BOLD AMBITION

2020 had proved to be a tough year for the Moroccan economy, as it was almost everywhere across the globe. However, in Morocco, COVID-19 was also accompanied by a drought. GDP contracted by 6.3%, tourism all but collapsed, and demand from Europe for manufacturing and agricultural exports fell precipitously. 2021 marked the turning of the tide, as recovery was underpinned by an exceptional vaccination drive and good rains helping the agricultural sector to rebound. The IMF, consequently, has predicted the country will grow 4.5% in 2021.

During our interview with Mohammed Benchaâboun, Ambassador to France and former Minister of Economy and Finance, he explained that the Recovery Plan of MAD120 billion was intended to be a holistic effort to integrate recovery from the pandemic with the transformation of the national economy.

First, densification of stimulus credit support and the scaling up of financial support for direct investment through the Mohammed VI Fund for Investment would be aimed at priority areas, including industrial restructuring, innovation, and growth-promoting activities, including the promotion of SMEs, infrastructure, agriculture, and tourism. Second, public sector reform aimed at strengthening the strategic role of public establishments and enterprises were designed to help accelerate the structural transformation of the Moroccan economy. With respects to the amelioration in the provision of social securities, Benchaâboun emphasized the government’s plans to progressively generalize social coverage, while reforming existing aid programs and the compensation system. The potential would be for 22 million Moroccans to benefit from the compulsory health insurance scheme.

The realization of this agenda is of pertinence to Morocco’s financial sector. Its fortunes are intimately tied to the recovery of the entire economy. Over the last year, Casablanca’s Financial City (CFC) has sought to alter its tax regime in a bid to increase its transparency and attract more business by being compliant with EU rules. In January 2021, a new law saw CFC companies subject to 15% corporate tax, up from 8.75%. In exchange for the tax levy, CFC companies would not be subject to regulation on movement, nor would they be obliged to hire local staff.

Accompanying this move has been a noted pivot southward. Morocco had reintegrated into the African Union in 2017, but it was only in January 2021 that African Continental Free Trade Area (AfCFTA) came into effect. The USD3.4 trillion economic bloc aims to facilitate the movement of goods and services and will be a boon to Morocco’s financial priorities in the coming years.

With Morocco’s economic recovery underway, the African continent opening up for trade, and regulatory reform improving the attractiveness of Moroccan enterprises, the horizon looks bright.