UNCTAD: Foreign Direct Investment in Morocco Fell by 29% in 2016

Chaima Lahsini

Rabat - Morocco failed to retain foreign capital in 2016, says a United Nations report. The country was ranked fourth in the top five African countries receiving foreign direct investment (FDI).

FDI flows to Morocco have declined from 29 percent in 2016 to USD 2.3 billion after reaching USD 3.2 billion in 2015, according to the United Nations Conference For Trade and Investment (UNCTAD)’s 2017 report on investment in the world.

The report released on Thursday explains that this decline in investment is mainly due to the decline of European demand in Morocco, which negatively affected FDI flux oriented towards the exporting sectors of the country.  

The level of European FDI to Morocco, although modest, could make a strong contribution to the economic take-off of the Kingdom, which also pursues an investment policy abroad that mainly targets countries in sub-Saharan Africa, notes the UNCTAD report.

Morocco therefore received less FDI in 2016, but it is still one of the most important investors in Africa.

The UNCTAD cites Attijariwafa bank’s acquisition of the Egyptian subsidiary of Barclays for USD 500 million. “Intra-African FDI has remained at very high levels in the previous year. They are led, among others, by countries like Morocco,” the report said.

Two other transactions are also presented as examples in the UNCTAD document. Sanlam (South Africa) which acquired 30 percent of Saham Finances for USD 375 million. The other operation concerns the investment of the OCP group in Ethiopia, which involves the construction of a fertilizer plant for USD 3.7 billion.

Morocco has promulgated a new investment law that centralizes investment promotion activities in the Moroccan Investment and Export Development Agency and creates export processing zones in every major region of the country.

According to figures from the Moroccan Foreign Exchange Office for the year 2016, the flow of FDI decreased by 28.2 percent. However, during the first four months of 2017, this flow amounted to MAD 7.8 billion, compared to MAD 7.4 billion in 2016, registering a 4.5 percent increase.

This growth was due to a 51.3 percent decline in FDI spending to MAD 1.7 billion (USD 174 million), which was higher than that of revenues (-13.6 percent), which reached MAD 9.5 billion at the end of April 2017, explains the Foreign Exchange Office in a note on the preliminary indicators of external trade in April 2017.

Decline of Global FDI Flows

On an international level, global flows of FDI depreciated by 2 percent to USD 1.75 trillion. The UNCTAD reports that investment in developing countries fell further by 14 percent last year.

In the least developed countries and structurally weak economies, FDI remains volatile. Although it claims a modest recovery in FDI flows in the 2017-2018 period, the organization expects them to remain well below their 2007 level.

“These developments are binding, especially given the enormous investment needs associated with the sustainable development goals detailed in UNCTAD's Investment Action Plan. Progress on sustainable development and sustainable peace requires more investment in basic infrastructure, energy, water and sanitation, climate change mitigation, health and education, as well as investment in productive capacity to generate jobs and income growth,” the UN agency said.

According to the UNCTAD, today, more than ever, it is important to ensure that the global political environment is conducive to investment in sustainable development.

“UNCTAD plays an important role in providing advice on national and international investment policy regimes. Its investment policy framework and its roadmap for the reform of international investment agreements have been used by more than 130 countries in formulating a new generation of investment policies,” the organization said.




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