I write this week from Casablanca, Morocco, where the Fourth GCC-Morocco Investment Forum was held on Friday and Saturday (Nov. 28 and 29). Building on the success of the three previous fora, this one attracted a large following of business people from Morocco and GCC countries, who came here to explore investment prospects and find business partners with whom to take advantage of new opportunities.
Investment has been a key part of the GCC-Morocco Strategic Partnership, which the GCC and Morocco’s heads of state launched in 2012. Since then, the partnership has followed several parallel tracks. At the official level, ministers of foreign affairs from Morocco and the six GCC member states have met regularly to oversee the progress made in the relationship. Their most recent meeting, the fourth one, was held last Tuesday (Nov. 25) in Doha, Qatar and expressed satisfaction with the pace of integration over the past two years. The GCC-Morocco Joint Committee, with senior officials from both sides, was formed to monitor and evaluate the work of 15 working groups of officials and experts specializing in all aspects of the relationship, including trade and investment, as well as legal and judicial cooperation, culture, education, scientific research, the environment and renewable energies, social development, culture, youth and social development.
Supporting those activities is a $5 billion aid package that was pledged by four of the GCC countries (United Arab Emirates, Saudi Arabia, Qatar and Kuwait) to fund development and infrastructure projects in Morocco.
GCC-Morocco trade is rather limited now, but holds some promise. Presently, the two-way trade is estimated at less than $4 billion, up from $700 million a decade ago, a healthy fivefold growth. Most of Morocco’s trade is currently with the EU, with which it has an association agreement. However, diversification is necessary to immunize Morocco’s exports against recurrent recessions in the euro zone. With a combined GDP of $1.75 trillion, GCC countries provide a robust and growing market where demand is considerable for Morocco’s agricultural and other exports.
Tourism is another growth industry in Morocco, contributing some 9 percent to the country’s GDP. It has largely weathered the Arab Spring as tourists continued to flock to its many attractions. Last year, tourists from GCC countries spent about $418 million in Morocco. In a meeting dedicated to tourism at the Investment Forum held this week in Casablanca, investors discussed the potential for cultural tourism in the country, home to some of the greatest examples of authentic Islamic culture and architectural marvels. Cultural and family tourism, which appeals especially to GCC tourists, has been little developed in Morocco, which has long catered to European tastes.
In addition to official aid and trade, Moroccans working in the GCC countries sent home over $1 billion in 2013. However, while all these elements are important, it is investment that holds the greatest promise for Morocco. It is a key win-win for both Morocco and GCC investors. Investment has brought jobs for Morocco’s growing population and foreign exchange to improve its balance of payments. Coming immediately after the onset of the global financial crisis, GCC-Morocco engagement has helped Morocco maintain a healthy growth rate in spite of the crisis in its traditional trading partners.
Morocco remains a favorite destination for investment and is the second largest FDI recipient in Africa. Earlier this year, the Moroccan government announced that in 2013, FDI exceeded $20 billion in 2013, a jump of 24 percent from previous year.
There are no precise figures about private investment flows between the GCC and Morocco, but in 2013, GCC investments in Morocco were believed to exceed $2.8 billion, accounting for about 16 percent of foreign direct investment (FDI) received in Morocco.
A new joint venture, Wessal Capital, is one of the vehicles created to channel GCC investments to Morocco, and is estimated to be worth $3.4 billion. Its principal investors are Abu Dhabi’s sovereign wealth fund Aabar, Saudi Investment Fund, Qatar Holding, the Kuwait Investment Authority’s Al Ajial Investments, and the Moroccan Fund for Tourism Development (FMDT).
The fund’s focus has been on tourism infrastructure. Its first project, launched in 2014, was the refurbishing of the port of Casablanca, at a cost of $737 million. Once completed, the development could change not only the city’s seafront but also other parts of it, as new hotels are built and the old city quarter is rejuvenated. Two similar projects are to follow, in Rabat and Tangiers.
Many believe that Morocco has still greater capacity to absorb foreign investment, including from GCC investors. To attract more investment, it would be useful to listen to the suggestions made by participants at the Investment Forum in Casablanca.
A detailed look at the Moroccan investment climate is beyond the scope of this article, but in my remarks before the Casablanca forum, I addressed some of the concerns GCC investors had voiced. New investors, in particular, need help in understanding the different licensing processes. Similarly, investors need guidance when problems arise while doing business in the country, as the legal environment in which investors must operate is unfamiliar to many GCC investors.
Infrastructure limitations are of course a challenge to most investors, but they can also present opportunities, as we see in the Casablanca, Rabat and Tangiers seafront developments.
Investment fora have managed to bridge some of the business-culture gaps between GCC and Morocco investors. Similarly at the official level, the GCC-Morocco Trade and Investment Working Group has been working on bringing the two regulatory environments closer together, to bring about a closer economic integration and greater flows of trade and investment.
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