The thwarted growth of startups in Morocco

Have Moroccan political leaders finally understood the centrality of the subject? Or are we facing yet another announcement effect. An important economic development issue, startups, young innovative companies with strong development potential operating in the technology sector, are still struggling in Morocco.

Thanks to the presentation of the Morocco 2030 national digital strategy, Wednesday September 25, 2024, support for the startup ecosystem was made a pillar of this new strategy which, among its priorities, aims to make Morocco a digital hub to accelerate the socio-economic development of the country and digitalize public services.

During a press briefing on Thursday September 26, 2024, the Minister Delegate in charge of Digital Transition and Administration Reform, Ghita Mezzour, seemed to have set the tone. The objective pursued through the national digital strategy is the creation of 1,000 startups by 2026, then 3,000 by 2030, with the ambition of raising funds worth 2 billion DH in 2026 and 7 billion in 2030. Another announcement, presented as a key measure, the creation of a Moroccan startup label as well as an “improvement of the legal framework to facilitate the process of creating small businesses and the adoption of adapted financing mechanisms”. The creation of incubators as well as strategic partnerships with national and international players is on the agenda, in addition to the promise to train 100,000 young people in digital professions in all regions of the kingdom.

Startup Ecosystem Index

This is not the first time that announcements aimed at promoting the startup ecosystem have been made public. Several initiatives have been launched, such as the Technopark, a technological business incubator or the “FORSA” program, an innovative plan aimed at people with entrepreneurial ideas or projects.

But the ecosystem in Morocco remains very precarious. Out of 100 countries, Morocco ranked 92nd globally and tenth in the Arab world in the Global Startup Ecosystem Index (GSEI) 2024. The report particularly points to “inadequate financing and legislation”.

According to the annual report “Africa: The Big Deal”, the kingdom only attracted $17 million, or 0.4% of total startup funding in Africa. The contrast with Kenya, which managed to raise $800 million in 2023, and Egypt, attracting $640 million, gives the measure of the delay the kingdom is experiencing on a continental scale.

Zakaria Fahim, director of technology at Korair, a start-up dedicated to modernizing agriculture through the use of multifunction drones, recognizes the vulnerability of the startup ecosystem in Morocco. “In terms of supporting startups, incubators, financial institutions and ministry incubator programs will have to make a clear distinction between the solutions and economic models of startups and those of SMEs and SMEs,” he says. They must develop specialized programs, with high-level experts who can predict and identify ideas with rapid growth potential. These companies need rapid financing procedures, personalized mentoring, and an introduction to other markets through the economic partnerships that our kingdom has been able to establish, as well as large investments.

Digital precarity

An observation shared by Ayman Stitou, co-founder of the startup Scarabot – in reference to dung beetles – a project which proposes the deployment of robots that clean port containers, “faster, more efficient and eco-responsible”. If the young entrepreneur admits that there are several programs in Morocco such as “Forsa”, “Tamwilkom”, “Bidaya” or the national human development initiative (INDH) for the benefit of innovation, these are not always adapted to the needs of young shoots.

“The difficulty lies in the absence of technical and scientific support. A fledgling startup needs experts and professors to carry out its innovation, which is often at the idea stage, although it is promising and has high added value, particularly when moving from the research phase to that of industrialization,” explains Mr. Stitou.

Financing, the question of the survival of the startup over time, accounting and legal support for startups are also among the obstacles encountered. While most startup projects are services whose monetization is done on the internet, digital insecurity, which affects a large part of Moroccans and the low rate of digital transformation are significant obstacles to innovation.

Does the Morocco 2030 digital strategy offer promising prospects for Moroccan startups? The idea leaders interviewed by Maroc Hebdo are optimistic. They believe that it comes at the right time, in a context where a positive dynamic for the growth of national startups is observed, despite the challenges.

As a sign of this awareness, on Tuesday October 1, 2024, an initiative from the General Confederation of Moroccan Enterprises (CGEM) was added to the existing national system. Called “CGEM for Tech Founders”, the platform offers solutions to simplify administrative procedures for startups, networking opportunities, meetings with investors and access to the CGEM network.

Still, the threats are also exogenous. On the international front, another sword of Damocles hangs over Moroccan talents. Competitiveness. International startups, present in large numbers in Morocco, represent a significant concern. The battle for technological sovereignty is on.