Middle East & North Africa
Morocco risk report
Corruption represents a problem for businesses in Morocco. Almost all sectors suffer from rampant corruption. Cultures of patronage, nepotism, and wasta (the use of connections) exist, and inefficient government bureaucracy and excessive red tape deter investors. The legal framework concerning corruption, transparency, and integrity is in place, and the regulatory system is becoming increasingly transparent. Under the Moroccan Criminal Code, active and passive bribery, extortion, influence peddling and abuse of office are illegal. Anti-corruption laws are reportedly not enforced effectively by the government. Prosecutions of corruption cases have been accused of targeting only petty corruption, and, allegedly, companies owned by highly influential persons are rarely disciplined. Facilitation payments and giving and receiving gifts are criminalized under Moroccan law, but businesses indicate the likelihood of encountering these practices is high.
Judicial system Very high risk
Businesses encounter high corruption risks when dealing with the courts in Morocco. The judiciary is perceived to be corrupt and to lack independence (HRR 2015). Companies report that bribes and irregular payments are often exchanged in return for favorable court decisions and more than two-thirds of households in Morocco have paid a bribe to the courts (GCR 2015-2016, TI 2016). Likewise, most household respondents believe the judiciary is corrupt (GCB 2013). Businesses perceive the judiciary to be subject to influence from the executive and do not have confidence in the judiciary’s ability to settle disputes or to challenge government regulations (GCR 2015-2016). Almost three in every ten companies find the courts a major constraint to doing business in Morocco (ES 2013). Corruption among working-level clerks in the courts constitutes a problem, particularly in law enforcement (HRR 2015).
The lack of professionalism of Moroccan judges on general commercial matters constitutes an obstacle to effective dispute resolution, and Moroccan and foreign companies complain about the inefficiency and the lack of transparency in the judicial system (ICS 2016). As a result, foreign companies often settle disputes through arbitration instead of using local courts and have cited recourse to foreign arbitration as a strong benefit to doing business in the country, so companies are advised to include arbitration clauses in all their contracts (ICS 2016). Morocco has signed the New York Convention (with reservations) and the Washington Convention, which provides for the use of the International Centre for the Settlement of Investment Disputes (ICSID).
Police Very high risk
Morocco's police sector is rife with corruption and impunity, and this has resulted in limited police effectiveness and respect of the rule of law. Almost four in every ten households surveyed report having paid a bribe to the police during 2015 (TI 2016). There were several reports of abuse and impunity among the ranks of officers and civilian authorities were not effectively controlling the security forces (HRR 2015). Investigations are carried out, yet they seldom result in criminal proceedings or even disciplinary action (HRR 2015). Local and foreign NGOs report that authorities often dismissed complaints and relied solely on the version of events (HRR 2015). Almost eight in ten citizens perceive the police to be corrupt, while almost one-third of Moroccans do not trust the police (GCB 2013, Afrobarometer 2013). Businesses find the police to be moderately reliable in protecting companies from crime and enforcing the law (GCR 2015-2016).
On a more positive note, successful prosecution of police corruption has been reported. In one case, two highway policemen were sentenced in early 2015 to one month of imprisonment and fined USD 200 after being caught on tape accepting a bribe from a tourist (HRR 2015). Another officer, also video-filmed taking a bribe from a driver in Casablanca is released on bail and will stand trial in October 2016 (DW, Sep. 2016). These cases, triggered national security authorities to equip police officer's helmets with small video cameras, and shortly after, members of the royal guard in Rabat also followed suit (DW, Sep. 2016). The outcome of these measures has, however, yet to be documented.
Public services High risk
The Moroccan public services administration is opaque and difficult to navigate presenting companies with moderate to high corruption risks. Basic administrations are generally undermined by a lack of resources, low skilled employees and pervasive corruption (BTI 2016). Routine permits are difficult to obtain, particularly those required by local government agencies (ICS 2016). Bribes and irregular payments are sometimes exchanged in return for obtaining public utilities (GCR 2015-2016). Almost two in every ten surveyed companies expect to give gifts to government officials to obtain an operating license or to simply 'get things done' (ES 2013). Nonetheless, almost half of citizens report having paid a bribe to obtain a document or permit, while a sweeping majority believe that the public sector suffers from corruption (TI 2016).
Companies identify government bureaucracy as one of the main impediments to doing business in Morocco (GCR 2015-2016). However, Morocco has made some efforts to improve business regulations. Among other, the government eliminated the minimum capital requirement for limited liability companies and reduced registration fees to half (BTI 2016). Furthermore, the government further eased the process of starting a business by eliminating the need to file a declaration of business incorporation with the Ministry of Labor (DB 2016). The time and cost required to start a business and to deal with construction permits are lower than the regional averages (DB 2016).
Land administration High risk
Property rights are well-defined and protected under Moroccan law, but rampant judicial corruption hampers the enforcement of property rights (BTI 2016). More than two in every ten companies expect to give gifts to officials in return for a construction permit (ES 2013). State policy allows the sale of tribal land to international companies and property developers, however, the process has led to the degradation of villages and has left inhabitants with inappropriate compensation or, in some cases, none at all (BTI 2016). Morocco has established electronic communication links between different tax authorities making it faster to transfer property (DB 2016). Registering property has also become easier, currently only taking 30 days and requiring only five procedures; averages that are almost equal to the regional ones (DB 2016). Businesses can access online land administration services on the Office for Industrial and Commercial Property site.
In one corruption case, a leaked list revealed the identities of several government officials and state servants who purchased large plots of state-owned land for a fraction of the price. They had paid GBP 30 for a square meter instead of the market price of GBP 320. Reportedly, the Ministries of the Interior and Finance defended the land confiscation and claimed that the leaked list was politically motivated (Middle East Monitor, Aug. 2016).
Tax administration High risk
The tax administration carries moderate to high corruption risks to companies. Almost three in every ten companies expect to give gifts to tax officials, while bribery is sometimes exchanged in meetings with tax officials (ES 2013, GCR 2015-2016). One-third of Moroccans believe most tax officials are corrupt (AB 2013).
Morocco has improved its business environment through reforms that include changes to tax payments; the government improved the electronic platform for filing and paying corporate income taxes, labor taxes, and VAT (DB 2016). Paying taxes is less time-consuming compared to neighboring countries (DB 2016).
Customs administration Very high risk
Corruption may be a problem within Morocco's customs administration due to the occurrence of irregular payments in the process of importing and exporting (GETR 2014). Inefficient administration and corruption are, in effect, cited as the two major impediments to foreign trade (BTI 2016). The government eased trading across borders by reducing the number of documents required to export goods, so the average time and cost required to trade across Morocco's borders are lower than the regional average (DB 2016). Businesses can access online customs services on the Administration of Customs and Indirect Taxes site.
Public procurement Very high risk
The public procurement sector carries high corruption risks for business. Bribes and irregular payments are often exchanged in return for obtaining public contracts and licenses (GCR 2015-2016). Companies in Morocco indicate that public funds are sometimes diverted to companies, individuals or groups due to corruption, and government officials tend to show favoritism when deciding policies and contracts (GCR 2015-2016). Companies utilizing local content or establishing local production facilities are more likely to win public contracts (ICS 2016). The country's procurement sector is also plagued by patronage, and market competition is distorted by interference – especially by the royal family and the elite that control much of Morocco's economy. Companies controlled by these groups are more likely to be awarded government contracts (BTI 2014), so businesses are recommended to use a specialized public procurement due diligence tool to reduce corruption risks related to public procurement in Morocco.
The Government of Morocco passed two public procurement decrees in 2014 incorporating international best practice in the sector (PPRiM 2014). The reforms include creating a central public procurement policymaking body, establishing a national procurement training strategy, and developing a new national e-procurement system to simplify procurement procedures (PPRiM 2014). The decrees also provide for the creation of the ‘Commission Nationale de la Commande Publique’ (CNCP), an independent body responsible for handling company grievances. Unsuccessful bidders can instigate an official review of procurement decisions and can challenge procurement decisions in court. The government has also attempted to increase procurement transparency through the decentralization of the process, however, these reforms have seen limited implementation (ICS 2016).
Natural resources Very high risk
The Government of Morocco has been criticized for a lack of effective resource governance, which has been mainly linked to an incomplete regulatory framework and insufficient disclosure policies (NRGI). Morocco is the world's largest exporter of phosphate, which is an industry controlled by the royal family and by the elite who monopolize larger, multi-sector industries and who are close associates of the monarch. These influential families enjoy undue advantages as they are most likely to win public bids and contracts, and they enjoy immunity for corrupt practices (BTI 2012). Corruption is also rampant in Morocco's sand quarrying industry, which is generally controlled by well-connected people with privileged access to natural resources (Morocco News Board, Feb. 2013).
The Moroccan Criminal Code criminalizes corruption, active and passive bribery, giving and receiving gifts, attempted corruption, extortion, bribing Nonea foreign public official and abuse of office. Morocco has criminalized money laundering under the AML Law No. 43-05 (in French), which covers concealing and altering goods originating from trafficking, corruption, extortion, influence peddling and misappropriation of public and private property. Anti-corruption laws are not effectively enforced in Morocco, and government officials reportedly engage in corruption with impunity (HRR 2015). Morocco’s anti-corruption legislation provides for the compulsory disclosure of assets by government officials, but it does not provide for criminal or administrative sanctions for non-compliance (HRR 2015). Morocco has ratified the United Nations Convention against Corruption but is the only African country not to have signed the African Union Convention on Preventing and Combating Corruption as it is not a part of the African Union.
Morocco's Constitution guarantees freedom of the press, but there is ample room for the government to crack down on the media (FotP 2015). The King and his government maintain considerable control over the press, and authorities may ban publications deemed offending and jail or fine journalists accused of defamation (FotP 2015). State media publishes only content favorable to the monarchy and its achievements (BTI 2016). In mid-2015, the private news website Goud was fined over USD 50,000 after it had published a story alleging corruption of the king's private secretary (FitW 2016). Authorities also control broadcast media and have the power to appoint the heads of all public radio and television stations, so self-censorship occurs (FotP 2015, HRR 2015). The government also exerts control over the online media, and online content censorship is not uncommon (FotP 2015). The government drafted a public access to information bill in 2015, however, the draft was criticized for including formulations that would actually restrict rather than expand freedom of access to information (FotP 2015). The bill was still not passed at the time of review. Morocco’s press environment is described as 'not free' (FotP 2015).
Freedom of assembly in Morocco is only allowed with permission from the Ministry of Interior (HRR 2015). Nonetheless, inconsistencies in the approval process were reported by NGOs, which were reportedly intended to block unwanted assembly (HRR 2015). Civil society is active in Morocco, and a large number of NGOs operate in the country, nonetheless, civic participation of Moroccans in CSOs is low compared to regional averages (BTI 2016). The Ministry of Interior retains the right to dissolve associations and organizations whose activities are deemed to offend the government (FotP 2014).
- World Economic Forum: Global Competitiveness Report 2015-2016.
- Transparency International: People and Corruption: Middle East and North Africa Survey 2016.
- Bertelsmann Foundation: Transformation Index - Morocco 2016.
- US Department of State: Investment Climate Statement - Morocco 2016.
- Freedom House: Freedom in the World - Morocco 2016.
- World Bank & IFC: Doing Business 2016.
- DW: 'Fighting Corruption in Morocco', 18 September 2016.
- Middle East Monitor: 'Morocco is crippling Morocco's nascent democracy', 5 August 2016.
- Freedom House: Freedom of the Press - Morocco 2015.
- US Department of State: Human Rights Practices Report - Morocco 2015.
- Freedom House: Freedom of the Press - Morocco 2014.
- Bertelsmann Foundation: Transformation Index - Morocco 2014.
- World Economic Forum: Global Enabling Trade Report 2014.
- World Bank: Public Procurement Reform in Morocco 2014.
- Transparency International: Global Corruption Barometer 2013.
- Afrobarometer: Morocco 2013.
- Afrobarometer: Governments Falter in Fight to Curb Corruption: The People Give Most a Failing Grade, November 2013.
- Morocco News Board: 'How state corruption works', 3 February 2013.
- Bertelsmann Foundation: Transformation Index - Morocco 2012.
- Natural Resource Governance Institute: Morocco.