Marrakech – The US Department of State’s 2025 Investment Climate Statement reveals Morocco’s strategic efforts to establish itself as a regional business and industrial center.
Published this month, the report examines how the North African country is leveraging its “geographically strategic location, political stability, and infrastructure to expand as a regional manufacturing and export base for international companies.”
Morocco “actively encourages and facilitates foreign investment, particularly in export sectors like manufacturing,” through positive macroeconomic policies, trade liberalization, investment incentives, and structural reforms, according to the report.
The government implements targeted strategies focused on boosting employment, attracting foreign investment, and raising performance and output across various sectors.
The report states that Morocco has prioritized several key industries for development, including renewables, automotive, aeronautics, textiles, pharmaceuticals, outsourcing, and agro-industry.
The State Department’s assessment compares figures from different sources, noting that according to the United Nations Conference on Trade and Development’s World Investment Report 2024, Morocco’s inbound foreign direct investment (FDI) decreased by 50% in 2023 to $1.1 billion from $2.6 billion in 2022.
However, according to host country data cited in the report, Morocco’s inbound foreign direct investment increased by 50.7% in the first nine months of 2024, reaching over $1.6 billion. This growth is primarily driven by countries such as France, which makes up 61.4% of the total net FDI, and sectors including industry, real estate, and tourism.
The report also notes that “Moroccan direct investment abroad meanwhile showed a modest net outflow of $176 million over the same period.” This indicates Morocco’s continued focus on domestic development while beginning to establish investment presence beyond its borders.
The State Department document observes that Morocco consistently positions itself as the “gateway to Africa” for global investors seeking access to the continent’s markets.
Investment in infrastructure remains a priority
The 2025 Investment Climate Statement details how Morocco is preparing to host the Africa Cup of Nations in December 2025 and co-host the 2030 FIFA World Cup with Spain and Portugal. It is “investing heavily in infrastructure projects such as roads, rail, telecoms, and airport expansion,” the report states.
The country is also constructing additional ports, including Nador West Med – near Tangier-Med, Africa’s largest commercial shipping port – and Dakhla Atlantic, which aims to connect landlocked states of the Sahel as part of the country’s Atlantic Initiative.
These infrastructure investments demonstrate Morocco’s commitment to enhancing connectivity both within the country and across the broader region.
The State Department report acknowledges that despite these positive developments, Morocco faces several significant challenges. These include “inefficient government bureaucracy, corruption, and the slow pace of regulatory reform,” which can impede business operations and investment flows.
Additionally, “the Moroccan government does not have an investment screening process for critical industries” such as telecommunications, critical minerals and rare earths, and renewable energy. This lack of screening could potentially create vulnerabilities in strategic sectors of the economy.
The document also addresses corruption concerns, noting that in Transparency International’s 2024 Corruption Perceptions Index, Morocco ranked 99th out of 180 countries, a drop from 94th the prior year. It states that while “the law provided criminal penalties for corruption by officials, there were recurring reports of government corruption.”
The labor market presents both challenges and opportunities, according to the report. The State Department notes that the unemployment rate in Morocco was 13.3% in 2024, up from 13% the prior year, with particularly high rates among youth.
“Approximately 36.7% of young people between the ages of 15 and 24 and 19.6% of graduates” lack employment, indicating a disconnect between education and job market needs.
Investment opportunities exist in multiple emerging sectors
The 2025 Investment Climate Statement details Morocco’s significant investments in renewable energy and the digital sector. The New Development Model “lays out the country’s ambition to increase the share of renewable energy in total energy consumption from 19.5% in 2021 to 40% by 2035,” representing a substantial shift toward sustainable energy sources.
The report identifies opportunities for investment in smart grids, green hydrogen, energy storage, and renewable energy. These areas align with global trends toward decarbonization and sustainable development.
The document also discusses Morocco’s digital transformation efforts. In September 2024, Morocco launched the 2030 Digital Strategy “seeking to transform Morocco into a digital leader and drive economic growth, aiming to create 240,000 jobs and train 100,000 young people annually in the digital sector.”
This initiative demonstrates Morocco’s recognition of digitalization as a key driver of economic development and job creation.
The State Department report mentions that Morocco has introduced several changes to its income tax regime in 2025, “building upon the 2023 and 2024 Budget Laws which focused on corporate tax and value added tax (VAT).”
These changes include “a phased reform of corporate tax rates and the introduction of certain investment incentives” available until December 31, 2026.
According to the report, Morocco’s banking sector “has several large, homegrown institutions with international footprints, as well as several subsidiaries of foreign banks.”
It notes that Attijariwafa, “Morocco’s largest bank,” is the sixth largest bank in Africa by total assets (approximately $73 billion in December 2024) and operates in 27 countries, most of which are in Sub-Saharan Africa.
Trade agreements fortify Morocco’s competitive advantages
The State Department report points out that Morocco is “the only country on the African continent” with a free trade agreement (FTA) with the United States.
This agreement provides Morocco with a unique competitive advantage and “supports Morocco’s goals to develop as a regional financial and trade hub, providing opportunities for the localization of services and the re-export of goods to markets in Africa, Europe, and the Middle East.”
The impact of this agreement has been substantial: since the US-Morocco FTA came into effect, “bilateral trade in goods has grown nearly eightfold,” according to the report. This dramatic increase in trade volume demonstrates the effectiveness of the agreement in fostering economic ties between the two countries.
Both governments work closely to “increase trade and investment through high-level consultations, bilateral dialogue, and other fora to inform US businesses of investment opportunities and strengthen business-to-business ties.”
Beyond its relationship with the United States, the report notes that Morocco has had a bilateral investment treaty (BIT) with the United States since 1991, and has BITs in force with over 50 countries. It is also a signatory to several free trade agreements and Association Agreements.
Morocco is actively engaged in regional economic integration efforts, the report states. “Morocco is a member of the African Union and was among the early signatories of the African Continental Free Trade Area (AfCFTA), which came into force on January 1, 2021.”
Morocco completed ratification of the agreement in 2022, showing its commitment to intra-African trade and economic cooperation.
The report also mentions Morocco’s relationship with the European Union, noting that “Morocco has a free-trade area with the EU.” However, it also references a 2024 European Court of Justice ruling that “upheld an earlier ruling annulling two bilateral EU-Morocco agreements,” though “the original free trade agreement remains in force.”
The updated Investment Charter transforms investor incentives
The State Department report provides detailed information about Morocco’s new Investment Charter, adopted in December 2022, which “expands incentives for foreign investment such as financial benefits aimed at reducing costs for foreign investors” and “aims to increase the share of private investment to two-thirds of total investment by 2035.”
The charter establishes three main support schemes, according to the report: a common scheme providing grants based on job creation and other criteria, a territorial scheme offering incentives for investments in less developed regions, and a sectoral scheme focusing on priority sectors.
The report states that the common scheme provides “a grant corresponding to a percentage of the invested amount” based on criteria including the number of permanent jobs created (5 to 10% of the investment amount), gender (3%), type of occupations (3% for high technological content), sustainable development impact (3%) and local integration (3%).
The territorial scheme classifies provinces and prefectures into Category A (10% of the investment) and Category B (15%) to enhance “the attractiveness of investment in the provinces and prefectures, and for reducing territorial disparities.”
The sectoral scheme grants up to 5% of the eligible investment amount to projects in priority sectors such as industry, tourism and leisure, cultural industries, digital, renewable energy, waste recycling, transportation, and logistics.
The report adds that the National Commission on Projects may confer “strategic” status to investments greater than or equal to MAD 2 billion (approximately $544.5 million) that meet specific criteria. For these projects, “support measures are to be specifically discussed within the framework of an agreement with the State.”
Morocco’s institutional, legal frameworks support foreign investment
According to the State Department report, Morocco has established specialized institutions to facilitate investment. “Operating under the Ministry of Investment, Convergence and Evaluation of Public Policies, Morocco’s Investment and Export Development Agency (AMDIE) is the national agency responsible for the development and promotion of investments and exports.”
Additionally, “each of the country’s 12 regions also leads its own investment promotion efforts through Regional Investment Centers (CRIs).”
The report explains that “AMDIE and the 12 CRIs work together throughout the phases of investment at the national and regional level,” coordinating “contact between investors and partners.”
It notes that “Regional investment commissions examine investment applications and send recommendations to AMDIE” while “the inter-ministerial investment committee, for which AMDIE acts as the secretariat, approves any investment agreement or contract which requires financial contribution from the government.”
Morocco’s legal system is described in the report as “a hybrid of civil law (French system) and Islamic law, regulated by the Decree of Obligations and Contracts of 1913, the 1996 Code of Commerce, and Law No. 53-95 on Commercial Courts.” This hybrid system creates a unique legal framework that investors must navigate.
The country has established commercial courts with “sole competence to entertain industrial property disputes” and jurisdiction over commercial cases, including insolvency.
Despite improvements in handling commercial disputes, the report identifies “the lack of training for judges on commercial matters” as “a key challenge to effective commercial dispute resolution.”
Royal Decree No. 1-97-65 (1997) established commercial court jurisdiction over commercial cases, which has led to “some improvement in the handling of commercial disputes.”
According to the report, Morocco is signatory to over 70 bilateral treaties recognizing binding international arbitration of trade disputes, including one with the United States. It notes that Law No. 08-05 established a system of conventional arbitration and mediation, while allowing parties to apply the Code of Civil Procedure in their dispute resolution.
The document states that “foreign investors commonly rely on international arbitration to resolve contractual disputes” and “commercial courts recognize and enforce foreign arbitration awards.” It affirms that “generally, investor rights are backed by a transparent, impartial procedure for dispute settlement.”
Morocco officially recognizes foreign arbitration awards issued against the government, according to the report. It is a member of the International Center for Settlement of Investment Disputes (ICSID) and the Washington Convention for the ICSID, and as such agrees to enforce and uphold ICSID arbitral awards.
Additionally, Morocco is also a party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
Foreign investors face specific market conditions
The State Department report clarifies that while “foreign and domestic private entities may establish and own business enterprises,” there are certain restrictions by sector. While there are no “economy-wide limits on foreign ownership,” Morocco places a 49% cap on foreign investment in air and maritime transport companies and maritime fisheries.
Additionally, “foreigners cannot own agricultural land, though they can lease it for up to 99 years.” The report notes that “the Government of Morocco holds a monopoly on phosphate extraction through the 95% state-owned Office Chérifien des Phosphates (OCP).”
The banking sector presents both opportunities and limitations. The report states that “the Moroccan Central Bank (Bank Al-Maghrib) may use regulatory discretion in authorizing the establishment of domestic and foreign-owned banks” and “the Moroccan state also has a discretionary right to limit all foreign majority stakes in the capital of large national banks, but it is unclear whether this right has ever been exercised.”
In the oil and gas sector, the National Agency for Hydrocarbons and Mines (ONHYM) retains a compulsory share of 25% of any exploration license or development permit.
As part of the 80th UN General Assembly in New York, several American officials – including Deputy Secretary of State Christopher Landau and Special Advisor Massad Boulos – reiterated support for Morocco’s Autonomy Plan while actively encouraging American investments in the Western Sahara region.
Beyond the State Department report, S&P Global Ratings upgraded Morocco to investment-grade status on Friday, making it Africa’s only investment-grade Eurobond issuer.
This upgrade to BBB- with a stable outlook represents a major achievement as Morocco seeks to attract foreign investment while preparing for the 2030 World Cup. The rating puts Morocco’s credit score on par with Hungary and Oman, and restores a ranking lost in 2021 when the pandemic and drought affected Morocco’s economy.
S&P noted that “Morocco’s recent economic performance and its outlook are supported by its policy mix and strong structural socioeconomic and budgetary reform momentum.”
The agency forecast “a slow decline in the ratio of government debt to gross domestic product, as higher revenue helps narrow the budget deficit.”
This external validation aligns with many of the positive trends identified in the US Department of State’s comprehensive assessment of Morocco’s investment climate.
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