Interview with: Imad Barrakad, Chairman & CEO, Moroccan Agency for Tourism Development (SMIT)
July 4, 2022
Over the past two decades, tourism has become one of Morocco’s main assets. It represents a major component of the country’s economy and generates an average of seven percent of the national GDP. Before COVID-19, Morocco was the leading destination in Africa and was in the top 30 of world destinations. The pandemic hit the Moroccan tourism economy hard. Various measures and mechanisms have been put in place by the Moroccan government to support a quick relaunch of both tourism and investment to help it return stronger than it was before the pandemic.
What kind of mechanisms will help relaunch the tourism investment sector in Morocco and how will the Moroccan Agency for Tourism Development (SMIT) support them?
The government has put in place an emergency plan of €200m to aid the revival of tourism, with €100m set aside to help hotels upgrade their product and quality. This emergency programme is a decisive lever for boosting investment. As the sector has been hit by a considerable drop in hotel occupancy rates, this financial mechanism will allow investors to participate in its revival. To improve the quality of service, it will be necessary to quickly bring hotels up to standard by re-considering the structural loads, training qualified staff, and carrying out digital transformation.
SMIT is a government body with expertise in tourism investment and hospitality. It encourages and coordinates the development of the Moroccan tourism industry so that it benefits all stakeholders. To reboot tourism, SMIT will assist hotels who have expressed their interest in being supported by financing improvements including renovations, maintenance of equipment and spaces, training, upgrading of standards (international, environmental, safety, hygiene, etc), and digital transformation.
SMIT is playing an essential role in the tourism sector’s recovery, continually mobilising to adapt its solutions. Its challenge for the year is to accelerate the implementation of structural projects with high added value for the tourism ecosystem, to amplify actions to promote national and international investments, and to boost the development of emerging regions and territories. Also, a wide range of incentive measures are planned through financial support initiatives, state subsidies and investment agreements.
How will SMIT actively participate in improving the business environment in Morocco and what kind of tourist investment incentives are there?
Located at the crossroad of cultures, an African hub with more than 40 connections to the continent and less than three hours’ flight from the main European capitals, Morocco is a safe, stable and secure destination with a GDP averaging 3.6 percent growth since 2010.
Morocco has numerous qualities that make it appealing to investors and visitors alike: solid infrastructures, an ideal climate all year long, a rich and diverse culture, and stunning landscapes. As such, the tourism sector has long been a crucial economic driver in the country.
Tourism generates significant employment opportunities, particularly for young people. The sector is also a valuable foreign exchange provider for Morocco’s trade balance. The Moroccan government has long recognised and prioritised tourism as a key sector. As a result, the industry benefits from various government incentives, both in terms of financial contributions and administrative support. The chief aim of these policies is to help ensure that tourism growth delivers broad and equitable social, economic and environmental benefits for the population. Morocco is an investment-friendly kingdom. In fact, it is easy to set up a business in Morocco even as a foreigner: there is no restriction on capital investment; no restrictions on repatriation of capital and profits; no restrictions on land ownership; and ease in terms of staff recruitment.
The tourism sector is a government priority with benefits such as prime location government land at an attractive price; private land purchase support; support for project expenses; total exemption on custom duties; and co-investment with Morocco senior partners. There is also a fund guaranteeing medium and long-term bank loans intended for the financing of accommodation and/or tourist projects that can cover up to 60 percent of the nominal value of the loan.
In addition, attractive investment incentives are in place, such as total VAT exemption on capital expenditure (for all goods, equipment and tooling acquired both in Morocco or those imported); total corporate tax exemption for the portion of the turnover denominated in foreign currency, for a period of five years from the start of the company’s operations; a reduced corporate tax for the portion of the turnover denominated in foreign currency for an unlimited period after the five years from the launch of operations (versus a standard corporate tax); and a reduced VAT rate of 10 percent (on all hotel accommodation sales for an unlimited period).
The government has also simplified all the prerequisites to enter the Moroccan market by creating dedicated institutions to assist investors in all aspect of their projects. These include SMIT, whose role is to promote the destination in terms of tourism investment and support the investors during the investment process. In fact, SMIT orients investments towards high added value projects for both the investors and region, creating sustainable and inclusive tourism components.
Tell us about the origins of the tourism support programme. How will it strengthen the capacities of existing companies and support new project leaders?
As well as its strong impact on the national economy, the pandemic led to persistent social consequences, especially in terms of tourism employment. To limit the effects, it is essential to support the private sector to maintain an investment dynamic, particularly for VSMEs. To this end, there have been moves to make VSMEs a lever for economic development. A support programme for SMEs has been set up as part of a partnership between the Departments of Tourism and Finance and SMIT.
The programme is being developed as a pilot in the Agadir region, to support the profitability of existing SMEs by creating rich, sustainable and diverse experiences. Its objective is to strengthen the tourism entertainment offer, to improve tourism consumption and to improve the attractiveness of the Agadir region (Souss Massa). It is intended for existing SMEs as well as new projects in various tourism fields. However, the focus in this pilot region will be entertainment and innovative projects with the aim of diversifying and increasing them. The programme’s impact on boosting tourism investment will help the socio-economic development of the region through the attraction of 250 new SME investors and the creation of almost 800 direct jobs for the local young population.
What kind of promotional activities has SMIT created to promote the kingdom and its tourism investment opportunities? Have they been successful so far? What do you have planned for the future?
The objective is to showcase Morocco investment potential as well as existing opportunities. Our main goal is to make the destination more attractive to investors and keep the attention of world-class brands. To achieve this, our promotional activities include attending the most prestigious global gatherings of tourism investment and hospitality forums, a specific and tailored communication campaign, the organisation of international events and webinars with high-profile participants, as well as international business meetings, roadshows and inviting guests.
Our main goal is to make the destination more attractive to investors and keep the attention of world-class brands
SMIT’s role is to develop projects that fit within the kingdom’s overall tourism development strategy: to make it internationally attractive by adapting products to each destination to meet tourism trends and needs, as well as those of the investors. These changes must benefit all stakeholders, attracting customers while encouraging investors to optimise their investments. Our promotional activities make the kingdom visible at the international scale. In the years to come we want to maintain the interest of international investors and hotel brands towards the destination.
Our short-term objective is a quick exit of the sector from the fallout of the pandemic. SMIT’s challenge for the future is to accelerate the implementation of structural projects with high added value for the tourism ecosystem, to amplify actions to promote national and international investments, and to boost the development of emerging regions and territories.
Also, Morocco is actively working to become a more attractive destination, through investments in infrastructure and the creation of assets such as an airport, train station, malls, and so on. We want to become one of the leading African and Mediterranean tourism investment destinations, with the goal of recovering market share from investors by offering tourists differentiated products.
Which parts of SMIT are you looking to digitise? How will you make this happen?
We were looking at accelerating digitisation even before the pandemic, with the aim of improving the support level of all stakeholders in the tourism investment process. We want to streamline exchanges, share insights, increase responsiveness, ensure the transparency of operations, disseminate and initiate good practices, and develop operational efficiency. Becoming digital has tremendous advantages such as increasing commitment, obtaining better collective intelligence and gaining in efficiency and decision-making.
This transformation positively affects SMIT’s operating systems and mechanisms, including interactions with stakeholders in internal and external investment, the strengthening of tools with the latest management technology, and the monitoring of investment files. We also plan to create an innovation LAB to monitor, develop and continue the digitalisation of tourism investment. These improvements will help our coworkers be more efficient, work in total transparency and place the investment process and investors at the heart of our concerns.