VZCZCXYZ2222
RR RUEHWEB
DE RUEHCL #0192/01 2791645
ZNR UUUUU ZZH
R 061645Z OCT 09
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC 8533
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUCNMGH/MAGHREB COLLECTIVE
RUEHFR/AMEMBASSY PARIS 0725
RUEHMD/AMEMBASSY MADRID 3903
RUEHBJ/AMEMBASSY BEIJING 0053
UNCLAS CASABLANCA 000192
SIPDIS
SENSITIVE
STATE FOR NEA/MAG
COMMERCE FOR NATHANIEL MASON
E.O. 12958: N/A
TAGS: ECON ETRD PGOV CH MO
SUBJECT: CHINA, MOROCCO, AND THE SCRAMBLE FOR AFRICA
REF: CASABLANCA 93
1. (SBU) Summary: With a controlling stake in some of Africa's
largest banks and solid 2010 earning projections, China is
increasingly turning to Morocco's largest banks - Attijariwafa and
Banque Marocaine du Commerce Exterieur (BMCE) - for its banking
needs in Francophone Africa. To secure its influence with Morocco's
banking institutions, China has implemented a dual approach, which
entails awarding sizeable nearly interest-free loans to Morocco's
largest banks and providing them with fiscal incentives to open
branches in China. While Morocco's banks have benefited financially
from its rapprochement with China, some remain uneasy about growing
Sino-Moroccan relations. End Summary.
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Just the Beginning
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2. (SBU) With a controlling stake in some of Africa's largest banks
(REF A) and solid 2010 earning projections, China is increasingly
turning to Morocco's largest banks - Attijariwafa and Banque
Marocaine du Commerce Exterieur (BMCE) - for its banking needs in
French-speaking Africa. Present in more than 20 countries in
sub-Saharan Africa, Morocco's BMCE and Attijariwafa have become the
preferred alternative for Chinese firms operating in Africa, said
Taoufik Joundy, President of the Morocco-China Business Council in
Casablanca. (Note: Much of the money pouring in from China is tied
to exploitation of oil and non-oil commodities such as timber,
copper, and minerals. End Note.) "I don't think it boils down to
just raw commodities. It is much bigger than that now. This is the
beginning of a strategic partnership", argues Joundy.
3. (SBU) With more African countries opening their economies to
foreign investment, many in Morocco's banking community believe
Africa is a burgeoning economic opportunity. More so than other
Moroccan investors, Younes Benjelloun, CEO of BMCE is aggressively
expanding in the continent, with the end goal of being present in
most of Africa's 54 countries. Asked about China's growing
relationship with Morocco's banking institutions, he commented, "if
managed well, Morocco can extract a lot from its relationship with
China".
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China's Approach to Securing the Partnership
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4. (SBU) To secure its influence with Morocco's largest banks,
China has developed a dual strategy, which entails awarding large,
nearly interest-free loans to Morocco's banks and providing them
with fiscal incentives to open branches in China. First, it has
awarded several long-term concessional loans to Moroccan banks
through the Industrial and Commercial Bank of China (ICBC), one of
the world's largest banks. Presently, BMCE is securing several
major lending deals with ICBC, confided BMCE's Corporate Office
Director, M'fadel El Halaissi. (Please strictly protect this
sensitive commercial information.) While El Halaissi declined to
share specific data, he added that the loans were "very sizeable."
5. (SBU) Second, to attract Morocco's largest banks to Beijing,
China is providing them with fiscal incentives, including a
corporate tax holiday during the first five years of business and a
tax rate of 15 percent thereafter. (Comment: The incentives are
more than likely a Chinese strategy to increase its access into
Africa. End Comment.) BMCE's branch in Beijing is also a tribute to
the lobbying done by high-level official visitors to Morocco, said
El Halaissi. Not to be outdone, a well placed source in
Attijariwafa told Econoff that Attijariwafa will soon open a branch
in Shanghai.
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Assessing the Benefits of China's Ties to Morocco
--------------------------------------------- ----
6. (SBU) China's relationship with Morocco elicits mixed
sentiments. On the one hand, the GOM and Morocco's banking
institutions have benefited financially from the nascent partnership
with China in Africa. On the other hand, economists like Jawad
Kerdoudi of the International Institute for International Relations
(IMRI), a Casablanca based think-tank, remain uneasy about China's
growing relationship with Morocco. He queried: "Is China bringing
trade and investment that Africa so badly needs, or just meddling
and exploitation? I really don't know." "All partnerships, whether
healthy or not, bring risks," Kerdoudi commented.
7. (SBU) Similarly, BMCE is proceeding with caution. While its
relationship with China is strong, it has declined other offers from
ICBC, including one which entailed buying a significant share of
BMCE Capital, confided El Halaissi. BMCE's commitment to Africa is
long-term and as such the bank has to be careful about the
implications of its partnerships, he added.
8. (SBU) COMMENT: Despite concerns in some quarters about the
burgeoning relationship between China and Morocco's banks, the
Kingdom's involvement with China in Africa is likely to continue to
expand. Moroccan bankers say they will be vigilant to ensure that
they can get a fair deal from the partnership. If so, in their
view, both Morocco and China can be winners.
MILLARD