Foreign direct investments are making progress: the decline continues in Morocco
Économie

Foreign direct investments are making progress: the decline continues in Morocco

Nothing seems to slow down the decline in foreign direct investment, which continues to decline month after month! The Foreign Exchange Office just published the latest monthly note of foreign trade indicators at the end of August 2023, and the foreign direct investment indicators in Morocco showed a significant decline at the end of August 2023. What do the numbers say?

The latest data published by the Foreign Exchange Office shows a continued decline in foreign direct investment (FDI) in Morocco, with significant consequences for the country’s economy. At the end of August 2023, FDI receipts fell by 23.4%, from 27.722 billion dirhams at the end of August 2022 to 21.237 billion dirhams at the end of August 2023. At the same time, expenditure related to FDI increased by 44%. %, up to 3.420 billion dirhams. As a result, the net flow of foreign direct investment fell by 49.6%, from 19.957 billion dirhams at the end of August 2022 to 10.052 billion dirhams at the end of August 2023.

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This downward trend in foreign direct investment is part of a global context that has seen a 12% decline in foreign direct investment in 2022, according to a recently published report from the United Nations Conference on Trade and Development (UNCTAD).

Several factors may explain the continued decline in foreign direct investment in Morocco. Global geopolitical uncertainties, such as the war in Ukraine, may have deterred some international investors. In addition, high food and energy prices have put pressure on global economies, potentially reducing foreign investor interest in new projects and putting pressure on debt. On the African continent, foreign direct investment flows fell by 44% compared to 2021, with a decline of 6% in Morocco, which nevertheless remains among the top 5 most attractive African countries.

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Given the global context, everything indicates that the new investment charter that Morocco has adopted has something to do with the Kingdom doing only a little bit well, but we should not sleep on your laurels. It is crucial that Morocco continues to improve its business environment and strengthen its competitiveness to attract more foreign investors. This could include measures such as simplifying administrative procedures, promoting innovation and research and development (R&D), but also improving access to finance for businesses, as much remains to be done.
Overall, the significant drop in foreign direct investment in Morocco in August 2023 calls for careful reflection and strategic action. It is imperative that policymakers and economic actors work together to create a favorable investment environment, promote investor confidence and stimulate long-term economic growth.

Increasing internationalization of Moroccan companies

It should also be noted that Moroccan direct investment abroad (IDME) has undergone a different trend. During the first eight months of 2023, IDME amounted to 18.211 billion dirhams, up from 11.805 billion dirhams at the end of August 2022. Sales of these investments also increased, reaching 10.667 billion dirhams. However, excluding intra-group debt instruments and reinvested profits, the net flow of equity investments saw a slight decline of 190 million dirhams.

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This evolution of IDME highlights the growing internationalization of Moroccan companies and their desire to explore new opportunities abroad. However, it is essential that this international expansion does not come at the expense of domestic investment.

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