By Dale McEwan
Morocco has long been the most developed legal market in North Africa, and last year saw a significant amount of growth when it comes to the presence of international firms in the country.
In October 2011 Bird & Bird sealed an association agreement with local firm El Amari & Associés. This was preceded by announcements over the course of one week in July 2011 that Norton Rose, Clifford Chance and Allen & Overy (A&O) were to launch offices in Casablanca. In March, Eversheds added Morocco to its expanding international network through a cooperation agreement that is expected to develop into a Casablanca office in the future.
More to come
“My understanding is that new entries are still to come,” says Gide Loyrette Nouel partner Julien David. “Maybe French firms – firms that maybe already have a presence but are looking for a physical presence.”
“Others will follow the path,” forecasts CMS Bureau Francis Lefebvre Morocco co-director Wilfried Le Bihan. “I predict mergers. People who don’t have strong intangibles and a task force, such as international firms, may work jointly to give them critical mass.”
Amin Hajji, partner at local outfit Hajji & Associés, says his team has been contacted by a UK firm to enter into a cooperation agreement.
“Clearly, there are now major actors here in Morocco,” he says. “The market is bubbling. I suspect there will be some kind of adjustments with regard to the presence of foreign law firms. Some will need to adjust their activities to be able to work in other fields.”
“The good thing is that [the arrival of firms] will help the market become more structured,” adds A&O partner Hicham Naciri. “But competition will be tougher for certain firms.”
No fear
Jeantet Associés partner Laurent Sablé echoes the view that the Moroccan legal market will become more structured, but states that he is not feeling any pressure.
“There’s enough space for all the actors here in Morocco,” he says. “It’s not a stressful time for firms. We’re in a booming place. We’re very happy with our colleagues and we don’t fear the Anglo-Saxon firms. We’re happy to have them on board.”
“These international firms setting up is something significant for this market, especially in the energy sector, where investments are big and sophisticated,” adds Simmons & Simmons partner Yves Baratte. “The impact of that will be really seen in the months and years to come.”
Energetic work
Energy is indeed an active area for firms at the moment, with a massive solar power project in the pipeline. The World Bank has approved loans to Morocco totalling $297m (£191m) to assist with financing the first phase of the 500MW Ouarzazate concentrated solar power plant project. The initial 160MW part of the venture is a PPP between the Moroccan Agency for Solar Energy (Masen) and a private partner, set to be selected early this year.
The ambition is for the capital city Rabat to reach 2,000MW by 2020 as part of a $9bn programme. Firms such as Norton Rose, Linklaters and Gide have come on board to advise Masen.
“Many actors are positioning themselves ready for the race,” says Le Bihan. “It’s critical to make sure the power can be purchased on a long-term basis.”
Norton Rose partner Alain Malek says the firm is assisting Masen on the organisation of the call for tenders in relation to the first phase of Ouarzazate, while Simmons & Simmons’ Rome and Paris offices are advising one of the bidders on the construction and operation of the first part of the project.
With such a plethora of work on the horizon it is easy to see why firms are moving into Morocco. Word on the street is that the country is set to become the financial centre of Africa. Upcoming draft laws concerning topics such as the reform of public offering rules are of paramount importance to Moroccan and foreign issuers, as well as financial institutions. One such law will create a new financial authority, the Autorité Marocaine du Marché des Capitaux (AMMC), which will succeed the existing Conseil Déontologique des Valeurs Mobilières (CDVM). While the regulatory scope of the CDVM is limited to transactions on securities, the remit of the AMMC will be enlarged to all transactions on any financial instrument as defined by the law.
“What’s important to understand is that Morocco is a gateway to Africa,” stresses Le Bihan, likening the country’s efforts at growing its financial sector to those made by Dubai.
Financial incentives
As Gide’s David notes, a number of Moroccan businessmen and women are travelling through African countries to promote Casablanca’s stock exchange as a source of finance.
“If my understanding is correct the Casablanca Stock Exchange wishes to attract small- and medium-sized African businesses in all kinds of sectors,” he explains.
The development of Casablanca Finance City is also intended to bring activity into the country. Le Bihan and fellow CMS partner Marc Veuillot explain this is a campus aimed at hosting foreign finance companies or domestic banks and insurance companies, as well as regional headquarters or clusters of multinationals performing their activities in the regions of Africa, North Africa and the Middle East. Those involved can benefit from brand-new premises along with tax holidays.
“The purpose for Morocco is to attract foreign investors in added-value sectors and improve foreign currencies capacities,” explains Le Bihan.
Sablé says he is witnessing the comeback of Middle Eastern investment into real estate and investment funds in Morocco, although activity is a little more cautious than before.
“They’re not wasting money as they were 10 years ago,” he says. “They’re careful with their money.”
“Other North African countries are suffering in terms of foreign investment,” says August & Debouzy partner Kamal Nasrollah, adding that the firm has received several enquiries from foreign investors who feel they may need to switch gears and move into Morocco.
In further economic growth plans, November 2011 saw A&O advise the Kingdom of Morocco and sponsor, the Moroccan Fund for Tourism, on a $2.7bn joint venture with investors Qatar Holding, Kuwait’s Al Ajial Investment Fund Holding and UAE-based Aabar Investments PJS.
The agreement is part of Morocco’s Vision 2020 project, which aims to double the size of the kingdom’s tourism sector to 18 million visitors a year and place it among the world’s top 20 tourist destinations.
Naciri led the deal for A&O, while Freshfields Bruckhaus Deringer, August & Debouzy and Gide advised Qatar Holding, Al Ajial Investment Fund Holding and Aabar Investments, respectively.
Eyes down
Despite the movement into Morocco, lawyers are noticing that local businesses are setting their sights on pastures further afield.
“What’s new is that Moroccan companies are going outside of Morocco,” says Sablé. “We’ve noticed that not only big companies but also lots of mid-market companies aren’t going to Europe but to Africa.
“There’s a cultural proximity,” he adds, noting that Mauritania is high on the list of destinations. “A number of medium-sized groups are now looking at Western Africa.”
As far as 2012 is concerned, lawyers remain confident about Morocco’s potential.
“For investment, I can give you a prediction,” teases Malek. “It’ll be a good year. Morocco, I would say, is definitely on the right side.”
“Morocco is a safe place for doing business,” adds Le Bihan. “Any potential player should be confident in the fact that this is a good market.”
—
Growth and stability
Tourism, power and financial reform are all areas of growth for stable Morocco. The country has attracted a number of international law firms and lawyers believe it will continue to do so.
—
Key figures
- GDP
$90.8bn - Annual inflation (November 2011)
1.2% - Population (January 2012)
32.4m - Life expectancy at birth
72 - Unemployment rate (Q3 2011)
9.4%
.
