Morocco's Investment Offer

Morocco’s Investment offer:

Opportunities, value proposition & African vision

September 2014

Morocco Overview

835 Billion MAD (2013) Capital Rabat GDP US$ 100 Billion Democratic and social Constitutional 25 681 MAD/ inhabitant (2013) Institutional System GDP per capita Monarchy US$ 3 500 Area 710 850 km² Average growth 4.9% (over the last 5 years) N° of inhabitants 32.5 million GDP Distribution Primary Sector 12.7% Time Zone GMT (GMT+1 in summer) (2012) Secondary Sector 28.1% Arabic and Amazigh (official) Tertiary Sector 59.2% Languages French, Spanish, English Inflation Rate 1.9% (2013)

Source: Haut Commissariat au Plan et Office des Changes

I Morocco: An Attractive Country For Investors

II Value Proposition

III Morocco : priority to investor needs

V Moroccan- African vision

A Stable Political Environment

A continuing drive for openness and democratisation

. A monarchy established in the year 788 (12 centuries ago) . The Constitutional Council reviews the constitutionality of all laws . In July 2011, a referendum established a new Constitution, guaranteeing:

• Human rights • Improved moral standards in public life • The legality of the State and its institutions • The plurality of the Moroccan identity • Individual and collective liberty

Morocco, most stable country Morocco, most pacifist Morocco, most democratic in North Africa in 2012 country in North Africa in country in Arab region in 2013 2013

According toThe Association According to Global Peace Index 2013 According to the Egyptian center For International Affairs Ibn Khaldoun

African Country of the future 2011-2012 GDP Growth #1 (average 2001-2013) 4,8% in Africa

S&P affirms Morocco's stable Inflation rating (average2001-2013) 1,8% May 2014

FDI Growth* Fitch Ratings maintains (average 2011-2013) 40% Investment Grade & BBB stable April 2014

Unemployment rate (End 2013) 9,5% Moody’s

Moody’s maintains Stable government bond rating September 2014

* Flux Net des IDE entrant Sources: Haut Commissariat au Plan, Office des Changes; Bank Al Maghrib; Banque Mondiale

Easiness of doing business

Free More than No restrictions 100 protection to capital for repatriation of profits and foreign non-residents investment Plus de 50 capital for non- conventions de residents agreements nonand double imposition+prtaxation otection de l’investisseme 1 2 3nt 3

INDUSTRY: Performant Ecosystem Strategy 2020 AGRICULTURE: GREEN MOROCCO PLAN 2020 • Industrial GDP to reach 23% of global GDP Launched in 2014 Launched in 2008 • To modernise the agricultural sector • Creation of 500 000 jobs • US$10 billion in additional GDP from • Creation of Industrial Development Fund: agriculture $2.5 Bn • Allocation of 1 000 hectars of land for • US$15 billion in public and private investments rent TOURISM: 2020 VISION LOGISTICS PLAN 2016

• Launched in 2010 • 20 million tourists in 2020 Launched in 2010 To improve the country’s logistical competitiveness • 200 000 new beds • To reduce logistical costs from 20% to 15% of GDP • Tourism GDP: from US$6 billion in 2010 to • An integrated national network of 70 multi- US$17 billion in 2020 flow logistical zones

ENERGY: MOROCCAN SOLAR PLAN 2020 IT: MAROC NUMERIC Launched in 2009 (Solar) and in 2010 (Wind) Launched in 2009 • Generalized access to broadband

• Renewable energy >40% of national • Encourage IT use by SMEs production by 2020 • Development of government e-services • Capacity: 2 000 MW of solar power + 2 000 MW of wind power PHARMACEUTICAL PLAN 2020 CHEMICAL PLAN 2020 Launched in 2012 Launched in 2012 • Turnover in export: US$1.5 billion • Turnover: US$18 billion

• Direct job creation: 12 500 • GDP contribution: US$ 5.5 billion

• Indirect job creation: 45 000 • Job creation: 43 000

Modern Infrastructure

Airports Tramways •16 international airports •Rabat and Casablanca Ports: •Casablanca is #1 Europe-Africa hub •€1 billion • Morocco has two coastlines (Mediterranean and Atlantic)

• More than 95% of trade in Morocco go through the seaway.

• Morocco has 38 ports of which 18 are devoted to foreign trade.

Tangier Med port:

• Ideal port platform to serve Europe and West African countries

Highways Railway Network • 2015: it will connect all the big cities of •First high-speed train in Africa Morocco (Tangier-Casablanca) in 2016 – €1.8 billion

TANGER FREE ZONE TANGER AUTOMOTIVE CITY ATLANTIC FREE ZONE TETOUAN SHORE

TECHNOPOLIS TANGER TETOUAN BERKANE OUJDA SHORE

KENITRA OUJDA CLEANTECH RABAT FES CASANEARSHORE MEKNES CASABLANCA NOUASSEUR FES SHORE AEROSPACE CITY MARRAKECH

AGADIR AGROPOLIS

LAAYOUNE MARRAKECH SHORE

DAKHLA

OFFSHORING P2I AERONAUTICS P2I RENEWABLE ENERGY P2I GENERAL P2I AUTOMOBILE P2I AGRICULTURAL P2I

Contents

I Morocco: An Attractive Country For Investors

II Value Proposition

III Morocco : priority to investor needs

V Moroccan- African vision

EUROPE

AMERICAS 9 miles MIDDLE EAST

TANGER MED

AFRICA

MOROCCO

At The Crossroads Of The Continents

7h 5h 3.5h 10d 3h NEW YORK 2d 3d PARIS 3h FRANKFURT 3h 1h 2d 1d ROME MADRID 22h 4h 30d 5d 4h BEIJING ACCRA 4d 3h CAIRO 4d DAKAR 10h 25d SAO PAULO Flight duration Sea/land route

Sources: Royal Air Maroc; COMANAV

Agreement under negotiations with Canada

Association Agreement with European Union (1996)

Located just 14 km from Europe Agreement with Turkey (2003) Agreement with United States of America (2005)

Agadir Agreement (2004) United Arab Emirates Agreement (2003) Arab League Agreement (1998) Agreement under negotiations with the Economic Community of West African States (ECOWAS & CEMAC)

Since 2008, Morocco enjoys an Advanced Status with the EU.

Logistics Hub of international stature Connections to 120 ports in 56 countries, with 40 services

Index of maritime connectivity in Morocco

18 18 23 19 33

77 83 84 80

2004 2005 2006 2007 2008 2009 2010 2011 2012

Current capacity of 3.5 million containers (8.5 millions in 2015) 2 container terminals 2.5 million TEUs * in 2013 Ambition: To be included in the World Top 15

Number of international Direct connections to 33 Direct connections to 36 cities passengers: European cities in Africa and the Middle East Steadily growing

In millions 16.5 15.1 15.1 13.5 11.5 12 10.1 8.5

2006 2007 2008 2009 2010 2011 2012 2013

Mohammed V Airport in Casablanca: best airport in North Africa in 2012 According to the International Association of Airports

Sources: Office National des Aéroports & Royal Air Maroc

Competitive Costs

Competitive salary (average) Exports costs* Total Tax Rates**

US$ per month US$ per container

1292 3662 1268 65.0% 62.0% 64.0% 59.0% 2646 49.6% 750 576 598

1186 1044

488 512 293 380

Morocco China Tunisia Spain France Morocco Spain Tunisia China France

** Amount of taxes and mandatory *Associated costs with all procedures contributions by the company during the required to export goods second year of activity, expressed in % of commercial profits

Source: World Bank 2012; Caisse Nationale de Sécurité Sociale; Doing Business

A young and educated population

• 64% of Moroccans are aged under 34 years • 6 million young people (between 18 and 35 years old) • An active population of 12 million • 175 000 university students • Training of 15 000 engineering graduates per year for 2015 and 25 000 for 2020 • Over 100 public universities and schools • Over 200 private universities

A youth open to the world • 16 million internet users

• 4,4 million Facebook users (+38k Twitters, 1st in arab countries)

• ~10 millions of french speakers

• ~6 millions of spanish speakers

• Steady growth of English (Morocco ranked 45th worldwide and 2nd in North Africa, in terms of mastering English*)

• Strong cultural and linguistic affinity with Europe

Sources: Arab Social Media Report, Dubai School of Government; Haut Commissariat au Plan, Ministère de l’Enseignement Supérieur, Agence Nationale de Réglementation des Télécommunications * World index of english level, by « Education First » organization

Contents

I Morocco: An Attractive Country For Investors

II Value Proposition

III Morocco : priority to investor needs

V Moroccan- African vision

Investment Promotion Offshoring Sector Funds Hassan II Fund Incentives (IPFs)

. Eligibility Conditions: . Eligibility Conditions: . Corporate tax Full exoneration for • Investment ≥ US$ 24 million • Total investment ≥ US$ 1.2 first 5 years and 17,5% starting • Jobs created ≥ 250 million from the 6th year or • Transfert of technoloy • Investment in goods and . Income Tax : 20% cap in • Implementation in a priority area equipment ≥ US$ 0.6 million Nearshoring Business Parks • Protection of environment • Sectors: Automobile, aeronautics, nanotechnology, . Land Assistance: A contribution up to microelectronics, and . Training Subsidies up to US$7,800 20% of acquisition costs biotechnology. (over 3 years)

. External Infrastructures: assistance . Contributions are limited to a of up to 5% of total amount of maximum of 15% of the total investment programme investment and US$ 3.7 million as the following: . Training: A contribution of up to 20% • Land Assistance: 30% of costs of training costs. of land acquisition and development. • Equipment: 15% of costs of new equipment (excluding taxes and import duties).

An Attractive Incentive Package

General Tax Casablanca Finance Free zone regime Code City

. Eligibility Conditions . Eligibility Conditions . Eligibility Conditions • Investment ≥ US$ 24 • 70% of sales to be • Activities with non- million achieved abroad resident businesses • Compliance with financial . VAT exemption for the . Unlimited exemption from legislations and importation of equipment goods, customs duties regulations, foreign trade materials, and tools for the 36 . Simplified customs procedures and foreign exchange months following the start of the . Corporate tax = 0% for 5 years and activity. 8.75% for 20 years For service companies CFC status: This exemption is also granted to . Income tax = 0% for 5 years, then . Total exemption from corporate parts, spare parts and accessories 80% tax reduction for 20 years tax for companies during the first imported at the same time as the . Business tax exemption for 15 5 years of operation and 8.75% above equipment years thereafter. . Value Tax Added : unlimited For regional and international office: exemption for goods delivered . Taxed at a reduced rate of 10% . Exemption from import of and services (corporate tax) equipment goods, materials, and . Registration fees: exemption acts . Specific taxation rate of 20% for tools for the 36 months after the of incorporation and capital wage income (income tax) signing of the Investment increase . Exemption acts of incorporation Agreement and capital increase

• 51 Double Tax Avoidance Agreements • 62 Investment Protection Agreements Investor • Member of OECD Investment Committee Protection • Member of International Centre for Settlement of Investment Disputes (ICSID) • Member of MIGA (Multilateral Investment Guarantee Agency) • The creation of the Business Environment National Committee (CNEA) to facilitate procedures and access to information, and to carry out legal reforms • The modernisation of business law Legal Reforms • The strengthening of intellectual property protection • A new law on arbitration and mediation • New banking regulations • Administrative simplification

An Incentive Tax • Reduction of tax burden System • The creation of funds specifically for investment promotion

International • Morocco adhered to the OECD Declaration on Propriety, Integrity and Transparency in the Conduct of International Business and Finance and to the Instruments OECD Declaration on Green Growth

Morocco gained 8 positions in global ranking of “Doing Business 2014” Morocco is "the most improved" country in business regulations in 2011 (+21 positions)

Contents

I Morocco: An Attractive Country For Investors

II Value Proposition

III Morocco : priority to investor needs

V Moroccan- African vision

• By 2050, Africa's economy would be close to 10 times bigger than it is today.

• Six of the world’s ten fastest-growing economies in the world over the last decade were in Africa. It is expected to be seven by 2020.

• The economy in the Sahel region is growing by more than 5% annually.

• There is a rise of a consumer society, which increases demand, boosts local production and amplifies middle class.  In 2014, 106 million Africans should have an annual income of over $ 5,000*

The true size of Africa embraces China, the US, India, Eastern Europe and the most important Western European countries

* Bloomberg

Africa’s attractiveness

8th 8th 5th 2nd 2011 2012 2013 2014

Africa’s relative attractiveness is on the rise: a way above Asia and Western Europe and slightly behind North America*

Africa’s attractiveness rises significantly when investors get established in the African market*

*: EY’s Africa’s attractiveness Report

Telco Consumer Electronics Consumer Electronics Automotive Goods Goods

Facility in # African Commercial 1 South Africa countries representation 16 13 21 6 Commercial in every invested representation country in every country 12% 9% % Africa 7% Sales on 3% 3% 3% Total Sales

African countries combined represent a GDP of 3.1T$, comparable to GDP of India (3.3T$) or Russia (2.2T)

Source : World bank statistics, Company websites

Tomorrow, African challengers will invest even more in the continent

40 fast-growing "African Challengers" with global aspirations

Competitive companies Algeria - 2 Tunisia – 2 investing heavily in Africa Sonatrach Groupe Elloumi Cevital Groupe Poulina Egypt – 7 • Out of the 40, 32 Orascom Telecom Orascom Construction Industries Morocco - 7 Egyptair Holdings companies are already at Al Ezz Group Office Cherifien Des Phosphates El Sewedy Cables least regional players Groupe ONA EFG Hermes Saham Group CIB Maroc Telecom • African challengers stay Royal Air Maroc Attijariwafa Bank inside the continent in two- BMCE South Africa – 18 thirds of all cross-border Anglo American Sasol Togo - 1 The Bidvest Group deals MTN Group Ecobank Shoprite Holdings Vodacom Group Imperial Holdings Nigeria – 2 Barloworld Steinhoff International Dangote Sappi United Bank for Africa Datatec Sab Miller Murray & Roberts Holding Naspers Altron Angola - 2 Aspen Pharmacare Holding 65 Standard Bank Group Sonangol Old Mutual Banco Africano de Investimentos

Need for a coordinated approach to support investments of African Challengers

Alegria Tunisia

Libya

Mali Mauritania Niger Senegal Burkina Djibouti Faso Guinea Nigeria Benin Ivory Coast Central African Ethiopia Republic Liberia Ghana Cameroun RDC Equatorial Guinea Uganda Kenya Gabon Congo Burundi Tanzania

Angola

Madagascar

Moroccan geostratergic vision towards Africa

•Morocco, under the vision of its King, is keen to strengthen its position as an African leader. This is marked by the various visits of His Majesty to different African countries. • 7% of Morocco’s exports in 2012 were to the markets of the Sahel-Saharan states, aiming to raise the ratio up to 20% in 2018. •With its $800 millions of investments, Morocco is the King Mohamed VI meeting Malian President (up) and SenegalianPresident (down) second African investor in the continent after South Africa. •In a decade, nearly 5,000 bilateral agreements have been signed and entered into force. 40 joint commissions have been established in the same period. •Morocco is considered as a platform for foreign companies to project their activities in sub-Saharan Africa due to:  Deep knowledge of African markets  Very frequent airline connections  A strong Moroccan banking sector present in Africa