The Moroccan invasion: Casablanca banks charge into sub-Saharan Africa

By Nadia Rabbaa

Three Moroccan banks – one part owned by a royal holding company – have led an expansion charge into sub-Saharan Africa. Now, they have changed tack, seeking slower growth and consolidation.

To give them valuable experience and seize opportunities beyond the domestic market, the government of an Asian country with a medium-sized economy decided in 1999 on a ‘going out’ policy for the country’s corporations.

China’s banks and construction firms are now active on every continent, and the former medium-sized economy has become the world’s second largest.

Given the difference in scale, Morocco’s ambitions are somewhat more modest. But its own version of that ‘going out’ policy can be seen in the encouragement with which King Mohammed VI tours sub-Saharan Africa (SSA) with a gaggle of Moroccan businessmen in tow.

“Africa must trust in Africa,” thundered Mohammed VI on a trip to Côte d’Ivoire’s capital, Abidjan in 2014, speaking both to North African businesses still chary of the trip over the Sahara and prospective clients south of the desert.

Two banks in particular have crossed swords over the prize of emerging demand for banking services in SSA.

Publically-listed Attijariwafa Bank (#7), is owned by a holding company, the Société Nationale d’Investissement, controlled by the royal family.

The second is the private-sector owned Banque Marocaine du Commerce Extérieur (BMCE, #13), which decided in March to rename itself BMCE Bank of Africa. BMCE is the majority shareholder of the Bank of Africa (#37) and is refocusing its activities on the continent.

The two Moroccan banks have different regional strengths. North and Central Africa remain the preferred territory for Attijariwafa, and BMCE is gaining ground in Anglophone East Africa.

West Africa is an area of intense competition. In Côte d’Ivoire, for example, a third Moroccan group – Banque Centrale Populaire (BCP, #9) – is pushing both aside. Some countries are seeing the impact of the Moroccan competition more than most.

In Mali, the three Moroccan banks have subsidiaries: Attijariwafa is present via the Banque Internationale pour le Mali; the BCP via Banque Atlantique; and BMCE via Bank of Africa Mali (#179) and the Banque de Développement du Mali (#184), also controlled by BMCE. The three banks control more than half of the branch network in the country and manage two-thirds of bank assets.

In the most enticing of Francophone markets, the rapidly growing Côte d’Ivoire, banks owned by the three Moroccan musketeers have cornered a quarter of the market.

Morocco’s banks are in competition for clients, but they often seem to be acting in unison.

Abdou Diop, president of the South-South commission of the Confédération Générale des Entreprises du Maroc, argues the issue of competition between the three banks south of the Sahara is not clear cut: “They manage their interests so as not to step on each other’s toes. They are working in three different niches and are focused on different geographies.”

He adds that the growth potential is large as the banks have different strategic approaches. “Attijariwafa is more based on retail banking. BMCE enters a market as a minority shareholder and builds up slowly until it is the majority partner. BCP buys a bank and then develops it.”

Managing risks

Morocco’s central bank, the Bank Al Maghrib (BAM), is also influencing the overseas expansion of Moroccan banks. It has imposed limits on foreign exposure to avoid upsetting the balance of the national banking system.

“We look at the competition in an indirect way to see if it implies too much risk taking,” says Hiba Zahoui, deputy director of the banking supervision unit in the BAM.

She adds: “The more a group is spread over multiple jurisdictions, the more complex and long-winded the harmonisation of procedures will be.”

Indeed, since the governance crisis in West Africa’s Ecobank (#14) in early 2014, the BAM has been more active in the supervision of Moroccan-owned bank subsidiaries and has formed working groups focused on each bank that operates elsewhere in Africa. African operations outside of Morocco now represent about a quarter of the profits that Attijariwafa, BMCE and BCP make.

Morocco’s banks have entered an era of consolidation in Africa. Attijariwafa co-chief executive Ismail Douiri tells The Africa Report that further expansion is not a priority because, “we are in a period where the driving focus is the acceleration of growth where we are currently present.” He says the bank will finish up some expansion projects that have already begun, such as in Benin and Chad. BCP officials also plan to limit their African growth.

Nevertheless, Morocco’s banks are looking at bustling Anglophone markets with envy. Has BMCE stolen a march on Attijariwafa because of its activities in East Africa, picking up the codes and language of global business?

Douiri does not see it as a problem: “Our executives speak English. And there are greater similarities between, say, Benin and western Nigeria than between Benin and Tunisia.”

Other banks are less sure about the transition to the Anglophone market. A senior executive at one Moroccan institution, says: “We have begun thinking about Anglophone countries, but it will be more difficult as all our procedures are in French. But it’s not insurmountable.”

The key question then is what about Nigeria? “Nigeria is on our radar,” explains Attijariwafa’s Douiri. “You can’t have an Africa strategy without looking at the Nigerian market.” But while he sees potential in Nigeria’s low banking penetration rate, he argues that the corporate sector is overbanked. “Yes, we will go in, but it is all a matter of how,” Douiri concludes.

Entering this Nigerian market has also been on BMCE’s agenda, although this seems now to have stalled.

Competition is set to increase in terms of the products Moroccan banks offer, with insurance products foremost on the list. Attijariwafa’s insurance arm Wafa Assurance might be a leader at home, but it has mostly struggled abroad. Out ahead is Finance Com, the holding company that owns BMCE. In June it created an Africa-focused joint venture with Saham Assurance.

While Moroccan banks are bringing more competition to Africa’s markets, are they changing business practice in Africa? One Senegalese businessman who requests anonymity says: “I don’t know why Attijariwafa keeps putting Moroccan expats in charge of local branches, especially here where there is real banking know-how. There have been strikes and waves of departures, like at the CBAO Attijariwafa in Dakar.” Douiri says that the company does not have a policy preference for employing Moroccans in its African operations.

However, many Moroccan banks expanded internationally without the skills necessary to navigate other cultures. They are learning on the job now. For example, Attijariwafa’s Douiri explains: “We had no idea that intra-African migration was so large.”

To meet the needs of African migrants, the bank has put in place a payments platform that links Gabon and Mali. The Moroccan push is probably not neo-imperialist, but more learning is certainly required.

This article first appeared on The Africa Report. Image via CC.

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