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At a time when innovation is increasingly becoming the driving force behind all economies, start-ups find themselves on the front line thanks to their simple and agile structures that enable them to venture into the most promising sectors.
However, innovation cannot develop successfully without a complete and adapted ecosystem, bringing together all the players that must interact and join forces to bring innovative projects to life (organisations, companies, start-ups, universities, investors).
This article details the dynamics that are forging the innovation ecosystem in Morocco, whether related to national strategies or private initiatives. Our mapping of support structures makes it possible to assess strategic issues in particular, for any country looking to take full advantage of its potential for talent and entrepreneurship.
This is key as innovation constitutes a critical lever for the economic growth and development of a country.
A. Support structures for innovative start-ups have multiplied in Morocco thanks to political and private initiatives.
B. Nonetheless, their presence in Morocco remains uneven and concentrated in the Casablanca region.
C. Large Moroccan companies are progressively contributing to the innovation ecosystem and are starting to use open innovation as a value creation lever.
D. Moroccan innovation, measured in terms of patent applications and start-up fundraising, is still not achieving its full potential.
1. INNOVATION SUPPORT STRUCTURES IN MOROCCO
WHAT DOES THE CURRENT INNOVATION LANDSCAPE IN MOROCCO LOOK LIKE?
A. A growing number of structures
Support structures are composed of both physical and non-physical structures. They include (i) incubators and accelerators, (ii) co- working spaces, (iii) support programmes and (iv) financing programmes. Based on our research, there are 74 active and planned support structures in the country.
Among them, Technopark was the pioneer and now constitutes a textbook case. Created in 2001 as the fruit of a public–private partnership, Technopark is managed by the MITC (Moroccan Information Technopark Company), whose founding shareholders are the Moroccan state (35%), the Caisse de Dépôt et de Gestion (17.5%) and Moroccan banks (47.5%). The MITC offers work spaces and supports startups by allowing them to benefit from its privileged ecosystem. The model was duplicated in Rabat in 2012 and Tangier in 2015 and will soon be duplicated in Agadir (opening planned in 2021). Technopark has supported over 1,100 companies since its creation, particularly in the information and communication technology (ICT), green technology and cultural industry sectors. It is well known that start-ups require financial support and specialised assistance. But the need to integrate them into a community to interact and exchange ideas is just as vital. Indeed, a start-up community represents a rich and diverse source of collective intelligence, which enables start-ups to discuss ideas in co-working spaces, exchange best practices and build a network to develop.
New structures have developed in Morocco with this very thinking in mind, offering support, training and mentoring services. These support structures organise different events like hackathons, where various teams (composed of developers and project leaders) must find the solution to a strategic issue by producing a proof of concept (in general, software or an application) in a very short space of time. In December 2019, Emerging Business Factory organised the first ‘water hackathon’ in Marrakech with the aim of making water use in the area sustainable and eco-responsible.
Other support structures have implemented co-working spaces for all those who wish to launch their entrepreneurial projects and are looking for a community of partners. One such example is New Work Lab, created in Casablanca in 2013. It is a space dedicated to the development of Moroccan start-ups through the organisation of meetings, training and the provision of a co-working space.
Mapping of start-up support structures
B. An uneven geographic split
Although support structures are concentrated primarily in and around Casablanca, regional dynamics resulting from a strong political will take shape through:
• the duplication of Technopark in other cities in the country;
• regional development projects, such as the innovation city of the Souss-Massa region, which plans to make R&D laboratories available to start-ups, or Mazagan’s urban hub, developed by the OCP and the government;
• support mechanisms on a national scale, with for example the Réseau Entreprendre Maroc and Injaz Al-Maghrib, which support start- ups, or even the financing programme Fonds Innov Invest.
However, the support offered in some large Moroccan cities, like Fes and Meknes for example, is far below the needs of their large student populations.
At the start of the school year in 2017, the Euromed University of Fes (UEMF) had over 1,300 students and researchers2, suggesting a potential talent and entrepreneur pool that should not be neglected.
C. Mostly generalist structures supported by a wide range of sponsors
Though the vast majority (75.7%) of support structures are generalist, three specialisations stand out:
• ICT, in particular thanks to the rise of fintechs working with corporates (e.g. StartOn, Fintech Challenge);
• green technology, with Morocco having set itself the target of reducing its energy dependence and investing in renewable energies (e.g. Social Green Tech Bidaya);
• the social and solidarity economy, relying on, for example, sport to create a link between youth employment and the entrepreneurial spirit (e.g. TIBU Maroc).
It is interesting to note that the sponsors of support structures are diverse: 57% of support structures are backed by at least two organisations (assistance, financial support, etc.). Further, 32% of these structures come from public-private partnerships. Entrepreneurial support initiatives thus form part of a collective intelligence approach, a pooling of resources between complementary players – in short, open innovation.
2. THE GROWING INVOLVEMENT OF LARGE COMPANIES
HOW ARE LARGE MOROCCAN COMPANIES TAKING HOLD OF INNOVATION?
A. OCP: a heavyweight in the national economy and a global innovation model
Moroccan companies are gradually incorporating open innovation and digitalisation into their organisations in addition to increasing their employees’ awareness of innovation culture. A good example of this can be found in the OCP group.
OCP is the world leader in phosphates and the leading industrial company in Morocco. It has put in place an ambitious investment programme (2008-2027), where it aims to double its mining capacity and triple its transformation capacity.
However, where it is of particular interest is in its efforts to boost innovation. Indeed, it has initiated several projects to boost innovation in Morocco and within the group. In addition to physical support structures, numerous programmes have been implemented, such as the Seed- Stars Startup Competition or the Impulse acceleration programme in partnership with Mass Challenge, as detailed below.
The university environment gives us access to innumerable research centres across the world and open innovation […]
When we are at the university, we are able to have a different type of dialogue, one that is much more productive
Mohamed Soual, chef economist at OCP.
B. The growing involvement of Moroccan banks
Moroccan banks are not to be outdone in this matter. Attijariwafa Bank and BMCE Bank of Africa were pioneers in 2001 by financing Technopark Casablanca. They have been highly active in the promotion of innovation over the past five years.
Moroccan banks’ initiatives in favour of entrepreneurs have naturally led them to turn their innovation approach inwards to improve their own processes and offers in the context of increasing digitalisation. But the delegation of support management to a pure player is often essential in order to facilitate cooperation and maximise value creation between stakeholders. This is particularly the case when the stakeholders have very different cultures, notably when it comes to public-private partnerships.
Though Morocco’s start-up ecosystem has been strengthened by the launch of various support and financing mechanisms (as detailed below), the number of innovative technology companies in the country measured in terms of patents and fundraising is not meeting its potential, as detailed in the following pages.
Management of support structures created by Moroccan companies on the Moroccan All Shares Index (MASI)
3. INNOVATION AND ITS FINANCING IN MOROCCO
HOW HAS INNOVATION DEVELOPPED IN MOROCCO OVER THE PAST FIFTEEN YEARS?
A. Successive industrialisation strategies have contributed to raising the general level of innovation
Comprehensively evaluating the innovative nature of a country requires consideration of its institutional environment, infrastructure, training, R&D, and market structure and creation. The Global Innovation Index 2019 ranks Morocco 74th out of 126 countries based on 80 variables ranging from ease of obtaining credit to the protection of minority interests in a company. This index also distinguishes between input variables that define a country’s potential for innovation and output variables that measure effective innovation.
Our analyses here focus on the two output criteria that seemed the most tangible: research dynamism, measured through the number of patent filing requests (industry driver), and fundraising for technology and digital start-ups, which testifies to the potential for economic development. Reviewing the development of these variables against the backdrop of successive industrialisation plans implemented by the Ministry of Industry, Trade, and the Green and Digital Economy since the mid-2000s highlights a correlation. As shown in the figure elow, thanks to industrial policies, as well as the country’s stability and closeness to the European Union, Morocco has become a top destination for foreign investors.
Since 2005, three major industrial strategies have succeeded each other, with a substantial effect on the development of the number of patents filed. Nevertheless, these effects seem to differ based on the nature of the players considered. Indeed, patents filed by non-residents tripled between 2014 and 2018, whilst those filed by Moroccan residents almost halved over the same period.
The dynamism of national research seems to be losing momentum and remains mostly the domain of universities (58% in 2018), with Moroccan companies only requesting 9% of patent applications.
At the same time, the significant growth in filings from abroad testifies to the increased appeal of the country. This can be explained by two factors. First, the presence of foreign actors in Morocco has intensified across various sectors, like the automotive or aeronautics sectors, following the Industrial Acceleration Plan. Second, the implementation of a new way of filing patents by the European Patent Office, thanks a partnership with the Ministry of Industry, Trade, and the Green and Digital Economy in 2015, enables those filing patents in the European Union to also request patent protection in Morocco. Thus, the USA (20%) and European countries, with France and Germany in the lead (8% each), are the most represented among the countries of origin of those filing patents.
Patent filing requests in Morocco (2005–2018) and industrialisation strategies
B. But the funds raised by start-ups remain modest compared with other countries in the region
Fundraising constitutes another indicator of the dynamism of the innovation sector. Though it is difficult to establish a causal link between fundraising and the practice of filing patents, these two phenomena constitute complementary indicators of the dynamism of innovation in the countries concerned.
The spread of fundraising practices reflects, in particular, the growing participation of national and international private players in innovation financing. However, the small amounts concerned tend to show the predominance of public capital in innovation financing or indeed the internalisation of innovation by existing companies.
In terms of fundraising, Morocco places 12th in Africa in 2019 with USD 7 million raised by technology and digital start-ups (vs USD 3 million in 2018 corresponding to 15th place)3. We have gathered data to compare the situations in Algeria, Tunisia, Nigeria, Kenya and Egypt with that of Morocco. The differences can be explained by various factors such as access to financing, financing raised in other countries or the use of alternative eans of financing. In particular, we have put the amounts raised in perspective by setting them against the respective GDPs of each country. Finally, for all these countries except Algeria (for which we do not have enough data), we have studied the development of the amounts raised between 2018 and 2019.
Generally speaking, we note an increase in fundraising over these two years: Morocco, Kenya, Nigeria, Egypt and Tunisia all experience a significant increase in the amounts collected. As for the amounts themselves, Kenya and Nigeria stand out clearly from the other countries. The case of Nigeria may be explained simply by the size of the country’s economy (USD 368 billion in 2018); the case of Kenya, however, is different (USD 87 billion in 2018). Indeed, Kenya proves to be fertile ground for the development of startups. Widely distributed low-cost internet and the digitalisation of payments in 2007 with the launch of M-Pesa, a mobile phone money-transfer system, have greatly facilitated transactions and have been a boon to entrepreneurs in the country.
By way of comparison, the amounts raised in Morocco seem low in relation to the country’s GDP (USD 120 billion in 2018). Beyond the difference in the size of the economies considered, there may be various reasons for this result: fewer private initiatives due to an economy structured around rent-based activities or in low-risk sectors, insufficient tax incentives for both entrepreneurs and investors or even the less prevalent practice of fundraising.
The lower access to fundraising in Morocco compared with other African countries (Egypt, Nigeria, Kenya, Rwanda, etc.) can also be explained by the language. In contrast to the francophone Morocco, the other countries mentioned are anglophone, meaning they are more easily able to capture foreign capital (particularly coming from the US and the UK).
These figures can be used on a macroeconomic scale to measure trends, such as the opening of certain economies to foreign capital, but they also reveal the level of appropriation of certain best practices by local players. In this context, public policies can play a facilitating role in a ‘top–down’ approach. Nevertheless, local realities should not be ignored. Indeed, beyond public policies, it is the players’ actions and the quality of their interactions that enable them to create together innovative programmes and determine the dynamism of a sector. OCP, as mentioned in part 2, is a prime example of this and highlights the importance of involving all players in the implementation of an innovation ecosystem.
Thus, using best practices inspired by foreign countries could strengthen local ecosystems. These measures would be of such a nature as to enable the realisation of the innovation potential of a country like Morocco by promoting the rise of start-ups.
Development of fundraising between 2018 and 2019
Si ces chiffres peuvent être utilisés à l’échelle macroéconomique pour mesurer des tendances telle que l’ouverture de certaines économies aux capitaux extérieurs, ils révèlent aussi l’état d’appropriation de certaines bonnes pratiques par les acteurs locaux. Dans ce contexte, les politiques publiques peuvent jouer le rôle de facilitateur dans une approche « top-down ». Néanmoins les réalités locales ne oivent pas être ignorées. En effet, au-delà des politiques publiques, ce sont les jeux d’acteurs et la qualité des interactions qui permettent la co-construction de programmes innovants et déterminent le dynamisme d’un secteur. L’exemple de l’OCP abordé dans la partie 2 est à e titre évocateur et souligne l’importance d’impliquer l’ensemble des acteurs dans la mise en place d’un écosystème d’innovation.
Ainsi, la diffusion des meilleures pratiques inspirées des pays étrangers pourrait renforcer les écosystèmes locaux. De telles mesures seraient de nature à permettre la réalisation du potentiel d’innovation de pays comme le Maroc, en favorisant l’essor des start-ups.
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