Many investors looking to put their money into Africa envisage a divide between Arabic countries to the north and those south of the Sahara. The former are frequently viewed as having closer economic and cultural ties with the Middle East than the rest of Africa – hence the widespread use of the term MENA (Middle East and north Africa) among investment banks and their clients.
Background:
Morocco’s government wants to change this perception, which it insists does not reflect reality. It recently announced plans to establish a regional financial centre in Casablanca, which will, it hopes, link companies and investors to sub-Saharan Africa as well as countries such as Algeria, Tunisia and Libya. “We don’t agree with the expression ‘sub-Saharan Africa’; Africa begins in Tangier,” says Saïd Ibrahimi, head of Casablanca Finance City (CFC). “People think of north Africa as part of MENA. [In Morocco’s case] I don’t think it is [warranted] in terms of economics, exchanges, business and trade. Morocco is Africa. We feel we are much more African than we are Middle Eastern.
“We have historically strong ties with Mali, Niger, Mauritania, Côte d’Ivoire, Senegal, Cameroon, Gabon – all these countries. We do business with them.”
Morocco, formerly a protectorate of France, would like Casablanca to be the main hub for businesses operating in what it terms 'greater north-west Africa' – essentially the French-speaking countries in west, central and north Africa. The attractions of this region, which Mr Ibrahimi says has “very deep and strong potential”, are its population of 500 million and large gross domestic product of close to $800bn. “If you look at these countries apart, they are too small [for big investments],” says Mr Ibrahimi. “But if you look at them as a whole, it makes sense.”
Morocco is Africa. We feel we are much more African than we are Middle Eastern
Rush to be the first
The area has never possessed an outright financial hub. Mr Ibrahimi says this must change if investors are to be able to exploit its potential fully. “There’s a need for a financial centre [in the northern half of Africa],” he says. “When you look at the Global Financial Centres Index, there is only one African city among the 75 financial centres. That’s Johannesburg. And Johannesburg is an area of influence in the southern part of the continent.”
There are plenty of reasons for Casablanca to be the region’s financial core. Its stock exchange, with a market capitalisation of about $63bn, is bigger than any other in Africa bar Johannesburg’s. Morocco’s big banks – including Attijariwafa and Groupe Banque Populaire – are among the largest on the continent and operate extensively throughout west Africa. And its financial regulatory system was recently said by the International Monetary Fund to have set the benchmark for the region, while its infrastructure is far better than that in the likes of Lagos in Nigeria, another potential candidate for being west Africa’s hub.
Morocco has also been free of the uprisings that erupted in several other Arab countries last year. Most analysts believe its political stability is assured for the foreseeable future.
That investors think so too was exemplified when Renault opened a huge car factory – one that will eventually be able to produce 400,000 vehicles annually – near Tangier on Morocco's north coast in February.
Foreigners welcomed
Several companies already use Morocco as their regional headquarters, including Unilever, Coca-Cola and Microsoft. Roche, the Swiss pharmaceutical firm, operates in 29 African countries from its base in Casablanca.
But through the CFC, the Moroccan government aims to attract more financial services firms. It is offering what it says is are competitive tax incentives, including a 20% flat rate of income tax for all employees of CFC companies and, at least initially, a 0% corporate tax rate for the revenues these firms make outside Morocco.
Mr Ibrahimi says there are almost no restrictions on foreign investment in the country. “You can invest your money whenever you want,” he says. “You can take away your dividends. You can realise the value added when you sell. You can have 100% ownership in any kind of business you want.”
So far the reaction to the CFC has been positive, he says. Law firm Clifford Chance opened its first African office in Casablanca in December and has applied for CFC status. “At the end of last year, we received 28 letters of intent from companies established outside Morocco that [want to come to Casablanca],” says Mr Ibrahimi.
If even some of these result in actual moves to the CFC, Casablanca will be far ahead of any of its rivals when it comes to creating a regional financial hub.
