Regional Reform: AREPs Transition to Limited Liability Companies
Advanced Regionalization Reform in Morocco: New Developments
The advanced regionalization reform has taken a significant step forward in Morocco with the implementation of Organic Law No. 031.26, which modifies the legal framework governing the regions. Among the main innovations is the transformation of Regional Project Execution Agencies (AREP) into joint-stock companies, alongside an enhancement of the financial resources allocated to regional entities.
AREPs’ Legal Status Changes
One of the cornerstone measures of the reform pertains to the AREPs, which were established within the regions to oversee the execution of development projects and programs. These agencies will transition into Regional Project Execution Companies, structured as joint-stock companies with a board of directors. The region will hold the majority of the capital, as stipulated by the new provisions of the law.
This change primarily aims to provide greater flexibility to the institutions responsible for implementing regional projects and to enhance their operational efficiency.
A New Governance Model
The reform also seeks to clarify the responsibilities among the various stakeholders involved in territorial development. The government highlighted the difficulties stemming from overlapping competencies, the proliferation of interlocutors, and the cumbersome nature of some administrative procedures.
The new framework is designed to empower the regions with better-suited tools for implementing their programs, with the goal of accelerating project completion and improving their real-world impact.
The new regional companies will be organized around a board of directors and will have a distinct legal framework, which includes new rules concerning governance and the appointment of their managing directors.
At Least 12 Billion Dirhams Annually for Regions
The reform introduces a substantial financial component. Starting from 2027, the annual transfers from the state to the regions must reach a minimum of 12 billion dirhams.
Additionally, the new system will allocate 5% of corporate tax revenues, 5% of income tax revenues, and 20% of the insurance contract tax to the regions.
This bolstered funding is intended to provide regions with more resources to finance their programs and gradually assume their responsibilities within the context of advanced regionalization.
Toward More Operational Regionalization
Beyond changing the status of AREPs, the reform aims to transform the very functioning of public territorial action.
The explicit goal is to gradually shift from a system marked by centralization and administrative complexity to one that emphasizes proximity, efficiency, and speedy execution.
The reform’s transformation of AREPs into joint-stock companies represents a key lever in this new architecture. It is expected to provide regions with a more flexible instrument for handling their major infrastructure and development projects.
This reform comes at a time when Morocco is accelerating its territorial investments and seeking to strengthen the role of regions in the implementation of public policies and in reducing disparities between territories.
