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Morocco: the new investment land for Germany

Thanks to its privileged geographical location and a colossal investment policy in various economic sectors, Morocco is emerging as the new "Eldorado" for German investors
industria marruecos crecimiento

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Morocco's privileged geographical location in the north of the African continent, facing the Mediterranean and the Atlantic Ocean, as well as its massive investment policy in the transport and logistics sectors for more than a decade, are undeniable assets that make Morocco a real strategic centre. This is reported by the Moroccan Chamber of Commerce and Industry, which defines Morocco as a strategic centre for the development of Euro-African business. 
 
Although the coronavirus pandemic that has been raging for more than two years has led to a reorganisation of international value chains, Morocco has emerged stronger from this situation, as it now stands as a major partner for Europe, which is seeking to compensate for its strategic dependence on Asia. Morocco is particularly attracting the attention of German investors, who see it as a gateway to the African continent and a potential player in nearshoring, i.e. the practice of transferring a business activity to a nearby country. The latest issue of Bilateral magazine, edited by the German Chamber of Commerce and Industry in Morocco, writes that 'from the perspective of the search for sourcing and production alternatives, Morocco could assume the role of a key player in nearshoring'. The advantage of this technique lies in its proximity, as Morocco is less than three hours away from Berlin, but also in the savings in production thanks to cost reductions of up to 50%. Finally, this technique offers companies the possibility of controlling their fixed costs in the event of low activity.

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In addition, Germany is an important financial partner for the Kingdom, as it has seen an increase in German direct investments since 2015. In fact, according to data from the Deutsche Bundesbank, the stock of German direct investments has increased from €213 million (2015) to €1.3 billion in 2020. Similarly, the number of German companies established on Moroccan soil would have almost doubled to 93 today. In fact, the increase in German investment has been made possible mainly thanks to investments by both sides in the automotive construction, electronics and logistics sectors, sectors that will remain "essential in the future", according to the same source. The continuation of cooperation efforts between the two countries could also allow Morocco to benefit from German know-how in the sectors of digitalisation or ecological transition, a real added value for the Kingdom. The favourable diplomatic context between the two countries, as demonstrated by German support for Morocco's proposal for a large autonomous Western Sahara under Moroccan sovereignty to resolve the Sahrawi conflict, is a further asset for deepening relations between the two countries.

The Kingdom, which accounts for 10% economic performance through it, is trying to increase the attractiveness of the transport and energy sector by developing numerous infrastructures, such as the port and industrial complex of Tangier Med, located 15 km south of Spain. With the development of its transport and logistics infrastructures, Morocco drains economic activity by employing nearly 182,000 people, according to 2019 figures. These Moroccan assets constitute a real reservoir of investment opportunities for German companies that perceive Morocco as a real long-term investment niche. The privileged relations between the European Union, thanks to its advanced candidate status, and Morocco make the latter a growing player in economic exchanges, which predestines it to become, in the long term, an "international trade hub", in the words of Mohamed Yousfi, Director General of the Moroccan Agency for the Development of Logistics (AMDL).

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However, while the AMDL director considers that 'Morocco has the foundations to develop an intercontinental logistics vocation', he warns Morocco of the need to continue its efforts to become even more competitive if it wants to continue to attract new international flows, at a time when the world economy is recovering. The Kingdom's global positioning in the upper mid-range in terms of the performance of its logistics sector should encourage it to pursue this ambition in order to maintain its leading position in Africa. A better structuring of the transport and logistics sector should also be a solution to enable Morocco to become a real "lever for the various sectoral strategies", in the words of Jean-Pascal Darriet, president of the monthly magazine Conjonctures.
 

Indeed, Morocco would have much to gain from German investors directly involved in the country's socio-economic development and the drain on its economy, as Andreas Wenzel, Director General of the German Chamber of Commerce and Industry in Morocco, attests: "German companies create more than 35,000 direct jobs in the Kingdom and countless other indirect jobs with local partners". As the second most important investment location of the German economy on the African continent, the investment stock between Rabat and Berlin has increased significantly since the 2010s. To this end, "German investment stock has increased by 643% since 2010 and Moroccan exports have increased by 122% since 2010," according to Andreas Wenzel.
 
Despite the coronavirus crisis, "Morocco constitutes a real growth relay for international and German companies in this particular context", according to Hicham Boudraa, acting director general of the Moroccan Agency for the Development of Investment and Exports (AMDIE). The conclusions of the latest report published by the German Chamber of Commerce and Industry in Morocco reinforce this position, underlining that the two countries still have much to offer each other, particularly in the fields of sustainable food production or Industry 4.0, which will involve the new challenges of digital technology.