Igniting Climate Entrepreneurship in MOROCCO Findings from the Climate Entrepreneurship and Innovation Ecosystem Diagnostic April 2017 The World Bank Group 1818 H Street NW Washington, DC 20433 February 2017 Authors: Kalyah Ford, Ayoub Derdabi, Rosa Lin, and Justine White Design and Graphics: Rosa Lin This work is a product of the staff of World Bank Group. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the donors of infoDev, the World Bank Group, its Board of Directors, or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank Group concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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License: Creative Commons Attribution CC BY 3.0 “Entrepreneurship and innovation are the twin values that are both stepping stones towards freedom, social mobility and prosperity...” - His Majesty the King Mohamed VI GES, 2014 Acknowledgments This report was written and finalized by a core team including: Kalyah Ford, Rosa Lin, Ayoub Derdabi, entrepreneurship consultants at the World Bank Group, and Omar Agodim, former business incubation manager of the Morocco Climate Innovation Center, led by Justine White (Senior Private Sector Specialist and Project Leader, World Bank Group). This endeavor would not have been possible without the participation and assistance from a number of people, from both within and outside of the World Bank Group. The authors of this paper would like to extend their sincere appreciation to Morocco CIC / Cluster Solaire Chief Executive Officer, Mohamed Bernannou, the staff of the Cluster Solaire and Moroccan Agency for Sustainable Energy (MASEN), Nadia Zeddou, Cluster Solaire Business Development Manager, and most notably Obaid Amrane, Member of the Board of Directors of the Morocco Agency for Sustainable Energy (MASEN), for their partnership and cooperation during this diagnostic. The team also wishes to thank the following colleagues for contributions, comments on initial drafts, general guidance, and inputs: Maja Andjelkovic, Jonathan Coony, Philippe de Meneval, Nawal Filali, William Fellows, Marwa Kamel, Kenza Lahlou, Alexandre Laure, Komal Mohindra, Sophia Muradyan, Ellen Olafsen, Jean-Louis Racine, Farid Tadros, and David Treguer. Finally, heartfelt thanks go to the individuals in Morocco who were generous of their time, and shared insights during our interviews, as well as the numerous entrepreneurs who responded to the online survey. This research was made possible due to the contributions of the Ministry of the Environment and Protection of Land and Sea of Italy, and was done in partnership with the Morocco Climate Innovation Center and Cluster Solaire. 9 Glossary TABLE OF 10 Executive Summary CONTENTS 20 Introduction 26 Morocco’s Climate Challenge and Economic Opportunity 4. Few Corporate and Private Foundation Linkages to Boost Ecosystem 30 Main Findings 5. Funding for Startups Limited by A. Morocco’s Green Entrepreneurs Risk-averse Investors 1. Solo Founders Lack Co-founders to Build 6. Market Access Not Widely Available for High-growth Firms Entrepreneurs 2. Too Few Mentors Limit Entrepreneurial 7. Additional Market Information Necessary Growth for Doing Business 3. Women Entrepreneurs Could Benefit from Dedicated Support B. Morocco’s Burgeoning Climate 62 Recommendations Entrepreneurship Ecosystem 1. A Perceived Lack of Policy Support to 68 Endnotes & Bibliography (Green) Entrepreneurs 2. A Growing, but Fragmented Ecosystem 3. Entrepreneurs Lack Later-stage Support Figures 76 Annexes Annex I: Report methodology Executive summary Figure 1e. Climate Entrepreneurship and Innovation 1. Secondary Data Collection Diagnostic Data Collection Channels 2. Indicator Assessment Figure 2e. Mapping Startups and their Enablers by 3. Background Research Entrepreneurial Stage 4. Qualitative In-country Data Collection a. Semi-structured interviews Body b. Online entrepreneurial attitudes and Figure 1. Babson Entrepreneurship Ecosystem experts survey Model c. Defining a population and distribution Figure 2. Climate Entrepreneurship and Innovation d. Calculating confidence Diagnostic Data Collection Channels e. Defining the sample Figure 3. Benchmarking Morocco’s Key Indicators to Other Countries Annex II: Why Climate Innovation? Figure 4. Profile of Morocco’s Green Entrepreneurs, based on survey results Figure 5. Top Client Countries for Morocco’s Entrepreneurs Case studies & Figures Figure 6. Top 5 Sources of Mentorship Figure 7. The Entrepreneurial Process Figure 8. Morocco’s Climate Entrepreneurship Ecosystem, mapped by category Case studies Figure 9. Morocco’s Climate Entrepreneurship 35 Case Study 1: eLum Ecosystem, mapped by connections 38 Case Study 2: Cleanzy Figure 10. Mapping Startups and their Enablers by 40 Case Study 3: Evaptainers Entrepreneurial Stage 44 Case Study 4: Biodome Figure 11. Top Source of Funding Connections for 55 Case Study 5: Kilimanjaro Entrepreneurs, based on survey results 58 Case Study 6: Farasha Figures cont’ Boxes Box 1.1 Entrepreneurship Macro-data Snapshot Annex Box 1.2 Misconceptions of Green Entrepreneurs Figure 1a. Babson Entrepreneurship Ecosystem Box 1.3 Women’s Support Programs Globally Model Box 1.4 Acceleration Support Can Help Businesses Figure 2a: Six Pillars of Babson’s Ecosystem Scale Framework, as applied to an innovation and Box 1.5 French and British Investor Financial entrepreneurship context Incentives Figure 3a. Morocco’s CEED Benchmarking Box 1.6 GreenCape: Providing South Africa with Rationalization Green Market Intelligence Figure 4a. Interviews by Stakeholder Group Figure 5a. Defined Population of Morocco’s Entrepreneurship Ecosystem Figure 6a. Ecosystem Actors Survey and Response Rate Acronyms AI Artificial Intelligence MENA Middle East and North Africa AMIC Moroccan Association of Capital Investors MNF Maroc Numeric Fund B2B Business-to-business MRE Ministry of Moroccans Living Abroad and Migration Affairs CEED Climate Entrepreneurship and Innovation NGO Non-governmental organization Ecosystem Diagnostic CO2 Carbon dioxide OECD Organisation for Economic Co-operation and Development CSP Concentrated solar power OS Operating system CTIC Clean Tech Innovation Challenge, Morocco P2P Person-to-person CSP Concentrated solar power PER Public Expenditure Review DIV Development Innovation Ventures PV Photovoltaic GEM Global Entrepreneurship Monitor R&D Research and development GIZ German Agency for International Cooperation SEIS Seed Enterprise Investment Scheme (UK) GDP Gross domestic product SME Small and medium enterprise GES Global Entrepreneurship Summit USAID United States Agency for International Development HR Human resources VC Venture capital IFC International Finance Corporation WBG World Bank Group IT Information Technology MAD Moroccan Dirham MASEN Moroccan Agency for Sustainable Energy MCIC Morocco Climate Innovation Center mCISE Moroccan Center for Innovation and Social Entrepreneurship Glossary Technologies that provide climate mitigation, adaptation benefits, or positive environmental Green Technology benefits. Typical sectors include clean energy, energy efficiency, sustainable agriculture, food (Greentech or production, forestry, resource management and conservation, sustainable consumption and Cleantech) production, and environmental sustainability. Green Technology An entrepreneur whose business is based on utilizing green technology in some form. This covers Entrepreneur both entrepreneurs wishing to commercialize indigenous/local technologies and those deploying technologies and business models invented elsewhere. Example. A person who initially deployed a green technology successfully in Country A, and is now looking for new markets in Country B. Green Technology Companies that base their business on green technology, whether existing or new. This includes Company companies that innovate with regard to their process/business model — whether or not their technological solution is new. Example. Many solar startups (for example, SolarCity, Mosaic) do not offer a new solar technology, but are nevertheless innovating their delivery and business model aspects. Note. Many ventures that the World Bank considers “greentech firms” do not actually regard themselves as such. A company’s method of creating value for the customers and capturing value for the company and Business Model its stakeholders. Opportunity An opportunity entrepreneur leads, founds, organizes, and/or runs a business that aims to grow Entrepreneurs beyond the scope of an individual’s needs. It ultimately provides jobs and income for others in specific sectors. 9 Executive summary The environment in Morocco, like many other low- to high-income countries, is particularly vulnerable to climate change. However, unlike other countries facing similar struggles, the Moroccan government has responded to these challenges and imbalances through a green growth agenda. This agenda is firmly oriented toward climate change mitigation and adaptation. Further motivated by concerns not only about energy security — but also about economic development and poverty reduction — the Moroccan government invested more than US2 billion in clean energy technologies and installed 166 megawatts (MW) of capacity between the years 2009 and 2013.1 The primary goal of this investment was to drastically reduce the energy dependence on foreign sources and become increasingly more energy self-sufficient. However, self-sufficiency begins at home. It requires but specifically climate entrepreneurship, have investment in localized technologies through reached a ‘start-up’ stage. Nonetheless, the overall innovative entrepreneurs who can propel this growth support environment requires more targeted in direct response to Morocco’s climate threats. The intervention, in particular, favorable policies, primary way to combat these challenges is largely resources, and a resilient entrepreneurial-minded through the creation and adaptation of green culture to inspire future growth. technologies and climate solutions, such as small-scale hydroelectric plants, photovoltaic solar installations, Research Approach off-grid solar plants, and biomass treatment facilities. Indeed, climate technology is an area in which The report takes a mixed-methods approach, and is investments are expected to exceed US$23 trillion in based on four forms of data collection and analysis emerging markets between now and 2030, according undertaken from August-November 2016. By using to the International Finance Corporation (IFC).2 different data sources, the team was able to triangulate the data and gain higher validity and Although there are good opportunities for Moroccan consistency for the findings and recommendations growth-oriented entrepreneurs, stronger (see figure 1e). entrepreneurship-related policies and support to the climate entrepreneurship ecosystem is necessary. Such support would help improve the environment for green entrepreneurs, and unlock the full potential of Morocco’s green private sector development agenda. In recent years, investment in the various facets of Morocco’s entrepreneurship ecosystem has become the focus of both the public and private sectors. The foundation has been developed, and all the structures necessary for nurturing not only entrepreneurship, 11 Morocco CEED • Executive Summary for the Moroccan green entrepreneur, while also bringing to light the different factors that shape Morocco’s current entrepreneurship ecosystem. The following are a range of the report’s findings that have been organized into two interwoven groups: (i) “Morocco’s green entrepreneurs,” which details insights about green entrepreneurs doing business in Morocco; and (ii) “Morocco’s burgeoning climate entrepreneurship ecosystem,” which explores and defines the various strengths and limitations of the Source: Authors environment for doing business in Figure 1e. Climate Entrepreneurship and Morocco. Innovation Diagnostic Data Collection Channels Morocco’s Green Entrepreneurs From the perspective of various Moroccan Profile of Moroccan Green Entrepreneurs stakeholders, the ecosystem suffers from structural The Moroccan green entrepreneur (surveyed) is barriers, a policy environment that could be young, educated, and started their business because strengthened, and gaps in knowledge and access. The they wanted to be their own boss. These research and analysis for this report delved deeper entrepreneurs work in diverse sectors —from green into these issues, and explored the current situation 12 Morocco CEED • Executive Summary information technology (IT) to energy efficiency — expert with a great idea, but less of the know-how to and are creating and adapting technologies and run and operate a successful business —but also makes solutions to solve some of Morocco’s greatest it more difficult to obtain funding. environmental challenges. They are doing so at a time when investment in solutions to combat the Too few mentors limit entrepreneurial growth. country’s climate challenges is high, as well as a Finding solid vested mentors in Morocco to guide public necessity. Case studies throughout the report entrepreneurs through all phases of the growth cycle complete the profile of the Moroccan green is difficult. Not only do mentors tend to be more entrepreneur, showing the different stages of business technically- than business-focused in nature, but maturity and providing more context to the different because of a perceived lack of a “giving-back” culture types of green IT, solar refrigeration, and other in the ecosystem, many mature entrepreneurs are products and services being developed by local viewed as unwilling to mentor their younger entrepreneurs. counterparts. This also promotes a lack of trust within the broader community. Solo founders lack co-founders to build high- growth firms. The skills gap in Morocco limits most Women entrepreneurs could benefit from businesses from reaching their full potential. While dedicated support. There are currently no focused entrepreneurs are generally highly skilled, most of cleantech entrepreneurship programs for women. In their value tends to lie in technical areas, for example, this context, women lack entrepreneurial role models scientific and mathematical skills. However, they lack and mentors. Overarching inhibiting factors include: the business savvy to advance their concepts and cultural expectations (including social and familial technologies beyond the ideation and early stages. responsibilities); a lack of access to information, Indeed, forty-three percent of surveyed Moroccan networks, financing — and by extension — markets entrepreneur businesses are solo-run. This not only and inputs. Nonetheless, young women are exacerbates the skills issue —as most of these climate increasingly prevalent and active at a young age in technology startups tend to be started by a technical the field of social entrepreneurship. 13 Morocco CEED • Executive Summary Morocco’s Burgeoning Climate potential for impact; and investment from the Entrepreneurship Ecosystem international community. However, as many respondents suggested, there is a disconnect within A perceived lack of policy support to green the ecosystem that is exacerbated by a lack of entrepreneurs. The policy aspects of green communication among the key players (namely entrepreneurship remain relatively new, and the roles government and the private sector), which results in of all of the players in the ecosystem and government lack of sufficient support for entrepreneurial activities. are slightly underdeveloped. Further, there are misconceptions about the profile of entrepreneurs, Entrepreneurs lack later-stage support. The and especially green entrepreneurs. These general consensus among interview respondents was misconceptions hinder further development of the that early-stage support exists, but requires stronger ecosystem. The government has taken steps toward connections in the ecosystem, as well as an better serving entrepreneurs, centralizing information improvement of existing infrastructure and quality. and providing incentives for investing in startups. There is a clear gap in later-stage support However, knowledge of these efforts is not yet programming in Morocco for green widespread among the community. In this context, entrepreneurs. It is evident that the support a green 62 percent of surveyed entrepreneurs said that overall entrepreneur can receive currently has its limits — in government support is lacking. contrast to a digital entrepreneur, for example. With an absence of financial support and acceleration A growing, but fragmented ecosystem. Many of services, it is difficult for many green entrepreneurs, the pieces necessary for building a healthy who are at this critical juncture to fully scale their entrepreneurship ecosystem exist in Morocco. These businesses (figure 2e). include: active support organizations; a willing government; education and research centers with 14 Morocco CEED • Executive Summary Figure 2e. Mapping Startups and their Enablers by Entrepreneurial Stage Source: Authors 15 Morocco CEED • Executive Summary Few corporate and private foundation linkages exist to Market access is not widely available for green boost the ecosystem. Corporations and large private entrepreneurs. Green entrepreneurs commonly found the foundations have few links to the Moroccan Moroccan market to be small and difficult to access. Almost entrepreneurship ecosystem. There is little trace of financial 50 percent of surveyed entrepreneurs found the market size support or other significant entrepreneurship programs, and demand unfavorable for doing business. Experts and which are commonplace in more developed ecosystems. entrepreneurs agree that the public market is virtually This is a missed opportunity, as corporations and private inaccessible. Opportunities are perceived to be reserved for foundations could bring value to the ecosystem by simply larger, more established companies, and often international working with a select number of startups. This would ones. provide them with the opportunity to grow. Additional market information is necessary for doing Funding for start-ups is limited by risk-averse investors. business. Fifty-four percent of entrepreneurs said that there Access to funding at every stage of enterprise development was a lack of access to market information, nothing that this is difficult to attain in Morocco, and potential sources of is the biggest market barrier to doing business in Morocco. financing are limited. Eighty-four percent of surveyed As a result, green entrepreneurs often start their businesses entrepreneurs were self-funded at the early-stages. With in reverse. Rather than trying to solve a problem or fill a gap, regard to later-stage support, 38 percent of entrepreneurs many Moroccan green entrepreneurs create a technology or found it difficult to access (this includes loans, angel solution before sourcing demand or market fit. This, in turn, investing, and venture capital funding) — indicating that it can stunt the development of a start-up business and its as the biggest financial barrier to doing business in Morocco. potential to scale. This financial barrier is also exacerbated by the lack of risk- appetite among investors who are commonly viewed as only seeking stable investments. In this regard, such investors are more likely to invest in real estate than in a new start-up venture. Likewise, they are more likely to invest in digital than in cleantech ventures. 16 Morocco CEED • Executive Summary Recommendations 17 Morocco CEED • Executive Summary 18 Morocco CEED • Executive Summary 19 Morocco CEED • Executive Summary INTRODUCTION Introduction A World Bank Group (WBG) team, together with the support of Cluster Solaire’s and the Moroccan Agency for Sustainable Energy (MASEN), undertook a climate entrepreneurship ecosystem diagnostic in Morocco. The purpose was to shed light on the complexities of the country’s climate entrepreneurship ecosystem. This was part of the preparation of an International Finance Corporation (IFC) advisory service activity. Climate-smart development is a rapidly growing area in Morocco, and indeed much of the world. It has simultaneously been proven to boost economic development and contribute to more sustainable economic development by reducing emissions and energy costs, creating jobs, and increasing economic opportunity.1 Climate entrepreneurship2 offers a good opportunity to promote climate- smart development and help countries transition to a green economy. Opportunity entrepreneurs, who are the main focus of this report, and small and medium enterprises (SMEs) can play a key role in propelling the industry through the creation and adaptation of green technologies and solutions, as well as attendant job creation. However, there is currently a knowledge gap as to how to utilize existing resources to design solutions to promote future entrepreneurial activity in the green sector. 21 Morocco CEED • Introduction In order to substantially contribute to the knowledge in this entrepreneurs, as well as contribute substantively to the area, as well as contribute to existing and planned WBG design of the aforementioned International Finance activities, the team considered several questions to guide the Corporation (IFC)-supported activity. research: Methodology Overview I. What are the strengths, weaknesses, and opportunities for improvement in the existing climate entrepreneurship The report’s methodology and analytical process were ecosystem? developed based on the Babson Entrepreneurship Ecosystem II. What is the typical profile of potential high-growth, model (see Annex I for complete methodology). This model green entrepreneurs in Morocco, and what do they require captures the most widely held understanding of to scale their operations? entrepreneurial ecosystems, including the factors that III. How are the current climate entrepreneurship constitute them and how they work. While the World Bank ecosystem players in Morocco – mainly the network of Group has previously undertaken diagnostics in Bangladesh, institutions in the public and private sectors whose activities Serbia, and Suriname for various sectors, the Morocco and interactions initiate, import, modify, and diffuse new diagnostic is the first climate-focused Entrepreneurship technologies – helping or hindering climate Diagnostic. entrepreneurship in the country? IV. How can the scaling up of emerging technologies be This report adopts a mixed-method approach. It is based on better supported in Morocco? four forms of data collection and analysis undertaken from V. How can Morocco’s existing entrepreneurship activity August-November 2016 (See figure 2). By using different be more inclusive of women and youth? data sources, the team was able to triangulate the data and gain higher validity and consistency for its findings and The overarching aim of this report is to inform different recommendations. ecosystem stakeholders in Morocco on how to spur and sustain high-growth, green entrepreneurship and innovation activity. At the same, this report also aims to increase the awareness of and support to green 22 Morocco CEED • Introduction The structure of the report is as follows: Figure 1. Babson Entrepreneurship Ecosystem Model I. A context section based on secondary data analysis seeks to position Morocco’s current status in the entrepreneurship, innovation, and climate-centered fields. II. A findings section based entirely on primary data — both survey and in-person interviews — presenting the main outcomes of the assessment. III. A recommendations section based on the findings and analysis of the two preceding Sections. Source: Authors 23 Morocco CEED • Introduction Figure 2. Climate Entrepreneurship and Innovation Diagnostic Data Collection Channels Source: Authors 24 Morocco CEED • Introduction The city of Ouarzazate, located in the middle of a bare plateau south of the High Atlas Mountains. To the south of the town is the desert. Photo: Arne Hoel / World Bank Morocco’s Climate Challenge and Economic Opportunity The environment in Morocco is particularly vulnerable imperative. Indeed, it can have substantial lifetime effects to climate change. From the sand dunes of Ouarzazate and benefits. to the coast of Tangiers, Morocco faces many climate- related challenges. These include: air pollution, solid In addition, Morocco is substantially energy dependent. hazardous waste, soil degradation, and decreasing water About 90 percent of its energy comes from abroad. This quantities and qualities. These conditions are slowly includes a combination of coal, oil, gas, and electricity6 — intensifying — and have tremendous social and economic with a continuing strong reliance on petroleum.7 The ramifications.3 government has responded to these challenges and imbalances with a green-growth agenda. The government Detrimental climate impacts, such as droughts, sea-level rise, has firmly oriented its policy toward climate change and food scarcity could be limited through the reduction of mitigation, as well as the adaptation of multiple policy emissions by 12 gigatons (Gt).4 Due to the substantial commitments to sustainable development.8,9 impact the recent drought had on agricultural production in the early part of 2015, Morocco's real gross domestic In order to reduce its dependence on foreign energy sources, product (GDP) growth declined nearly three-fold, that is, the government set a goal in 2008 of generating 42 percent from 5 to 1.7 percent in 2016.5 It is clear that cutting the of its energy from renewables (mainly solar and wind) by costs of climate change in countries like Morocco, which the year 2020.10 From 2009 to 2013 — further motivated by has an economy reliant on positive climate trends, is concerns about energy security, economic development, and poverty reduction — the government invested more 26 Morocco CEED • Introduction than US$2 billion in clean energy technologies and installed generation capacity in the country.16 Furthermore, as a 166 megawatts (MW) of capacity.11 result of the success of these investments, the renewable energy target was increased to 52 percent. Although Of the existing renewable energy, currently 90 percent government officials aim to create jobs through large-scale comes from large-scale hydroelectric plants, with the renewable energy projects,17 further investment in the remaining ten percent comprised largely of a mix of wind private sector will be key to attaining the country’s parks, thermo-solar plants, photovoltaic solar installations, ambitious social, environmental, and economic goals. micro-hydroelectric plants, and biomass treatment facilities.12 In just under eight years, Morocco has made The private sector is the engine of economic growth with substantial strides to reach its “green stimulus” goals. In this an important role in eradicating poverty and fostering regard, it has been continuously recognized by the inclusivity.18 Increasingly, governments in developing international community for its efforts. economies are realizing that in order to cultivate a competitive, diverse, inclusive and thriving economy,  In 2014, Ernst & Young ranked Morocco 4th of all investment in entrepreneurship and innovation will be Middle East and North African (MENA) countries as the required.19 country with the highest level of potential in renewable energy investment. By comparison, Jordan ranked 3rd.13 Climate entrepreneurshipwill be the driving force of the  In 2015, the Pew Charitable Trusts ranked the country green economy. High-growth entrepreneurs and SMEs are as the 7th best emerging market in clean energy propelling the industry and responding to climate threats investment (and the only one in MENA). Kenya ranked through the creation and adaptation of green technologies 4th.14 and climate solutions, as well as through job creation.  In 2015, according to WAMDA (a platform of programs Furthermore, according to the IFC, climate technology is and networks that aims to accelerate entrepreneurship an area in which investments are expected to exceed nearly ecosystems across MENA), Morocco had the most US$23 trillion for climate-smart investments in emerging renewable energy projects in MENA, with an estimated markets between now and 2030.20 28 projects. By comparison, Jordan had 12 projects.15 In Egypt, Jordan, and Morocco, in particular, the total By January 2016, state officials indicated that renewable climate-investment potential is estimated at US$265 energy accounted for 35 percent of the current electricity billion — with over one-third available for renewable 27 Morocco CEED • Introduction energy generation (US$97 billion); and 64 percent (US$169 billion) for climate-smart buildings, transportation, industrial energy efficiency, electricity transmission and distribution, and waste solutions. An earlier estimation of the market (made before the 2016 Paris Agreement) suggested that a quarter of this investment potential is accessible to SMEs. This translates into a similar but substantially larger opportunity for green entrepreneurs operating in this space.21 Strengthening targeted support of the country’s climate entrepreneurship ecosystem will boost job creation, sustainability, and the formation of a stronger knowledge- based economy.22 As the government already recognizes, working with the private sector, civil society, and other parts of the ecosystem is fundamental for climate-smart development. Indeed, these partnerships could help mobilize more investment to facilitate unique technology solutions for the country. Box 1.1 Entrepreneurship Macro-data Snapshot This sampling of macro-level indicators measures various aspects of Morocco’s entrepreneurship ecosystem. It reveals how the country compares to relevant regional and international counterparts in areas such as infrastructure, start-up activity, and financing. Several trends emerge from these macro-level statistics and show Morocco’s comparability with other strong regional players. For example, the ease of doing business is on par with the other middle-income countries on the continent, such as South Africa. In fact, the statistics show that Morocco is considerably stronger than other Middle East and North African countries. However, access to finance remains more problematic. 28 Morocco CEED • Introduction Figure 3. Benchmarking Morocco’s Key Indicators vis-a-vis Other Countries 29 Morocco CEED • Introduction MAIN FINDINGS The exact formula for what generates a “mature” or “thriving” entrepreneurship ecosystem is conditional on the many intersecting factors of its origin, and how they relate to each other within a specified context. Thus, this diagnostic analysis is rooted in the six-pronged Babson Entrepreneurship Ecosystem model. It aims to reveal insights into the challenges that hamper the creation, development, and existence of enterprises in any given country. Since the 2014 Global Entrepreneurship Summit in Morocco, investment in the various facets of the country’s entrepreneurship ecosystem have become a focal point of both the public and private sectors. During this time, the foundation of Morocco’s ecosystem solidified, and all the structures necessary for nurturing climate entrepreneurship have reached a ‘start-up’ stage. Nonetheless, the overall support environment requires more targeted support. In particular, it will require favorable policies, additional resources, and a resilient, entrepreneurial-minded culture to inspire future growth. There are a variety of reasons for the existence of these structural barriers, as well as the fact that the gap in knowledge and access persists. The following section aims to delve into these issues, exploring the current situation of the Moroccan green entrepreneur. It also brings to light the factors that have contributed to Morocco’s current entrepreneurship ecosystem. The holistic findings are based on the primary data collected, including interviews with over 40 key stakeholders and a survey of 334 individuals. 31 Morocco CEED • Main findings Morocco’s Green Entrepreneurs The Moroccan green entrepreneur surveyed is young, educated, and started their business because they wanted to be their own boss. These entrepreneurs are innovative and are creating technologies and solutions to solve some of Morocco’s greatest environmental challenges. This is occurring at a time when investment in solutions to combat the country’s climate challenges is high — as well as a public necessity. Morocco is not their only target market, as many have clients or customers in over 40 other countries (see figure 4 below). Indeed, many of these entrepreneurs work in diverse sectors — from green IT to desalinization. Yet, broad recognition of their ideas, and further participation in the field is limited due to a variety of social and operational barriers common in a growing entrepreneurship ecosystem. These barriers include, among others, a lack of mentors and/or market accessibility. 32 Morocco CEED • Main findings Figure 4. Profile of Morocco’s Green Entrepreneurs, based on survey results Source: Authors 33 Morocco CEED • Main findings 34 Morocco CEED • Main findings Case study 1: eLum Product/Service Environmental impact eLum offers a software-as-service product, dubbed the Energy OS  eLum supports reduction of carbon emissions by enabling solar (Operating System). It employs artificial intelligence to help manage both energy (the electricity grid in Morocco is 700h/kWh). on-grid and off-grid energy costs for industrial players. This solution  eLum also helps reduce losses linked to transportation of electricity targets industrial and commercial customers seeking to gain insight and (estimated between 3 and 7 percent). save money on their electricity bills and fuel consumption. In particular,  eLum’s product helps decrease dependence on polluting fossil energy eLum is piloting an energy storage system coupled with a photovoltaic sources. production unit that runs on their Energy OS. Current and target customer market Number of staff eLum’s first target customer is the automobile industry located in Tangier. 22 eLum aims to help the industry optimize production, storage and consumption of renewable energy. Beyond that, the larger target is the off- Location (national location and international if relevant) grid market in Africa, represented by the mines and the Paris, France; Casablanca, Morocco telecommunications towers (with 400,000 towers off-grid). Key value proposition Year founded eLum’s solution increases the value and profitability of both on-grid and 2016 off-grid energy projects, making it more attractive for industries to invest in renewable energy production and storage. It helps its customers save at Funding sources, amount least 20 percent of their energy costs— and reduce their carbon emissions Self-funded: 100,000 Moroccan Dirham (MAD) by 30 percent. Grants:  AMICA: 50,000 MAD  Banque Populaire: 50,000 MAD Competitive advantage  Morocco Climate Innovation Center (MCIC): 50,000 MAD This solution represents a new opportunity for industries that relied on the national energy costs to move off-grid, and potentially dramatically reduce their energy costs. eLum has two strong competitive advantages: Growth angle  Powerful algorithm based in artificial intelligence (AI) that forecasts The market for energy management software has been growing by 30 the consumption of the plant coupled with the weather forecasts. percent year-over-year, so a product that optimizes the yield for  The ability of the software to be plugged in any kind of photovoltaic independent energy producers is well positioned. There is a large need for technology or brand. effective energy management systems across the African continent, especially in the telecommunications towers and the mining industry. 35 Morocco CEED • Main findings Box 1.2 Misconceptions about Green Entrepreneurs There are several misconceptions about green entrepreneurs that limit the support they are currently receiving — and thus their ability to scale up and make a lasting and larger impact on the green economy. First, green entrepreneurs do not always identify themselves as such (nor do they necessarily receive support from “green”-focused incubators). As such, they not being embraced by ‘green’-focused support organizations. They also sometimes lack the necessary recognition and credibility for their pursuits. A common misconception about green entrepreneurship is that the types of technologies or services they innovate are mainly hardware in nature. However, based on the analysis for this report, more than 40 entrepreneurs claim to be developing companies focused on Green IT, for example. Second, of concern is the “new-to-the-world” or “cutting-edge” bias that currently exists in the Morocco’s climate technology entrepreneurship ecosystem. Moroccan green entrepreneurs tend to be focused on creating new solutions to climate challenges instead of using existing and proven technologies with clear models applied to a local country. The latter can be an easier path to scale in developing contexts, not least because funders tend to be reassured when investing in these types of businesses. Some support organizations are supporting entrepreneurs that have a new-to-the-world idea/technology and an unproven business model — rather than actively plugging into global networks and resources for existing technologies, and using validated and scalable business models that could then be replicated and adapted in Morocco by local high-growth entrepreneurs.23 The final misconception is that all Moroccan green entrepreneurs are in the start-up stage. In fact, many existing mature companies are also introducing new green products and spinning off new ventures. These have as much, if not more, potential to grow green sectors overall. However, without recognition of green entrepreneurs beyond the start-up stage, there has not been the kind of dedicated thought and calibration to the types of support needed beyond quite limited initiatives, for the time being (such as those being undertaken by the Fast-Track-to-Market (FT2M) program of the Cluster Solaire). 36 Morocco CEED • Main findings While there are no official statistics about the level of entrepreneurship activity in Morocco, Startup Morocco, one of the more influential stakeholders in the ecosystem, recently reported that there are less than 200 active start-ups in the country, with the bulk of activity concentrated in Casablanca and Rabat. This compares to activity in more developed markets, such as in Paris, France, where there are between 2,400 and 3,200 active tech start- ups.24 Library at Mohammed V University at Agdal, Rabat. Photo: Arne Hoel/World Bank 1. Solo Founders Lack Co-founders to development of entrepreneurs’ soft skills, it is often blamed Build High-growth Firms on Morocco’s educational system, and a culture that does not value entrepreneurship. Reportedly, from primary to college level education, students are encouraged to become “[Students] are good in scientific skills and mathematics, employees with stable salaries, either working in the public but they lack self-confidence and personal skills.” sector or for a major corporation. Although this limits the - Adalia available talent in the country willing to work for a start-up firm, it also does not positively present entrepreneurship or When asked to rank the skill level of entrepreneurs, 70 innovation as a viable career option. percent of experts in Morocco found entrepreneurs to have good technical skills, and 31 percent found them to have business savvy. This exemplifies the skills gap that many As the Organization for Economic Co-operation and entrepreneurs suggested may prevent businesses from Development (OECD) suggests, one of the Moroccan reaching their full potential. While many respondents stated government’s key priorities should be to develop a that support institutions are not sufficiently encouraging the comprehensive policy framework that ensures 37 Morocco CEED • Main findings Case study 2: Cleanzy Product/Service Environmental impact Cleanzy has created a new concept for an ecologically friendly, on- Cleanzy’s services significantly reduce water consumption per laundry demand laundry service in Morocco. Cleanzy’s stores offer cleaning of cycle (50 to 70 liters in aqua cleaning versus 250 to 400 liters in dry different types of textile products using biodegradable products. Their cleaning). Cleanzy does not use perchlorethylene (a classified products do not use polluting solvents, such as perchlorethylene (a carcinogenic solvent banned in several countries); instead, it uses classified carcinogen banned in several countries). The company’s biodegradable products in laundering. premium quality and prices are competitive with those of traditional cleaners, while also supporting environmental sustainability. Current and target customer market Cleanzy currently has 400 direct customers in a premium neighborhood in Number of staff Rabat, with a retention rate of 95 percent. Cleanzy is developing a 5; Near future: 8 employees as the store nears completion. business-to-business (B2B model to serve businesses (restaurants, hotels, spas, and so on), and is preparing partnerships that will benefit their Location (national location and international if relevant) franchisees. Rabat Key value proposition Year founded Cleanzy offers high-quality, eco-friendly laundry service for consumers, 2015 employees, and neighbors. More than 98 percent of laundry services in Morocco use dry cleaning methods involving toxic perchlorethylene, which Funding sources, amount have been banned in several countries. Cleanzy’s aqua cleaning  Personal funds: 2.5 million MAD techniques avoid these toxic chemicals, and can prevent air and water  Bank credit: 1.5 million MAD pollution. Furthermore, Cleanzy is currently building a brand in the Moroccan laundry market, which lacks local brands. They will compete Growth angle with existing global brands that are harmful for the environment and This year, Cleanzy opened the first store in Rabat and is finalizing the public health, while still being well-positioned at the same price. planning of three new stores in the coming months. Using a franchise model, Cleanzy plans to open eight stores in the next two years, with the Competitive advantage target of 20 stores in Morocco in the medium term. This expected growth Cleanzy has exclusive contracts with the suppliers who developed this has the potential to create an additional 165 jobs. special aqua cleaning process. While consumers have the choice of utilizing traditional cleaners, for the same price point, Cleanzy offers a laundry service with best-in-class cleaning capabilities (keeping colors vibrant and without deteriorating fibers), as well as environmental and health benefits. 38 Morocco CEED • Main findings entrepreneurship is recognized and taught as a key 2. Too Few Mentors Limits competency from the primary to the tertiary school levels.25 Entrepreneurial Growth This would not only begin to transform the culture of entrepreneurship, emphasizing more understanding and There are several sources of mentorship throughout the respect for the field, but it would also inspire youth to ecosystem. These are either directly accessed through the approach life with a more entrepreneurial attitude. In turn, Réseau Entreprendre Maroc network, using a variety of more people will begin to start businesses, and provide structured mentor talks and training held by organizations potential services and products that can contribute value- such as Secteur 21 and Startup Maroc. Alternatively, added goods and services to the Moroccan economy. mentorship sources can be utilized through other ad-hoc activities. However, entrepreneurs indicated that the ability Furthermore, even with the current situation of uneven to find a solid, vested mentor who will support an skills in the ecosystem, many entrepreneurs are not forming entrepreneur is difficult. Furthermore, many of the mentors teams to overcome these gaps. While 46 percent of who do exist in the ecosystem tend to be more technically- entrepreneurs are open to collaborating (forming teams and than business-focused in nature. Many are either foreign partnerships), 43 percent of surveyed entrepreneur and do not understand the particular characteristics of the businesses are solo-run. This not only exacerbates the skills Moroccan ecosystem, or are from corporations and have issue, but also influences the amount and kinds of funding never acted as entrepreneurs themselves. that entrepreneurs can access. These start-ups are often founded by a technical expert (typically an engineer) with a “The most important [need] is not the investment itself, great idea. Unfortunately, start-ups require much more than but more the coaching of the entrepreneurs.” just technical savvy, including a range business skills, human - Maroc Numeric Fund resource (HR), financial, and so on. These skills are typically supplemented by a co-founder as a complementary skillset. “The problem is that bringing foreign mentors will help, As financial experts emphasize, entrepreneurs who run solo but they won’t give the best advice, as they can’t understand businesses rarely gain access to equity, venture capital (VC), the Moroccan problems.”26 There were a variety of reasons or angel funding. It is considered to be a basic premise and suggested for this absence of available mentors, such as a commonly held principle that investors look for teams lack of a “give-back” culture. As one stakeholder noted, because no one person can build a high-growth business. “Entrepreneurship skills are hard to develop in Morocco 39 Morocco CEED • Main findings Case study 3: Evaptainers Product/Service atmosphere due to food spoilage. The spoilage rate of fruits and Evaptainers offers an electricity-free mobile refrigeration technology to vegetables grown in African countries is 45 percent. In high-temperature keep food fresher, longer, using only sunlight and water. regions, produce typically spoils after only two days. With Evaptainers, produce can stay fresh for two weeks with no energy consumption and Number of staff minimal water usage. 7 Current and target customer market Location (national location and international if relevant) The company has distributed 150 Evaptainers, mainly in the central region Rabat, Morocco of Morocco (Ifrane). This first batch of units is intended as a proof of Boston, USA concept. Once adjustments are made for a final prototype. Evaptainers will start mass production and target small villages without access to Year founded electricity. The ultimate target is to reach the 700 million people who live 2015 without refrigeration in the world. Funding sources, amount Key value proposition US$250,000+ in grants from the United States Agency for International Evaptainers creates dependable, cold-chain solutions without Development (USAID): Development Innovation Ventures (DIV), the dependence on costly infrastructure, as their refrigeration solution runs on National Geographic Society, the Massachusetts Clean Energy Center, and only sunlight and water. This enables small rural farmers to increase the a sponsorship from the 3M company. percentage of their crops that go to market, thereby improving their standard of living and putting fresher food in the hands of consumers. Growth angle Evaptainers is launching in Morocco as a pilot market. After a successful Competitive advantage proof of concept in Morocco, Evaptainers plans to expand to other Evaptainers’ target market is people living off-grid who currently do not countries in Africa, starting with Nigeria, where potential distributors have use refrigeration. Therefore, Evaptainers is not replacing another product. already signaled interest. Most of the vegetables and fruits spoil quickly for these people living off- grid. Evaptainer introduces a new, low-cost, transportable solution that Environmental impact ensures they obtain the most value from their produce. Evaptainers reduces greenhouse gas emissions related to conventional refrigeration. It also reduces carbon dioxide (CO2) released into the 40 Morocco CEED • Main findings because there is a serious lack of mentors that are willing to 3. Women Entrepreneurs Could Benefit give back.”27 This leads to weaker levels of trust between from Dedicated Support entrepreneurs. McKinsey Global Institute reported that by 2025, US$12 trillion could be added to the global GDP by advancing Figure 6. Top 5 Sources of Mentorship gender equality.30 Closing these inequality gaps and encouraging equal opportunity is a clear objective for any country. This is a fact his Majesty, the King Mohamed VI, exemplified through a 2014 speech: “Female entrepreneurship holds so much promise for our economies and our societies that we all need to encourage it; otherwise, we will be depriving ourselves of huge potential.”31 “Women need a dedicated program to empower them.” - Espace Bidaya The current situation for women entrepreneurs in Morocco Source: Authors is multifaceted and complex. The interview respondents — of whom 34 percent were women —were unable to express “Young entrepreneurs are not trusted by the market,” was a a single cause to explain the difficulties women statement consistently heard during interview. Indeed, the entrepreneurs face. In fact, many did not think there was an lack of trust is often viewed as ageist.28 In fact, while serial issue at all. In this regard, it is important to note that only 25 entrepreneurs were the highest rated mentorship source by percent of surveyed entrepreneurs were women, and only surveyed young entrepreneurs, the same serial entrepreneurs 33 percent of entrepreneurs found there to be an uneven were reported as not investing in helping new, younger playing field for women active in entrepreneurship. While entrepreneurs navigate the ecosystem. As noted in the many noted the visibility of a high number of women interviews, “There is a critical lack of entrepreneurs that operating in positions of power, in reality, only about 10 want to share their experiences.”29 percent of Moroccan women are active in entrepreneurship, 41 Morocco CEED • Main findings and very few of them are beyond the proof of concept Women entrepreneurs are commonly viewed as only stage.32 When compared to the data of the Global concentrating in industries with lower capital intensities and Entrepreneurship Monitor (GEM) regarding entrepreneurial lower average returns to capital. Many experts maintain that intentions33 in the broader Middle East (innovation-driven) this tendency lowers financial performance.36 However, the region, where 41 percent of women (and 46 percent of men) opportunity for women entrepreneurs to claim a stake in the expressed an interest in starting a business, it is clear that climate technology entrepreneurship market is high.37 more dedicated initiatives and a focus on the lessening Furthermore, women’s involvement in entrepreneurship is various cultural barriers are essential if policy-makers and becoming more lucrative, according to recent first round other stakeholders are to provide better support for women data from the United States. Investments in companies with entrepreneurs.34 at least one female founder outperformed investments in all- male teams by 63 percent; in their own words “women are Cultural expectations (social and familial responsibilities) winning.”38 were commonly stated as a reality, but not necessarily a barrier for women entrepreneurs. Nonetheless, young Yet, there are several constraints for women to overcome women are most active in social entrepreneurship. before they can sufficiently participate as economic actors in International entrepreneurial education non-profit, Enactus, Morocco. These include the lack of access to information, has a high participation rate of at least 90 percent among networks, financing, and by extension, markets and inputs.39 women in social entrepreneurship, with heavily-attended Although women said that they face the same legal barriers training and activities. CEED Morocco, which operates in as men, they have a particular difficulty in accessing funds, the early-stage incubation space, reported that of the 200 and often experience other forms of implicit bias. entrepreneurs in their program, nearly 30 percent are women.35 Further, several women-focused hackathons and Moroccan women stated one of the biggest barriers to competitions are increasingly being hosted by organizations doing business was the lack of local mentors (specifically such as the World Bank. However, beyond these few women mentors) to help guide and shape their ideas, examples, there are not many other existing programs in the operations, and businesses as a whole. A major barrier to ecosystem to support women entrepreneurs. women operating in the realm of entrepreneurship is the lack of dedicated support programs and mentors to help 42 Morocco CEED • Main findings quell insecurities, educate, and support women’s particular needs throughout the business growth stages. As one respondent stated, “There are great women managers from large corporations, but they are not inspiring role models in entrepreneurship: a woman [who] built something from scratch.”40 Box 1.3 Women’s Support Programs around the World Of all the existing incubator-type programs available globally, only a small percentage have a women-centric focus. However, existing programs from Colorado, US (MergeLane) to Lagos, Nigeria (She Leads Africa), and the mentorship/network-focused Pan-African (Graca Machel Trust Women’s Rights or Economic Advancement Program) equally suggest that women-focused programs can provide the right environment to nurture ideas, collaborate, mentor, and teach women how to navigate traditionally male- dominated industries. For example, from 2014 to the present, MergeLane’s accelerator cohorts of high-growth Soukaina and Mouna work in the marketing department at Label Vie entrepreneurs have raised US$20.2 million in funding, and headquarters in Rabat. Photo: Arne Hoel/World Bank created 231 jobs — including 38 leadership roles for women. 43 Morocco CEED • Main findings Case study 4: Biodôme du Maroc Product/Service Biodôme is the first Moroccan company specialized in developing bio-gas Environmental impact facilities for farms. These facilities take organic waste from agricultural  Recycling waste decreases carbon emissions from agriculture waste. activities and transform it into bio-gas and compost. The farms can then  Production of organic fertilizer offers an alternative to chemical use the bio-gas for their energy needs, helping secure energy fertilizers, and lowers pesticide use. independence. The compost can be sold as fertilizer to other users or back  Using compost fixes the carbon in the soil, which helps water to Biodôme. The methanation process is accomplished via a cave where retention and decreases runoff into waterways. farmers deposit daily animal waste, organic waste and used water. Biodôme is also working on a compost solution for urban users. Current and target customer market Biodôme’s current customer is a local farm in the region of Khouribga. Number of staff Biodôme built a biogas unit for the farm’s animal waste as a proof of 6 concept. With this successful demonstration, Biodôme is planning to develop biogas facilities for other regional farmers. Concurrently, Biodôme Location (national location and international if relevant) targets hotels in urban areas for their compost production unit. Khouribga Key value proposition Year founded Biodôme’s technology will reduce household waste, which accounts for 2013 over 70 percent of total waste, and costs cities over 400 MAD/ton to collect and destroy. For farms and rural operators, Biodôme offers a way to self- Funding sources, amount generate energy safely, as well as to reduce agricultural waste. Morocco Climate Innovation Center (MCIC): 500K MAD (through the fast- track-to-market program) Competitive advantage Biodôme’s bio-gas facility can produce enough energy to replace all of the Growth angle industrial gas currently being purchased by the farmers for heating, Biodôme is developing two solutions for rural and urban usage: lighting, pumping water, and other uses. For example, in the pilot farm,  A unit for bio-gas production from animal waste or organic waste, to bio-gas production replaced around 10 bottles of gas used for energy be used in farms and rural areas. (which costs ~400MAD /month, or 4800 MAD/year).  A unit for compost production in urban areas, for users such as hotels. Biodôme also has future goals to build a distribution network for compost within the cities. 44 Morocco CEED • Main findings “The most important [need] is not the investment itself, but more the coaching of the entrepreneurs.” - Maroc Numeric Fund Photo: Arne Hoel / World Bank Morocco’s Burgeoning Climate Entrepreneurship Ecosystem 1. A Perceived Lack of Policy Support to The lifecycle of an entrepreneur, from the proof of (Green) Entrepreneurs concept stage to high-growth, requires specialized and “The government […] is not involved in entrepreneur- tailored support, and funding and knowledge. These ship. They don’t understand it and don’t value its elements are key to spurring entrepreneurial activity and impact.” cultivating the ecosystem that supports it. This can include: (i) an educational structure that embeds entrepreneurial His majesty King Mohammed VI has described attitudes and practices into its curriculum from the primary entrepreneurship and innovation as “the twin values that level through university; (ii) available financing are both stepping stones towards freedom, social mobility mechanisms for each phase of product/idea development; and prosperity...”41 Nonetheless, entrepreneurship is still a (iii) market information to accurately assess supply and relatively new field in Morocco. In reality, the role of demand; (iv) a favorable culture that emphasizes the need policy is underdeveloped, and the misconceptions about for and importance of entrepreneurship; and (v) support this burgeoning field have resulted in an ecosystem that for institutions to provide for the needs of entrepreneurs could benefit from high-level policy support. from incubation to acceleration through growth. 46 Morocco CEED • Main findings The Moroccan government is acutely aware of its Currently, from the entrepreneurs’ perspective, there is a potential to increase economic opportunities through the lack of knowledge about existing government initiatives green sector. However, its awareness of the opportunities (64 percent of entrepreneurs found communication with and potential gains from (climate) entrepreneurship have the government difficult). While individuals and yet to be harnessed in terms of an overarching policy. This institutions who work more closely with the government is a fact not lost on the entrepreneurial community. In this are aware of these initiatives (and others in the pipeline), context, 62 percent of surveyed entrepreneurs stated that the majority of entrepreneurs see a fragmented, overall government support is lacking. uncoordinated government role in entrepreneurship. They also find that there is a lack of support from private Nonetheless, it should be noted that since 2014, the institutions in general. As many entrepreneurs stated, government has made notable strides in centralizing “Government agencies, incubators and the financial information and providing incentives, including: (i) auto- industry [need to] work together to support entrepreneurship status42; (ii) various tax benefits for hiring entrepreneurs.”43 The Italian Startup Act, or the draft staff at young companies; and (iii) a one-stop investment Tunisian Startup Act, are examples of policies aiming to shop spearheaded by the Centre Régional d’Investissement; clarify government support to the entrepreneurial space. and so on. Current initiatives for climate entrepreneurs are fragmented between ministries (including the Ministry of Environment, and the Ministry of Industry), as well as other organizations with weak overarching support for entrepreneurs. 47 Morocco CEED • Main findings Figure 7. The Entrepreneurial Process Source: Authors Moreover, there is work to be done to improve the overall doing business in Morocco. This may be due to the fact that, environment for doing business. This starts with although overall doing business is not unfavorable, doing streamlining administrative processes (paperwork, permits, business as a start-up--which is a very particular type of and so on)44 across ministries. Although Morocco ranks 40 business is. Even with the online one-stop shop improving out of 190 countries in the World Bank’s Doing Business Morocco’s rankings in 2017, many entrepreneurs still find rankings — compared to Egypt (39) and France (27) — the government support of entrepreneurship falling short of nearly 50 percent of surveyed entrepreneurs for this report potential, with 37 percent of entrepreneurs ranking this as found these administrative processes to be inconvenient to the biggest policy barrier in Morocco. 48 Morocco CEED • Main findings 2. A Growing, but Fragmented private player (for example, the Office Chérifien des Ecosystem Phosphates [OCP] Entrepreneurship Network), or external donor program-related financing, which poses a larger Many of the pieces necessary for a healthy entrepreneurship sustainability issue. ecosystem to thrive are in place in Morocco. This includes active support organizations, a willing government, Also, although there are quite some active players in these education and research centers with potential for impact, ecosystem roles, and while each occupies areas essential to and investment from the international community. entrepreneurship promotion and support, they are disconnected. As such, they operate insufficiently as an Morocco’s ecosystem is comprised of a number of local and ecosystem. As one interview respondent stated, “The international support organizations, with all mostly ecosystem is still young. Every player is [still] trying to find concentrated in the early-stage support space (that is, Impact his space.”45 Lab; Startup Maroc; Espace Bidaya; Dare inc.). Many of these organizations have been set up recently and, in Most respondents suggested that there is a disconnect within particular, after the Global Entrepreneurship Summit (GES) the ecosystem that is exacerbated by a lack of summit. The ecosystem also includes government ministries, communication among the key players, namely the financial institutions, and educational institutions. A few of government and the private sector, but also among the these programs have a partial-to-entirely-based climate private sector stakeholders. This results in insufficient technology focus (that is, MCIC/Cluster Solaire,). support for entrepreneurial activities. Based on primary data collected, there are several robust connections within Furthermore, there are few providers for a variety of support individual silos. However, as a whole, each stakeholder services, such as training or financing. Also, most of the largely operates in isolation. One entrepreneur ‘wishes,’ ecosystem is either highly dependent on funding from one “[for] the ecosystem [to] be less isolated, [with] players working together” (Figures 8 and 9).46 49 Morocco CEED • Main findings Figure 8. Morocco’s Climate Entrepreneurship Ecosystem, mapped by category Source: Authors 50 Morocco CEED • Main findings Figure 9. Morocco’s Climate Entrepreneurship Ecosystem, mapped by connections Source: Authors 51 Morocco CEED • Main findings This reality is exemplified by the relatively low linkages in 3. Entrepreneurs Lack Later-stage the ecosystem dedicated to research/academia and Support technology transfer. If these aspects were better connected, it could boost the commercialization of green technologies, The general consensus among interview respondents was but most particularly to financiers, which most support that early-stage support exists. However, the quality and organizations seem to be quite disconnected from, which is professionalism of services is somewhat lacking. Further, problematic from a growth standpoint. beyond the need to connect and improve existing infrastructure, there is a clear gap in later-stage support Furthermore, with a range of incubator offerings, programs. This lack of later-stage support is symptomatic of international interventions, and government actions the larger issue; as one stakeholder noted, “The ecosystem is occurring with little co-ordination, basic service gaps are growing, but the pipeline is not.”48 not being filled. Therefore, the forward momentum of the field is hindered, and entrepreneurs are not being optimally As many interview respondents stated, competitions, grants, supported. As the Kauffman Foundation suggests, an and other forms of seed funding are accessible through entrepreneurship ecosystem is like a rainforest, and the enablers, such as Réseau Entreprendre Maroc (Morocco challenge is facilitating connections between all parts of the Entrepreneurship Network) and Startup Maroc. However, ecosystem so that they are working together and reinforcing without later-stage sources of financial support and each other's efforts.47 There are a few enablers, such as InJaz, acceleration services, it is difficult for many entrepreneurs, Enactus and mCISE, which offer educational options, (or who are at this critical juncture, to fully scale their Startup Weekend with competitions). However, businesses. This is also linked to the fact that entrepreneurs overarching and structured support in acceleration beyond are not being optimally prepared for acceleration by current the seed stage, as it is internationally recognized, is currently incubation support, including matchmaking efforts for solo lacking (beyond ad-hoc programs). founders. There are a lack of services focused on support beyond the early stages, as can be seen from figure 10. “Support in Morocco has developed a lot at the seed stage, but beyond [this stage] it just stops.” - Evaptainers 52 Morocco CEED • Main findings Figure 10. Mapping Startups and their Enablers by Entrepreneurial Stage Source: Authors 53 Morocco CEED • Main findings Box 1.4 Acceleration Support can Help Businesses Scale While acceleration programs often provide funding, mentorship, and other essential services to help entrepreneurs scale their businesses beyond the startup stage, it is not a guaranteed ticket to success. Whether an entrepreneur works in the technology, fashion, or food science field, the core benefit of acceleration is the boost it can provide, initially for funding — and, over time, in terms of exposure to relevant influential players, mentoring, and knowledge in an ecosystem. There are various types of acceleration programs in countries around the world, each consisting of the same central tenets of support. However, each are uniquely designed to the contexts in which they provide support. Climate KIC Accelerator, the European Union’s only acceleration program focused on climate impact and clean technology commercialization, offers a three step, 18-month program to provide cleantech entrepreneurs/startups with the knowledge, resources, tools and coaching necessary for success, including: Step 1: Fundamentals, that is, finding a market niche, and developing a financial model to scale a business. Step 2: Validation in terms of grant funding, often up to €25,000 to talk to customers and verify any business assumptions. Step 3: Take-off in which entrepreneurs can receive up to €50,000 in seed funding; find launch customers, development partners, and investors; and form partnerships that can help an entrepreneur scale. In addition, KIC requires an equity percentage in return for grants and all other services received through the program. Finally, this sort of acceleration program can be applied in more developing country contexts. For example, the Ghana Climate Innovation Center applied innovation models from Silicon Valley to encourage the growth of firms working in the green technology space in the country, and in the developing world more broadly. Sources: http://www.climate-kic.org/for-entrepreneurs/accelerator/ Climate Technology Program In Brief: No. 4 54 Morocco CEED • Main findings Case study 5: Kilimanjaro Product/Service  One ton of bio-diesel reduces CO2 by 2.6 tons compared to traditional Kilimanjaro collects used cooking oil from restaurants and hotels in diesel. Morocco, which it then processes to sell to traders and bio-diesel  Reduction of wasted oils and fatty acids in discharge pipes will lessen manufacturers internationally. It also supplies fatty acid products. water pollution that can impact both human and ecological health. Number of staff Current and target customer market 70  Customers of Kilimanjaro are global traders mainly in Europe. It is currently focused on developing the suppliers. Location (national location and international if relevant)  Kilimanjaro collects from around 2500 locations. They target growth Casablanca (HQ) to 10500 locations. Of these suppliers, there are around 65 large Ain Sebaa (Warehouse and production unit) accounts (e.g. McDonald’s, KFC), with the rest local shops and businesses. Year founded  Kilimanjaro plans to develop large industries that produce fatty acids 2008 such as olive oil fatty acid or fish acids. Kilimanjaro also plans to develop slaughterhouses. These three products (used oils, fatty acids Funding sources, amount and animal fat) can then be inputs for biodiesel. Personal funds and credit (2008-2015) 20 million MAD debt for investment (2016) Key value proposition Kilimanjaro collects a waste product from a large network of suppliers. Growth angle These are waste products that would otherwise pollute water channels. Kilimanjaro is looking to grow its collection of oil, as well as fatty acids. It The company then repurposes it for bio-diesel production. By expanding also plans to develop animal fat supplies from slaughterhouses. Beyond its reach to household consumers, Kilimanjaro aims to raise finding more suppliers, the company plans to develop its production of environmental awareness, and create value from ordinary kitchen waste bio-diesel and distribute it locally to the industry sector. Kilimanjaro as well. currently works with businesses, but plans to target households for oil collection by raising awareness on sustainable waste management. Competitive advantage Households can donate plastic, cartons and used oil. Kilimanjaro’s competitive advantage is its large network of suppliers. It has secured supplies from some of the largest restaurant chains in Morocco, Environmental impact which ensures a sustainable supply source for the company.  Bio-diesel emits 88 percent less carbon than traditional diesel. 55 Morocco CEED • Main findings 4. Few Corporate and Private entrepreneurship programs, which are commonplace in Foundation Linkages to Boost more developed ecosystems. Ecosystem A benefit of the ecosystem would be for corporations and Corporations and large private foundations have few links private foundations to work with a select number of startups to the Moroccan entrepreneurship ecosystem. Apart from to give them the opportunity to grow. For example, the OCP Foundation, several banks making small corporate Shell Foundation supports green entrepreneurs who are social responsibility-type contributions to the ecosystem, working to provide access to clean energy services for low- and some mentors who work in the corporate world, there income communities in developing countries. Programs like is little trace of financial support or other significant Shell’s have been fundamental in East Africa and India. They help to fill crucial gaps in ecosystems like Morocco’s that have yet to fully embrace and bolster green entrepreneurship. Figure 11. Top sources of funding connections for entrepreneurs, based on survey 5. Funding for Start-ups Which of the following actors have given you funding connections? Limited by Risk-averse Investors Seventy-seven percent of entrepreneurs found the strongest financial support channel to be family and friends. While this is a common occurrence in nearly every start-up ecosystem, almost every other Moroccan ecosystem actor received an extremely low favorability rating vis- a-vis financing and most other forms of financial support (figure 11). Source: Authors 56 Morocco CEED • Main findings Eighty-four percent of surveyed entrepreneurs were self- ventures. This pivot was suggested to have been influenced funded in the early-stages. With regard to later-stage by several recent failures in the ecosystem and a general support, 38 percent of entrepreneurs found it difficult to disappointment in its own early returns on investment. access funding, including loans, angel investing, and As a result of these early trials, many investors also do not venture capital funding. This indicates that it is the biggest fully embrace the common mindset of an investor: someone financial barrier to doing business in Morocco. As one whose knowledge, experience, and guidance play an respondent stated, "There is a critical need [for] structures essential role as capital in their investment. The World Bank [such as] VCs (venture capital firms) that will [help] start- Group has finalized a program aimed at boosting equity ups reach a critical development level.”49 investments to entrepreneurs, and this should help to somewhat fill this gap. Beyond the difficulty of accessing funding, entrepreneurs found the risk-appetite among investors to be the biggest The Morocco Piloting Equity Financing for SMEs project is cultural barrier to doing business in Morocco. It was an integrated approach to building early-stage risk finance commonly stated that investors, including (potential) angel in Morocco, particularly by crowding in private sector investors, seek stable investments. They are more likely to investors. It has three key elements. First, it aims to establish invest in real estate than a new start-up venture. Some think a seed co-investment fund that will match investments from this harkens back to the lack of a “give-back culture” in the local investors on a deal-by-deal basis for young innovative ecosystem. As one stakeholder suggested, “some rich people firms. Second, it will support the establishment of several invest in start-ups for their own public relations [PR] and co-investment venture capital companies combining for their image.”50 government and private investment funds. These would be Only 12 percent of surveyed entrepreneurs found it “easy” run by private sector fund managers. Third, it will provide to access investors with valuable expertise and support. some support to strengthen the entrepreneurship ecosystem. Maroc Numeric Fund (MNF) is one of the country’s only However, beyond this, the question remains of how to operational VC-type institutions. MNF’s initial focus was further channel funds and/or de-risk investments into green on supporting early-stage tech startups. However, in recent businesses, which continue to be perceived as more risky by years, it has shifted to more innovative growth-centered investors. 57 Morocco CEED • Main findings Case study 6: Farasha Product/Service  In 5 years, Farasha plans to grow to 110 employees (10 Farasha offers solar field diagnostic services for improving performance administrative and commercial staff, 20 in R&D, and 80 in and reducing operation and maintenance costs of large-scale solar plants. sixteen solar power plants). Farasha can help concentrated solar power (CSP) and photovoltaic (PV) plants to detect and measure thermal leakages, as well as the need for Environmental impact cleaning through a mobile unit (vehicle or drone). Farasha helps improve solar power’s return on investment, making the clean energy source more attractive to businesses and investors. Its Number of staff product also reduces water consumption in the solar field cleaning 5 process. Location (national location and international if relevant) Current and target customer market Rabat Farasha’s targeted customers are large-scale CSP and PV operators in Middle East and Africa region. Year founded 2016 (incubated in the MCIC since 2014) Key value proposition Farasha improves the performance and reduces the costs of large-scale Funding sources, amount solar fields. Its diagnostic services can help plants avoid an environmental  ~ 650,000 MAD disaster. For example, it can detect if there is a leakage of heat transfer  Equity: 100,000 MAD fluid (by tracking hundreds of kilometers of oil piping).  PACEIM Prize 2014: 35,000 €  MVP22 Prize 2016: 50,000 MAD Competitive advantage  MEETAfrica Prize 2016: 15,000 € To date, the cleaning of solar power plants is done periodically, without optimization, and there is no specific method to measure the heat Growth angle produced. Checking is done visually by the operators. Farasha’s solution  Farasha plans to have a first project validated with Noor 1, and enables plants to measure their statistics automatically, with real-time expand with other projects in Morocco and in the Middle East alerts if there is an issue. and Africa region.  In 3 years, Farasha plans to grow to 35 employees (5 administrative and commercial staff, 10 in research and development [R&D], and 20 in four solar power plants). 58 Morocco CEED • Main findings Box 1.5 French and British Investor Financial Incentives French Tax incentives for Investment in Start-ups  Deductions on income tax (Impot sur le Revenu): deduction of up to 18 percent of the amount subscribed to the capital of unlisted companies.  Deductions on the solidarity tax on wealth (ISF): deduction of up to 50 percent of the in-kind or cash contributions made toward the initial capital or capital increases of an unlisted company. British Seed Enterprise Investment Scheme (SEIS) In order to stimulate entrepreneurship and kick-start economic growth, the British Seed Enterprise Scheme was implemented in 2011 by Chancellor George Osborne. It offers tax efficient benefits to investors in return for investment in small and early stage star-tup businesses in the United Kingdom. A few details about the scheme include:  SEIS investors can place a maximum of 拢 100,000 in a single tax year, which can be spread over a number of companies.  Investors can receive up to 50 percent tax relief in the tax year the investment is made, regardless of their marginal rate. Some countries, including France and the United Kingdom, 6. Market Access Not Widely Available have investment incentives for individuals to invest in start- for Entrepreneurs ups (Box 1.5). Tapping into international sources of financing for green entrepreneurs and working on novel Entrepreneurs commonly deemed the Moroccan market to financing mechanisms (such as blended finance / results- be small and difficult to access, with almost 50 percent of based funds) can be an alternative way to boost funding to surveyed entrepreneurs finding the market size and demand this sector. unfavorable for doing business. Experts and entrepreneurs agree that the public market is virtually inaccessible, with opportunities reserved for larger, more established, and often international companies. Moroccan entrepreneurs who are seeking funding and attempting to procure public projects are often plagued by a perceived lack of maturity. 59 Morocco CEED • Main findings 7. Additional Market Information “Startups are automatically excluded from public Necessary for Doing Business bidding where they should be prioritized.” -mCISE Fifty-four percent of entrepreneurs noted there was a lack of access to market information, viewing this as the biggest Between 2009-2013, the Moroccan government invested $2 market barrier to doing business in Morocco. As a result, billion.51 Yet, few of those funds have gone to local entrepreneurs often start their businesses in reverse. Rather entrepreneurs. As one entrepreneur noted, “Large projects than trying to solve a problem or fill a gap, many Moroccan are developed by large foreign companies, [and] the entrepreneurs create a technology or solution before environment is not adapted for small Moroccan companies sourcing demand or determining market fit. This can to be included.”52 While the government has recently potentially stunt the development of a start-up, as well increased its investment in clean energy, local green hinder its potential to scale. entrepreneurs are not yet receiving significant opportunities to play a role. There are a few organizations that aim to address this issue. For example, the International Youth Foundation, which Agencies like MASEN encourage the growth of the green conducts research into agricultural industries, helps to find economy, and entrepreneurs and SMEs by creating biddable opportunities in the market for associated entrepreneurs. projects, for example, for green mosques or public lighting The Moroccan Center for Innovation and Social in Marrakech. Further encouraging small and growing Entrepreneurship (mCISE) trains entrepreneurs to develop companies to be involved in these bids would help them market-oriented products and services. Official networks, grow. It would also help validate new technologies, as is such as Réseau Entreprendre Maroc, aim to use their done in South Africa, with regard to many public sector international reach to open potential markets to renewable energy tenders.53 The capacity and desire to take entrepreneurs and guide them along the way. Yet, these on larger-scale projects will also increase over time. initiatives are few and far between. In this context, there is a lack of available ecosystem players that can multiply the necessary guidance and support to entrepreneurs wishing to navigate and operate in these markets. 60 Morocco CEED • Main findings Ecosystem actors and local and foreign investors are also information is largely inaccessible to the ecosystem and handicapped by a lack of available market information, as anyone interested in it. As a result of the missing context they require similar information when navigating the about the level of entrepreneurial activity, the outcomes of Moroccan market. Twenty-four percent of surveyed experts past and current investments, as well as unfavorable policies expressed the view that information about the market was toward foreign investment, “international investors are not lacking. Experts interviewed repeatedly stated that market very interested in Morocco.”54 Box 1.6 GreenCape: Providing South Africa with Green Market Intelligence GreenCape, a South African non-governmental organization (NGO) mandated by the Western Cape Government with working in the green technology space, produces market intelligence reports about the green economy. This includes sector-focused information, market opportunities and challenges, and a general overview of investment opportunities for both investors and businesses interested in, or already operating in, the green space.55 This information is accumulated through engagement with various facets within the country’s ecosystem, including businesses, investors, government, and academia. GreenCape aims to play a key role in removing barriers to the growth of green entrepreneurs and the green economy as a whole. Over the past three years, GreenCape has written annual market intelligence reports about: utility-scale renewable energy; energy services; sustainable agriculture; the waste economy; and water. Source: http://www.green-cape.co.za/ 61 Morocco CEED • Main findings RECOMMENDATIONS Morocco’s potential for climate entrepreneurship is high, and the country’s dynamic high-growth entrepreneurs are helping lead Morocco toward its green growth goals. By scaling innovative business solutions to local climate challenges, these entrepreneurs are benefiting not only Moroccans, but Africans across the continent as well. Morocco has a young and highly educated workforce, and bountiful natural assets. It has a potentially big economic opportunity to play a leading role in climate change adaptation and mitigation both in Morocco, as well as abroad. Moreover, many young Moroccan entrepreneurs have already started their businesses with an international mindset, and are working in various countries throughout the world. Although the potential for climate entrepreneurship is high, as the findings in the report demonstrate, there are various constraints weakening the momentum for entrepreneurship. These constraints hamper Morocco’s potential to create jobs and increase overall economic growth. However, these are not unsurmountable challenges. 63 Recommendations Improving the overall ecosystem will require investment in several key areas, such as policy, financing, markets, and culture. In particular, a coherent and pro-active national entrepreneurship policy would set the tone for dynamism throughout the sector. Furthermore, this would help lay the official foundation for entrepreneurship, while ideally easing the culture of risk around securing funding for the earliest stages of activity. Executing a well-crafted policy is often a lengthy and difficult cross- governmental process. However, the benefits of achieving this would have a lasting effect across all entrepreneurial sectors, especially with regard to green entrepreneurship. For example, countries such as Italy have been pioneering entrepreneurship policy, through the Start-Up Act.56 Pending this reform, Morocco may wish to explore the following pragmatic areas of thematic focus, some of which are being explored as part of IFC project implementation. 64 Morocco CEED • Recommendations 65 Morocco CEED • Recommendations 66 Morocco CEED • Recommendations 67 Morocco CEED • Recommendations ENDNOTES & BIBLIOGRAPHY Endnotes [1] “Climate-smart development: adding up the benefits of actions that help build prosperity, end poverty and combat climate change.” World Bank, 2014. [2] The team defines climate/green entrepreneurship as the process of developing a new business or a new product line from an existing business for purposes of climate mitigation, adaptation, or other positive environmental benefits. [3] Energy and Development at a Glance: Country Fact Sheet Morocco, German Watch, 2016, [4] Green to Scale: Low-carbon success stories to inspire the world. Sitra, 2015. [5] Global Economic Prospects: Divergences and Risks. World Bank, 2016. [6] Morocco. International Energy Agency, 2014. [7] 100% Renewable Energy: Boosting Development in Morocco. World Future Council, 2015. [8] The Green Economy in Morocco, United Nations Economic Commission for Africa, 2014. [9] This includes: the Plan Maroc Vert (green growth) for agriculture, water resource management, Vision 2020 for ecotourism, and a National Energy Policy, which was adopted in 2009. The energy policy comprises five main strands to provide support for energy efficiency and renewable energy programs. Additionally, as a key component of Morocco’s National Sustainable Development Strategy, a National Charter for Environment and Sustainable Development was adopted in 2012. The Charter strengthens integration of the environment in all public and sectoral strategies, and a framework law (99-12 Model Law on the Environment and Sustainable Development Charter) was enacted in 2014 to help operationalize the Charter’s efforts. [10] National Sustainable Development Strategy, Kingdom of Morocco, 2012. [11] Power Shifts: Emerging Clean Energy Markets. Pew Charitable Trusts, 2015. [12] Morocco Country Commercial Guide. U.S. Export Agency, 2016. [13] Cleantech Survey Report: Middle East and North Africa, 4th edition. Ernst & Young, 2014. [14] Pew Charitable Trusts, 2015. [15] “MENA’s Cleantech startups: unlocking the path to scale and solve environmental challenges”, WAMDA, 2016. [16] Office National de Electricité et de l'Eau Potable (ONEE), 2016. 69 Morocco CEED • Endnotes & Bibliography [17] Report: Morocco, “Morocco sets bold targets to boost renewable energy generation capacity,” Oxford Business Group, 2015. [18] “A Thriving Private Sector at The Heart of an Inclusive Society,” The European Commission, 2016. [19] High-Growth Entrepreneurship, a Preliminary Literature Review. infoDev, 2016. [20] “Climate Investment Opportunities in Emerging Markets: An IFC analysis.” IFC, 2016. [21] Building Competitive Green Industries, infoDev, 2014. [22] WAMDA, 2016. [23] The World Bank Group’s Innovation and Entrepreneurship Unit is currently working on a program, “Market Connect”, with different local partners in Ethiopia, Kenya and South Africa, as well as global corporate partners such as the Shell Foundation. The program aims to forge B2B technology and knowledge matchmaking on a larger scale. [24] L’usine Nouvelle “Startup Maroc, l'usine 脿 fabriquer des jeunes pousses”. http://www.usinenouvelle.com/article/maroc- l-ete-des-startups-1-10-startup-maroc-l-usine-a-fabriquer-des-jeunes-pousses.N342781 [25] Implementation of the “Small Business Act” for Europe in the Mediterranean Middle East and North Africa. OECD, 2014. [26] Secteur 21 Interview. [27] OCP Foundation Interview. [28] mCise Interview. [29] Secteur 21 Interview. [30] “The power of parity: How advancing women’s equality can add $12 trillion to global growth.” Mckinsey Global Institute, 2015. [31] Royal Message to The 4th Global Entrepreneurship Summit, His Majesty King Mohammed VI, Marrakech, 2014. [32] Association of Women Entrepreneurs in Morocco (AFEM), 2015. [33] Entrepreneurial intentions refers to the percentage of the adult population between 18-64 years of age (excluding individuals already engaged in any stage of entrepreneurial activity) who intend to start a business within the next three years. [34] Women’s Report, Global Entrepreneurship Monitor, 2015. [35] http://ceed-morocco.org/ 70 Morocco CEED • Endnotes & Bibliography [36] “Gender and the Business Environment for New Firm Creation.” Leora Klapper, Simon Parker, World Bank Research Observer, 2011. [37] http://10years.firstround.com/ [38] Klapper, Parker, 2011. [39] Klapper, Parker, 2011. [40] New Work Lab Interview. [41] His Majesty King Mohammed VI, 2014. [42] Any individual carrying out an individual industrial, commercial or craft activity, or service provider, whose annual turnover (CA) received does not exceed 500,000 MAD for industrial/commercial/crafts and 200,000 MAD for services. [43] Entrepreneur with the Morocco Climate Innovation Center. Interview. [44] There are currently four procedures required to start a business in Morocco: 1) Obtain a "Certificat Négatif" to register the company name; 2) Pay stamp duty; 3) Register for patent tax, the Tribunal of Commerce, social security and taxation; and 4) Make a company stamp. It takes 9.5 days, and costs 7.9 percent of income per capita for both men and women. [45] International Youth Foundation Interview. [46] Adalia Interview. [47] Enabling Entrepreneurial Ecosystems: Insights from Ecology to Inform Effective Entrepreneurship Policy, Kauffman Foundation, 2015. [48] Espace Bidaya Interview. [49] Secteur 21 Interview. [50] Maroc Numeric Fund Interview. [51] Pew Charitable Trusts, 2015. [52] Rawa Services Interview. [53] Renewable Energy Auctions, International Renewable Energy Agency, 2016. [54] New Work Lab Interview. [55] http://www.green-cape.co.za/ [56] http://www.mise.gov.it/images/stories/documenti/italian_startup_act_annual_report_to_parliament_2016.pdf 71 Morocco CEED • Endnotes & Bibliography Bibliography Akbar, S.; Kleiman, G.; Menon, S.; Segafredo, L. 2014. Climate-smart development : adding up the benefits of actions that help build prosperity, end poverty and combat climate change. World Bank Group. Auerswald, P. October 2015. Enabling Entrepreneurial Ecosystems: Insights from Ecology to Inform Effective Entrepreneurship Policy. Kauffman Foundation. Bayt.com. 2016. Top Cities in the Middle East and North Africa Survey. Bayt.com. November 2015. Entrepreneurship in the Middle East survey. Calenda, C. 2016. Annual Report to Parliament on the implementation of legislation in support of innovative startups and SMEs. Ministry of Economic Development, Italy. Compass. 2015.The Global Startup Ecosystem Ranking Ernst & Young. 2014. Cleantech Survey Report: Middle East and North Africa. 4th edition. European Bank for Reconstruction and Development, European Investment Bank, and The World Bank. 2016. What’s Holding Back the Private Sector in MENA? Lessons from the Enterprise Survey: 124. European Commission. 2016. “A Thriving Private Sector at The Heart of an Inclusive Society.” 72 Morocco CEED • Endnotes & Bibliography Global Entrepreneurship Monitor. 2015. The Entrepreneurial Dynamics in Morocco Global Entrepreneurship Monitor. 2015. Women’s Entrepreneurship HSBC Private Bank. 2016. The Essence of Enterprise Development. International Finance Corporation (IFC). 2016. Climate Investment Opportunities in Emerging Markets. infoDev. 2014. Building Competitive Green Industries. infoDev. 2016. High-Growth Entrepreneurship: a Preliminary Literature Review. International Energy Agency. 2014. Morocco 2014. International Labor Organization. 2014. Key Indicators of the Labor Market database. International Renewable Energy Agency. 2016. Renewable Energy Auctions. Kingdom of Morocco. 2012. National Sustainable Development Strategy. Klapper, L. Parker, S. 2011. “Gender and the Business Environment for New Firm Creation.” World Bank Research Observer Vol. 26, No. 2: 237-57. 73 Morocco CEED • Endnotes & Bibliography Klawitter, J. Shinke, B. 2016. Country fact sheet Morocco. Energy and Development at a Glance. German Watch. Mckinsey Global Institute. 2015. The power of parity: How advancing women’s equality can add $12 trillion to global growth. Organization for Economic Co-operation and Development (OECD). 2014. Implementation of the “Small Business Act” for Europe in the Mediterranean Middle East and North Africa 2014. SME Policy Index: 41. Oxford Business Group. 2015. “Morocco sets bold targets to boost renewable energy generation capacity.” Energy & the Environment. Report: Morocco 2015. Pew Charitable Trusts. 2015. Power Shifts: Emerging Clean Energy Markets. Sitra. 2015. Green to Scale: Low-carbon success stories to inspire the world. United Nations Economic Commission for Africa. 2014. The Green Economy in Morocco. United States Agency for International Development (USAID). 2012. Morocco Economic Competitiveness, Entrepreneurship Promotion Organizations: Summary Analysis. United States Census Bureau. 2010. Small Business Association: Update 2002- 2010. United States Export Agency. 2016. Morocco Country Commercial Guide. WAMDA. 2016. MENA’s Cleantech startups: unlocking the path to scale and solve environmental challenges. 74 Morocco CEED • Endnotes & Bibliography World Bank Group. 2014. Country Partnership Strategy: Morocco 2014-2017. World Bank Group. 2016. Divergences and Risks. Global Economic Prospects, June 2016. World Bank. 2017. Doing Business: Morocco. World Bank. 2012. Kingdom of Morocco, Promoting Youth Opportunities and Participation. World Bank Group. 2016. Trade and Competitiveness Monitoring Note: Morocco. World Future Council. 2015. 100% Renewable Energy: Boosting Development in Morocco. 75 Morocco CEED • Endnotes & Bibliography ANNEXES Annex I: Report methodology The diagnostic was developed based on the Babson Several diagnostics have already been undertaken by the Entrepreneurship Ecosystem model, which captures the World Bank in Bangladesh, Serbia, Sri Lanka, and Suriname. most widely held understanding of entrepreneurial Although some have focused specifically on the digital ecosystems, including what factors they consist of, and how sector, the Morocco diagnostic is the first climate-focused they work. (See figure 1a) iteration. There are a variety of external and internal factors at each Figure 1a. Babson Entrepreneurship Ecosystem Model stage of enterprise development that affect the livelihood of a business. This can include the culture and attitudes to entrepreneurship that one is exposed to, and the policies that can help, hinder, or even halt activity. These factors influence everything from the concept to the start-up stage, and from there to growth, optimization, and eventually innovation. The Babson model consists of six domains, each with several sub-components (see figure 2a).It captures the most important dimensions of an ecosystem that are (initially) interdependent of each other. These six domains are meant Source: Authors to determine the overall entrepreneurial strengths, weaknesses, and opportunities that ultimately drive entrepreneurship in any city or country. 77 Morocco CEED • Annexes Figure 2a: Six Pillars of Babson’s Ecosystem Framework, applied to an innovation and entrepreneurship context Policy Financial Capital Markets Culture Human Capital Support  R&D environment  Debt finance  Key product  Business activity  State of youth  Support to & institutions  Foreign direct markets and  Startup activity employment entrepreneurs and  Regulation investments their demand  Risk tolerance  Skilled workforce startups  Taxation  Equity for innovation  Confidence  Management  Business networks  Venture-friendly Investments  State of  Role models quality  Diaspora legislation and Internet Access  Availability of  Incubators/ processes  Role of large management accelerators  Foreign business companies as training  Cluster friendliness buyers of local initiatives/supply  Industry policy, products chain development support and  Overall  Business incentives financial development services inclusion Source: Authors By conducting a comprehensive and holistic diagnostic that Secondary Data Collection uses an advanced analytical approach to identify existing gaps and challenges in the ecosystem, one can gauge the The report is based on the collection and analysis of four need for future support programs that can be designed to sources of data: address identifiable gaps. These interventions, in turn, could be expected to move the ecosystem toward greater synergy Two primary sources: 1) 44 semi-structured interviews among the domains, leading to non-linear, catalytic effects. conducted from August-October 2016 throughout Morocco, 2) a targeted national online survey of 334 ecosystem actors in Morocco; and Two secondary sources: 1) 42 national-level quantitative indicators, 2) a review of more than 40 existing reports on entrepreneurship and clean technology. 78 Morocco CEED • Annexes Morocco Jordan South Africa Egypt France Country of Analysis Comparable country Comparable country Regional comparator Global comparator along the units of: along the units of: GDP: $107b GDP: $35.8b GDP: $287b GDP: $2.3t Population: 34.4m Population 6.74m GDP: $313b Population: 91.5m Population: 66.5m Governance: Constitutional Governance: Population: 54.8m Governance: Republic Governance: Republic Monarchy Constitutional Governance: Republic Unemployment 13.2% Unemployment 9.9% Unemployment: 10.2% Monarchy Unemployment 25.1% Unemployment: 11.1% Figure 3a. Morocco CEED Benchmarking Rationalization Source: World Bank, World Development Indicators For each data collection method, the team designed Indicator Assessment complementary analytical instruments to capture data along each of the six ecosystem domains and their sub- The indicator assessment started from a list of 109 potential components. Specifically, the team performed extensive indicators. These were subsequently distilled by relevance to background research of relevant publications about climate the objectives of the diagnostic. Several countries were sectors, entrepreneurship, access to finance, innovation and included in the analysis to benchmark the data and compare more. The team also selected suitable country-level Morocco to countries relative in composition (see figure 3a indicators, and developed an interview guide for each below). Often serving as regional benchmarks or places of stakeholder group in the ecosystem. Finally, the team comparison for Moroccan policymakers and ecosystem designed and distributed a survey to a defined population of actors, Egypt and Jordan were included. As one of the stakeholders. By using different data sources to assess the strongest economies on the African continent, South Africa same ecosystem dimensions and reflecting sources against was also incorporated. Finally, France was included largely each other, the team triangulated the data to gain higher because of the historical connection that continues between validity and consistency for the findings. the countries — socially, economically, and linguistically. 79 Morocco CEED • Annexes The preliminary indicator selection was further refined following the in-country data collection. Data was Figure 4a. Interviews by Stakeholder Group ultimately collected through desk research on 43 indicators. Segment # Interviews Entrepreneurs and SMEs 14 Qualitative In-country Data Collection Ecosystem enablers (incubators, accelerators, 10 mentors, co-working spaces, etc.) Government officials 2 Semi-structured interviews Financial representatives 4 The qualitative in-country data collection component Corporate Stakeholders 3 represented the basis for all report findings. It encompassed a Business Associations and Chambers 8 series of semi-structured interviews with stakeholders from Academia 3 multiple sectors. An initial informant list was established Total 44 based on desk research, and local and in-country contacts. It was reviewed and updated by several strong ecosystem influencers in Morocco. Online entrepreneurial attitudes and experts survey The focus was on meeting with a wide array of ecosystem The team conducted a survey of ecosystem actors in actors and entrepreneurs who were all uniquely positioned Morocco during September 2016. The survey was intended to speak to one or more of the six ecosystem domains. This to further corroborate and quantify the findings from the included, but was not limited to 1) entrepreneurs and SMEs; qualitative stage of analysis. 2) managers of ecosystem enabler organizations; 3) government officials and policymakers; 4) financiers; 5) Defining a population and distribution NGOs; 6) academic institutions and scholars; as well as 7) There are no known official statistics regarding the exact leaders of business associations and chambers. Figure 4a number of entrepreneurs in Morocco, including green shows the breakdown of interviews and group consultations entrepreneurs. However, in an effort to ensure accuracy of by segment. results, the team did a wide review of existing literature on related topics in the region to find an estimation of the number of active entrepreneurs in Morocco. 80 Morocco CEED • Annexes Figure 5a. Defined Population of Morocco’s selection approach brought with it a potential bias in the Entrepreneurship Ecosystem results. However, based on the (albeit limited) available data to estimate the size of the entrepreneurial community in Name Estimate Size of Network Morocco, and the number of responses received, it can be 7ay 30 assumed that the results are representative of the population. AMIC/LixCap 16 Amina Investment Network 75 Calculating confidence Cluster Solaire / MCIC 80 From the survey of 603 ecosystem actors in Morocco — Enactus Maroc 84 with a margin of error of plus or minus five percentage Espace Bidaya 13 points at 95 percent level of confidence — a sample size of Ministére des MRE 100 219 actors was required. With a large sample size of 334, it MOWGLI Morocco 168 can be inferred that the data collected is representative. However, considering the green-focus of the survey, it Réseau Entreprendre Maroc 52 cannot be claimed that the findings are representative of all Secteur 21 15 entrepreneurs in Morocco. Furthermore, as the survey was Total: 603 taken by self-selection, the team acknowledges the potential bias associated with the data. Startup Morocco, one of the biggest and most influential stakeholders in the ecosystem, recently stated that Morocco Defining the sample has less than 200 start-ups. This is the only known source to The survey was designed to capture the “ecosystem help validate the sample. Based on this information the only identity” of each respondent by having them self-select the way to determine any sort of sample was to distribute the classification that best described their current situation (See survey through various known green and entrepreneurship- Figure 6a for list of actors). Since the survey ultimately related networks in the country. This ultimately served to aimed to gather insights about green entrepreneurial estimate the population size: 603 (see figure 5a for details), attitudes and experiences in Morocco, the term for which the team received 334 responses. This self- “entrepreneur” was broadly defined. Four classifications were used to encompass entrepreneurship and innovation- 81 Morocco CEED • Annexes related activities from the ideation stage to market-ready Morocco and many do not self-identify as green established businesses. entrepreneurs, of the total entrepreneurs surveyed, an estimated 22 percent would consider themselves to be green The classifications include: 1) Entrepreneur; 2) Researcher; 3) entrepreneurs.This number is based on Question 29 Startup; and 4) Existing company creating or adapting a (optional) of the survey, which received 45 responses. It climate technology or business model. From this group of asked respondents to indicate: “What clean technology do stakeholders, 205 responses were received. Additionally, as you develop and/or commercialize? (if relevant).” the green/climate technology field is still emergent in Figure 6a. Ecosystem Actors Survey and Response Rate Response Ecosystem Actors Rate Entrepreneur 118 Researcher (e.g. R&D person in a university) 31 Startup 38 Existing Company creating or adapting a climate technology or business 18 model Total number of entrepreneurs 205 Government Official 7 Association 28 Incubator/Accelerator 14 Investor/Banker 3 Journalist 2 Private Sector 29 Other 46 Total Survey Responses 334 82 Morocco CEED • Annexes Annex II: Why Climate Innovation? The need to discover innovative solutions for mitigating the recognition from commercial sources about the effects of climate change is at the forefront of almost every importance of “social impact investing.” Multinationals nation’s policies. Morocco, like many other countries has continue to make climate change a centerpiece of their invested in renewable energy, and begun to develop more strategies, and have emphasized the global need to ‘go sustainably-driven policies. However, Morocco has yet to cleaner.’ As a result of these developments, there is now realize the greater industrial competitiveness and economic a wide-range of financing sources for climate-related growth that can accompany investment in climate sectors. This includes public sources, such as the Green innovation. A pivotal part of this potential growth is Climate Fund, which is scaling to its target of US$100 through the promotion of climate entrepreneurship, which billion per year, and the World Bank, which will can lead to greater economic development in emerging increase its share of overall investments in climate to 28 markets. percent by 2020.  Large sector growth rates: Political pressure,  Transformation favors new entrants: Climate sectors technological advances, and falling prices lead to high have traits that allow new entrants to gain market share expected growth rates for climate-related sectors. This is against incumbents. These traits include the expansion particularly true for emerging economies and of markets, technological advancement and disruption, developing countries, which must make large and immense growth in demand (particularly in infrastructure investments (for example, in power sector emerging/developing countries), which goes beyond supply and transmission). On the adaptation side, the supply capacity of existing firm capability. In general, increase in climate change will also force countries to whereas developed country firms hold dominant invest in sectors such as clean water supply and climate- incumbency positions in most sectors, firms from smart agriculture. developing countries are the new entrants in climate sectors.  Availability of Financing: There has been increase in national government policy support, and a growing 83 Morocco CEED • Annexes  Local knowledge needed for entrance into local markets. Firms are innovating rather than relying on the markets: Climate technology requirements for often imperfect, technology-transfer model. While some developing countries differ from developed countries components of clean products have been commoditized due to local market, social, and natural circumstances. (for example, photovoltaic cells), most require Greater participation by developing country firms to knowledge of local market conditions. This gives local innovate relevant technologies and related business firms a distinct advantage vis-à-vis competition from models can develop solutions appropriate for local foreign firms. 84 Morocco CEED • Annexes