*Report from Thomas More Institut Praises Morocco’s Efforts*
Yet another prominent source has issued a report noting the importance of Casablanca Finance City’s strategic role in Morocco’s campaign to become a key center for business development in Africa. The Thomas More Institut, with offices in Paris and Brussels, recently published, in its Tribune series, the report Morocco: The Hub of African Financial Integration?” Although the question is rhetorical, it is important to have a clear understanding of Morocco’s capacity to build the legal, financial, physical, and services infrastructure required for such an undertaking.
The report was authored by Paul Goldschmidt, whose 50+ year career spans leadership roles at Goldman Sachs, the European Commission, and the European Investment Fund – someone intimately acquainted with the challenges Morocco faces. His assessment is that Africa has great potential as well as challenges, and it is international and regional partnerships with expertise and local sensitivities that are key elements in realizing its future. Among Africa’s strengths he mentions: high economic growth rate, young population feeding a growing workforce, and extensive natural resources that provide the engines for future growth, if harnessed effectively leading to a diversified economy. He mentioned the key role of “its untapped land reserves which are amongst the most important in the world (estimated at about 60%).”
Among the most significant challenges Africa faces is grinding poverty that depletes its human resources as “47% of the sub-saharan Africa inhabitants still live under the poverty threshold (1.25 dollar PPP/day).” This has generated enormous demands on social services, education, savings, and technical and physical infrastructure. In addition, the unstable political context continues to undermine efforts to attract investors and upgrade human resources. Finally, Goldschmidt notes the “persistence of endemic corruption” abetted by the “weaknesses of institutions guaranteeing the rule of law” that discourages investors and the “misappropriation of a large part of the economic benefits in favour of a privileged few at the expense of the vast majority of the local populations.”
Improving Africa’s Investment Environment
At the top of the requirements identified by Goldschmidt is the need to strengthen institutions through significant reforms, coordination with international organizations, and improving human assets. There is a similar need to make large-scale investments in physical infrastructure across all sectors, especially energy and transport, which are needed to add value to the exploitation of natural resources. “According to the World Bank, the continent’s needs for infrastructure alone are in the order of 93 billion dollars annually.” The development of effective financial services for local and international players is mentioned as a necessary vehicle for ensuring the long-term “improvement in living standards that should result from [Africa’s] development potential.”
It is this analysis that leads Goldschmidt to conclude that Morocco is “the African country that best meets all these criteria,” which he defines as “a stable political environment, an optimal geographic position relying on efficient physical infrastructures, an operational legal framework, and a sufficiently development infrastructure of services…” As a result, he believes that Morocco should “constitute the location of choice for establishing decision centres covering the continent as a whole.” He dismisses the notion that North Africa is somehow distinct from the rest of Africa, stating “Quite to the contrary, Morocco has the potential of becoming a financial hub of major importance for the development of the entire African continent.”
It is Morocco’s economic performance over the past 20+ years that gives it this prominent role. It has established preferential trade agreements affecting more than 50 countries; it has direct access to international financial markets; it is emerging as a player in Islamic finance; it enjoys close economic and diplomatic relations with the EU, Middle East, and throughout central and west Africa; and it has adopted a long-term strategy to serve as a major hub for African business development exemplified by the Casablanca Finance City (CFC) and the King’s visits to countries throughout the region.
CFC is clear in its mission – to become the major financial and economic hub in the region, stretching from Francophone Africa down the Atlantic coast. It has operationalized international standards for attracting investors, protecting investments, and bridging project services from conception to implementation. Morocco has more than 60 double taxation agreements and more than two dozen agreements for the protection of investments. Its administrative arm, the CFC Authority (CFCA) has partnership agreements with financial centers in Singapore, Luxembourg, London, and Paris — “evidence of the trust and support of those countries in CFC’s vision, and the belief that Morocco has important strategic strengths justifying its position as an economic and financial hub.”
As the report concludes, “Even if there is obvious room for further improvement in specific areas, no other centre in Africa offers today such a complete range of benefits for initiating in a conducive environment, the many product investment opportunities in Africa.” Morocco’s strong efforts to enhance its regional role through maximizing its presence as a financial services center, coupled with its continuing internal economic, judicial, and labor reforms are critical ingredients in positioning itself as the location and partner of choice for business in Africa.