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Morocco, Most Improved Economy, Creates Business-Friendly Environment

October 20, 2011

Morocco improved its business regulation the most compared to global economies as reported in Doing Business 2012

Strengthening the business environment to empower entrepreneurs

The government of Morocco is showing rapid advancements in improving the country's investment climate, ranking 94th among 183 economies measured in Doing Business 2012 – climbing 21 places from its ranking in the 2011 report.

Morocco has come a long way in strengthening its business environment. In 2007, IFC's investment climate advisory services conducted a diagnostic study, showing the business entry rate in Morocco at 5 percent -- lower than the business entry rate of 10 percent in Tunisia and Algeria. Procedures were found to be lengthy, costly and complex.

Since then, World Bank Group teams together with the government of Morocco developed investment Climate reform activities, helping Morocco improve its performance as measured by the Doing Business indicators. Working very closely with the national reform coordination unit placed under the Ministry of General Economic Affairs and with Morocco's first public-private dialogue mechanism (the National Council for the Investment Climate), the teams focused on four Doing Business topics: enforcing contracts, resolving insolvency, starting a business, and dealing with construction permits.

"Our strong partnership with the investment climate teams of the World Bank Group has been instrumental in identifying priority reforms and to evaluate their impact on the business community in Morocco," said Najib Boulif, Ministre chargé des affaires générales et de la gouvernance. "The early involvement of the private sector has also been a key element of this successful collaboration that we intend on pursuing this year as we are determined to continue improving our business environment," says Mr. Boulif.

Improving the business environment is central in Morocco's policy reforms especially at the wake of the Arab Spring. These reforms benefiting micro and small and medium businesses are aimed at providing additional savings to the private sector, encouraging job creation and economic growth.

Investment Climate reform yields strong results 

Morocco implemented overarching reforms including publishing a decree in May 2011 that considerably simplified business start-up procedures. The minimal capital requirement for starting a business was eliminated, cutting start-up costs by 42 percent. Half of the six procedures for starting a business were eliminated, and the company name search can now be handled online at the one-stop shop.

In the area of construction permitting, the one-stop shop established in Casablanca at the end of 2005 became fully operational and widely used by entrepreneurs, who can obtain a permit in 15 days.

In addition, Morocco eased the administrative burden of paying taxes for firms by enhancing electronic filing and payment of the corporate income tax and value added tax. The two electronic systems are now used by the majority of taxpayers.

Morocco also strengthened investor protections by allowing minority shareholders to obtain any non-confidential corporate document during trial.

Next steps

The Government of Morocco is keen on maintaining the momentum of the reforms and has requested assistance from the World Bank Group in providing follow-up advisory services to take stock of ongoing reforms and update last year's recommendations. A potential follow-up intervention is now being considered with collaboration across different units of the World Bank Group. It would address topics related to Doing Business and a broader governance reform agenda, focusing on the measurement of how regulations are actually implemented. Discretion and transparency will form the core of the follow-up engagement.