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Marrakech – According to a recent report by Bloomberg, Morocco, the co-host of the 2030 FIFA World Cup alongside Spain and Portugal, is planning to introduce derivatives trading this year as part of its efforts to expand capital markets and finance increased infrastructure spending in preparation for the prestigious event.
The introduction of derivatives trading is part of the deepest overhaul of financial regulations in the country in over three decades, as stated by Nezha Hayat, the head of the Moroccan Capital Market Authority, during an interview in Rabat.
These capital market reforms have been underway since 2021, when King Mohammed VI launched a 15-year plan called the New Development Model, which aims to double GDP per capita and boost the economy from lower-middle income to emerging market status.
The urgency to finance World Cup projects, such as high-speed rail links and stadiums, has increased the need for these reforms.
Currently, capital markets contribute around 10% to the total financing of the economy, largely thanks to institutional investors. The goal is to increase this percentage to 25%, according to Hayat.
To achieve this, legislation is expected to allow exchange-traded funds, currency-denominated investment funds, and Sharia-compliant investment funds this year.
It will also permit investment funds dedicated to professional investors, benefiting from less restrictive constitutions and investment rules. The Moroccan stock exchange plans to launch a derivatives market before the end of the year.
Morocco needs to allow private investors to contribute much more to financing the economy by boosting the small community of retail investors in the country and raising the profile of the local financial market for foreigners.
Hayat stated that only a “tiny fraction” of about twenty million bank account holders invest in stock markets.
The Casablanca Stock Exchange, with a market capitalization of around $70 billion, is the largest in North Africa and the second-largest in Africa after Johannesburg.
The country’s annual GDP amounted to about $144 billion last year, according to the International Monetary Fund, and implementing the plan will cost between 8% and 10% of that amount annually.
Banks are aware that they cannot provide financing for all the ambitious projects planned, and the capital market reform will benefit some of these initiatives, such as desalination plants, solar and wind parks, gas pipelines, highways, and industrial projects ranging from electric batteries to airports.
Morocco will need to spend 200 billion dirhams ($20 billion) on so-called strategic projects as it prepares for the 2030 World Cup, according to Prime Minister Aziz Akhannouch’s statement to lawmakers in April.
Read also: Report: 2030 World Cup Expected to Boost Morocco’s Economy by $1.2 Billion
