Morocco’s Entrepreneurial Growth: A Decade After the Summit

A decade after hosting the Global Entrepreneurship Summit, Morocco has made significant strides in fostering entrepreneurial growth. The country has seen a rise in startups, innovation hubs, and investment opportunities, transforming its business landscape. This article explores Morocco's progress, the challenges faced by entrepreneurs, and how the summit's impact continues to shape the nation's economic and entrepreneurial future.

By hosting the Global Entrepreneurship Summit in Marrakech in November 2014, Morocco drew global attention to entrepreneurship and made it a key focus of national strategy. During the summit, the World Bank announced a $50 million loan aimed at funding startups, which became a turning point for financing innovation and laid the foundation for a national venture capital sector.

Ten years later, it’s clear that while support and financing for startups have improved, Morocco’s economy has yet to be transformed by a new generation of high-growth startups. The lack of growth-focused entrepreneurship is hindering national progress. According to the CSMD's New Development Model report, Morocco needs at least 6% annual economic growth to meet its human development goals and rank among top advanced economies. Achieving this will require scaling up the country’s entrepreneurial ecosystem, which remains in its early stages compared to other regional ecosystems.

The Digital Morocco 2030 strategy mentions approximately 380 startups, which is insufficient for creating high-growth companies (gazelles) or unicorns. As of 2023, only 46 startups have received seed funding, and 75 have received venture capital - far fewer than the 380 startups mentioned in the Digital Morocco 2030 strategy. The total investment in startups is also relatively small, with only 290 million MAD ($29 million) in seed funding and 653 million MAD ($65 million) in venture capital by the end of 2023. These amounts pale in comparison to investments in other global markets.

The Digital Morocco 2030 plan aims for 10 gazelles by 2026 and one to two unicorns by 2030 - an ambitious target given the current state. The question remains: why does Morocco have so few growth companies?

This situation is puzzling, given the creation of numerous incubators and accelerators in the past decade, supported by both public and private funding. The national venture capital industry has also emerged, particularly with the Innov Invest fund, which received the initial $50 million loan from the World Bank.

The modest investment in startups is not due to a lack of capital but a shortage of high-quality projects. Financial resources have increased significantly, including through the Mohammed VI Fund and corporate venture capital funds. Investors are now engaging in bidding wars for a limited number of quality projects.

Thus, the issue is no longer the lack of support and investment but rather the lack of entrepreneurial supply. Public policies and private initiatives have mainly focused on the later stages of the entrepreneurial process, while the real challenge lies at the early stages.

Addressing this issue requires strengthening the national innovation system, which suffers from a lack of resources, creativity, and leadership. Morocco’s only attempt at a national innovation strategy, launched in 2009, failed due to poor implementation. Since then, the country’s research and development investment has stagnated at around 0.7%, well below the OECD average of 2.4%.

A large portion of the R&D budget is spent on university professor salaries, with little actual research output. In 2022, only 8% of patent applications filed by OMPIC were domestically originated, and Morocco also lags in international scientific publications.

The second challenge lies in education, which consumes 20% of the state budget but fails to cultivate an entrepreneurial mindset among young Moroccans. Despite years of discussion, the educational system still lacks focus on fostering initiative, creativity, autonomy, and teamwork.

Reforming the education system to support innovation and entrepreneurial growth is essential. Public and private efforts must focus on addressing the upstream factors that hinder entrepreneurship, not just the downstream ones. By doing so, Morocco could unlock the potential for a thriving entrepreneurial ecosystem in the next decade.

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Source: moroccoworldnews‍