World Bank Report: Morocco’s Private Investment Slumps Below Pre-Pandemic Levels

While the Covid-19 pandemic is now in the past, private investment is struggling to recover. Private capital formation fell by 6.2% comparing 2022 to 2019 and by 15% comparing the first half of 2023 to the first half of 2019. As a result, net exports and public consumption have already largely exceeded pre-pandemic levels, but private consumption is stagnating and total investment remains below its 2019 level. This is a cause for concern for the World Bank, which recently released its new report on the Moroccan economy. This slowdown in private investment is likely to affect not only current growth, but also medium and long-term economic growth, it is specified.

This situation is also worrying the Moroccan government, which is trying to take the bull by the horns. In the 2024 Budget Bill, it intends to promote private investment in order to establish the foundations of a "competitive", "equitable" and "sustainable" national economy in line with the Investment Charter. The aim will be to rebalance the current distribution of the overall investment effort at the national level, by increasing the share of private investment, currently set at one third, to two thirds by 2035, while achieving parity between public investment (50%) and private investment (50%) by 2026. These objectives are fully in line with the principles and aspirations carried by the new Investment Charter.

From 2024, the government should introduce a new system to support private investment. This system will include financial incentives, including a territorial premium for less developed regions and a sectoral premium for strategic sectors. This will be supplemented by specific measures for strategic projects and initiatives to promote Moroccan investments abroad in order to strengthen national industrial sovereignty and improve the country’s industrial position on the regional and international scene.

"The entry into force of the Investment Charter, the reform of VAT and corporate tax should normally favor a rise in private investment," commented Javier Diaz Cassou, senior principal economist at the World Bank, during a press briefing to present the report on November 16 in Rabat. According to the estimates of the report of the Special Commission for the Development Model, the share of private investment is around 35%. The commission recommends increasing it to 65%.