is divided has the authority to develop its own investment promotion campaigns.

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Morocco: To see the list of investment treaties signed by Morocco, consult UNCTAD's International Investment Agreements Navigator.
International Controversies Registered By UNCTAD: Refer to UNCTAD's Investment Dispute Settlement Navigator.
Organizations Offering Their Assistance in Case of Disagreement: ICSID , International Center for settlement of Investment Disputes
ICCWBO , International Court of Arbitration, International Chamber of Commerce
Member of the Multilateral Investment Guarantee Agency: Morocco is a signatory of the MIGA convention.

Country Comparison For the Protection of Investors	Morocco	Middle East & North Africa	United States	Germany
Index of Transaction Transparency*	9.0	6.4	7.0	5.0
Index of Manager’s Responsibility**	2.0	4.8	9.0	5.0
Index of Shareholders’ Power***	7.0	4.7	9.0	5.0

Source: The World Bank - Doing Business, Latest data available.

Procedures Relative to Foreign Investment

Freedom of Establishment: Foreigners can generally invest in the country enjoying the same conditions as locals (a few exemptions apply for specific sectors).
Acquisition of Holdings: Foreign investments in air and maritime transport companies and maritime fisheries are capped at 49%. Foreigners cannot own agricultural land, though they can lease it for up to 99 years. In the oil and gas sector, the National Agency for Hydrocarbons and Mines (ONHYM) retains a compulsory share of 25% of any exploration license or development permit. The Moroccan government also has a discretionary right to limit all foreign majority stakes in the capital of large national banks.
Obligation to Declare: Investment system in Morocco is very open as investors do not have to obtain prior approval: they simply have to send the Foreign Exchange Office a report in the six months following the completion of the operation.
Competent Organisation For the Declaration: Foreign exchange office
Requests For Specific Authorisations: The financial sector has specific regulations, as well as that of hydrocarbons and air and maritime transport.

Office Real Estate and Land Ownership

Possible Temporary Solutions: Consult Instant Offices, CoWorker, Regus, etc.
The Possibility of Buying Land and Industrial and Commercial Buildings: Guaranteed except for the agricultural sectors, where foreigners may only rent the land for up 99 years. However, foreigners may acquire agricultural land in order to carry out an investment or other economic project that is not agricultural in nature, subject to first obtaining a certificate of non-agricultural use from the authorities.
Risk of Expropriation: Expropriation may only occur in the public interest and with a fair compensation. If the State and owner are able to come to agreement on the value, the expropriation is complete, otherwise the amount of compensation will be established by a judge.

Investment Aid

Forms of Aid: Incentives generally take the form of tax exemptions and customs advantages, subsidies for certain expenses related to investment, etc. Tailor-made incentives can be agreed directly with the government for certain investment projects.
Detailed information is available on the official portal Invest in Morocco.
Privileged Domains: In addition to the tax exemptions granted under the common law, Moroccan law provides specific financial, tax and customs advantages to investors, as part of agreements or investment contracts to be concluded with the State, provided that they meet the required criteria. This concerns:
- the contribution of the state to certain investment expenses through the Investment Promotion Fund;
- the contribution of the state to certain expenses for the promotion of investment in specific industrial sectors and the development of modern technologies through the Hassan II Fund for Economic and Social Development;
- exemption from customs duties under Article 7.I of the Finance Act No. 12/98;
- exemption from import VAT under Section 123-22 °-b of the General Tax Code.
Privileged Geographical Zones: The industrial sector has been at the centre of Morocco's investment development policies, through to the country's "Industrial Acceleration Plan" 2014-20 and 2021-25. Furthermore, Morocco is increasingly investing in the energy sector.
The Agricultural Development Agency (ADA) provides incentives for investments in the agricultural sector.
Free-trade zones: There are industrial parks (Bouskoura, Meknès, etc.), technoparks (Casa Technopark) and free zones (which were recently transformed into “Industrial Acceleration Zones”, providing a 15% corporate tax rate following an initial five years of exemption). Furthermore, the government established the Casablanca Finance City (CFC).
To know more about the incentives available in each zone of the country, refer to the list of the regional investment centres.
Public aid and funding organisations: The Investments Commission, the Hassan II Funds for Economic and Social Development and Funds of Promotion of Investments. For further information, visit the dedicated page on the website of Invest in Morocco.
Furthermore, the Caisse Centrale de Garantie (CCG) is a public finance institution which offers co-financing, equity financing, and guarantees.

Investment Opportunities

The Key Sectors of the National Economy: Textile-clothing, tourism, agriculture, aquaculture, automotive.
High Potential Sectors: Call centers, high-technology, green energy (the country has the world’s largest concentrated solar power facility with storage, near Ouarzazate)
Privatization Programmes: In recent years, Morocco has launched an ambitious program of privatisation in many sectors of the economy. The largest privatisations were carried out in the sectors of mobile telephony, finance, tobacco stores and water supply.
Nevertheless, as of March 2021, the Moroccan Treasury held a direct share in 225 state-owned enterprises and 43 companies, including telecommunications companies, banks, and insurance companies, as well as railway and air transport companies (US Department of State).
The government relaunched Morocco’s privatization program before the Covid-19 pandemic but the plan was delayed. The 2022 budget schedules the privatisation of Marsa Maroc, Maroc Telecom, La Mamounia, Energie Electrique de Tahaddart (EET), Biopharma and Sonacos.
Tenders, Projects and Public Procurement: Tenders Info, Tenders in Morocco
Global Tenders, Tenders in Morocco
MCA Morocco

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors: The Moroccan government holds a monopoly on phosphate extraction through the 95% state-owned Office Cherifien des Phosphates (OCP). Moreover, several sectors remain under public monopoly, managed either directly by public institutions (rail transport, some postal services, and airport services) or by municipalities (wholesale distribution of fruit and vegetables, fish, and slaughterhouses).

Finding Assistance For Further Information

Investment Aid Agency: Moroccan Investments and Exports Development Agency (AMDIE)
Other Useful Resources: List of Regional Investment Centres
Invest in Africa (IIA)
Attractiveness of investment in Africa (EY)
Doing Business Guides: World Bank's Doing Business - Morocco
Doing Business in Morocco (PKF International)
Doing Business in Morocco (UHY)

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