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"My father-in-law is very demanding"

Published by Forbes on 1989-05-01

WHO SAYS THE Third World has to be third-rate?" Fouad Filali is talking with a FORBES reporter as they fly across Morocco in Filali's sleek French-built corporate jet. Filali then recites a favorite proverb: "If you don't grasp your future today, it will be too late to do so tomorrow."

As chairman of Casablanca-head-quartered Omnium Nord-Africian, the 33-year-old Filali is not waiting for tomorrow to happen, nor will he settle for the third-rate or even second-rate. He runs a company that is big by any standards, huge by African standards, and that is at the cutting edge of business development in an ancient and tradition-bound land.

Filali's ambitions for his country are not modest. He talks of helping Morocco become to Africa what South Korea and Taiwan have become for Asia -- emerging economic power-houses. It could happen.

With a population of 25 million spread over an area the size of Oregon and Washington, Morocco is a potentially rich country. It is the world's biggest exporter of phosphates, possessing nearly 75% of estimated reserves. Morocco also has the fourth-biggest fishing reserves.

ONA has made quite a start in advancing Moroccan development. Its 1988 revenues were roughly $ 1.1 billion -- equal to about 5% of the Moroccan GNP.

ONA provides both capital and expertise to a wide range of modern businesses. In March it launched the Arab world's first privately owned television channel. The new station is called 2M and was financed by ONA in conjunction with French and Canadian firms. The channel, in which Filali has invested $ 25 million, now sends lively broadcasts in Arabic and French throughout Morocco and soon by satellite to Western Europe, where more than 5 million immigrants from North Africa live. In creating 2M, Filali persuaded the French government to donate $ 6 million worth of training for more than 100 young Moroccans in TV technology.

As befits his training and education, Filali is thinking of opportunities well beyond Morocco's immediate neighborhood. He talks spiritedly about the increasing globalization of capital and markets. He wants to do business with American firms. "To be completely linked with Europe will be dangerous for our future -- especially with 1992 just around the corner. There will be increasingly a sharing of business language between American and countries like Morocco, because so many of us were trained in the U.S."

So ONA has been strengthening its foreign ties. Last year ONA bought 10% of Laidlaw Holdings, the New York investment bank where Filali is a managing director. The firm was spun off from Laidlaw, Adams & Peck, where Filali started as a stockbroker and worked his way up to vice President.

Tourism is high on Filali's list of priorities for Morocco and for ONA. He has formed partnerships with Club Mediterranee and several other European companies -- mainly French -- to encourage these companies to join ventures with ONA in Morocco. His alliances with Club Med reflect his belief that tourism has a great future in this colorful land with its rich architectural and cultural heritage, its warm climate. Neighboring Tunisia, a much smaller country than Morocco, gets considerably more tourists because its hotels have greater capacity. Filali is determined to help Morocco catch up.

Also high on his list is fish. This business is especially promising, given the world's insatiable demand. Fish reserves in Moroccan waters are so rich that foreign poachers are a continual problem. Last year the Soviet fishing fleet took 700,000 tons of fish from Moroccan waters through highly advanced but illegal operations. The Moroccan catch was less than 250,000 tons. Filali has committed $ 60 million for 20 deep-sea trawlers. ONA's expanded mining ventures include zinc, lead, copper, cobalt and silver.

It is significant that Fouad Filali has decided to devote his efforts to private enterprise rather than to government service -- the more traditional approach for highly educated people in developing countries. Many Western reporters and diplomats tend to focus on the contrast between mass poverty and the lavish lifestyle of the Moroccan aristocracy. But the rich do not consume that much of the national income. What does bleed the country are some 800 state-owned-or-controlled companies, many of them corruption-ridden behemoths.

It is auspicious for Morocco's future that 60-year-old King Hassan II, who is Morocco's temporal as well as spiritual leader, realizes that statism is the biggest single barrier to faster economic development. Under King Hassan's economic liberalization program, many of these companies are scheduled to either dismantled or sold to the private sector. The king has tried to speed the process by wooing foreign investors into such sectors as textile production through the offering of generous tax holidays.

With a foreign debt burden of $ 22 billion, Morocco needs all the foreign exchange it can ear, but earning it should be no insuperable problem if the country can unleash more of its potential. In this respect it has taken promising steps by moving the state out of the economy and giving more scope to free enterprise. "We are becoming an increasingly open economy," Mohammed Berrada, the Moroccan minister of finance, told FORBES in an interview in Casablanca. "In contrast to many countries of the developing world, we are emphasizing liberalization."

There is other good economic news in Morocco. King Hassan recently had talks with the Marxist Polisario guerrillas -- who operate out of neighboring Algeria -- over the disputed western Sahara. This could result in an easing of Morocco's defense burden: Morocco spends more than $ 1 million a day on protecting the phosphate rich western Sahara.

Morocco's current account recorded a $ 100 million surplus last year, the second surplus since 1973. A debt rescheduling in late 1987 helped. But more important was a 25% increase -- to more than $ 1 billion -- in tourism receipts last year; more sales of phosphates and phosphate derivatives to the U.S.; and another rise -- to $ 1.5 billion -- in remittances from the million-plus Moroccans living in Western Europe and the U.S. Too few developing countries enjoy the kind of confidence that such private capital inflows indicate.

Filali is nothing if not well connected. He is married to Princess Lalla Meryem, eldest daughter of King Hassan. The king himself owns 15% of ONA, Filali nearly 3%; the rest is widely spread among Moroccan individuals and institutions.

Observers interpret the king's confidence in Filali as sending a message to the country: that the future lies not along traditional lines but in free enterprise and that there is a big role for the young in this society long dominated by graybeards. "Filali," says Mustafa Benali, a young computer technician in Casablanca, "has shown that it is possible to shake up the system and give it energy -- without excessively upsetting the local culture."

The cosmopolitan son of a diplomat, Filali was educated at the Sorbonne and ten took English language courses at Columbia University. He could easily have stayed abroad and done well, but he chose to come home. "I am a man who's proved that you can go home again," says Filali, "especially if you are from a Third World country with as much potential as Morocco."

In the three years since Filali was put in charge, ONA's sales -- which now stem from such diverse operations as real estate, insurance, cars, communications, agribusiness and mining -- have almost tripled. Last year, according to its annual report, ONA's profits amounted to almost $ 85 million, before taxes and on a nonconsolidated basis -- about 8% of revenues. Sales in 1989 are expected to exceed $ 1.2 billion. The ONA stock, which is currently quoted on the thin Casablanca Stock Exchange, has doubled in value in the last two years to a recent $ 60 share -- a market value of $ 120 million. Filali says he will try to have ONA stock quoted on the Paris Bourse. (Note to global investors: The Casablanca Stock Exchange currently has 77 issues, worth about $ 500 million in the aggregate. ONA has no American Depositary Receipts.)

But change disturbs people, and as a spearhead for change in this conservative land, Filali has inevitably had his detractors. Many of Morocco's established businessmen and bazaar merchants are jealous of his prominence. The king has ordered that many of the state-controlled enterprises should be sold off to private owners. People are watching to see if ONA is favored in these sales. "ONA is seen by some as gobbling up little companies and becoming a fiefdom within the kingdom," says one senior Western diplomat based in Rabat.

As these freely voiced complaints show, Morocco under King Hassan is a relatively open society where people are allowed to do more or less as they please, as long as they don't try to rebel against the crown. In such a situation, you need more than the monarch's support to assure success; you must avoid causing too much resentment in traditional circles. To his credit, Filali understands this. While he is determined to bring other young Western-educated men into the company, he is retaining the older Moroccans who had been running ONA. In Morocco, as in other traditional Third World cultures, it isn't wise to trample on the old in your rush to progress; it is important to help others maintain their dignity.

"We want to create new developments and ventures, rather than privatize existing companies," Filali insists. "Some people dislike me because I am the son-in-law of the king. But let me tell you, it's not easy being His Majesty's son-in-law. He's very demanding, and he doesn't make too many allowances for mistakes." So far, Filali hasn't made many.

Pranay Gupte,
Senior Writer and Global-Affairs Columnist

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