“The greatest peril for the country’s development and the promotion of investment are the obstacles intentionally created by those who seek personal gain. These practices must be combatted”. This extract from the royal speech given by King Mohammed VI on Throne Day 2022 sends a signal with a high level of clarity and transparency to caution the concerned authorities and government about “investment’s obstacles and the obstruction of its procedures”, which may block the way of the Moroccan capitals, as well as the foreigners wishing to land their investment in Morocco.
On the same day and prior to the royal speech, King Mohammed VI, escorted by Prince Moulay El Hassan and Prince Moulay Rachid, received at the Royal Palace in Rabat, Abdellatif Jouahri, Wali [Governor] of Bank Al-Maghrib, who presented to His Majesty the annual report of the Central Bank on the economic, monetary, and financial situation for the year 2021, highlighted “The world is preparing to enter a new phase marked by profound transformations that have resulted from accelerated or successive crises.” Successive crises such as environmental, geostrategic, war-related, and epidemic crises. In order to face this difficult circumstance, the Wali of Bank Al-Maghrib stated that “national constants” and human capital remain the main capabilities of the Kingdom.
The royal call this time, commensurate with the speeches of the past years that came in full clarity, was bearing a strong tone, calling the concerned authorities on facilitating the attraction of foreign investments that chose our country regardless of the global circumstances and to remove the obstacles facing it.
In October 2017, at the opening of the first session of the second legislative year of the 10th legislature, King Mohammed VI emphasized that “problems are obvious and the priorities clear. No further diagnosis is required. In fact, the situation has been abundantly analyzed.” Adding that “being the guarantor and custodian of the rule of law, and the first person to respect it, I have never hesitated to hold to account anyone who has patently underperformed while carrying out his or her professional or national duties. However, the situation today commands greater firmness in order to put an end to complacency and disregard for citizens’ interests.” In other words, the message behind the speech was that there will be no tolerance for “manipulating the interests of citizens”.
The chronological events above, all led somewhere. After extensive discussions and consultations, and the process it took to prepare it, a “new investment charter” came into existence after the approval of the Council of Ministers, held on 13th July 2022, and headed by King Mohammed VI, on a “draft-law framework tantamount to an investment charter,” which aims to envisage directing investment towards productive sectors with high added value. According to Mohcine Jazouli, Minister delegate to the Head of Government in charge of Investment, Convergence, and Evaluation of Public Policies, by the beginning of October, the vote of this law should be precise, thus the promulgation of the decree as they are already working on it.
[bs-quote quote=””The reform of public institutions as well as in the overhaul and reform of the tax system, an objective that should be achieved as soon as possible, using a new charter that promotes investment.”” style=”default” align=”left” color=”” author_name=”King Mohammed VI” author_job=”” author_avatar=”” author_link=””][/bs-quote]
Today, the new investment charter draft set by the government, came to change the current direction of investment in the country, where two-thirds is made up of public investment, while one-third remains private investment. The goal is to raise the share of private investment to reach two-thirds of the total investment by 2035 (against barely a third today), reaching 350 billion dirhams.
The investment charter sets measures to grant donations to investment projects according to certain conditions, for instance, incentives for projects that create important job positions, and projects that will invest in the most fragile and most economically affected regions in order to achieve territorial justice between the various regions of the Kingdom. There are also incentives for promising sectors and strategic projects such as the defense industry or the pharmaceutical industry. At the moment, only 4 regions produce more than 67% of GDP.
As good as this might sound, how is the government going to meet its words under the pressure of the global and the local crisis?
The annual report of Bank Al-Maghrib for 2021 revealed regarding the social sector that state resources are under increasing pressure due to the growing need to respond to social priorities, such as education and health reform and the retirement system. As for the economic sector, it pointed out that there are other margins latent at the level of the projects launched by the King, and this is related to the reform of the contracting sector and public institutions, in order to improve their efficiency and their contribution to the investment dynamism, as well as the launch of the Mohammed VI Investment Fund, which, in addition to the adoption of the draft investment charter, will give a new impetus to the productive fabric, which the country desperately needs.
In this regard, Abdellatif Jouahri crystally clear said something that not only related to Prime Minister Aziz Akhennouch but to the government entirely: “In this regard, all concerned parties and living forces must mobilize behind His Majesty, imbued with the spirit of the national interest, which must rise above all personal, factional or partisan considerations, in order to achieve the desired ambition of elevating Morocco to the ranks of emerging countries.”
To top it all off, King Mohammed VI promised that under this circumstance to responsibly and resolutely confront speculation and price manipulation; as he had previously spoken precisely and clearly about the “parts of regulation and legislation with regard to investment files” drawing attention to the necessity of “setting the deadlines for answering investors’ demands” which the throne speech had set in a period of a month.
The same speech back in 2018 also addressed in detail the investment file and the need to keep a good pace with small and medium-sized enterprises, which constitute 95% of the entrepreneurial investment fabric in Morocco (Ministry of Industry and Commerce). These powerful speeches put the government and parliament under heavy pressure, imposing on them a “strict timetable” that concerns self-imposed issues urgently. Recently on the 20th of August 2022, King Mohammed VI delivered a speech to the Nation on the occasion of the 69th anniversary of the Revolution of the King and the People, in which he called young youths and project holders once again to make the most of the numerous investment opportunities in Morocco, as well as the incentives and guarantees offered by the new investment charter.
The Annual Report adds that in order to strengthen the resources of the state budget, the expansion of the tax base is needed as the report sees it as the most important resource. The goal itself is still slow and intractable as the various exemptions deprive the state annually of resources of approximately 2.5% of the gross domestic product. (GDP) .
GROSS DOMESTIC PRODUCT GROWTH PER YEAR – HIGH COMMISSION FOR PLANNING OF MOROCCO (HCP)
Speaking of sectors reforms, Jouahri’s Annual Report blew the whistle on corruption and bribery for fear of affecting the investment process and growth of the country, considering that “the uncontrolled corruption remains one of the manifestations of structural deficit that Morocco suffers from, which is represented in the quality of public governance locally and centrally.”
Even after the devastating COVID-19 pandemic, the annual Corruption Perceptions Index (CPI) report in 2021 by Transparency International reveals that corruption levels have stagnated worldwide. Despite commitments on paper, out of 131 countries worldwide that have made no significant progress against corruption in the last decade, two-thirds of countries indicate that they have serious corruption problems with a score below 50, while 27 other countries are at their lowest score ever.
Source : Corruption Perceptions Index (CPI) – Transparency International
Being ranked 87th worldwide and with a decrease in score change by 1 point since 2020, Morocco’s numbers don’t seem promising with a score of 39/100.
Omar Kettani, Professor of Economics at Mohammed V University in Rabat, raised the issue of “methods of granting investment licenses” in his blog, criticizing what he described as “favorite practices and privileges that characterize the process of handling some files.”
On the occasion of the recent approval of the new investment charter by the Ministerial Council (July 13), Kettani did not hesitate to describe what is happening as “economic rent and corruption that threatens any ambitious project to reform the investment sector, as it loses the Kingdom two points annually from its economic growth.” He stressed the need to “activate oversight in its various stages while implementing transparency in these procedures in order not to waste the available growth opportunities.”
With the rise of this new investment charter that has been frozen for more than a decade, high expectations are to be kept in mind as well as professional monitoring and regular follow-up, not to mention the role to apply the principles of the law within this plan, in hopes to rank Morocco as it should be, among well-developed countries to become a major power. How long? When? And in what way? That’s what the parliamentary entry is going to unveil in next October.