Good news from North Africa
Right now, there seem to be few good reasons to invest in North Africa. Despite the recent political upheavals, Allen & Overy has opened up an office in Morocco. The law firm is convinced that the Casablanca Financial City has a promising outlook. LFF interviewed Managing Partner Henri Wagner and Corporate Partner François Duquette to find out more.
An Economist Intelligence Unit report, that was published at the beginning of the year, predicts that in the near future, Western European countries as well as China and India will use Morocco as a platform from which to invest in African markets. Why Morocco ?
Morocco is rapidly establishing itself as a key hub for international companies and investors looking to build a presence in Africa. It is one of the leading destinations for foreign direct investment (FDI) in Africa and was one of the few places in Africa to see FDI projects increase in 2010. It also has strong trade links with other key markets in our network and there is growing interest from China, India and Japan in the region. The potential that Morocco offers both domestically and in expanding our extensive Africa-focused work made this the perfect fit for us. It is also where a large number of our clients already have, or are looking to establish, a presence.
To what extent did studies like that influence your decision to setting up an office in Casablanca?
There are a number of key considerations involved in Allen & Overy's decision to open a new office in Casablanca and one of the factors which has influenced our decision is the dynamic nature of the Moroccan economy. We have been active in Morocco for a number of years and witnessed its growth potential. A number of economic studies did comfort us in our analysis. Essentially, establishing a presence in Morocco is part of Allen & Overy's emerging markets strategy which contributed about half of the growth in revenues for the firm last year.
Did the Arabian Spring halt your plans to open up the office for a certain while?
The Arab Spring did not halt our plans to open up an office. Our internal process followed its normal course but it was reassuring to see that Morocco remained relatively stable during that period. If anything, the Arab Spring highlights why Morocco is the right choice in terms of where to open an office in North Africa. The country had already started down the road of political reform and showed willingness to continue following that path.
Sadly, the African continent is often linked to bad news in the media. What is the economic outlook for this region according to you?
The Moroccan economy is growing rapidly and has continued to grow while other countries have stalled during the financial crisis and global recession. Real GDP growth is expected to grow by an average of 4.7% for the period of 2011 to 2015. We are also seeing an increasing amount of investment in Morocco by Middle Eastern investors and there is a growing interest in the region from Chinese and Indian investors. We think the economic outlook for both Morocco and the wider African region is strong.
Does bad news deter people and companies from investing in Africa?
Some people and companies may be discouraged from investing in Africa by negative news items. At Allen & Overy the decision to open in a new location is taken seriously and all factors are taken into account. In this instance we have no doubt that opening in Morocco is a sensible and exciting decision for us. We hope that our lawyers in Casablanca will help clients better understand the African market and bring them the comfort they need to invest in the region.
To what extent do African financial centres differ from their competitors in the Middle East?
African financial centres are less developed than their competitors in the Middle East but recent initiatives such as the Casablanca Financial City (CFC) are very encouraging. The CFC reinforces Morocco's positioning as a hub for the region by offering certain tax benefits and advantages for financial institutions and service providers wanting to establish a presence in the zone to service clients outside of Morocco. The CFC was one of the factors we considered in deciding to establish a presence in Morocco.
Do these two regions compete in terms of financial business?
There is very little competitive overlap between the Middle East and African financial centres. Conversely, there are very strong synergies between the two. Whilst the investment flow is mostly inwards into North Africa, we are seeing an increase in the number of Moroccan and North African clients who are interested in investing in the Middle East region. With a presence in both regions, we are now very strongly placed to assist our clients with such investments.