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Doing Business in Morocco
Why do business in Morocco in 2008?
Morocco was the top market reformer in the Middle East and North Africa in 2005–2007, according to the new report by the World Bank and the International Finance Corporation (IFC). Morocco cut the cost of starting a business, complying with tax regulations, and doing property transfers, all measures that can help support job creation, an urgent challenge across the whole region.
- It reduced the minimum capital required to start a new business from 100,000 to 10,000 dirham;
- Eased transfer of property by cutting the transfer tax from 5 percent to 2.5 percent of the property’s value;
- Simplified its tax rules by combining multiple tax regulations into one source, making compliance easier.
In 2005, the Moroccan GDP grew 7 % and 6.7 % in 2006. Morocco is also the UK's nearest exotic locationand hasa new free trade agreement with the USA. The U.S.-Moroccan Free Trade Agreement (FTA) is one of the most comprehensive free trade agreements that the U.S. has ever negotiated.
Moroccan Trade: Exports--$14.037 billion (27% GDP, 2005). Major markets--EU 71.5%, India 4.1%, U.S. 2.6%, and Brazil 2.4%. Imports-- $17.68 billion (34% GDP, 2005). Major suppliers--EU 52.1%, Saudi Arabia 4.8%, Russia 6.7%, China 5.2%, U.S. 3.4%. The main industries in Morocco are phosphate rock mining and processing, food export and processing, leather goods, textiles, arts and crafts, construction and tourism. Morocco owns about 2/3 of the world's phosphate reserves.
| The challenges of launching a business in Morocco are shown below. Entrepreneurs can expect to go through 5 steps to launch a business over 11 days on average, at a cost equal to 12.0% of gross national income (GNI) per capita. They must deposit at least 700.3% of GNI per capita in a bank to obtain a business registration number. |
| Indicator |
Morocco |
Region |
OECD |
| Procedures (number) |
5 |
10.1 |
6.5 |
| Time (days) |
11 |
45.4 |
19.5 |
| Cost (% of income per capita) |
12.0 |
64.2 |
6.8 |
| Min. capital (% of income per capita) |
700.3 |
859.3 |
41.0 |
| The steps, time, and costs of complying with licensing and permit requirements for ongoing operations in Morocco are shown below. It takes 21 steps and 217 days to complete the process, and costs 1,302.8% of income per capita. |
| Indicator |
Morocco |
Region |
OECD |
| Procedures (number) |
21 |
19.9 |
14.1 |
| Time (days) |
217 |
216.1 |
146.9 |
| Cost (% of income per capita) |
1,302.8 |
469.7 |
75.1 |
| The difficulties that employers in Morocco face in hiring and firing workers are shown below. Each index assigns values between 0 and 100, with higher values representing more rigid regulations. The Rigidity of Employment Index is an average of the three indices. For Morocco, the overall index is 60. |
| Indicator |
Morocco |
Region |
OECD |
| Difficulty of Hiring Index |
100 |
30.8 |
30.1 |
| Rigidity of Hours Index |
40 |
55.0 |
49.6 |
| Difficulty of Firing Index |
40 |
35.0 |
27.4 |
| Rigidity of Employment Index |
60 |
40.2 |
35.8 |
| Hiring cost (% of salary) |
17.7 |
15.9 |
20.7 |
| Firing costs (weeks of wages) |
83.3 |
62.4 |
35.1 |
| The ease with which businesses can secure rights to property is measured below. In Morocco, it takes 3 steps and 82 days to register property. The cost to register property there is 6.1% of overall property value. |
| Indicator |
Morocco |
Region |
OECD |
| Procedures (number) |
3 |
6.3 |
4.7 |
| Time (days) |
82 |
52.2 |
32.2 |
| Cost (% of property value) |
6.1 |
6.8 |
4.8 |
| Measures on credit information sharing and the legal rights of borrowers and lenders in Morocco are shown below. The Legal Rights Index ranges from 0-10, with higher scores indicating that those laws are better designed to expand access to credit. The Credit Information Index measures the scope, access and quality of credit information available through public registries or private bureaus. It ranges from 0-6, with higher values indicating that more credit information is available from a public registry or private bureau. |
| Indicator |
Morocco |
Region |
OECD |
| Legal Rights Index |
2 |
4.1 |
6.3 |
| Credit Information Index |
1 |
2.0 |
5.0 |
| Public registry coverage (% adults) |
2.0 |
1.9 |
7.5 |
| Private bureau coverage (% adults) |
0.0 |
1.7 |
59.0 |
| The indicators below describe three dimensions of investor protection: transparency of transactions (Extent of Disclosure Index), liability for self-dealing (Extent of Director Liability Index), shareholders’ ability to sue officers and directors for misconduct (Ease of Shareholder Suits Index) and Strength of Investor Protection Index. The indexes vary between 0 and 10, with higher values indicating greater disclosure, greater liability of directors, greater powers of shareholders to challenge the transaction, and better investor protection. |
| Indicator |
Morocco |
Region |
OECD |
| Disclosure Index |
6 |
5.5 |
6.1 |
| Director Liability Index |
5 |
4.7 |
5.1 |
| Shareholder Suits Index |
1 |
3.5 |
6.6 |
| Investor Protection Index |
4.0 |
4.6 |
5.9 |
| The effective tax that a medium size company in Morocco must pay or withhold within a year is shown below. Entrepreneurs there must make 28 payments, spend 690 hours, and pay 54.8% of gross profit in taxes. |
| Indicator |
Morocco |
Region |
OECD |
| Payments (number) |
28 |
27.3 |
16.3 |
| Time (hours) |
690 |
241.9 |
197.2 |
| Total tax payable (% gross profit) |
54.8 |
35.1 |
45.4 |
| The costs and procedures involved in importing and exporting a standardized shipment of goods in Morocco are detailed under this topic. Every official procedure involved is recorded - starting from the final contractual agreement between the two parties, and ending with the delivery of the goods. |
| Indicator |
Morocco |
Region |
OECD |
| Documents for export (number) |
7 |
7.3 |
5.3 |
| Signatures for export (number) |
13 |
14.5 |
3.2 |
| Time for export (days) |
31 |
33.6 |
12.6 |
| Documents for import (number) |
11 |
10.6 |
6.9 |
| Signatures for import (number) |
17 |
21.3 |
3.3 |
| Time for import (days) |
33 |
41.9 |
14.0 |
| The ease or difficulty of enforcing commercial contracts in Morocco is measured below. It takes 17 steps and 240 days to enforce contracts there. The cost of enforcing contracts is 17.7% of debt. |
| Indicator |
Morocco |
Region |
OECD |
| Procedures (number) |
17 |
39.5 |
19.5 |
| Time (days) |
240 |
432.1 |
225.7 |
| Cost (% of debt) |
17.7 |
17.7 |
10.6 |
| The time and cost required to resolve bankruptcies is shown below. In Morocco, the process takes 1.8 years and costs 18% of the estate value. The recovery rate, expressed in terms of how many cents on the dollar claimants recover from the insolvent firm, is 35.13. |
| Indicator |
Morocco |
Region |
OECD |
| Time (years) |
1.8 |
3.8 |
1.5 |
| Cost (% of estate) |
18 |
13.4 |
7.4 |
| Recovery rate (cents on the dollar) |
35.1 |
28.8 |
73.8 |
Read a great article on Moroccan property investments
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