Legal Reform in Morocco

The EBRD’s assessment of commercial laws and practice in Morocco, as well country visits conducted by the Bank, has revealed a need for developing a number of initiatives, in particular:

  • encouraging the diversification of the financing of the agricultural sector via well tested tools such as warehouse receipts law;

  • promoting the development of a wider range of financial products via the development of a secured transactions law which would permit a more flexible security package, the revision of the mortgage law to address the problems of enforcement; and exploring other legal tools, such as factoring;

  • strengthening the private sector via better corporate governance framework (including of banks and listed companies)

Morocco: Access to Finance

The framework for collateral and liens remains complex in Morocco. This is mainly attributable to a difficulty in determining priority in ranking classes and liens. Banks usually resort to pledges and mortgages. In addition, banks typically apply debt discounting, factoring and assignment of claims techniques. One of the key challenges that are cited in the overall framework for secured lending in Morocco is the inefficiency of the judicial system which hinders effective enforcement and recovery.

In 2014 the EBRD conducted an assessment on secured transactions which examined the availability of collateralising different types of assets regardless of the underlying legal instruments used to achieve the establishment of secured creditor’s rights. In addition to the classic security interests (pledges and mortgages the assessment also covered usual types of quasi security, such as sale and lease back transactions. The assessment also covered related issues such as enforcement and syndicated lending. The links below take you to the assessment results for Morocco.


Morocco: Contract Enforcement and Judicial Capacity

Courts in Morocco suffer from a deficit in material and human resources. Many judges lack sufficient judicial training and opportunities to specialise. The process of allocating cases to judges is not sufficiently transparent nor is it efficient, and court decisions lack predictability. Recent reforms have led to the creation of specialised courts, and there is a trend towards an increased use of alternative dispute resolution, including mediation. However, both litigation and enforcement procedures remain lengthy and uncertain.

Morocco: Corporate Governance

Corporate structure in Morocco is generally characterised by the concentration of ownership and majority owner control over director nomination and election processes for board members. The legal and regulatory framework does not contain a comprehensive definition of directors’ duties of loyalty and care. Although conforming to the Corporate Governance Code is only voluntary, the Code does provide a definition for the fiduciary duties of board directors that is in line with best practice.

Morocco: Debt Restructuring and Bankruptcy

The Moroccan insolvency system is substantially inspired by the French insolvency regime, which is amongst the most debtor-friendly regimes in the world. It contains provisions for prevention of financial difficulties in advance of insolvency or cessation of payments (a cash flow-based insolvency test) and for either rehabilitation or liquidation during insolvency. Creditors do not have an important role in insolvency proceedings. The system relies instead on strong judicial control. One of the key practical issues in Morocco is the lack of professional skills and experience of insolvency office holders and judges who handle insolvency cases.

Assessment of Insolvency office holders, 2014 - country profile

Assessment of Insolvency office holders 2014 - country results

Morocco: Electronic Communications

The EBRD’s assessment of the overall legal and regulatory risks in association with the country’s telecommunications sector shows that Morocco is a “medium risk category” for investors. Liberalisation of the telecommunication sector started in 1997. Interestingly, the assessment shows that regulation in practice has superseded applicable legislation as the sector regulator has introduced amendments to the regulatory framework, which in many cases reflect best practice concepts. Nevertheless, there appears to be no consistent regime on rights of way to access the public domain. In addition, there is no general authorisation regime, and the regulator remains in control of the number of licences granted. With the exception of interconnection prices, there is no clear requirement that prices of other wholesale services include a return on capital as a component of costs.

Amendments are being proposed to the current telecommunications law. In addition, there is an initiative to reduce the maximum timeframe for decision-making on rights of way and to introduce standard fees for the use of the public domain. It is worth noting that Morocco has the highest percentage of internet users in the region.


Morocco: Energy Regulation

The assessment placed Morocco in the “medium risk category” for investors when measured against EU Directives and international energy regulation principles. This is mainly attributable to the lack of a unified policy framework; the lack of an independent regulatory authority; limited consumer choice; limited third party access; and non-compensatory tariffs. In addition, there is no independent regulator. Morocco’s electricity market is based on a “single buyer” system, where a state-dominated entity is responsible for buying all power generated by the country’s privately-owned generating companies. Domestic gas production is almost negligible and is all located in the south. Since there is no gas market, there is no regulatory framework.

Morocco: PPPs/Concessions

Both the law on the books and PPP practice in Morocco were found to be in “medium compliance” with internationally recognised standards. Specific PPP legislation is lacking and the scope of the current legislation governing concessions is restrictive as it does not apply to PPP procurement by central government departments nor to concessions procured by companies, even if they are fully state-owned. Concessions and PPPs are mainly governed by the law on the delegated management of public services or infrastructure by municipalities or public enterprises. However, this law is not applicable to central governmental authorities, as the Civil Code and Administrative law regulate the granting of concessions/PPPs by these entities. A PPP unit was only recently established and it is thus too early to assess its effect on the overall PPP framework.


Morocco: Public Procurement

The assessment revealed that, although stable and based on the principles of fair competition and non-discrimination, public procurement legislation allows for preferential treatment of domestic bidders, which has a negative effect on competition standards. A positive feature of the public procurement process in practice is that contracting entities have adopted standard tender procurement forms, templates, and contract documentation, which is bound to encourage the efficiency, certainty, and economy of the process. Nevertheless, the law does not currently prescribe specific deadlines for the completion of the procurement procedures, which negatively impacts the speed, certainty and efficiency of the overall process.

In EBRD’s 2012 assessment of the quality of the public procurement legal framework (law on the books) Morocco scored medium compliance as compared to other countries in the EBRD region.