Morocco’s southward investment push a win for Africa

Two men cross a street in Casablanca. Photo by: Hassan Chabbi / IFC

By Olivier Monnier

This article was first published by the International Finance Corporation.

Moroccan investment in Africa has risen sharply over the past two decades, laying the groundwork for increased trans-regional commerce.

In 2020, Morocco’s third-largest bank, BMCE, decided to change its name to Bank of Africa, matching that of the sub-Saharan African subsidiary it acquired 15 years earlier.

The change was far more than a rebrand – it was a statement of how the company, founded as a state-owned bank in the 1950s, has emerged as a major player in the African financial services sector with a presence in nearly 20 countries today.

“It was a bold decision that surprised our Moroccan customers, who had been accustomed to our historic name for decades,” says Amine Bouabid, chief executive officer of Bank of Africa Group. “But it was a clear desire from the group to establish a single brand across the whole of Africa.”

Bank of Africa’s successful expansion south of Morocco’s borders isn’t a unique story. Over the past two decades, a growing number of Moroccan companies have sought to strengthen their ties with the rest of the continent, leading the Kingdom’s foreign direct investment into Africa to grow eightfold between 2014 and 2021, according to the finance ministry.

“Morocco occupies a very unique position in Africa,” says Thomas Pellerin, IFC’s lead for the manufacturing and services sectors for the Maghreb and West Africa, based in Rabat.

“For many international investors, especially those from Europe, the Kingdom’s geographic location and level of development make it a gateway to the African continent. At the same time, as Morocco has built a solid industrial and services base, Moroccan companies are now looking overseas, particularly to Africa, to expand.”

Change in mindset

Moroccan investors have long viewed sub-Saharan Africa as a “difficult region to access, but since the early 2000s we have seen a paradigm shift,” says Abdou Diop, who heads up the African Commission at CGEM, Morocco’s leading business association, and is also a managing partner of Mazars in Morocco, an audit, tax and consulting firm.

“We have observed an important shift in terms of mindset as emerging Moroccan champions began to seek out new markets to expand their operations. The private sector has then reassessed the risks to adjust to the new situation and seize more opportunities,” says Diop, who has advised many of the Kingdom’s companies, including Attijariwafa Bank, on their first steps in the region.

Led by the country’s top banks – BMCE, Attijariwafa Bank, and Banque Centrale Populaire (BCP) – and telecommunications company Maroc Telecom, the 2000s ushered in a first wave of investment, focused on French-speaking West Africa, which shares a language (French) and historical ties with Morocco.

The 2010s saw a diversification of investment flows to other sectors, with the likes of phosphate provider OCP Group, real estate developer Addoha, and pharmaceutical company Cooper Pharma all expanding their operations in the region.

A subsidiary of OCP Group, the world’s largest phosphate-based fertiliser producer, OCP Africa was established in 2016 to provide fertiliser solutions tailored to local conditions and crop needs in the region. Headquartered in Morocco, OCP Africa now operates in 16 countries, including Cameroon, Rwanda and Zambia.

Financing the continent

With foreign direct investments reaching over $800 million in 2021, according to the finance ministry, Morocco has become the second largest African investor on the continent, after South Africa – and the largest in West Africa.

“Moroccan companies have realised that their future lies more in the south than in the north. Our ambition is to accompany them in this dynamic and contribute to the financing of African economies, in particular the private sector,” says Bouabid from Bank of Africa. “We believe Morocco has a card to play in financing the continent and acting as an intermediary between Europe and Africa.”

Looking ahead, Bank of Africa plans to continue its expansion strategy and aims to increase its number of branches from the current 19 to 25 by 2030, says Bouabid. Particular attention will be paid to Central Africa, where the lender still has a relatively small presence, and to lending to small and medium-sized enterprises, the backbone of the continent’s economies, he says.

As part of its mandate to support private sector growth and trans-regional business development in Africa, the International Finance Corporation (IFC) has helped Moroccan companies strengthen their footprint in the region.

Since the early 2000s, IFC has supported the expansion of major Moroccan banking and insurance groups such as BCP, Attijariwafa Bank, BOA, Saham Group, and Holmarcom across Africa to accelerate access to finance.

IFC has also partnered with Ciments de l’Afrique (CIMAF), a cement maker owned by Morocco’s Omnium des Industries et de la Promotion (OIP), to boost cement production in West Africa; with OCP Africa to support food security on the continent; and with Dolidol, the Kingdom’s leading bedding manufacturer, to expand production and distribution in Nigeria.

‘Sharing our know-how’

In Casablanca, Morocco’s largest city and its main business hub, furniture retailer KITEA is one of the Moroccan companies betting on Africa. From a small 300m2 shop that first opened for business in 1993, the group has grown to 31 stores in 17 Moroccan cities, selling home, decorative, outdoor and office furniture to the mass market.

The company has just begun to expand in the region. Last year, it opened a 12,000m2 mall in Accra, Ghana, and acquired a majority stake in Furniture Palace, Kenya’s leading furniture retailer. It aims to expand to four other African countries by 2025, including Senegal and Côte d’Ivoire.

“Africa is a logical extension of our operations in Morocco,” says its CEO Othman Benkirane. “We see a lot of market opportunities on the continent, and we have close ties with some of its countries, particularly in West Africa, so it’s only natural for us to build our presence there.”

Expanding in Africa is also a matter of regional integration, enabling the transfer of skills and the creation of synergies, says Benkirane.

“As Moroccans, we’re proud to contribute to the development of Africa by sharing our know-how and experience,” he says. “And we come with a great deal of humility. Not so long ago, Morocco faced similar challenges to those of many African countries, including on the logistics front, and while we haven’t solved all our problems, we do have some keys to success to share.”

This sharing of knowledge, resources, and technology between developing countries – referred to as South-South cooperation – is playing an increasingly important role in the international development landscape, including in areas such as food security, sustainable agriculture, and climate adaptation.

This momentum has been accompanied by the rapid expansion of South-South trade, which has soared over the years to reach $5.3 trillion globally in 2021 , exceeding the trade volume between developing and developed countries, according to the United Nations Conference on Trade and Development (UNCTAD).

King Mohamed VI

One man who has been instrumental in promoting greater South-South collaboration and influencing how Moroccan companies look at Africa is its King. Since ascending the throne in 1999, Mohammed VI has actively promoted an African agenda, both diplomatically and economically, making numerous visits throughout the region.

In a landmark speech delivered in Abidjan at the opening of a Morocco-Côte d’Ivoire economic forum in 2014, the King said: “The wealth of our continent should benefit, first and foremost, the people of Africa. This requires that South-South cooperation be at the heart of their economic partnerships.”

With a growing number of Moroccan companies gaining in maturity and capacity for international expansion, Moroccan investment in Africa is set to accelerate in the coming years.

“Moroccan companies have built up expertise in a number of sectors and can bring best practices and help raise productivity in the region,” says IFC’s Pellerin. “They have also developed risk appetite, agility and resilience in challenging environments, and are positioning themselves as long-term investors in Africa.”

Meanwhile, some African players are starting to show interest in investing in the Kingdom. In 2018, for example, South African financial services group Sanlam acquired a majority stake in Moroccan insurance company Saham, extending its reach to more than 30 African countries and making it Africa’s largest insurer.

Diop from Morocco’s business association also sees significant potential for bolstering Morocco’s ties with Africa as the African Continental Free Trade Area (AfCFTA) is implemented. According to the World Bank, Moroccan exports to sub-Saharan Africa accounted for only 6% of the Kingdom’s total exports in 2021.

Established in 2018 to create a single continental market for Africa’s 1.3 billion people, AfCFTA is the world’s largest free trade zone in terms of the number of participating countries.

Morocco’s automotive industry, for example, can be a catalyst for the development of industries in several African countries, from natural rubber in Ghana and Côte d’Ivoire to lithium in the Democratic Republic of Congo, he says.

“The AfCFTA offers a great opportunity for the continent to strengthen the complementarity of its value chains,” Diop says. “And countries like Morocco, which have already linked their value chains to the global economy, can be a driving force in this regard.”