Boosting Economic Freedom: Morocco’s Businesses Set to Thrive with $40 Million EBRD Fund

Morocco is recognized as the most economically free country in North Africa according to the Heritage Foundation’s 2024 Index of Economic Freedom. This annual report, now in its 30th edition, assesses the economic freedom of 184 countries based on 12 factors grouped into four main categories: rule of law, government size, regulatory efficiency, and open markets.

In the 2024 report, Morocco achieved an overall economic freedom score of 56.8 out of 100, ranking 101st globally and 9th out of 14 countries in the Middle East and North Africa (MENA) region. Despite a 1.6-point decrease from the previous year, Morocco still leads North Africa, outperforming neighboring countries like Algeria, Tunisia, Egypt, and Mauritania.

The Heritage Foundation credits Morocco’s progress to its economic reforms that encourage private-sector dynamism, improved competitiveness, and a diversified productive base. However, the report also notes that Morocco still faces challenges that require deeper institutional reforms.

Morocco’s scores in various categories reflect its strengths and areas for improvement:

• Rule of Law: Property rights (57.6), judicial effectiveness (32.9), and government integrity (33.9).
• Regulatory Efficiency: Business freedom (68.5), labor freedom (48.6), and monetary freedom (71.1).
• Open Markets: Trade freedom (67.4), investment freedom (65.0), and financial freedom (70.0).

While the country has streamlined procedures for setting up and registering businesses, labor market rigidity and a significant informal sector continue to impede dynamic job growth. Morocco’s business environment is relatively free, but labor market regulations and high tax rates, with a top individual income tax rate of 38% and a corporate tax rate of 32%, present challenges.

On a global scale, Singapore remains the most economically free country, followed by Switzerland, Ireland, Taiwan, and Luxembourg. In the MENA region, the United Arab Emirates, Israel, and Qatar lead the rankings, while Mauritius, Botswana, and Cape Verde top the African rankings.

The 2024 Index emphasizes the crucial role of economic freedom in fostering human progress and prosperity, highlighting that greater economic freedom significantly reduces poverty levels and enhances overall human development.

Moroccan businesses set to gain from a $40 million EBRD fund aimed at fostering business expansion

The European Bank for Reconstruction and Development (EBRD) has reaffirmed its commitment to supporting mid-cap companies across North African nations, including Morocco. In a recent announcement, the bank disclosed a $40 million investment in SPE REF III, a newly established fund managed by SPE Capital. This initiative aims to bolster the growth of mid-cap businesses in Egypt, Tunisia, and Morocco.

The EBRD’s investment in SPE REF III represents a strategic move to foster economic resilience and competitiveness in North Africa. The fund is designed to target sectors with high growth potential, including manufacturing, goods production and processing, healthcare and pharmaceuticals, and private education. These sectors have demonstrated robustness in navigating market fluctuations, making them ideal candidates for investment aimed at long-term sustainability.

“This investment is pivotal in enhancing financial market resilience and boosting local business competitiveness,” noted the EBRD in a press release. The bank emphasized its commitment to providing alternative funding sources through private equity, addressing the challenge of limited access to growth capital that many businesses face.

Since its inception in 2012, the EBRD has been a significant investor in the economies of Morocco, Egypt, and Tunisia, injecting over €19 billion across various sectors. This latest $40 million commitment underscores the EBRD’s ongoing dedication to supporting economic development and fostering inclusive growth in the region.

Nabil Triki, Senior Partner and CEO of SPE Capital, echoed these sentiments, highlighting the partnership’s potential for “positive and lasting impact.” “Together, we promote sustainable growth and development that benefits both communities and economies,” Triki affirmed.

The partnership between EBRD and SPE Capital goes beyond financial investment; it aims to diversify financing options and support mechanisms for businesses across North Africa. By targeting mid-cap companies with high growth potential, the initiative seeks to create a ripple effect, contributing to sustainable development and improving the quality of life for communities throughout the region.