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New CGEM boss looks to reassure Morocco’s entrepreneurs

By El Mehdi Berrada
Posted on Thursday, 30 January 2020 18:48, updated on Tuesday, 11 February 2020 10:19

Car industry terminal is pictured at Tanger-Med port in Ksar Sghir near the coastal city of Tangier
Car industry terminal is pictured at Tanger-Med port in Ksar Sghir near the coastal city of Tangier, Morocco, June 26, 2019. REUTERS/Youssef Boudlal

Faced with internal dissent, the national situation, numerous economic sectors in difficulty, testy relations with the government and the accession to the African Continental Free Trade Agreement (AfCFTA) to name a few, the future boss of the Confédération Générale des Entreprises du Maroc (CGEM) has a busy programme and major challenges that will mark his mandate.

Three months after the resignation of Salaheddine Mezouar, the CGEM chose a new president. Mezouar, a former finance and foreign affairs minister, who was elected in May 2018, in tandem with audit specialist Fayçal Mekouar, resigned from office in October 2019, after his remarks on the situation in Algeria drew the government’s ire.

On 22 January, Chakib Alj and Mehdi Tazi were elected president and vice-president respectively of the CGEM for three years. As has been the case since 2006 — apart from a duel in 2018 — only one list stood for election.

The boss of Moroccan bosses is a 54-year-old Casablancan who began his career in 1987 with the Société Nouvelle des Moulins du Maghreb, an institution more than 100 years old that he developed considerably. An entrepreneur familiar with risk-taking, this father of four built a reputation first in the flour-milling industry before diversifying his activities into industry and services. President of the federation of millers for the past seven years, he also manages the federation for the distribution of consumer goods.

Alj, a respected industrialist and reputed to have no political allegiance, is working with Quadra Mehdi Tazi, the CEO of insurance broker Beassur Marsh and former CEO of Saham Morocco, in the leadership of the CGEM.

Surrounded by his staff, including one of his sons, Chakib Alj welcomed us into his sober and elegant office. On the wall is a large canvas by the Moroccan painter Khalid Nadif. Alj will shortly move into the office reserved for the president of the CGEM, two kilometres away, in the chic Palmiers district. Between meetings with various federations, the 50-year-old discussed the lack of confidence affecting the kingdom’s entrepreneurs, the limits of economic liberalisation and the criticisms levelled at the Moroccan private sector south of the Sahara.

The list you presided over was the only one in the running for the CGEM elections. Doesn’t this return to single candidacies signal a lack of internal democracy?

Chakib Alj: On the contrary, it is a step forward, since it shows that there is a consensus. In the past, we have always worked in a consensual manner. But it is a democratic process: no one has been prevented from running. The members of our organisation simply judged that our pairing with Mehdi Tazi corresponded to the needs of the CGEM and the country’s economy and came out in support of our candidacy, including those who withdrew.

But the election of May 2018, with the final confrontation of two lists, had been welcomed by many observers as a step forward.

It was the one and only time that there was a “final confrontation” in the history of the CGEM. We didn’t stop anyone from running this year and, in any case, I would have been just as happy if there had been a list in front of ours.

How do you campaign without competitors?

Normally. We meet the members, the regional CGEMs, and the federations, to understand how things work, the needs and expectations of each one. It’s the only way to better understand the problems of our economy and to be operational on D-Day.

What can we learn from these consultations?

That Moroccan entrepreneurs are suffering and need to be reassured. This is what we are working towards. We are not going to lie to ourselves, the local economy is not in good shape. Economic operators do not doubt the country’s potential, they want a relaunch a new approach and a new global dynamic!

And, according to the entrepreneurs you meet, what should be changed in concrete terms?

We are in a down cycle, and problems are multiplying. For example, there are currently Dh400bn ($41.5bn) in debt owed to private-sector companies, which is drying up their treasuries. As a result, we have companies that are doing well but have to close down because of cashflow problems. It’s scary! To make matters worse, tax inspections have been very intensive lately.

So what is your team planning to do to change this dynamic?

We continue to outline our programme to members and try to enrich it with their proposals. In any case, I think we need to pay particular attention to very small and medium-sized businesses, which are a real source of growth and are the core of our economy.

For me, the CGEM must also be a major player in the process that must facilitate access to financing and secure existing jobs. But, to do this, it is imperative to restore confidence to operators. I think that companies just need a few positive signals to get back on their feet. All the stakeholders in our country must invest in restoring the confidence without which there can be no growth. But confidence cannot be decreed, it has to be earned.

The authorities believe that positive signals have been sent out, particularly in the latest budget law. Do you share this view?

There have been some positive elements and others that are not. Take Article 9 of this text [which enshrines the principle of the administration’s assets cannot be seized], it contains nothing positive. With this text, if a company is not paid by the state and wins a lawsuit — which can last a very long time — the administration has a period of four years to pay what it owes! Although the government has a procedure in place to get paid quickly through the banks [which the state will then reimburse], companies will have to pay interest on the money they receive. I think that with dialogue and concessions on both sides we will find better solutions. I also believe that our team is well placed to find such compromises. Those who know me know that I am pragmatic and to the point.

The CGEM always emphasises its independence. But the resignation of Salaheddine Mezouar, following criticism of the government, has raised questions. Do you think you can express your opinions freely?

I think the CGEM reacted very well after this episode. It was one of the worst scenarios imaginable, but the reaction was perfect, an example of democracy, in my opinion. I prefer to look ahead. For my part, I will freely express my opinions in the sense that I will defend the institution and the economic operators. I will not talk about subjects that do not concern neither the CGEM nor myself. I will remain within the framework of what I have to defend.

The treaty establishing the AfCFTA has entered into force. Is this trade liberalisation a threat or an opportunity for Moroccan entrepreneurs?

It is a very interesting initiative, especially since the rate of inter-African trade is very low compared to other continents. Moroccan entrepreneurs read it positively, according to the exchanges I have had with them. It is a real opportunity for the Kingdom, which is one of the economic powers of the continent.

The Kingdom succeeds — more or less — in attracting international investors, but very few come from other African countries. How do you explain this?

Morocco is open to all investments, whatever their country of origin. We’ve already had examples of this: the South African insurer Sanlam [which took over the Moroccan Saham] or recently the Tunisian cheese specialist Land’Or and the Egyptian Chemi-Pharma. Things are starting to move, and in my opinion the AfCFTA will encourage more investment here.

However, many Moroccan entrepreneurs have criticised the free trade agreements previously signed by the Kingdom.

This point is indeed often made. Our members complain about it and ask that these agreements become more balanced. We want to work on this and find solutions that allow for equal opportunities. The process of revising the trade deals has already begun, and the one with Turkey is proof of this.

So, you are campaigning for the introduction of national preference?

Yes, I am in favour of giving preference to our companies when awarding public contracts. This is the only way to build and strengthen our economy. If we don’t do it quickly, it can be fatal to some companies. We are sending a very bad signal to entrepreneurs if we do not change anything.

On the other hand, Moroccan companies based south of the Sahara are often criticised for not trusting local managers enough. How do you respond to these criticisms?

I think it is only a matter of time. An entrepreneur who sets up in a country other than his own needs, in the first instance, to surround himself with people he trusts and knows well. Afterwards, it is clear that it is necessary to open up to local skills. It is a natural evolution. I also think that this is a global issue and does not only concern Moroccan operators.

In terms of investments, you have noted that less than 1% of those made in the automotive and aeronautical sectors in the Kingdom are Moroccan. How can this delay be explained?

Very few of our entrepreneurs work in these sectors, and we want to rectify this. This will also require a revival of confidence. A dynamic has been created, and Morocco has become, for example, a recognised player in the automotive sector. This is quite new, and it happened quickly. These are businesses that we didn’t know about, and our investors didn’t have time to get a clear idea of them. In addition, the international companies involved started by building an ecosystem made up of their usual suppliers, who joined them in Morocco. Our contractors now have to follow suit.

Morocco is seeking to define its next development model. What should its priorities be?

There is no doubt that the commission appointed in November by His Majesty will not fail to make the necessary recommendations to unleash the wealth creation potential of the Moroccan economy. In fact, three members of the CGEM participate in this commission.

Morocco has clearly chosen the path of progress. We must significantly increase our growth rate to create the conditions for the take-off so eagerly awaited by operators. We must also find ways of boosting the competitiveness of SMEs, especially very small businesses, of increasing the volume of exports and of creating sufficient jobs.

King Mohammed VI has asked banks to increase credit to small businesses. Is this also a request from the CGEM?

His Majesty was clear and put his finger on the problem. An economy cannot prosper if its VSEs and SMEs suffer. In this case, they represent 95% of the economic fabric. Yes, the banks must play the game and be more courageous, they must grant credits according to the viability of each project and not only on the basis of the sector of activity or the size of the company. I also call on large companies to take an interest in these projects and help SMEs.

The country suffers from high youth unemployment, what role can the CGEM play?

It is important to know that companies also have difficulty recruiting, especially in the regions, and cannot find qualified people! It is essential to review the vocational training policy so that it is adapted to the needs of companies. This is possible and has been achieved in the aeronautics and automobile industries, but also in the flour-milling industry. This work must be carried out in coordination between the federations and the Office for Vocational Training and Employment Promotion. At the same time, companies must commit themselves to hiring a certain number of people. Above all, however, our country needs growth in order to reduce unemployment.

Have you had discussions with the government and what relationship do you anticipate with the executive?

I have not yet taken office. But I know several members of the government. They want to work for their country and are aware of the economic situation. The diagnosis has been made, we just have to apply the right remedy.

Post-election plans

After more than 30 years of running his companies, Chakib Alj needs to find a replacement for the next three years.

“I have already planned the next steps for my group. I have a very young structure and team that I trust completely. I am used to delegating, and my children are also in the company. This period will allow them to develop a little more,” explained Chakib Alj.

He acknowledges he has been able to invest in several sectors (plastics industry, poultry farming, transport, logistics, hotels and restaurants), because he has found the right people.

“I am a conductor. I’m no longer in day-to-day management, my role is more in strategy,” he added.

Chakib Alj’s companies are present in Morocco, Mauritania, and Tunisia, but the manager does not rule out expansion south of the Sahara.