Morocco is a tourist attraction for many Americans and is located in Africa. The warm climate and the aesthetically pleasing view make this an ideal vacation place. However, there is so much more going on behind the scenes in Morocco. Morocco is considered a third world country by America and thus it receives little attention from us in the business arena. In an effort to change this, Morocco and the United State are trying to finalize a US-Morocco trade pact. This would allow free trade between the US and Morocco, which could greatly increase their level of entrepreneurship. At the present time, the trade agreement has been delayed until 2006.
In an effort to bolster entrepreneurship in their country using their own resources, Morocco plans to establish two entrepreneurship centers in an effort to attract and provide young people with opportunities to create their own business. They are also recognizing that they have resources that they are not utilizing. Upon the realization that one of the cities in the country has an abundant population of snails, they created a snail farm to mate these snails and are now capitalizing on the escargot industry. They are continually holding forums both in the US and abroad to attract new ideas on how they can increase their entrepreneurial efforts.
Morocco is becoming heavily privatized. This is not necessarily helping the country as a whole. Most of the housing that is being built in Morocco is by private owned enterprises. There are many problems facing the growing entrepreneurship in this country. The main problem is that they are no longer protected by the governments, so they now have to compete with foreign enterprises for that same business. As we know, the consumer will usually choose to purchase from the cheaper of the two enterprises.
Morocco is an upper middle income economy with an annual GDP of roughly $137 million and growing at a rate of 4-5% annually. As Morocco received its independence from France relatively recently, 1956, the economy and its labor force of approximately 11 million is not yet fully developed. Its economy is almost entirely supported by agriculture and the services industry. Therefore, the regional weather patterns play a huge part in the success or failure of the local economy. For instance, 2003 and 2004 were both periods of record rainfall which boosted the agricultural output and helped lift the country’s GDP to positive growth; however, without that boost, the GDP would have been flat, if not negative. As with many countries in Africa, the public debt is staggering at upwards of 70% of the GDP and external debt is over $17 billion. Morocco has been a large beneficiary of World Bank and UN programs designed to further develop its economy.
In 2004 the Moroccan government signed a Foreign Trade Act with the United States in an effort to boost foreign direct investment in the country; however, the results of that action are still undetermined. Preparations are underway to prepare the economy, educational systems, and labor force for free trade as it moves towards a more capitalist structure.
Morocco 2010: walk to modernity
- The present government has introduced a number of important structural economic reforms over the past several years (financial sector has been reformed while state enterprises are being privatized and some sectors liberalized).
- Morocco’s challenge for the coming years:
- diversify its economy away from agriculture to develop a more stable economic basis for growth
- reduce disequilibrium among the regions
- accelerate growth in order to reduce high levels of unemployment
- improving education and attracting foreign investment to improve living standards and job prospects for Morocco’s youthful population
- preparing the economy for free trade with the EU (association planned for 2012)
Entrepreneurial activity and entrepreneurs in Morocco
- Lack of entrepreneurial spirit among the population for cultural and educational reasons. Many of the high profile students leave for Europe to complete their studies. However, an increasing number of them come back to their country once graduated to set up their own business.
- No figures regarding entrepreneurial activities.
- Many entrepreneurial businesses concentrate on low capital (based on personal savings) and thus low added value activities.
- An important part of the entrepreneurial activity is necessity related; new entrepreneurs are motivated by the crucial need to get some revenues and to go out of unemployment.
- Most of the businesses are micro to small (in 1999, 92% of the companies are SMEs).
- Opportunity businesses have to face many difficulties: time consuming administrative paperwork, corruption, lack of support, difficulties to get funding…
- Banks offer very restrictive conditions and capital risk investments firms are still scarce.
- But success of micro credit initiatives (400 000 customers – regional leader)
How Morocco encourages / develops Entrepreneurship
- Education / Training
- Governmental plan for 100% literacy rate at 2015 and 100% primary enrolment in 2010. Today, net primary enrollment ratio is at 90% (vs. 50% a few years ago). However, many rural zones are still underserved, the curses are quite short and the adult literacy rate is still only at 50% in 2002 (vs. 80% for the youths)
- Women are encourage to take a growing role in business life (Afem encourages women entrepreneurship) – they currently account for 25% of the labor force but most of them work in the informal sector. It is estimated that 10% of the companies (excluding micro-enterprise sector) are own or run by women
- Regulatory simplification and advantages
- Tax abatements or exonerations (profit tax, corporate tax and/or VAT) for companies that goes public or invest in some areas (free zone…) or industries (tourism, export, mines, education and training)
- Promotion and development of entrepreneurship
- Association Marocaine pour la Creation d’Entreprise (Moroccan Council for Enterprise Set up)
- Set up of the first Regional Forum on the Enterprise Incubation under the Ministry of Economic and General Affairs auspice
- Efforts towards SME:
- Set up of the National Agency for SMEs (ANPME) in 2003 integrating 16 regional investment centers (CRI) into a new national SME support network.
- To facilitate access to funding and markets, several guarantee funds have been set up to facilitate credit access to SMEs (FONDAM, Oxygene, MEDA I).
- Simplification of the conditions to create and set up a small business and assistance provided on quality / training / innovation issues. Launch of incubators
- Foreign investments
- Foreign nationals can invest freely in all the sectors, without any preliminary authorization. In 2005 FDI in Morocco increased from $1.07 billion to $2.9 billion from 2004 to 2005.
- Expatriates: Morocco has many expatriates in Europe (especially in France)
- Maroc Entrepreneurs: association of Moroccan students in France aiming at developing entrepreneurial spirit among Moroccan students in Morocco, France and elsewhere. Objective: encourage brains to come back to Morocco.
- Sindibad fund: aim: encourage entrepreneurship among Moroccan expatriates. Target: innovative and young companies and provide them financial support and help in exchange of minority capital participation.
Other elements that influence the context for business and entrepreneurs in Morocco
- Authorities’ intentions and acts to develop the economy (especially the industry) through the Emergence plan: precise targeting on 8 core sectors through specific initiatives:
- Offshoring: CasaShore, RabatShore, MarrakechShore, TangerShore.
- MEDZone: free zone in the Tanger area targeting outsourcing activities from European businesses (electronic, automotive, aeronautics).
- Europe proximity (geographic and political (especially through France)) and support (many development projects are co-financed; European credits still account for a large part of funding availabilities).
- The Moroccan economy has been facing the problems typical of developing countries—restraining government spending, reducing constraints on private activity and foreign trade, and achieving sustainable economic growth.
- Problems of transparency in businesses practices as well as in public affairs / politics (corruption at the local level) – lack of an efficient and quick regulation (problems within the control mechanisms and judiciary system: laws exist but there are not necessarily enforced)
- Competition from smugglers and abstract economy.
- Banks are reluctant to make loans; procedures are long and constraining.
- Limited financial capacities of public authorities, especially at the local level.
- Inadequate human resources capabilities.
- Uncertain political stability: Morocco is quite stable but the country future could be endangered by the increase of extremist Islamic thesis among the low end of the population and the presence elements linked to Al-Qaeda (terrorist attacks in Casablanca in 2003).
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