Thirty years ago, in 1990 to be exact, Morocco captured “only” 165 million dollars of FDI once morest nearly 3.5 billion dollars on average over the last decade. But this is still little compared to the tens of billions of dollars drained by the emerging economies of Southeast Asia. The most radical break consists of the irruption of ETIs, mid-sized companies.
It was necessary to press the accelerator of the program of privatizations and concessions of public water and electricity distribution services, as well as in the production of electricity, to cross the threshold of 2.5 billion dollars. The opening of telecoms in 1999, the explosion of investment in the hotel industry – in which Accor and its partner Risma played the role of hare wonderfully – combined with the real estate fever in the mid-2000s, served as products of call for FDI to Morocco.
It should be noted in passing that despite the jolts and the accumulation of “nightingales” (unsold stocks) in the balance sheets of real estate development companies, this sector is still among the top three recipients of FDI. The rise of commercial real estate, accelerated by the introduction of new investment vehicles and the development of self-service, stabilized real estate investments.
In the sectoral mapping of FDI, the “revenge” of industry has undergone the most spectacular evolution, with the automobile in pole position of this change. If the general public mainly retains the sites of Renault in Tangier and Stellantis in Kenitra, the most important phenomenon is the arrival of ETIs (intermediate-sized companies) specializing in automotive components, following the installation of French groups in Morocco. To this must be added the hare effect which has prompted two of the largest Japanese multinationals to bet on the Kingdom.
Yazaki and Sumitomo have spun off more than a dozen automotive component manufacturing units in Morocco, followed since by German rivals. These two companies are today the largest private employers in the Kingdom. The fact of having succeeded in redirecting the policy of FDI towards mid-cap companies represents, without a doubt, the biggest breakthrough of the last ten years.
Moreover, the future investment charter enacts this “new” strategy. Not so long ago, only project sponsors eligible for the conventional regime (above 100 million dirhams) were pampered by the public authorities, which rolled out a red carpet for them. The promoters of small and medium-sized projects had only to “manage” through the maze of administrative circuits and those leading to tax incentives, among others.
Third in Africa
In 2021, global FDI flows returned to their pre-pandemic level of $1,580 billion, a spectacular 64% increase compared to 2020. However, this year cannot be considered a benchmark year due to from the shutdown of economies to the height of the Covid-19 pandemic.
75% of the global growth in FDI is achieved in developed economies. Starting from a low level in 2020, FDI increased last year thanks to the boom in mergers and acquisitions and the rapid growth of international project financing, boosted by the easing of financing conditions and ambitious plans revitalization of infrastructure. Flows to developing economies rose 30% to $837 billion, the highest level on record.
This result was largely explained by strong growth in Asia, a partial recovery in Latin America and the Caribbean, and some expansion in Africa. The top 10 economies for FDI inflows in 2021 were the United States, China, Hong Kong (China), Singapore, Canada, Brazil, India, South Africa, Russia and Mexico . In Africa, Morocco is in third position behind South Africa and Nigeria.
Abashi Shamamba / ECO Inspirations
