About a month ago the World Bank published a 300-page report on Morocco’s economy that both applauded its resilience and recognised its leading position in the region, while also inviting the government to seriously consider substantial reforms to boost investment.
I was not surprised, then, to read that government officials, including economists from the Association of Economics of Morocco, rejected the document and its conclusions. Morocco’s leaders are proud of their country and its achievements, and rightly so.
Still, the World Bank’s prodding has helped spark a necessary discussion around Morocco’s need to shape up its investment environment to improve its human capital pool, among other necessities for long-term progress.
Timely as usual, Oxford Business Group has just finalised its first Business Barometer: Morocco CEO Survey, a study of almost 70 CEOs in the country that provides strong local insight into current C-suite business sentiment.
It looks as though the vast majority of the local business community firmly believes in Morocco, at least when it comes to short-term projections.
When asked about their expectations of local business conditions in the coming 12 months, 86% of respondents said they have positive or very positive expectations. Likewise, 62% of CEOs said their company was likely or very likely to make a significant capital investment in the next year.
Morocco is considered a transparent economy overall – 77% of respondents to our survey said the level of transparency for conducting business in the country relative to the region is either high or very high – however, there is also a large degree of dissatisfaction with local suppliers and service providers: 44% said their level of satisfaction is high or very high, but the same percentage characterised their satisfaction as low or very low.
Access to credit is another area where there is room for development. In fact, more than half of CEOs surveyed said accessing credit is difficult or very difficult.
In tax policy terms, the executives interviewed by OBG also found current regulations wanting: just 40% characterised the tax environment as competitive.
The optimism of CEOs regarding general business conditions for the next year – which indicates a determination to pursue growth opportunities in whatever environment – seems striking given that they are playing on softer ground.
That said, a recent analysis by The Economist of the correlation between the corporate tax rate and gross fixed capital formation has shown that more than just policy impacts investment decisions; factors such as underlying economic growth may in fact be more important than the tax rate, which goes some way to explaining why Morocco’s CEOs might wax so positive.
Indeed, as neighbouring Algeria and Egypt prepare to see their GDP growth ease to 1.39% and 3.51%, respectively, this year, according to the latest IMF projections, Morocco is on track to nearly triple its rate of expansion to 4.35%. In doing so, the country will outpace not just the broader MENA region, but the EU as well.
While not exactly showing signs of weakness, Morocco nonetheless risks stagnation if a number of changes are not implemented. Notwithstanding the World Bank report, the economy as a whole could greatly benefit from education and tax reforms, among others.
As OBG’s Business Barometer shows, Moroccan businesspeople are willing to invest in the country's future even when not all elements are in place – which begs the question: what could stop Morocco the day they are?
OBG Business Barometer: Morocco CEO Survey Copyright (c). All rights reserved.
This survey has been designed to assess business sentiment amongst business leaders (Chief Executives or equivalent) and their outlook for the next 12 months. Unlike many surveys, the OBG Business Barometer is conducted by OBG staff on a face-to-face basis, across the full range of industries, company sizes and functional specialties. The results are anonymous.
OBG Business Barometer is based on data from companies with revenue within the following parameters, among others:
53% of companies surveyed were international
28% of companies surveyed were local
83% of companies surveyed were private
The data generated allows for analysis of sentiment within an individual country, as well as regionally and globally. Additionally, comparisons can be drawn between both individual countries and regionally. The results are presented statistically within infographics and discussed in articles written by OBG Managing Editors.
OBG provides this survey, infographics and accompanying analysis from sources believed to be reliable, for information purposes only. OBG accepts no responsibility for any loss, financial or otherwise, sustained by any person or organisation using it.
For further information on the content of the survey, please contact: Jaime Pérez-Seoane de Zunzunegui, Regional Editor, the Americas.
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