Morocco is taking a strategic approach to its international investments and focusing on key industries across Africa. While this makes commercial sense, economics is not the only driving force behind these decisions writes Jihad Ait Soussane.
In a speech delivered on 20 August 2017, King Mohammed VI of Morocco declared, “As far as Morocco is concerned, Africa is the future, and the future starts today“. This statement highlights Africa’s importance to Morocco. Rather than look north to Europe, the country is looking south. Africa has become a strategic partner and an area for entrepreneurial growth for Morocco.
Morocco’s moves in Africa
The global financial crisis of 2007 significantly affected Morocco primarily through reduced demand from European trading partners and rising oil prices. Exports fell by 14 per cent in 2009, while remittances from Moroccans abroad dropped by 9 per cent. It prompted the country to diversify its commercial partners to better absorb global economic shocks. From these considerations, Africa emerged as both a safety net and an opportunity. According to a report by the McKinsey Global Institute, Africa holds undeniable potential to play a pivotal role in the future. By 2040, Africa’s economy will be reaping the benefits of a vast demographic dividend from a working-age population of 1.1 billion people, rising commodity prices that could boost GDP to £1.54 trillion, and the emergence of a middle class of 128 million households with significant potential for consumption.
Morocco has sought to deepen its ties with Africa by applying for membership in the Economic Community of West African States (ECOWAS) as the 12th member. Additionally, the Nigeria-Morocco Gas Pipeline project will make it easier to transport oil across the country, stimulate development in transit zones and create new jobs in industries and agribusiness sectors.
Seeking to strengthen its ties with Africa, Morocco has consistently encouraged its major companies to invest more in the continent. As a result, Moroccan foreign direct investment (FDI) in Africa has flourished. Between 2007 and 2023, the average annual growth rate of Moroccan FDI in Africa was 12.72 per cent. By 2023, annual FDI flows to Africa were estimated at 5 billion dirhams (£400 million). This represents 20 per cent of Morocco’s total outward FDI putting Africa ahead of Asia (13 per cent) but still behind Europe (64 per cent).
Factors behind Morocco’s African FDI
Moroccan firms have strategically expanded their investments across key sectors in Africa, including telecommunications, agribusiness, mining, and real estate, while major Moroccan banks have made significant strides in the continent. AttijariWafa Bank, a leading Moroccan financial institution, now operates in 14 African countries, and works on Morocco’s direct investments in Senegal, Côte d’Ivoire, and Mali. BMCE Bank of Africa, now known as Bank of Africa, has established a presence in 20 African countries, with notable operations in Burkina Faso and Tanzania.
In telecommunications, Maroc Telecom has enhanced connectivity across the continent by forming partnerships with local companies. Since 2010, Maroc Telecom has held substantial stakes in several African telecom firms, such as a 51 per cent stake in Gabon Telecom and a 100 per cent acquisition of Mauritel in Mauritania, strengthening its presence across West Africa and growing the company into a regional power in the sector.
The real estate sector has also attracted significant Moroccan investment. For instance, the Addoha Group, a major Moroccan real estate developer, has been active in Côte d’Ivoire and Guinea since 2015. The group’s investments include residential and commercial developments aimed at capitalising on the growing urbanisation in these countries.
Natural resources are a key driver for Moroccan FDI, especially in the extractive industries. The OCP Group, a leading phosphate producer, operates major mining projects in Gabon and Ethiopia. OCP’s phosphate operations in Gabon, which began in 2017, are among the largest in the region. Similarly, Managem, another Moroccan mining company, has been involved in gold mining in Sudan since 2014 and copper extraction in the Democratic Republic of Congo, where it has invested heavily since 2016.
Economic freedom also plays a critical role in investment decisions. Economically free countries with transparent regulations, such as Rwanda, Côte d’Ivoire, Senegal, Ghana and Tunisia, attract more Moroccan FDI compared to less free economically African countries
Political and social stability are crucial factors influencing Moroccan FDI location choices. Moroccan firms generally avoid regions marked by instability and conflict. For example, the frequent instability in Somalia, DR Congo, Sudan and South Sudan has deterred Moroccan investments. Conversely, countries with stable environments, such as Mauritania, Rwanda, Senegal, Ghana, and Tanzania, are more attractive. Rwanda, in particular, has seen increased Moroccan investment due to its political stability and low corruption levels. Since 2018, Moroccan firms have significantly increased their investments in Rwanda, drawn by the country’s favourable business environment.
The recognition of Morocco’s sovereignty over Western Sahara is a significant factor in attracting Moroccan FDI. King Mohammed VI’s statement on 6 November 2021, during the Green March anniversary, underscored this. He declared: “Morocco will not have any economic or commercial transaction with them in which the Moroccan Sahara is not included”. African countries that recognise Morocco’s sovereignty over Western Sahara hold a significant share of Moroccan FDI, amounting to £1.3 billion. These 10 countries (Côte d’Ivoire, Gabon, Senegal, Burkina Faso, Guinea, Madagascar, Togo, Guinea-Bissau, and the Central African Republic) receive 55 per cent of Morocco’s total FDI in the continent. Conversely, the remaining African countries, which either recognize the separatist movement or maintain a neutral stance on the issue, account for 45 per cent of Morocco’s total FDI but include major economies like Nigeria, South Africa and Kenya, and local countries such as Algeria and Egypt.
Morocco employs diplomatic and economic policies to encourage investment in countries that support its stance on Western Sahara. A prime example of Moroccan economic diplomacy is the OCP Group, a state-controlled firm and the second-largest exporter of phosphate, holding 31 per cent of the global market. The OCP Group plays a crucial role by establishing subsidiaries in 16 African countries, which reinforces economic ties and political alliances. In this context, the state-owned giant plans to dedicate 4 million tons of fertilisers to support food security in Africa, following the export of half a million tons of phosphates to African countries in 2023, either for free or at preferential prices. Phosphates and fertilisers have become diplomatic tools for Morocco in its determination to resolve the Western Sahara conflict in its favour.
Moroccan firms also prefer regions with cultural and linguistic affinities, which facilitate mutual understanding and business partnerships. Arabic and French are particularly important, as they ease communication and negotiations. Countries like Mauritius, Senegal, Côte d’Ivoire, Burkina Faso, Cameroon, Congo and Gabon, where French is spoken by over 20 per cent of the local population, are favoured destinations for 82 per cent Moroccan FDI on the African continent.
Morocco’s strategic focus on Africa as a key investment destination reflects its recognition of the continent’s vast potential for economic growth and development. By capitalising on economic, institutional, and cultural factors, Moroccan firms have successfully expanded their footprint in Africa. They have leveraged Africa’s abundant natural resources and tapped into the continent’s burgeoning middle class and urbanisation trends to drive growth, alongside Africa’s obvious resource wealth.
Despite challenges such as political instability and institutional quality, Morocco continues to view Africa as a promising frontier for business expansion. The kingdom’s active involvement in regional cooperation initiatives and investment in key sectors like banking, telecommunications, and real estate will strengthen its position as a leading African player in the African market. This approach not only benefits Moroccan firms but also contributes to Africa’s overall economic development and integration.
Photo credit: Wikicommons used with permission CC BY-SA 4.0
