Rabat – With Morocco’s new Digital 2030 strategy, many had placed hope in the government to finally recognize the importance of startups and the young people who drive any country’s innovation, but alas, it appears the 5-year strategy lacks both the necessary ambition and reveals a worrying dependence on foreign capital and technology.
The next plan was unveiled with great fanfare as Aziz Akhannouch’s government and Mezzour’s ministry laid out their vision, its targets and the planned roadmap to achieve the modest ambitions outlined in the plan’s strategy for startups.
In a country where youth unemployment (22.6%) and post-graduate unemployment (25.9%) are worryingly high, startups have become part of the national economic narrative over the past years. For many countries the choice to promote startups is logical as an alternative to providing meaningful employment to graduates.
In Morocco, the desire to be a young entrepreneur has even more appeal: no angry bosses, no years doing unpaid internships. Starting a business promises freedom and agency for a new generation of talented young Moroccans. Yet this dream is not as simple as it sounds.
Statistics of the success rate of startups reveals that it is tremendously hard to build a new business, especially as a recent graduate with a bright idea. In the United States, arguably the most favorable country in the world to start and grow a business, the US Bureau of Labor Statistics details that eventually 90% of all US startups fail in the long term, often after years of hard work. In Morocco, 99% of failed businesses in 2022 were very small enterprises.
The more the better
The fact that startups are not a guarantee, and have a large fail-rate, is a statistic that is vital for governments that plan to grow their startup ecosystem. For the government, scale is essential. The more startups are allowed to grow, the more we see success and the occasional “unicorn,” a startup worth $1 billion or more.
The more the better. This is why the world’s top startup cities have thousands of startups, some will fail, some will flourish, but the startup ecosystem continues to grow. San Francisco hosts 11,812 startups, London has welcomed 11,533 startups, New York City has 13,594, Beijing has 8,835, and Shanghai has 7,422.
So if we see this number, how many startups does Morocco envision to support in the entire country of 40 million people? A grand total of 3,000, and that’s not the goal for this year, that is the desired outcome of a five-year strategy that concludes in 2030.
Of course Morocco cannot afford the same funding that US,UK and Chinese startups enjoy; New York startups alone have more funding than the entire GDP of Morocco. Moroccan startups will face the same issue all African nations face, a lack of access to global capital to invest and fuel sustainable growth.
While Morocco’s government has correctly identified this factor, and promises to help fund startups, if this funding is based on the lowly 3,000 startups it aims to produce, it clearly doesn’t recognize that you need to help fund 30,000 startups in order to have 3,000 successful ones in 2030.
Overdependence on foreign funds
Even with the promised support, the new plan still calls for an extremely high dependency on international venture capitalists, exposing Moroccan startups to the ebbs and flows of the international economy that routinely experiences severe shocks.
If this sounds abstract, let me provide an example of these shocks.
The 2024 Venture Capital in Africa Report details a “mass exodus” of foreign investors in Africa in 2023 after a record-breaking year in 2022. Half of all investors suddenly left, driven by US investors abandoning their investments on the continent. The report concludes its analysis of this trend by saying it reveals “the need for indigenous capital allocators with a long-term commitment to the continent.”
Currently, the entire African startup scene has garnered $4.5 billion in funding, about 2.5% of the funding New York startups enjoy, and a little over 1% of San Francisco startup funding.
Okay, you might say, so the issue is Africa and its structural difficulties relating to international finance. We are handicapped and African startups are by definition doomed. That analysis is understandable but wholly incorrect.
A painful lack of ambition despite youthful potential
Africa’s startups scene is still young, and governments are only just starting to recognize their potential for economic growth and employment. Some countries have taken startups very seriously, and they now have a strong lead over others.
A 2023 article in Business Insider detailed the top African countries for startups, showing that startups are thriving in major countries like South Africa, Egypt, Kenya and Nigeria. Interestingly enough, Morocco is also being outclassed by tiny island nations such as Cape Verde and Mauritius.
Even Tunisia with its political drama and severe macroeconomic crisis is outperforming us.
These facts undoubtedly are known by our policy makers in Rabat, it might even be the reason for this shiny new strategy. But it reveals a painful lack of ambition, a dependence on foreign capital that has a tendency to scatter and flee at the tiniest sense of trouble, and a sincere lack of respect for Morocco’s youth.
If you tell talented young people and aspiring entrepreneurs that there are no jobs for them, and suggest that the alternative is for them to create their own business, it’s vital to support these shining stars of Moroccan society. Instead, some dusty politicians decided that in five years we should have less startups than Nigeria has now.
This is a strategy that could turn a brain drain into a brain flood, where the only thriving startup is one that sells inflatable boats to kids who would rather start with nothing in Europe, than putting the effort into their startup that the government says it supports.
