Outward FDI from Morocco driven by weak dollar

PRLog (Press Release) – Jun 09, 2008 – According to Thomson Financial, in 2007 foreign investor have injected over $400 billion into securing stakes in American companies, factories and other properties through private deals and purchases of publicly traded stock. This represented a 90 percent increase over the previous year and more than double the average for the last decade. Morocco outward FDI have increased from an annual average of $25M (between 1990 -2000) to $468M in 2006.

In May of last year, a Saudi Arabian conglomerate bought a Massachusetts plastics maker. In November, a French company established a new factory in Adrian, Michigan, adding 189 automotive jobs to an area accustomed to layoffs. In December, a British company bought a New Jersey maker of cough syrup. But the days when foreign investment was the sole preserve of firms from developed countries are over.

The continued weakening of the dollar has made American companies more affordable to Moroccan investors who had so far only been focusing on the Maghreb region and Sub-Saharan countries.

These regions are, however, risky because the economic fabric is poorly developed and because other more competitive foreign companies, notably French, have a historical relationship with the Maghreb Sub Saharan countries.


Today, multinational companies from emerging and developing economies are becoming major players in the globalized world economy and Morocco is supporting this trend according to the United Nations Conference on Trade and Development (UNCTAD). The kingdom as recognized that outward FDI can strengthen the competitiveness of its firms, or bring other benefits to the home economy.

But Morocco should adopt a more ambitious outward FDI policy as par of its development strategy and look for opportunities across the Atlantic. Today the US economy offers panoply of investment opportunities. Many companies are filling for chapter 7 or are sold at a discount. Some of them have lost 80 percent of their Market value. This is a golden opportunities for foreign investors and entrepreneurs who realized that when the dust settles down, the potential ROI in the next 3 to 5 years could be enormous.

The US real estate bust has also attracted a number Morocco individuals, specially those who own property and have bank accounts outside Morocco. With its warm weather, and climate similar to Morocco, real estate in Florida is a well sought after. It has even become somewhat trendy to own a vacation home in the sun shine state.

Buying back its supplier.

Between the entrepreneurs looking for investment opportunities and individuals who acquire vacation homes in the US, another breed of Moroccan investors has emerged. Those who are taking steps to ensure they have adequate supplies of raw materials and parts. Moroccan companies at risk of loosing their upstream suppliers consider backward integration as an important step in their corporate strategy.

A recent change in legislation gave Moroccan companies greater access to foreign currency and have allowed invest in foreign market up to 30 Million Dirham (4.12 Million. What is business as usual for companies in developed countries represents a real paradigm shift for Moroccan corporations. A recent example of a Moroccan company showing interest in acquiring a US baby diapers production plant and ship it back to Morocco, is a testimony of this new trend.

This new legislation is a good first step but the 30M Dirham ceiling may not be sufficient to allow Moroccan companies to proceed with larger acquisitions.
As Morocco moves up on its economic development path small companies should think of a pool system where several companies can purchase a single supplier.

Karim Zouiyen
Morocco Newsline