Before buying in MOROCCO - factors to consider

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Factors to consider when buying / investing in Morocco

Natural factors

Morocco is situated on the extreme northwestern corner of Africa and is bordered by Mauritania and Algeria, both to the south and east. Southern Morocco basks in a year-round hot, dry climate and borders the Sahara Desert. Destinations such as Marrakech have average temperatures of 21C in winter months and a searing 38C in the summer. The coastal plains are rich and fertile and therefore form the backbone for agriculture in Morocco. The majority of the country’s interior is home to well-established ski resorts such as the beautiful Atlas mountain range.

It’s geographical location means – easy access from northern and central Europe (from UK 2.5 hours flight) and direct transatlantic flights from the eastern United States. It is a strategically located along the Straits of Gibraltar means it is a regional hub for transportation, transit, and business

NOTE:International disputes:Morocco claims and administers Western Sahara, but sovereignty is unresolved; the UN is attempting to hold a referendum; the UN-administered cease-fire has been currently in effect since September 1991; Spain controls five places of sovereignty (plazas de soberania) on and off the coast of Morocco - the coastal enclaves of Ceuta and Melilla which Morocco contests as well as the islands of Penon de Alhucemas, Penon de Velez de la Gomera, and Islas Chafarinas

Economic Factors
The national development strategy, named the “Plan Azur” is designed to increase tourism from 2 millions to 10 millions by 2010. This plan is structured to incorporate 6 “Kings Resorts”, which will be backed by the government.

Moroccan government revealed that since the launch of the Plan Azur the tourists visited Morocco increased to 6.5 millions in 2006 comparing to 2 millions in 2002.

Government’s expectations from the new projects includes over 600 thousand new jobs, increasing the hotel capacity by a further 160 thousands beds and building new infrastructure.

According to International Monetary Fund, Morocco is currently Africa’s fourth largest economy and stands at number 58 in the global chart of Gross Domestic Product (GDP).

Employment, however, remains overly dependent on the agriculture sector, which is extremely vulnerable to inconsistent rainfall. Morocco's primary economic challenge is to accelerate growth in order to reduce high levels of unemployment and underemployment. While overall unemployment stands at 11%, this figure masks significantly higher urban unemployment, as high as 33% among urban youths.

Through a foreign exchange rate anchor and well-managed monetary policy, Morocco has held inflation rates to industrial country levels over the past decade; inflation between 1999 and 2004 remained at 1.5% and fell to 1% in 2005. Despite criticism among exporters that the dirham has become badly overvalued, the country maintains a current account surplus. Foreign exchange reserves are strong, with over $16 billion in reserves, the equivalent of 11 months of imports at the end of 2005. The combination of strong foreign exchange reserves and active external debt management gives Morocco ample capacity to service its debt. Current external debt stands at about $15.6 billion, or 27.8% of GDP.

Political Factors
Morocco is divided into 16 administrative regions (further broken into provinces and prefectures); the regions are administered by Walis (governors) appointed by the King.

The Moroccan Constitution provides for a monarchy with a Parliament and an independent judiciary. Ultimate authority rests with the King. He presides over the Council of Ministers; appoints the prime minister following legislative elections; appoints all members of the government taking into account the prime minister's recommendations; and may, at his discretion, terminate the tenure of any minister, dissolve the Parliament, call for new elections, or rule by decree. The King is the head of the military and the country's religious leader.
The last parliamentary elections were held in November 2002 and were considered largely free, fair, and transparent.
Following the 2002 elections, King Mohammed VI highlighted several goals toward which the new government should work: gainful employment, economic development, meaningful education, and increased housing availability.

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