Morocco's Business Climate
The government approved a law in 1999 that would accelerate privatization plans, covering the sale of stakes in more than 100 companies. The government in the summer of 1999 sought an advisor to help with privatizing the state telecommunications company, Ittisalat al Maghrib. In the first round, between 20 percent and 30 percent of the company will be sold. The country's airlines, the Royal Moroccan Airlines, is also to be opened to the private sector as is the Public Bank.
Morocco was one of the Middle East's first countries to begin a privatization program. In 1989, a law was passed calling for the privatization of 112 firms by the end of 1995. The law was amended in 1994 to add two more firms and extend the deadline to 1998. By mid-1998, some or all of its stakes in 34 firms and 18 hotels had been sold.
More recently, the Moroccan parliament passed a privatization law intended to accelerate the sale of state-owned enterprises. The approved legislation calls for the sale of stakes in more than 100 companies, including the telecom utility, Ittsalat al-Maghrib.
Morocco boasts what many have termed the Arab world's most ambitious privatization program, with 112 firms worth US$ 2 billion mandated for sale by mid-1996. As a result of a rough economic performance in 1995, however, the government raised less than half the US$ 400 million that had been forecast from selling state-owned assets that year.
In the beginning of 2000, the Casablanca Stock Exchange will move action from the trading floor to the computer, allowing brokers anywhere to trade directly in the Moroccan market. There are 55 companies and 84 mutual funds traded on the Casablanca exchange, with daily volume running at about $10 million. This relatively small capitalization makes this exchange unattractive for big investors. In May 1998, the volume of transactions reached DH 18.1 billion versus DH 27.6 billion a year earlier. During that same period the market capitalization dropped from DH 148.3 billion to 134.3 billion.
While the exchange performed relatively well, particularly before the Asian crisis in 1998, it has slumped since. One of the biggest issues facing the exchange is convincing more local companies to go public. Many, however, are family owned and resist making their finances available.
In 1997, parliament adopted a new telecommunications law that has transformed the industry. The law divided the "ONPT" monopoly into two independent entities: "Ittissalat Al Maghrib,'' the telecommunications operator, and "Barid Al Maghrib,'' the postal service operator. Furthermore, the law opened the way for private firms -- local and foreign -- to compete in telecommunications.
Today, the telecommunications market is growing rapidly. The government has sought to increase the number of main lines to 2 million to a teledensity of 10 percent. The government also wants to install fiber optic inter-urban networks connecting most major cities and extending telecommunications services to 1,600 rural locations, possibly with a fixed wireless technology.
Mobile phone use is also rapidly growing. The number of users is expected to grow at an annual rate of 16 percent, from the current 15,000 to 6 million by the end of 2014. In July 1999, the government awarded a $1.1 billion contract to Medi Telecom-Telefonic of Spain to operate the country's second mobile telephone system.
The National Office of Electricity (ONE) has launched a program to meet growing electricity demand and to bring electricity to rural areas. The office is using solar power to electrify the most remote areas, where approximately 40,000 villages are without basic water and electrical services.
Roads & Highways:
Approximately 60,000 km of roads covers Morocco, reaching all parts. The government plans to add an additional 1,000 kilometers of 4-lane highways by 2004 to reduce congestion and improve safety. The number of cars on the road and traffic has been increasing. In 1995, there were 1.4 million registered motor vehicles, with that number growing by 6 percent a year.
The Office National des Chemins de Fer (ONCEF) is planning two major projects. The first is 120 km of new tracks from Taourirt to Nador. The second 1,000 kilometers of new tracks form Marrakech to Laayoune.
The franchising market is expected to grow at an annual average rate of 30-50 percent during the next 4 years. Opportunities exist in fast food, hotels and motels, auto repair, toys, convenience stores, dry cleaning, printing and business equipment and services.
In 1992, Pizza Hut became the first franchise to open in Morocco. Most franchises are in fast food, clothing, furniture and cosmetics.
In addition to McDonald's and four Pizza Huts, which have had successful openings in Morocco, Dairy Queen has opened a restaurant in Rabat. A Moroccan franchisee has signed a contract with Subway Sandwiches. There appears to be an ample market for additional fast food chains. Hotels and motels, automotive parts and services, dry cleaning business equipment and services offer additional franchising opportunities in Morocco.
Principal Business Opportunities
1 Telecommunications Equipment
2 Electrical Power Systems
3 Environmental Equipment & Services
4 Water Resources Equipment & Services
5 Engineering Services
© 2000 Mena Report (www.menareport.com)