Casablanca Finance City (CFC) now tops the ranking of African financial centres. In the 40th edition of the Global Financial Centres Index (GFCI) published earlier this month, it gained eleven places to reach 38th worldwide, ahead of Mauritius (55th) and Johannesburg (95th).

“Casablanca now stands out as the third-largest financial centre in the Middle East and Africa region, behind Dubai and Abu Dhabi,” says Saïd Ibrahimi, managing director of CFC Authority. The centre has nearly 300 companies benefiting from its status, up from 65 in 2015. Among them are a growing number of English speakers looking for a way into French-speaking Africa.

With around 20 members, including Lloyd’s, PwC, DLA Piper, Clifford Chance, Standard Chartered and PIDG, British firms form the third-largest national community in the centre, behind Moroccans and the French.

Casablanca’s edge over Nairobi and London

“CFC allows them to use Morocco as a preferred investment platform to coordinate and develop their activities in African markets,” Ibrahimi said. Clifford Chance’s Casablanca teams, for example, advised on Banque Centrale Populaire’s (BCP) financing for the acquisition of BNP Paribas’s subsidiaries in Mali, Gabon, Côte d’Ivoire, Togo and Cameroon.

Another example is the Private Infrastructure Development Group (PIDG), a London-based infrastructure funder backed by six governments, with the United Kingdom contributing around 70%. “Anglo-Saxons have historically had more affinity with East Africa. But we covered West Africa very poorly from Nairobi and London,” said Gilles Vaes, the group’s director of investments and project development and a former regional head of Engie in Casablanca.

Faced with Abidjan, Dakar or Lagos, geography settled the matter. “Casa is three hours’ flight from London, but also four or five hours from Lagos, Yaoundé or Conakry – all markets in which we operate,” he said.

A full financial ecosystem

The office, opened a few years ago, has around a dozen staff, compared with around 30 in Nairobi. It is from there that the Kong solar plant (50MWp) in Côte d’Ivoire was developed; its €55.5m ($62m) financing was signed in mid-October with Dutch bank FMO.

“The working language is French. Getting an English-speaking team in Nairobi to do this would have been practically impossible: with our partner as with CI-Energies, everything is done in French,” Vaes said.

“When people talked about Casablanca Finance City [CFC] 15 years ago, I didn’t yet see the talent – I mainly saw a building site. Today there is a genuine ecosystem: everything is within a short distance,” said Ghislane Guedira, head of the Casablanca office of AP Moller Capital, a Danish infrastructure fund manager with around $2bn in assets under management.

Indeed, fund managers, private equity investors, law firms and consultancies, as well as Moroccan institutions such as the Caisse de Dépôt et de Gestion (CDG) and the Caisse Interprofessionnelle Marocaine de Retraite (CIMR), all revolve around the ecosystem created by CFC.

There is another factor: banks, insurers, telecoms operators and the major Moroccan groups have all expanded into French-speaking sub-Saharan Africa, and setting up at CFC often amounts to buying that access.

“It’s not so much the regulatory framework that helps. It’s the fact that Moroccan companies already know these countries: they are established there, they have invested there. Arriving in French-speaking Africa with a Moroccan bridgehead is a real advantage, and international investors have understood that well,” Guedira said.

Globex, the exclusive FedEx licensee in Morocco, whose takeover A.P. Moller Capital signed in August, holds licences in Senegal and Cameroon.

Where CFC’s reach into sub-Saharan Africa falls short

CFC’s managing director Ibrahimi maintains that “the singularity of the Moroccan centre lies in a unique combination”.

“Morocco’s structural strengths, a prime location in the immediate vicinity of Europe and a competitive value proposition that notably offers effective support in African markets,” he said. “Today, our members operate in 53 of the continent’s 54 markets. That figure says it all.”

PIDG’s Vaes adds a note of nuance saying: “Morocco has a rather good reputation in West Africa.” But for an infrastructure developer, the points of contact remain limited: builders seeking to become concession holders, and a few banks.

“Many project financings are done by DFIs [Development Finance Institutions], IFC [International Finance Corporation], Proparco or FMO. We don’t really work with commercial banks. And as Moroccan banks are commercial banks, we don’t really work with them outside Morocco. There is potential, but it is still emerging,” he says.

CFC Authority is aware of this. Its African partnerships, such as the protocol signed in March with the Nairobi International Financial Centre, are intended “first and foremost to make it easier for our members to access markets, business opportunities and local stakeholders”, said Ibrahimi.

Tax breaks, currency rules attract foreign investors

For a foreign investor, repatriating dividends and sale proceeds remains the central question. On this point, Morocco did not wait for CFC. “The Moroccan dirham is not the naira or the Ethiopian birr. The strength of the balance of payments assures foreign investors that they will be able to recover their dividends and sale proceeds,” says Guedira.

CFC status adds a layer of ease. “I pay in foreign currency for services invoiced by group entities abroad without prior authorisation,” Guedira says.

Companies granted CFC status are fully exempt from corporation tax for their first five financial years. They are then taxed at 20%, never moving into the 35% band that applies to profits above 100m Moroccan dirhams ($10m). For employees, a flat-rate withholding tax of 20% applies for 10 years – enough to pay talent well at a lower cost.

“CFC is not a free zone, nor an offshore zone: our members have access to the Moroccan market,” said Ibrahimi, who says the tax advantages “are not enough to explain decisions on where to set up”.

Segments with room for progress

To domicile project vehicles, however, financiers look elsewhere. The main centres remain Luxembourg, the Netherlands and Mauritius. Morocco is trying to position itself but is not yet at the top of the list of jurisdictions. The same goes for international arbitration and the choice of governing law: English or French law remains the norm.

The centre makes it easier to hire foreign profiles and attracts a Moroccan diaspora tempted by a return home. Candidates from French-speaking Africa based in France are also applying.

“I tell young Moroccans living in London or Paris: by coming back, you get the best of both worlds. You live in Morocco, with a quality of life that Dubai, expensive and saturated, no longer really offers. But you keep an international exposure, on deals as well as on counterparts,” said Guedira. That is enough to fuel a flow of deals that extends well beyond the kingdom’s borders.