INVESTMENT OPPORTUNITIES IN MOROCCOS MAIN CITIES Workshop Africa - - PowerPoint PPT Presentation

INVESTMENT OPPORTUNITIES IN MOROCCO’S MAIN CITIES

Workshop Africa Works 2019 Mr Jean Boissy Senior Consultant MEYS Emerging Markets Research

INDEX WORKSHOP

• Short profile MEYS Emerging Markets Research
• Morocco: An overview
• Main market trends in Morocco
• Investment opportunities in Morocco’s main cities:

− Real estate developments − Social housing program − Urban logistics − Public works

• Business environment in Morocco

Short profile MEYS Emerging Market Research

• Established in 2010
• MEYS Emerging Markets Research is an international consultancy and advisory firm
• Together with local partner Harvard Consulting an office in Casablanca (Morocco)
• Clients are public organizations, SMEs and large enterprises searching for new business opportunities

in the MENA-region and West Africa

• Active in sectors: maritime industry, construction and real estate, agribusiness, industry, transport and

logistics

Morocco: An overview

14 km Europe Morocco

Morocco: A strategic geographical location

A short history of Morocco

• Morocco is part of the Maghreb (Morocco, Tunisia, Algeria, Libya, Mauritania)
• 24 – 253 AD: part of Roman Empire -> Volubis (near Meknes)
• Early 8th century: arrival Arabic rule (Moussa Ibn Nasr) -> invasion of Spain
• 8th – early 19th century: various Berber dynasties (Idrissi, Almoravid, Marinid, Wattasid, Alawi) ruled

Morocco and large parts of the Maghreb and Spain

• Centre of governance in Fez or Marrakech

Almoravid era Idrissi era Wattasid era

• 1822 – 1956: European rule
• 1956: Morocco independent and becomes Kingdom of Morocco
• Sultan Mohammed V first king of Morocco
• 1961: King Hassan II (son of king Mohammed V) in power
• 1975: the Green March (El Massira), 350,000 Moroccan civilians marching to the Western Sahara ->

Spain retreats, conflict with Polisario (ongoing)

• 1990s: liberalization of the economy, increasing cooperation with Europe
• 1997: first Parliamentary elections
• 1999 - .. : King Mohammed VI succeeds his father Hassan II -> modernizing Moroccan society and

economy

European rule King Mohammed V 1956: Morocco independent

Capital Rabat Population 35.4 million people (2018) Institutional System Democratic and social Constitutional Monarchy Area 710 850 km² Climate Mediterranean Time Zone GMT (GMT+1 in summer) Languages Arabic (official), French, Spanish, English Main cities (population 2016) Rabat: 0.6 million people Casablanca: 3.4 million people Marrakech: 1.4 million people Tanger: 1.1 million people GDP 1063.3 Billion DH (2017) 96.7 Billion euro GDP per capita 30 509 DH (2017) 2 774 euro Average growth 4.4% (over the last 10 years) GDP Distribution (2016) Primary Sector 13.6% Secondary Sector 29.5% Tertiary Sector 56.8% Inflation Rate 0.7% (2017)

Source: HCP

King Mohammed VI, 1999 - ….

Country overview

Rabat Casablanca Marrakech

Sustained GDP growth Controlled inflation Relatively low unemployment Rising FDI Control of Public Debt

2,8 4,7 4,8 3,6

5 10

2010 - 2017 2005-2009 2000 - 2004 1995 - 1999 2,7 1,6 2,2 1,2

5 10

22,0 12,7 14,2 13,9 8,2 10,2

20 40

123,0 192,0 319,0 590,0

250 500 750

73,7 54,6 65,1

50 100

2010 - 2017 2005-2009 2000 - 2004 1995 - 1999 Average GDP Growth rate (%) Average Inflation rate (%) National Urban Unemployment Rate (%) 2010 1999 2017 2007 2000 2017 2005 2008 2012 2017 FDI Stock ( in Billion MAD)

Source: IMF, HCP, Office des Changes, UNCTAD

Gross Public Debt (% of GDP)

Strong macro-economic drivers during last twenty years

Morocco now 6th economy of Africa

Source: UNCTAD

• 100.000

200.000 300.000 400.000 500.000 Sao Tome and Principe Gambia Guinea-Bissau Comoros Somalia Seychelles Cabo Verde CAR Djibouti Lesotho Liberia Burundi Sierra Leone Swaziland Togo Mauritania Malawi Eritrea South Sudan Niger Congo Rwanda Guinea Benin Equatorial Guinea Mozambique Namibia Madagascar Chad Burkina Faso Mauritius Gabon Mali Senegal Botswana Zimbabwe Zambia Uganda Cameroon Côte d'Ivoire DRC Tunisia Ghana Libya Tanzania Ethiopia Kenya Sudan Morocco Angola Algeria Egypt South Africa Nigeria

GDP (million US$), 2016

Main foreign investors

Country 2014 2015 2016 2017 France 169.104,1 172.334,5 193.837,7 207.161,9 UAE 88.664,1 97.138,8 121.970,3 125.529,6 Spain 47.382,0 48.919,2 48.731,2 50.022,2 USA 22.488,0 26.152,7 27.462,7 29.818,0 UK 15.532,3 15.505,7 20.131,8 21.722,4 Saudi Arabia 15.613,9 17.803,5 18.947,0 20.543,0 Switzerland 16.324,4 18.006,7 18.888,3 19.555,3 Germany 10.532,0 12.425,4 13.127,4 13.377,4 Belgium 16.047,8 15.704,0 12.868,7 14.619,4 Kuwait 11.533,9 11.955,1 11.799,1 11.680,1 The Netherlands 7.348,3 8.399,7 10.140,4 11.426,2 Italy 5.818,1 6.309,6 6.787,6 6.950,6 Singapore 1.908,7 2.100,5 4.475,6 5.773,1 Ireland

• 198,0

3.665,7 Libya 1.945,4 1.963,8 1.963,8 1.963,8 India 1.380,1 1.557,8 1.636,8 1.764,8 Sweden 2.418,2 1.545,9 1.504,9 1.457,9 Tunisia 1.255,2 1.263,2 1.228,2 1.297,2 Portugal 638,4 794,6 901,6 1.138,6 South Africa

• 893,8

1.117,4 South Korea 624,1 659,0 734,0 1.064,0 Pakistan 561,5 561,5 603,5 639,5 Brazil 585,3 585,3 585,3 585,3 Japan 261,0 339,2 458,2 463,2 Other countries 24.937,1 29.995,5 33.225,7 36.332,7 TOTAL +462.903,9 +492.021,3 +553.101,5 +589.669,2

FDI stock in Morocco by country (million dirhams*)

Note: (*) including SFI’s (Special Financial Institutions) Source: Office des Changes

▪ Total FDI stock in Morocco end 2017 was 590 billion dirhams (54 billion euros) ▪ Largest foreign investor in Morocco is France followed by UAE and Spain ▪ The Netherlands in the Top15 of largest foreign investors in Morocco

Main market trends Morocco

Low agricultural output leads to low economic growth rate

Weather conditions influences agricultural productivity strongly

0,0 1,0 2,0 3,0 4,0 5,0 6,0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Economic growth rate Morocco (%)

10,2 7,5 8,4 5,2 9,7 6,9 11,7 3,6 9,6 10,3

2 4 6 8 10 12 200 400 600 800

Cereal production (million tons) R-axis Rainfall (mm) L-axis Source: HCP Maroc Note: The agricultural season begins in September and ends in May of the following year Source: Ministry of Agriculture, HCP Maroc

4,5 2,6 4,5 1,2 4,1 3 2,9

0,0 1,0 2,0 3,0 4,0 5,0 2013 2014 2015 2016 2017 2018 2019p

Note: (p) prognosis Source: HCP Maroc

Expectations business environment 2019

Lower expected economic growth rate in 2019

1,9 0,4 1,8 1,6 0,7 1,6 1,2

0,0 0,5 1,0 1,5 2,0 2013 2014 2015 2016 2017 2018 2019p

Inflation (%)

Expected lower inflation in 2019 compared to 2018

Note: (p) prognosis Source: HCP Maroc

Main economic sectors

Tourism Agriculture Fishery Retail Textile Construction & Real estate

15% 14% 15% 18% 4% 2% 3% 3% 7% 7% 11% 9% 3% 3% 4% 4% 38% 41% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2010 2016

GDP by main economic sector 2010 - 2016

Agriculture & Fishery Manufacturing industry Mining Utilities Construction Trade Hotels & Restaurants Transport & Logistics Other services Increasing importance of manufacturing industry

Source: HCP Maroc

Employment by main economic sector 2016 (%)

38 11,3 9,8 13,8 4,6 22,5 Agriculture & Fishery Industry Construction Trade Transport & Logistics Services

Source: HCP Maroc

Agriculture largest employer

Morocco’s diverse manufacturing industry

• Total employment: 597 278 employees (2014)
• Total turnover: 40 billion euro (2014)
• Export value: 1.2 billion euro (2014)

Great potential as international logistics hub

Expanding foreign trade with Africa

Source: Office des Changes 46% 43% 47% 46% 8% 8% 10% 11% 19% 20% 17% 15% 25% 28% 25% 28% 1% 1% 1% 0% 0% 20% 40% 60% 80% 100% 2010 2012 2014 2017

Total foreign trade Morocco by continent (%)

Oceania America Asia Africa Europe

Increasing number of Moroccan companies investing in Africa

Companies active in telecom, construction, trade, mining, finance

Investment opportunities in Morocco’s main cities

53,3 55,2 58 60,8 63,5 66,2 68,7

10 20 30 40 50 60 70 80 2000 2005 2010 2015 2020 2025 2030

Urban population Morocco 2000 – 2030 (% in total population)

Morocco’s urban population will grow with 30% in the next 15 years

By 2030 28 million people live in cities, 2/3 of total population

Urban challenges in Morocco

Air pollution Urban logistics Waste management Housing deficit Quality and quantity of public transport Sewage systems Youth unemployment

Possible solutions to tackle urban challenges in Morocco’s main cities

New bridge between Rabat and Salé

• I. Large real estate development projects within cities

New Casablanca Marina (building phase) Casa Anfa (building phase) Casa Finance City (development phase) Tanger waterfront development (including new marina) Bank of Africa Tower, Rabat (250m) (building phase)

• II. Social housing program

▪ Size of the current Moroccan housing market 7.1 million housing units occupied, of which 65% (4.6 million units) in urban areas ▪ Total demand for housing is estimated at 1.6 million units, of which 1.4 million in urban areas ▪ In 2008 start nationwide social housing program (rural + urban), by end 2017 395,000 social housing units being completed ▪ Goal Moroccan government to build 800,000 social housing units between 2018 – 2022 (160,000 / year)

Source: Ministry of Housing and Urban Planning

• 20.000

40.000 60.000 80.000 100.000 120.000 140.000 160.000 180.000 2012 2013 2014 2015 2016 2017

Total number started newly built social housing units (urban & rural)

Large social housing projects

Tamansourt (near Marrakech):

• 2004 - 2015
• 90.000 new units
• 450.000 inhabitants
• Total costs: 39.5 billion dh

Tamesna (near Rabat):

• 2004 – 2020
• 50.000 new units
• 250.000 inhabitants
• Total costs: 23 billion dh

Sahel Lakhyayta (near Casablanca):

• 58.000 units
• 300.000 inhabitants
• Total costs: 25 billion dh

Chrafat (near Tanger): ▪ 2009 - 2016 ▪ 30.000 units ▪ 150.000 inhabitants ▪ Total costs: 24 billion dh

• III. Urban logistics

▪ CO2 emissions on the rise in Morocco ▪ Transport 2nd largest contributor to CO2 emissions ▪ In 2015 Moroccan association of logistics AMDL carried out a study to investigate the problems of urban logistics in country’s the main cities ▪ Based on this study AMDL developed a program for the period 2016 – 2021 to improve urban logistics in 5 – 6 large cities ▪ Available budget for this program 700 million dirhams (approx. 64 million euros) to develop: reserved parking places in cities for loading/unloading; truck centers for heavy trucks outside the city centers ▪ First truck center to be constructed is near the Port of Casablanca, 10 ha. accommodating 600 parking plots

0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

CO2 emissions (metric tons per capita)

Morocco Algeria Tunisia Egypt 26 30 29 4 4 4 16 16 14 43 39 41 10 12 12 0% 20% 40% 60% 80% 100% 2005 2010 2014

Share in total fuel combustion, Morocco (%)

Residential buildings, commercial and public services Electricity and heat production Manufacturing industries and construction Other sectors, excl. residential buildings and services Transport

Source: World Bank

Truck Center

Source: AMDL

• IV. Public Works
• Improve quality of public transport in cities
• Improving roads for better traffic flows within main cities
• Construction of ring roads to decrease the burden of traffic in the city center
• Promotion of alternative transport like cycling
• Improving street lighting to decrease the number of traffic accidents
• Construction of public car parkings in city centers

Better public transport Improve traffic flows New ring roads including public car parking Alternative transport Street lighting Public car parking

Sub-sector Market size (2016) Steel and Aluminium construction works 8 billion dirhams Steel and Aluminium production 21 billion dirhams Building materials (cement, concrete, bricks, ceramics, marble) 25 billion dirhams Real estate developers and construction companies (incl. infrastructure): Private 84 billion dirhams Public 17 billion dirhams Market size formal 155 billion dirhams Market size informal 35 billion dirhams Total market size 190 billion dirhams

Total market size Real Estate & Contruction sector in Morocco is estimated by MEYS at 190 billion dirhams (17 billion euros)

Source: HCP, Ministry of Finance, Maroc1000.net, annual reports, business associations

Building of new theatre in Casablanca New marina in Rabat

Announcements of tenders

Public tenders:

• Portal ‘Marchés Publics’ for all public tenders
• Website governments (Ministry of Transport & Equipment, Ministry of

Urban Planning)

• Website of regional investment agencies
• Public companies (e.g. CDG Developpement, Al Omrane)

Private tenders:

• Personal networks
• Face-to-face contacts

Business environment in Morocco

Type of Dutch companies active in Morocco

Sector # Dutch companies active in Morocco Agriculture & Fishery 20 Textile 2 Transport & Logistics 35 Industry 13 Construction (incl. engineering) 6 Total 76

Source: database MEYS

▪ Total merchandise trade between Morocco and the Netherlands is around 1.2 billion euros annually (1.8% in Morocco’s total merchandise trade) ▪ Dutch total foreign investments (stock) by end 2017 was around 11.4 billion dirhams (~1 billion euro’s) ▪ Based on own database it is estimated by MEYS that around 80 Dutch companies are active in Morocco ▪ Majority of these Dutch companies are active in Transport & Logistics and Agriculture & Fishery ▪ Another approximately 40 Dutch companies are doing business with Morocco, but are not physically present in the country

• Formal economy in Morocco:

− Number of registered companies (private and public): 0.51 million units − Total annual turnover enterprises: > 900 billion dirhams

• Registered companies by annual turnover:

− < 3 million dirhams: 84.3% − 3 – 10 million dirhams: 8.6% − 10 – 175 million dirhams: 6.5% − > 175 million dirhams: 0.5%

• Informal economy in Morocco:
• Number of private companies: 1.68 million units
• Total annual turnover enterprises: > 410 billion dirhams

24.211 24.756 25.436 27.647 30.448 31.158 33.016 34.781 38.848 40.450 20.000 25.000 30.000 35.000 40.000 45.000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Total number of created enterprises in Morocco (units)

Source: OMPIC

SMEs 99.5%

Large informal economy, unfair competition

Main Moroccan family conglomerates

Controlling estimated 20 – 25% of the national economy

Note: annual turnover of companies in which families have a controlling share Source: information from companies, newspapers; compiled by MEYS

Aziz Akhannouch (Tafraout 1961) CEO Akwa Group Minister of Agriculture Personal wealth: 2.2 billion US dollar (2018) Othman Benjelloun (Fes 1931) CEO BMCE Bank Personal wealth: 1.6 billion US dollar (2018) Moulay Hafid Elalamy (Marrakech 1960) CEO Saham Group Minister of Industry and Commerce 2013 – 2016 Personal wealth: 620 million US dollar (2014)

• 5,0

10,0 15,0 20,0 25,0 30,0 35,0 Groupe El Alami Groupe Alj Groupe Zniber Groupe Lazraq Groupe Idrissi Akhannouch Groupe Lamrani Karim Groupe Sekkat Groupe Kettani Groupe Bensalah Groupe Boutgueray Groupe Sefrioui Groupe Chaabi Groupe Elalamy Groupe Benjelloun Groupe Akhannouch Royal family

Morocco’s great family business holdings Annual turnover, 2016 (billion dirhams)

Corruption most important obstacle for doing business in Morocco

9,8 15,4 16,9 19,1 21,3 22,1 25,4 26,6 27,4 27,9 29,8 29,8 30,1 30,2 30,4 31,2 31,3 32,6 36 36,9 39,2 39,5 40,1 41,4 41,4 42 43,5 44 44,7 44,8 47,2 50,7 50,7 53,1 54,1 57,7 58,6 59 64,3 64,7 65 67,2 70,4 70,6 73,6 75,6 83,7

10 20 30 40 50 60 70 80 90

Gambia, The Rwanda South Africa Uganda Kenya Namibia Mozambique Senegal Botswana Ethiopia Cabo Verde Zambia Malawi Madagascar Swaziland Liberia Guinea Zimbabwe Tunisia Sierra Leone Djibouti Benin South Sudan Central African Republic Gabon Cameroon Ghana Guinea-Bissau Togo Nigeria Tanzania Lesotho Mauritius Morocco Burundi Congo, Dem. Rep. Mauritania Egypt, Arab Rep. Algeria Sudan Congo, Rep. Chad Burkina Faso Mali Côte d'Ivoire Angola Niger

Percent of firms identifying corruption as a major constraint, Africa

Source: World Bank

Protests after death fish vendor in northern city of Al Hoceima, Northern Morocco (31/10/2016) Turned into demonstrations against corruption among local public officials

Tertiairy education in Morocco above average level Africa Overall in Sub-Sahara Africa lack of good education a major issue

0,8 1,7 2,6 2,7 3,1 3,4 3,6 4 4,2 4,4 4,4 4,8 5 5,6 5,9 6 6,5 6,6 7,4 7,5 8,1 8,7 9,3 9,8 9,9 10,8 11,9 15,4 15,6 16,9 19,7 23 24,6 27,5 34,6 34,6 38,7

5 10 15 20 25 30 35 40 Malawi (2011) Niger (2012) Eritrea (2014) Central African Republic (2012) Gambia (2012) Chad (2014) Tanzania (2013) Kenya (2009) Madagascar (2013) Burundi (2013) Uganda (2011) Burkina Faso (2013) Djibouti (2011) Mauritania (2015) Zambia (2013) Mozambique (2014) Seychelles (2014) Congo, Dem. Rep. (2013) Senegal (2010) Rwanda (2013) Ethiopia (2014) Cote d'Ivoire (2014) Namibia (2008) Lesotho (2014) Angola (2013) Guinea (2014) Cameroon (2011) Benin (2013) Ghana (2014) Sudan (2013) South Africa (2013) Cabo Verde (2014) Morocco (2014) Botswana (2014) Algeria (2014) Tunisia (2014) Mauritius (2014)

School enrolment ratio (gross) tertiairy education (%)

Note: School enrolment ratio (gross) is the number of students enrolled at a level of education, regardless of age, as a percentage of the population of official school age for that level. Source: World Bank

the Netherlands (2012): 78.5%

Drinking tea central when doing business Eating out together to discuss family business and work 99.5% of local companies are (informal) SMEs Time is relative Business deals are not done at the office, but in a restaurant Local market is main place for consumers to buy their products

Use local partner to find your way in Morocco A lot of data is not (online) available in Morocco Travel around by yourself not a problem Withdrawal money out of Morocco is limted Personal trust is more important than formal contracts Face-to-face contact is more important than online contact

Thank you for your attention MEYS Emerging Markets Research E-mail: info@meys.eu Website: www.meys.eu