Morocco eyes Africa for investment, political support

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Moroccan King Mohammed VI has visited a number of African countries at the head of a delegation of businessmen, in a move aimed at not only investment opportunities but also garnering political support regarding the Western Sahara dispute.

The visit of King Mohammed VI in late February-early March 2014 to four countries in West Africa (Mali, Ivory Coast, Guinea and Gabon), at the head of a large delegation of business owners, proves that the Kingdom of Morocco is looking at this region as a promising horizon for its major corporations, which are unable to expand in their natural surroundings — i.e., North Africa — as a result of the crisis of the Arab Maghreb Union. Meanwhile, Morocco still believes that Algeria is one of the most important markets that it dreams of tapping — entering into it and, through it, entering the Tunisian market — but this requires the normalization of relations between the two countries, or at least the opening of their land border, closed since 1994.

Awaiting normalization, which may be delayed pending the UN solution to the Western Sahara issue, Moroccan business owners are looking south for alternative markets. It could be argued that the narrow Moroccan market (34 million people), the decline in European demand for Moroccan products and the stagnation of domestic demand (increasing by only 2.4% in 2012 compared to 5.7% in 2011, although it was expected to improve in 2013 to reach 5%, according to the Moroccan High Commission for Planning) are all factors that make it imperative for Moroccan companies to strengthen their presence in Africa, “the roots of the Morocco tree whose leaves breathe in European air,” as King Hassan II described it. Moroccan attention is focused on the Economic Community of West African States (ECOWAS), registering a significant 7% economic growth in 2013 and with the purchasing power of the total population (300 million people) estimated at $590 billion.

Morocco’s foreign investments: Africa

As reported by the Moroccan Ministry of Economy’s Department of Studies and Financial Forecasts, 7% of Morocco’s exports in 2012 were to the markets of the Sahel-Saharan states. The companies exporting to Africa (reaching today 930 companies) aim to register triple this figure, raising the ratio up to 20% in 2018. The total of direct current Moroccan investments in Africa is $800 million, making the kingdom the second investor in the African continent after South Africa. According to figures published by the Moroccan daily L'Economiste on Feb. 20, 2014, Africa — especially West Africa — attracted in 2013 half of Moroccan foreign investments, i.e., 1.04 billion dirhams out of 2.186 billion dirhams ($127 million out of $267 million). During 2009-2013, investments amounted to 11.35 billion dirhams out of 16.28 billion ($1.38 billion out of $2 billion). Since 2009, Moroccan investors have transferred to their country 1.05 billion dirhams ($127 million) from the proceeds of their investments.

These investments fall within the scope of a global expansion toward Africa, as foreign direct investment in 2012 in the continent increased by 5% (United Nations Conference on Trade and Development Report), which is a significant ratio at a time when foreign direct investments are witnessing a real global collapse (dropping by 18% in 2012 and expected to stagnate in 2013).

The activity of some major Moroccan companies in the African continent symbolizes the importance of this inclination of Moroccan business owners toward Africa. These companies include Royal Air Maroc, covering 27 African capitals and ranking second after Air France as the most important airline operating between Europe and Africa, with an average of 217,000 seats per week (compared to 135,000 registered by its Algerian counterpart [Air Algerie] and 141,000 by [Tunisair,] its Tunisian counterpart).

Another company that symbolizes the importance of Morocco’s investments in Africa is Maroc Telecom (in which the state owns 30% of the shares). This company has had subsidiaries in Mauritania since 2001 (Mauritel), Burkina Faso since 2006 (Onatel), Gabon since 2007 (Gabon Telecom) and Mali since 2009 (Sotelma). In 2013, these subsidiaries — whose total customers reached 30 million — achieved earnings, before interest, taxes, depreciation and amortization, of 2.383 billion dirhams ($347 million), more than a 30% increase compared to 2012. Furthermore, the scope of activity in Africa of the most important Moroccan banks was remarkably expanded in recent years, as there are currently 20 branches in the African continent. Ivory Coast entrusted one of these banks, Attijariwafa Bank, to look for funds for its budget in the world capital market, which is a sign of confidence in this bank’s professionalism.

The relation to the Western Sahara issue

Of course, this spread into Africa is not purely economic, since one of its objectives is breaking the African diplomatic isolation imposed on the kingdom after its withdrawal in 1984 from the Organization of African Unity to protest the admission of the Sahrawi Arab Democratic Republic. 

Recent visits by the Moroccan monarch to Mali, Ivory Coast, Guinea and Gabon led to the signing of several economic agreements and the establishment of joint business councils between the Moroccan economic business owners and their counterparts in these countries. These visits culminated also in diplomatic gains, since King Mohammed VI succeeded in obtaining Gabon and Senegal’s support regarding the proposal for resolving the Western Sahara issue within the scope of a “broad autonomy” rather than a referendum that has yet to be held since the cease-fire in the former Spanish colony (1991).

Morocco hopes African support will help it convince the concerned states in the international community of the reasonableness of the autonomy proposal — mainly the United States, which does not seem to favor this proposal so far. Moreover, the French daily Le Monde recalled this fact on Feb. 17, 2014, since the kingdom miraculously dodged in April 2013 a UN regulation proposed by Washington to expand the powers of the United Nations Mission in Western Sahara to include human rights. This would have strengthened the diplomatic position of the Polisario Front and its Algerian ally.

Found in: western sahara, tunisia, morocco, king mohammed vi, investments, business, africa
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