Morocco – a strategic financial hub in Africa
Morocco benefits from a good strategic geographic position and political stability, especially when compared with its neighbors in North Africa and the Middle East. This makes it an attractive jurisdiction for investors keen to establish a presence in the MENA region.
Over the past years, Morocco has used (and facilitated) foreign direct investments as a strategic support for its economic and social growth. Morocco is now slowly positioning itself as a platform for business within the North Africa region and the rest of the continent. The increased number of free trade agreements between Morocco and other African countries and the creation of the Casablanca Finance City (CFC) attest to this strategy.
In 2010 the Moroccan Parliament passed Law 44-10 creating the CFC, established to serve as a strong financial hub in the region, as well as a gateway to the fast growing African markets. It has been positioned as a platform from which foreign investors will be able to coordinate financial transactions and activity in a sophisticated and tested legal and financial environment while benefitting from several incentives such as tax breaks and exchange control flexibility.
The CFC regime is offering specific advantages to businesses operating in the financial services, professional services and insurance industries, and to the regional headquarters of international businesses. In contrast to other financial centres such as the Dubai International Financial Center, no new regulatory body or judicial system will be established in the CFC. Rather, Morocco wants to bring its existing legal and regulatory framework in line with best practice and international standards to allow the CFC to compete with other international financial centres.
This means that all financial businesses registered with the CFC will be subject to the existing financial local authorities including Bank Al Maghrib (the Central Bank), the Conseil Déontologique des Valeurs Mobilières (the capital markets regulator), the Direction des Assurances et de la Prévoyance Sociale (the insurance sector regulator) and the Ministry of Finance. The absence of a heavy regulatory framework is seen as an advantage by some investors looking at moving their bases from financial centres where the regulatory requirements are too burdensome.
For international businesses already using Morocco as a strategic regional hub, transferring to the CFC will allow them to optimise their existing local investment while participating in Africa’s expansion and economic development. For new investors, the CFC will be a strategic and optimal route to access African markets. The CFC has already attracted a lot of interest from companies from around the world although it will not physically exist until early 2017. Since its launch, more than 100 leading multinationals such as AIG, Bank of China, BNP Paribas and Ford have chosen the CFC to operate in Africa.
A recent ranking (April 2016) by the 19th Global Financial Centres Index considers the CFC as the third most promising financial centre after Singapore and Shanghai. It would be interesting to see if and how investors will use the CFC when structuring investments into Africa and if the establishment of offices in the CFC by Bank of China will position Morocco as a gateway for Chinese investments in Africa.