Moroccan Financial Board’s Hicham Zegrary - Q&A

Author: Gemma Varriale | Published: 31 Jul 2012
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Everybody’s talking about Africa. People in the know are saying it’s the place to invest, and the emerging market of the future. It has a working age population that will outnumber China and India’s by 2030, massive infrastructure needs and abundant natural resources.

But there are also abundant pitfalls that foreign firms can fall prey to - not least the fact that it is made up of 53 countries, each with its own legal system. There are numerous questions around how to tap these fragmented markets that hold so much potential. No country seems more attuned to this fact – and how to exploit it - than Morocco.

Morocco’s heritage is certainly unique. It is a hybrid of Arabic and western values, 40 years of French occupation have left it with a more liberal outlook than other Islamic countries. But it also has strong ties with other African countries, through nine double taxation treaties, 17 investment promotion and protection agreements and seven financial cooperation agreements. In the last two decades Morocco has made sweeping reforms to its financial markets, as a result of which its banking and insurance sectors are in much better shape than many other countries in the region.

Here Hicham Zegrary opens up about the opportunities, and challenges, presented by investment in the region.


Why do you think Morocco should be North Africa’s financial centre?

South Africa has a huge financial centre and Egypt, at least before the Arab Spring, was the regional finance hub in the east of Africa. But North and West Africa have no financial hub to act as a regional international business centre.

In the last two decades Morocco has made huge reforms to its financial markets. As a result of these, we now have very strong banking and insurance systems. Our banks have headquarters in some of the sub-Saharan countries and we have a very strong historical relationship with these countries, particularly the French-speaking countries, Senegal, Gabon and Cameroon. So the idea was proposed to establish Morocco as the new regional centre for North-West Africa.

The biggest bank in Africa outside South Africa is Morocco’s Attijariwafa Bank. Thanks to quick growth outside of its home market – into countries such as Burkina Faso, Côte d’Ivoire, Mali, Mauritania, Tunisia and Senegal – it is now the biggest lender in West Africa and the Maghreb.


Morocco has a history of favouring French companies. Will other international companies be able to compete on a level playing field?

France has a strong relationship with Morocco. But our official language is Arabic. In the administration we speak both Arabic and French, but more business is conducted in French than Arabic. And France is now the first investor in Morocco.

Since gaining independence, however, Morocco has made great efforts to liberalise its economy and financial sector. We also have a good relationship with other European countries, especially Spain and Italy. In northern Morocco people speak Spanish and we also have a strong historical relationship with Spain.

Morocco is making big efforts to look outside of its usual European relationship and recently a Moroccan trade delegation travelled to Saudi Arabia to drum up business. Although the CFC was not involved in this, an increasing number of countries from this region, especially Saudi Arabia, Qatar, Bahrain and the UAE, want to do business in Morocco.

In comparison with other countries in the region we have political stability. After September 11 2001, Arab investors in the Middle East found it difficult to invest in the US. As a result they looked for somewhere they could put their money that would be easier and without the cultural problems that followed these terrorist attacks. Morocco offered them a good alternative as a peaceful, relatively open country with a liberalised economy.


What practical advice would you give to companies looking to invest in Africa?

Tackling the region’s fragmented market, made up of countries with different legal systems, is a big issue. And it’s why companies should first open activities in Casablanca and use the CFC as a stepping stone. We think that Casablanca is a safe platform that companies can use to open and do business with countries with legal systems that are not as well established as Morocco’s is now.

We are working with the Ministry of Foreign Affairs and the Ministry of the Economy and Finance to have legal conventions, such as a Double Taxation Convention and conventions to protect foreign investors. Morocco has signed a lot of these with African countries. We are looking to enhance those conventions, those relationships between international law, our central banks and other key actors in the African sub-Saharan countries.


Is there an issue with the perceived north-south divide and the fact that people seem to see Morocco as having stronger ties to the Middle East than Africa?

Yes our business relationship with the African sub-Saharan countries is not as good as our political and relationship historically has been. But we are now looking to strengthen these ties.

We began in 2000 with the banks, by doing business with these countries, opening subsidiaries and hiring people from sub-Saharan Africa to work in the banks’ headquarters in Casablanca.

So yes, the general view has been that we are more of a European than an African country because of our links with Europe. But we are making efforts to build bridges with Africa now.


What impact do you think the Eurozone crisis will have on investment in the region?

For us it’s a big opportunity because we know that the major companies in the financial sector are looking for opportunities in other parts of the world, beyond Europe and the US. These opportunities are not only in the Brics [Brazil, Russia, India, China], but Africa as well, which are geographically not far for the European countries.

Within the CFC we meet European clients in the financial sector and they say to us that Morocco - and Africa in general - will be the major player to do business with this century.  After the economic and the sub-prime crises it’s very difficult to do business in Europe. When we see the annual GDP [gross domestic product] of Spain, Italy, Greece, even Germany, and we compare it to other countries in Africa, the difference is striking.


What questions are people coming to you with about investing in Africa, especially using Morocco as a gateway to the rest of Africa?

A lot of investors don’t know about Africa and Morocco. For investors – even those from France with whom we have a strong relationship – Morocco is a part of the Maghreb region and because of the Arab Spring their appetite to invest has gone.

But we have made a big effort to show the world that Morocco is a very specific country in this region. We are a modernised and open country. We have got through the Arab Spring smoothly and our King introduced reforms in the constitution of July 2011. We have also democratically elected a new Government which is very involved in financial market reform and generally supports CFC.

If investors know more about Morocco they will see that they can invest from Europe or from North America or China directly into Africa.