As Morocco embarks on its transition to a floating exchange rate for the dirham in 2026, the entrepreneurial and fiscal landscape will play a pivotal role in shaping the country’s economic success.
In this third article of the series, Oualid El Meriague interviews financial expert Mr. Badr Bouarich, who provides invaluable insights into the importance of entrepreneurship, tax reform, and government intervention in fostering a resilient, inclusive economy capable of navigating this historic shift.
Entrepreneurship as the heart of a thriving economy
Entrepreneurship lies at the core of free-market economics, where innovation and adaptability drive value creation. Entrepreneurs identify gaps in the market, address needs, and create value, ultimately contributing to sustainable economic growth.
In 2023, Morocco’s entrepreneurial ecosystem saw significant growth, with 96,442 new companies established — a 15% increase from 2022. Microenterprises accounted for 99% of these businesses, particularly in sectors like information technology, real estate, and professional services. Small and medium-sized enterprises (SMEs), which represent 96% of the private sector, are Morocco’s largest employers, contributing significantly to GDP and private-sector jobs.
Bouarich emphasises that SMEs’ inherent flexibility makes them well-suited to adapt to potentially volatile conditions following the dirham’s flotation. Their ability to innovate, restructure, and localise production enables them to seize opportunities while maintaining economic stability.
Sectoral opportunities in a floating dirham economy
According to Bouarich, key sectors such as tourism, agriculture, and manufacturing are well-positioned to benefit from the new economic context.
For instance, a slight depreciation of the dirham would make Moroccan exports more competitive internationally. In 2023, Morocco’s exports of goods and services were valued at approximately $42.5 billion, with automotive manufacturing alone accounting for 28% of exports. Aeronautics and phosphates are also poised for further growth, especially with heightened global demand for fertilisers.
In 2023, Morocco’s tourism sector attracted 14.5 million visitors, generating MAD 91 billion ($8.9 billion) in revenue. This momentum accelerated in 2024, with a record-breaking 17.4 million tourists—a 20% increase—positioning Morocco as Africa’s leading travel destination.
Driven by strategic government investments and marketing efforts, this surge in tourism is expected to grow further with a weaker dirham, making Morocco even more attractive to international visitors, particularly from Europe and North America.
In agriculture, which accounts for 15% of GDP and employs 35% of the workforce, enhanced competitiveness could bolster exports of high-value crops such as citrus fruits and olive oil, which generated over MAD 23 billion ($2.2 billion) in export revenues in 2023.
Supporting SMEs through financial tools and training
To maximise the benefits of this transition, the government must support SMEs by providing access to financial tools and hedging instruments such as forwards, swaps, and options. Bouarich stresses the importance of equipping SMEs with the knowledge and training to use these tools effectively.
Commercial banks, in partnership with Bank Al-Maghrib, can play a pivotal advisory role by offering tailored financial solutions for SMEs, particularly those in export-dependent industries. Morocco’s $36 billion in foreign exchange reserves can serve as a safety net during market adjustments, further stabilising the economic environment for SMEs.
Bouarich also advocates for targeted tax reforms to incentivize entrepreneurship. Reducing corporate tax rates for SMEs and offering tax breaks for businesses operating in less-developed regions can encourage decentralization. Currently, 75% of Morocco’s economic activity is concentrated in coastal cities like Casablanca, Tangier, and Rabat, leaving interior regions economically less advanced. Offering incentives such as tax holidays could stimulate regional growth, alleviate disparities, and reduce the inflationary pressures in urban hubs.
Additionally, Bouarich highlights the importance of enabling SME owners to access their profits more readily. He argues that requiring business owners to wait an entire fiscal year to retrieve profits creates a significant barrier to liquidity and capital flow. This delay contributes to fiscal evasion, as entrepreneurs seek faster ways to access their earnings. Implementing reforms that allow business owners quicker access to profits would not only reduce tax evasion but also stimulate investment and business expansion, capital circulation and economic activity.
The role of digital transformation
Digital transformation is essential for empowering SMEs and entrepreneurs to adapt to changing economic conditions. By streamlining processes, enhancing data accessibility, and simplifying decision-making, digital tools can help businesses navigate a floating currency environment.
Morocco was recently ranked 57th globally and 1st in North Africa in the 2024 Digital Transformation Index. Building on this momentum, Morocco has launched initiatives like Maroc Digital 2025, aimed at boosting digital literacy and reducing bureaucracy. These efforts include establishing e-governance platforms that allow businesses to register and access licences online, cutting administrative delays by 40%.
Bouarich highlights that a fully digitized administrative framework would enable faster decision-making and encourage entrepreneurial activity, particularly in high-growth sectors such as technology and services.
Promoting tax transparency and building rust among Morocco’s SMEs
He also underscores the importance of promoting transparency and trust within Morocco’s economy. SME’s Tax evasion, estimated at MAD 32 billion ($3 billion) annually, and reliance on the informal sector, which officially accounts for 30% of GDP, undermine fiscal stability and limit financing opportunities for SMEs.
Bouarich proposes reducing corporate tax rates for SMEs with annual earnings below MAD 10 million to 10%, while eliminating taxes on dividends. This approach could expand the tax base, encourage compliance, and attract international investors and entrepreneurs. By fully disclosing financial statements, SMEs would also gain access to loans and equity financing, enabling long-term growth.
The broader impacts of tax reform
Comprehensive tax reform, when thoughtfully designed and effectively implemented, holds the potential to drive sustainable economic growth, decentralisation, and innovation in Morocco, Bouarich argues.
However, he cautions that fiscal discipline in government spending must be a foundational pillar of any tax reform strategy to prevent budget deficits and safeguard long-term economic stability. Without careful oversight of public expenditures, reduced tax revenues resulting from reforms could lead to imbalanced budgets, undermining efforts to promote economic growth and stability.
A crucial aspect of successful tax reform is addressing fiscal evasion. Bouarich estimates that appropriate tax policy and enforcement mechanisms for SMEs could unlock an estimated extra $3 billion in revenues for the government through the elimination of fiscal evasion. This projection underscores the critical role that SMEs play in Morocco’s economy and the untapped fiscal potential that could be realized through targeted reforms.
Beyond curbing tax avoidance, these expansionary reforms are expected to boost employment, stimulate GDP growth, and encourage both private and foreign investment. This expanded revenue base would provide the government with more resources to invest in strategic sectors, fostering sustainable development.
However, Bouarich stresses that for these tax reforms to be successful, they must be accompanied by strict control over public spending. The Moroccan government should prioritize expenditures on productive and high-impact sectors such as infrastructure development, renewable energy, and workforce training, which yield long-term economic returns. Conversely, misallocation of resources or unchecked government spending could lead to widening deficits, diminished investor confidence, and a reversal of the positive outcomes intended by tax incentives.
To illustrate the importance of pairing tax reforms with fiscal discipline, Bouarich points to Ireland’s corporate tax reform in the 1990s as a compelling example. Ireland successfully attracted global corporations like Google, Apple, and Pfizer by reducing corporate tax rates while maintaining tight control over public spending and strategically directing investments into high-growth sectors. This dual approach led to sustained GDP growth, increased tax revenues through an expanded tax base, and significant job creation across various industries.
For Morocco to replicate such success, Bouarich insists that tax incentives must be implemented strategically alongside rigorous expenditure oversight. Effective monitoring and enforcement mechanisms should be in place to ensure that tax breaks and incentives are granted only to businesses that actively contribute to innovation, regional development, and job creation. This disciplined, balanced approach to tax reform will be crucial in ensuring that Morocco realises the full potential of its private sector while maintaining economic stability and inclusive growth.
A stronger future through entrepreneurship
For Bouarich, entrepreneurship and tax reform are essential components of Morocco’s economic strategy as it transitions to a floating dirham. SMEs, with their adaptability and innovation, can drive job creation, reduce inequality, and strengthen purchasing power. By fostering a culture of consuming locally, SMEs can also mitigate the impacts of imported inflation, offering affordable alternatives to foreign goods.
Morocco’s history of entrepreneurial success, from pioneers like Omar “Nouss Blassa” and Miloud Chaâbi to modern leaders in agriculture, real estate, and technology, demonstrates the country’s potential to thrive in a free-market economy.
Indeed, as Morocco prepares for a floating dirham, entrepreneurship and tax reform have emerged as key drivers of resilience and growth. By supporting SMEs with financial tools, tax incentives, and digital transformation, Morocco can harness the full potential of its private sector.
However, the success of these reforms hinges on fiscal discipline in government spending. Ensuring that public funds are directed toward value-generating initiatives will prevent budget deficits and enhance the overall economic impact of the tax policies.
Transparent governance and targeted decentralization efforts are equally crucial. By extending opportunities to underdeveloped regions and fostering trust within the private sector, Morocco can ensure that the benefits of economic reform are distributed equitably across all segments of society.
Stay tuned for the fourth part of this series, which will examine the lessons Morocco can learn from nations that struggled with currency flotation, such as Egypt, Ethiopia, and Nigeria. It is essential to note, however, that Morocco’s robust institutional frameworks, strong economic planning, and disciplined fiscal policies place it in a unique position to avoid the challenges experienced by these countries. This nuanced analysis will be published exclusively on Morocco World News.
