Treasure in the sand: Investing in Morocco

A new project to build a Chinese backed Tech City near Tangier on a new 2000 hectare site which will house 300,000 people and host multiple industrial zones all creating thousands of jobs was recently unveiled in Tangier, Morocco. The project is backed by Chinese banks to the tune of up to USD 10 billion and is a sign of how important Rabat is to Beijing, this new project comes on the back of a newly announced strategic partnership between the two nations which aims to improve bilateral co-operation, trade and investment.

China favours Morocco because of its political and economic stability which make it a relatively safe place to invest. Morocco has also become home to many Chinese traders who supply the country with the consumer goods that China makes in vast quantities. These immigrants can be found in the Quarter Chinoise in Casablanca as well as other towns and cities selling goods in bulk to Moroccan traders and shopkeepers.

The Chinese government have also been pushing some other major infrastructure and industry projects such as Yangste Automobile’s investment to build electric buses and cars in Tangier, vast new solar plants, there are also talks to build a high speed rail link between tourist meccas Marrakesh and Agadir. Morocco has tried to move away from just exporting phosphates and is trying to push donkey (used in Chinese traditional medicine) and citrus fruits into Chinese markets. The Moroccan government are hopefully that all this new investment and trade will help spark job growth in a country suffering from high unemployment.

Morocco has also attracted attention from many other investors, it has two companies which feature heavily in many frontier market indexes namely Maroc Telecom and Attijariwafa Bank. Maroc Telecom now operates in a number of West African countries beyond its home and has enjoyed considerable success with this strategy. Attijariwafa Bank has followed a similar path outgrowing its roots and has also successfully spread its operations across West Africa.

Morocco has GDP of around USD 8000 per person, high for Africa, but of course much lower than most of Europe, it has a young demographic profile, which in theory at least makes it more attractive to consumer brands. The stock market in Casablanca is one of Africa’s most active and is open to foreigners, who hold around 15% of its value. Despite its position in Africa and the Arab world, Morocco’s economy is tied to Europe with much of its exports and imports based around its Northern partners, particularly Spain, France, Italy and Germany. Morocco holds the world’s largest reserves of phosphates (a vital ingredient for agricultural fertiliser) which is a major export (and one that China has a strategic interest in maintaining).

The country has a thriving tourist industry with thousands flocking from Europe every year to enjoy the culture, beautiful beaches, sunshine and surfing opportunities which it has in abundance. Morocco has also carved out a place as a renewable energy pioneer, the world’s largest solar plant recently opened near the Southern town of Ouarzazate, Noor 1 will help reach Morocco’s goal of achieving over 50% of its power from renewable sources in 2030.

Opportunities in Morocco

Property

Morocco’s proximity to Europe have made it an attractive place to buy property, the market is wide, whether you are after an underdeveloped riads in the centre of Marrakesh or luxury multi-million dollar apartments overlooking the Atlantic, the country has it all. There was a major crash in 2007 but prices have picked up since then. Right now returns on rental are high and prices appear to be going upward, but of course that could change quickly.

Casablanca Bourse

Investing directly in the stock market is an option although slightly cumbersome for an individual investor, a frontier market ETF might be the best way of getting exposure to Moroccan stocks.

Tech start-ups

Morocco might seem like an unlikely tech start-up spot – but sleepy, off the beaten track Taghazout formerly known for fishing and surfing has become an unlikely hub for technology businesses seeking low costs, quality of life and the opportunity to go surfing before work. The presence of other start ups means that there is a business ecosystem in place and people to bounce ideas off, and for many the village offers a more inspiring, stimulating environment. Local Moroccan authorities are hoping that these firms will in time grow and generate jobs.

Overall Morocco offers an attractive investment destination, there are concerns that local legislation is not always investor friendly and a fear that violence could afflict the country, but right now it is rightly regarded as one of the most attractive frontier investment destinations in the world.



Categories: China Goes Global, Country Investment Analysis, Frontier Markets

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