In Morocco, the startup ecosystem is organizing and consolidating, in particular through the development of new support programs. Of course, Morocco’s ecosystem is still in its development phase but is slowly approaching an inflection point to become a fast-growing tech landscape. Morocco relies heavily on this to give a boost to its economy, as well as to its jobs. Startup investment is making a comeback to North Africa. Morocco, along with Egypt is leading the entrepreneurial revolution in the region.
The birth of the startup ecosystem in Morocco
According to African Funding Report 2017 by WeeTracker, Morocco was ranked 65th in the world and 2nd in North Africa, scoring 29.2 points in the 2018 Global Entrepreneurship Index (GEI). The country has been heavily garnering foreign investment and has made significant improvements to its infrastructure. In an effort to ensure employment opportunities for the population, and given the fact that the public sector cannot provide jobs to all unemployed people, the government is attempting many projects and programs to encourage entrepreneurship among the country’s youth, and also relax the administrative procedures in hiring, taxes, social charges during the startups’ early years of operation. The country is becoming home to startup spaces throughout the capital Rabat or the economic center of Casablanca.
The adoption of the auto-entrepreneur framework in 2014, similar to the one in place in France, Morocco has put in place a lever to integrate the informal economy into a legal framework. More than 40,000 ‘auto entrepreneurs’ are now benefiting from simplified taxation and access to micro-loans as well as to social security.
Ecosystem, support and partnerships
As the number of startups steadily increased, startup-oriented initiatives emerged, creating a supportive and favorable environment for their growth. Whether they are International organizations’ local branches, private sector initiatives, co-working spaces, or other incubators and funds, today, a startup owner based in Casablanca or Rabat can find organizations to support them. Options vary, including incubation in an early stage, the possibility to attend numerous entrepreneurship-related events, participate in competitions, receive mentorship and find a place to work at low cost.
An example of structure helping startups is CEED. CEED is an American NGO under Moroccan law created in 2013.They operate under 3 stages, ideation, growth and mature, with specific corporate partners for each step.Beginning 2016, to optimize market penetration of startup solutions, the organization decided to start from a company need, which will then be matched with a startup. Many challenges were launched successfully after this pivot.
More recently, in 2017, the French Chamber of Commerce and Industry of Morocco (CFCIM) decided to make its contribution to the building by launching a support system for startups: « We thus wish to benefit the holders of project of our long expertise in the field of support for business creation and training, because it is by having targeted support at each stage that they will be able to put on their side all the chances of success « .
Funding and financing remain one of the top concerns of young entrepreneurs, who, in spite of their attractive business ideas, cannot take the plunge because of lack of resources and proper business mentoring. “The entrepreneurial ecosystem is still young,” says Outmane El Hassani, Entrepreneurship Network Director, a program of the Office Chérifien des Phosphates (OCP), the largest global producer of phosphate rock and controlled by the Moroccan state. “Lack of support, experts and mentors that could support entrepreneurs, differentiated geographical coverage in terms of resources and the availability of capital but only beyond the seed stage, are all barriers to the creation and sustainability of a company at the national level.”
Weak results in Morocco, compared to the rest of the continent
However, challenges remain in terms of aversion to risk, heavy bureaucracy, limited investment capacity and skilled labor force scarcity.
Across the continent, Moroccan startups are the worst-off in terms of fundraising. Out of 19 countries, Morocco is ranked 15th. In 2018, Moroccan startups raised barely $ 3 million compared to $ 348 million for Kenya (1st), Nigeria (346 million) or even South Africa ($ 250 million). Support systems are increasing, but the ecosystem remains embryonic with fairly limited, if not non-existent, coverage outside Casablanca and Rabat. Almost 70% of the support systems are concentrated in Casablanca. The rest is in Rabat. In the other regions, support and accompaniment structures stand out due to their absence.
In terms of fundraising, the results are meager. Across the continent, Moroccan startups are among the worst-off in terms of fundraising. Out of 19 countries, Morocco comes in 15th position just ahead of Mozambique, Uganda, Ivory Coast and Zambia. According to a study carried out by the transatlantic fund specializing in information and communication technologies (Partech Ventures), Nigeria occupied the 1st place of the podium with nearly 110 million dollars in 2016. It was followed by the » South Africa (96.7 million) and Kenya (92.7 million). With just $ 980,000, Morocco was ranked 10th out of 12 countries in 2016, again far behind Senegal ($ 6.5 million) and just ahead of Tunisia ($ 800,000).
If Morocco has a poor rank, it is because it has been late in taking the train of young shoots in Africa. National start-ups do not dare to go international, even in terms of fundraising. In addition, they fail to convince across borders. So the added value is negligible in the Moroccan ecosystem. The delay in mobile money is also a reason.
Mobile payment is essential to support the growth of the digital economy. Precisely, a modern digital economy would help stimulate electronic commerce and would benefit young startups and other SMEs. It expands market opportunities and enables producers, retailers and service providers to reach and interact seamlessly with customers in distant markets.
The collaboration and involvement of all stakeholders will be necessary to strengthen and energize this entrepreneurial ecosystem and may one day make Morocco a startup nation.