Facing Challenges in the Food-Water-Energy Nexus

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The fragility of water resources and how it impacts energy and food are moving rapidly to the top of the world’s environmental agenda. This should come as no surprise. A key principle in understanding core issues in the Middle East is that all Arab societies, bar none, have evolved around maintaining water supplies and managing their relationship to food, land, and survival. This is not uncommon given that human habitats emerged in regions where water was plentiful, accessible, and provided the means to sustain basic food production, transportation, and oftentimes defensible settlements.

A recent article carried by Voice of America made note of a meeting of Agricultural Ministers and other top officials from the Middle East/North Africa (MENA) region in Rome at the UN Food and Agriculture Organization (FAO) to discuss the newly launched  Regional Water Scarcity Initiative. One estimate “warns the availability of fresh water in the region could drop by 50 percent by 2050.” While the existing impression may be that this is more of a problem for the desert rich countries of the Gulf, the reality is that growing populations are depleting water resources throughout the region, with little prospect of replacing damaged, drained, and destroyed aquifers. The Regional Water Scarcity Initiative aims to identify and streamline policies in agriculture water management. The FAO says these are policies “that can significantly contribute to boosting agriculture productivity, improving food security and sustaining water resources.”

In a press release, the FAO’s representative in Egypt Pasquale Steduto remarked, “This region is already known to be very scarce [in water supplies] – one of the most scarce in the world.  But we are observing that there is an acceleration and an intensification of water scarcity that in the next 40 years will bring this scarcity to the highest intensity in history.” The FAO reports that in the previous 40 years “per capita freshwater availability in Near East and North African countries plummeted by two-thirds.” Steduto says it’s a complex situation. “Several things are coming into play from the population [growth], but also climate change. So, we need to be ready to address all the challenges that will come and the region will face in the coming years,” he said.

According to the FAO report, the chief culprit seems to be the agricultural sector, which uses more than 85 percent of the “available rain fed, irrigated, and groundwater resources.” With the rapid growth in populations, the demand for food is outstripping current agricultural capacity and underscores the link between water, food, and the energy needed to make future growth sustainable.

Food Demand Will Continue to Escalate Costs

Cognizant of the need to view food, energy, and water as interrelated parts of the ecosystem, the IMF’s Research Department cooperated with New York University’s Center for Technology and Economic Development, and Morocco’s OCP Policy Center for an in-depth analysis of the “causes and socio-economic challenges of food price volatility” February 25-26 in Morocco. Experts from around the world examined the conceptual, policy, and operational issues related to food in the marketplace. According to IMF Deputy Managing Director Min Zhu, “The conference will enhance our understanding of the drivers of food prices and thus help devise policies to improve food security and keep inflation in check…This is of great importance to many, indeed all, of our member countries.”

The conference examined both the causes and socio-economic challenges of food price volatility, ranging from “drivers of food prices and policies to ensure food security to defining the appropriate monetary policy response to food and fuel price fluctuations.”

 And for the Future?

As James Clapper, US Director of National Intelligence (ODNI), testified to Congress in January, “competition for and secure access to national resources (e.g. food, water, and energy) are growing security threats…Many countries important to the United States are vulnerable to natural-resource shocks…Demographic trends, especially increasing global population and urbanization, will also aggravate the outlook for resources, putting intense pressure on food, water, and energy.”

It is inevitable that Morocco has become a central player in the food-water-energy nexus policy discussion as it works to reconcile four overlapping conditions that shape its future: heavy reliance on imported energy, increased population and urban migration taxing local services, fluctuations in rainfall that have a significant impact on GDP, and the need to create employment opportunities at all levels. Timing is critical for reducing or ameliorating Morocco’s challenges in all these areas, and only a coordinated and integrated strategy will reduce dependency on imported fuels, increase capacity to service rapidly growing cities, continue to expand and enhance water management strategy and generate jobs from the introduction of new and more efficient technologies across the food-energy-water sectors.

Morocco is not waiting for a prescription to emerge from multinational organizations and think tanks. The Kingdom is reaching out to experts, analysts, practitioners, thought leaders, and a range of stakeholders to assess its assets and challenges and mobilize support for its grassroots and national strategies. Its 2020 national energy plan is already underway, making extensive investments in renewable energies. Morocco has pioneered two major agricultural plans that include the utilization of extensive water management technologies, as well as enhanced agricultural production technologies. And it is working with the European Bank for Reconstruction and Development (ERBD) to promote the use of small scale renewable energy products by consumers and small business. Overall, the integration of these efforts is a promising start to addressing the food-water-energy nexus.

King of Morocco Promotes Development in Africa by Africa

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While much of the news coverage of Western and Central Africa focuses either on security concerns or problems related to balanced growth, the King of Morocco took the debate in another direction, all but unnoticed in the Western media. At the Moroccan-Ivorian Economic Forum, which opened in Abidjan on February 24, King Mohammed VI laid out a compelling vision for Africa’s development. He said that “Today, it is the economic dimension which predominates. It is a crucial component of diplomatic relations. At one time, cooperation was based on trust and on historical ties. Today, it increasingly hinges on efficiency, performance, and credibility.”

The King is concerned that too much time is spent on political discussions rather than concrete actions to spur development. With respect to credibility he opined that “it requires that the continent’s wealth should benefit African peoples in the first place. This means that South-South cooperation should be at the heart of intra-African economic partnerships.” His words reflect the increasing disenchantment of Africans with international firms, backed by their governments, which extract commodities, undersell local manufacturing, and leave no long-term tangible benefits to citizens of the host countries.

Employment and economic growth received special attention, “job creation and the expansion of small and medium-sized businesses and industries, which are the continent’s real engine of growth and the main job provider for its young people.” Clearly understanding these challenges from similar ones in Morocco, he commented that “Africa is a great continent. It therefore has to take its destiny in its own hands. Africa is no longer a colonized continent. This is why Africa should learn to trust Africa [emphasis added].”

 Partnerships not Handouts

According to studies by the Center for Strategic and International Studies (CSIS) and the Atlantic Council, Morocco and Africa are too often treated as “part of a problem.” The King took exception, as did these leading think tanks, with that characterization. “Our continent does not need assistance so much as mutually profitable partnerships. Africa needs human and social development projects more than it needs humanitarian aid…The 21st century should be that of African peoples’ triumph over the ravages of underdevelopment, poverty, and exclusion.”

The King believes that there is much to be gained from partnerships for development. “Africa should forge further fruitful partnerships with the many developed countries that show a constant interest in and sincere commitment to economic progress and human development in Africa, while being actively involved in them…It should also benefit from the opportunities offered by triangular cooperation as an innovative tool that facilitates joint efforts and helps achieve optimum use of resources.” Morocco has much to offer in this regard, as it has used its networks and regional expertise to carry out a number of triangular projects in Africa using funding from international sources.

The bottom line, according to the King, is implementing strategies that utilize African expertise to expand economic growth. “It is our collective duty to make sure globalization becomes a positive force conducive to development in Africa…the creativity and dynamism of the private sector should focus on specific promising areas such as agriculture, industry, science and technology, and infrastructure development….Leveraging South-South public-private partnerships and the transfer of technology are key elements in this respect.”

 

Achieving Its Potential

King Mohammed VI did not avoid the tough issues of the impact of local conflicts and growing threats from extremists.  “These challenges [which threaten stability and hinder development] can only be met through cooperation, solidarity between African peoples, and respect for the States’ sovereignty and territorial integrity.” He emphasizes that “This makes institutional capacity-building in African States a strategic objective. Better governance, progress based on the rule of law, and the peaceful settlement of conflicts must constitute shared priorities.”

His message about the need for change is clear. “This objective [prosperity for future generations] will even be more readily attainable when Africa overcomes its Afro-pessimism and unlocks its intellectual and material potential as well as that of all African peoples. Just imagine what our continent will look like, once it frees itself of its constraints and burdens!”

The King’s optimism on these visits to Mali, Guinea, Ivory Coast, and Gabon is striking. In Mali, the two governments signed 17 bilateral agreements, and another 26 investment and public-private partnerships in Ivory Coast, more indicators of the substance behind King Mohammed’s messages. These are hopeful signs that Morocco and Africa, which are not without challenges to achieving their goals of prosperity, equality, and security, can forge commitments and partnerships to advance Africa towards its continental potential.

Morocco’s King Drives Regional Economic Integration with Africa

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Morocco and Mali sign 17 different bilateral cooperation agreements to strengthen economic and development ties

Even before the publication of a 2008 landmark study by the Peterson Institute identifying the benefits of regional economic integration in the Maghreb, international organizations and experts were expressing concerns that cross-border politics were depriving the area of much needed incentives to intra-regional trade. This past week, at the 3rd Maghreb Entrepreneurs Forum held in Marrakech, that theme was echoed by participants from the private and public sectors.

The Forum was organized by the Maghreb Employers Union, a coalition of employers from across the region who are trying to do what politicians are reluctant to do – move towards greater economic integration through closer cooperation and coordination of supply chains and marketing. Among the many speakers was Miriem Bensalah Chaqroun, president of the Moroccan business confederation (CGEM), which hosted the event. She noted that “Trade between the UMA [Arab Maghreb Union] countries [Algeria, Libya, Mauritania, Morocco, and Tunisia] represents on average only 3 percent of global trade in these countries, which represents the lowest level of integration in the world.” The forum has created an initiative called the Maghreb Trade and Investment Initiative (IMCI) to provide a roadmap to strengthen trade and intra-regional investments.

The topic of lost opportunities was echoed in a message to the participants from IMF Managing Director Christine Lagarde: “The economic integration of the countries of the Maghreb Union could create, according to our studies, between 2 and 3 percent additional GDP per year for each country.” Simon Baker, Director of the Maghreb section of the World Bank, added, “Currently the Maghreb counties often compete on products exported to the EU in particular. But there is a significant potential for a better division of labor through the establishment of value chains and regional production.” He also noted that “Studies conducted by the World Bank show that the loss of earnings due to the lack of Maghreb integration is estimated at 3 to 9 billion dollars per annum for the region as a whole.”

King Follows Own Path to Regional Integration

While the countries of North Africa struggle to overcome obstacles to greater integration, King Mohammed VI of Morocco has turned his attention to West and Central Africa as natural markets for the Kingdom. He has embarked on his second trip to Africa in less than a year to strengthen diplomatic, economic, and cultural ties with Morocco’s neighbors to the south. “This keen interest in the continent’s development is nothing new.” according to the Med Africa Times, “since Morocco cancelled as early as 2000 all the debts of the poorest African countries and exempted their products and goods from customs duties.”

The current visits are taking the King to Mali, Guinea, Cote d’Ivoire, and Gabon. The article goes on to point out that “Morocco has tirelessly endeavored to strengthen and diversify its economic relations with Africa and to encourage investments, at the institutional level as well as at the level of the private sector which has significant investments in several sectors including banking, telecoms, housing, insurance, and mining.” As with his earlier tour of African countries, the King will preside over political and economic cooperation agreements to support increased economic partnerships throughout the continent.

For example, it was announced that Morocco and Mali had signed 17 different cooperation agreements, promoting increased investment, industrial cooperation, air services, trade, health services, telecommunications, job training, natural resource and drinking water management, and others.

In one initiative, for example, the OCP Group, Morocco’s giant fertilizer company, the largest producer in the world, will invest more than $600 million to build a fertilizer factory in Jorf Lasfar dedicated entirely to the African market, where record level economic growth is anticipated in the next ten years. The plant’s planned production of one million tons of fertilizer annually will be exported exclusively to Africa, according to OCP Group’s president Mustafa Terrab, who made the announcement during the King’s visit to Mali.

Although Morocco’s strategy for regional economic integration may be said to mirror the movie line “If you build it, they will come,” it is apparent that its drive for regional economic integration both in the Maghreb and throughout West and Central Africa is looking more achievable every day.

From Analysis to Action – How to Address the Food, Water, Energy Nexus in Africa

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Over the past five years, foreign and security policy makers have become more attentive to the need to treat natural resources policies in terms of how they intersect with each other. No topic is more important than the food-water-energy “nexus” that was addressed by a conference at the Atlantic Council on February 12. Working from a draft paper, the discussion was divided into three sections: “Core Nexus Principles,” “The Nexus in Practice I: Transatlantic Perspectives,” and “The Nexus in Practice II: the Case of Africa.”

In Morocco, though environmental conditions may not be as dire as in other African countries, there are challenges in addressing this “nexus” in both the short and long term. For example, in any given year, the production of food depends on adequate rainfall and its management. Annual rainfall has a significant impact on the GDP share of agricultural production, which swing from 9 percent during periods of low rainfall to upwards of 17 percent in a good year, and the agricultural sector is the largest employer in the country. Reducing the impact of these swings requires more efficient use of land, fertilizer, recycled water, farming and irrigation techniques, and similar factors – all of which require inputs of energy, whether solar, wind, or fuel sourced, not to mention sunshine!

Morocco is fortunate that most of its environmental factors are largely internal, as no rivers originate in any of its neighbors. However, as an energy importer of more than 95% of its needs, the country cannot avoid the potential for a short term financial catastrophe if a “perfect storm” occurs that lifts energy and imported food prices way beyond the country’s capacity to manage them. It is the same for Morocco’s neighbors in Africa, whether energy rich or not, as the water-food-energy nexus demands dedicated attention in the next decade and beyond to manage supply. This is especially significant in the face of the growing demands of young and urban populations who have legitimate demands for services and want the government to meet these needs without mortgaging their futures.

 How to Move Ahead

Over the next month, I will report on the key issues raised during the conference and examine policy implications for Morocco and Africa, where most forecasts project significant growth in the coming decade. Expanding economies and rising numbers of consumers are generating increased demands on the food-water-energy nexus that cannot be overlooked. “One recent estimate predicted global demand to rise as much as 35 percent for food, 40 percent for water, and 50 percent for energy by  2030…The global demand for food might rise by as much as 70 percent or even more by 2050” according to the draft paper “Addressing the Food, Water, and Energy Nexus.”

Treating food, energy, and water resources as interconnected elements avoids policies and practices that might lead to misdirected investments, lagging economic sectors, and poor development choices. “The potential losses from ignoring interdependencies might be catastrophic, ranging from greater volatility in food and energy markets to absolute scarcities of water and food.”

It is in the face of these challenges, Morocco, with its growing leadership role in human development projects in Africa, is taking a key role in this solution-centered policy discussion on the nexus that is at the heart of the conference. As the Stockholm Environment Institute paper on the same theme notes, “Focusing on the nexus interdependence encourages policymakers, business and community leaders, and producers to think systematically about ecosystems, build coherent policies using multi-stakeholder structures, focus on improving resource productivity, treat waste as a resource, and internalize externalities.”

Drawing on global experts from the US, Africa, and Europe, the conference emphasizes that “despite the justified concerns about threats arising from scarcities, there exist ample opportunities to embrace forms of multilateral cooperation in order to avoid resource-related conflicts…For countries in Europe, the Americas, and Africa, therefore, the key challenge is to construct systems that build the political and technical capacity to understand, monitor, and address possible nexus-related problems before they begin to decay national and/or transnational stability.”

The search for practical solutions that address these food-water-energy requirements to avoid shocks to local, national, and international security and stability will be addressed in future blogs.

Conference to Highlight Business Opportunities in Morocco

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A preliminary agenda has been released for the 2nd Annual Morocco-US Business Development Conference in Rabat March 10-11, 2014. It brings together three principal themes of Morocco’s effort to promote economic growth:

  • Enhanced bilateral trade with the US
  • Investment opportunities in Morocco
  • Morocco as a platform for trade and investment development in Africa.

The first day of the conference will take place at the Ministry of Foreign Affairs and Cooperation with space available for B2B meetings. In addition to the three principal theme sessions, there will be concurrent sessions in the afternoon on the most dynamic sectors in Morocco: energy (renewable and carbon-based) and automotive and aeronautics manufacturing. The second day will feature travel/site visit options to Tangier, Casablanca, or elsewhere for meetings and orientations that advance the attendees’ objectives in visiting Morocco.

Organizations supporting the conference include major business groups in Morocco: the General Confederation of Moroccan Enterprises (CGEM); the Rabat and Casablanca Chambers of Commerce; the Moroccan Export Agency; the Moroccan Investment Development Agency (AMDI); the US Commercial Service; and the American Chamber of Commerce in Morocco (AmCham). They are actively promoting the conference to hundreds of companies that match the sectors and services targeted by Morocco.

According to Moroccan Embassy sources in the US, the goal is to attract upwards of 200 attendees, and it is anticipated that key decision-makers in the government and private sector will participate including, Salaheddine Mezouar, Minister of Foreign Affairs and Cooperation, Mrs. Miriem Bensalah Chaqroun, President of CGEM, and Scott Eisner, Vice-President of the US Chamber of Commerce responsible for North Africa. Panels will feature Moroccan and US speakers with extensive experience in their fields, with a special presentation on investment opportunities by AMDI.

Of particular value to American companies new to the region will be the session on Morocco in Africa. There will be a presentation on current Moroccan projects in west and central Africa, as well as details of the logistics, financial, and commercial services that are available to companies domiciled in Morocco for regional business.

Concurrent Sectoral Panels

While the automotive and aeronautic manufacturing panels will stand out for those in the field, some may be surprised by the extent of these activities already in Morocco. From Renault to Bombardier, car- and plane-parts manufacturing is one of the highest growth industries in Morocco.

Another rising star in the Moroccan economy is the energy sector, both renewables and carbon-based. With construction already starting on its first 500 MG solar plant, its extensive wind farms, and additional projects in the pipeline, Morocco has become a magnet for international companies investing in renewable energy projects. Oil and gas exploration is also high on the energy agenda, with on and offshore concessions attracting investors from the US and Europe.

The Morocco-US Business Development Conference had its initial session in Washington, DC in December 2012 as part of the Strategic Dialogue initiated by then-Secretary of State Hillary Clinton. The highly successful visit of King Mohammed VI to President Barack Obama in November 2013 and the upcoming convening of the second session of the Strategic Dialogue by Secretary John Kerry are reminders of the depth and vibrancy of the bilateral relationship. And this conference focusing on the private sector and its opportunities in Morocco and the region highlights the underlying reality that Morocco’s stability and network of relationships through the region make it an unrivalled platform for trade and investment.

For more details on the conference, contact Mrs. Majda Saber at the Embassy of Morocco in Washington, DC at (202) 462-7979 (Ext 22) Email: majda.saber@gmail.com

The US Commercial Service is hosting a webinar on Feb 11 on business in North Africa; information on time and registration fee is available at http://go.usa.gov/BcPF or contact the friendly and helpful commercial officer: Doug Wallace in Casablanca – douglas.wallace@trade.gov )

Unemployment numbers mask job solutions

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In an interview published in the newspaper “L’Economiste,” Moroccan Minister of Employment and Social Affairs Abdeslam Seddiki, made it clear that “to solve the problem of unemployment, we should not count only on growth.” He went on to say that “according to estimates, 1 percent of growth rate generates an average of 30,000 jobs, and we have a labor market that is witnessing an annual arrival of 180,000 job applications. To meet these arrivals, we need a growth rate of 6 percent, without including the existing stock of unemployed people.”

He pledged to work towards “setting the balance between innovative investment” and those in more traditional sectors that produce direct jobs and “investment in infrastructure that creates indirect employment.” This distinction is quite important, particularly in the high tech and tourism sectors, since they often create many more indirect jobs than the core employment generate by a specific project. For example, both high tech and tourism projects have three phases: development, start-up, and operations. During development, many of the employees are related to the planning phase, are engaged off-site and overseas, may be largely expatriates, and perform high-value and capital intensive (as opposed to labor intensive) functions.

Start-up requires looking to a broader employment pool to attract qualified expatriate and local employees to provide the services required to bring the project to the operational stage. These workers may or may not stay with the project beyond the short and medium term as their special skills are not needed once the project is up and running. It is during the operations phase that most long-term jobs are created because other functions are needed, ranging from logistics and maintenance support to marketing and packaging, household services, administrative tasks, and whatever else is needed to sustain the project.

Operations management looks to purchase local goods and services from the most cost-efficient and acceptable sources, thus creating opportunities for indirect jobs that support the project in the functional areas mentioned above. This is where government programs that promote local business development can play a facilitating role as a broker between the project and the skills and resources available locally. Morocco is moving in this direction as the Ministry of Employment and Social Affairs is focusing government training programs on a more collaborative relationship with investors in order to anticipate what jobs and local companies will be needed by various projects over the medium and long term.

Government plays a key role in enabling job growth

This is also the target of entrepreneurs in Morocco – finding where opportunities exist locally, regionally, and internationally for their products and services. At the recent Casablanca-based New Work Labs competition called PitchLab, the winner, Kipintouch’s founder Saad Jennane noted that Moroccan entrepreneurs must have a global mindset, not just focused on Morocco. “We can target the world or an entire region like the Middle East.”  As I have written previously, without an enabling environment, from access to finance and administrative support to friendly legal and regulatory regimes, obstacles will force entrepreneurs to abandon their efforts.

A second major area on which the government is focusing its efforts is the informal sector in Morocco. With an estimated value equivalent to 60 percent of Morocco’s GDP, bringing the informal sector into the marketplace through ease of entry regulations that encourage and reward these small firms will formalize the tens of thousands of informal jobs that are outside the country’s official employment roles.

This would have three immediate impacts: increased tax revenue and participation in social security and related programs, increased opportunities for collaboration among these largely micro-enterprises to enable them to have access to banking and administrative services, and, most importantly, for those with ambition, to provide the means for growth by attracting funding to expand their businesses. The government’s role in ensuring a positive and business-friendly regulatory environment and in making training and resources accessible is vital and critical to the success of this effort.

The Minister, who noted that the “pressure on the labor market is still high, said that his department can act immediately on existing employment creation policies, namely the Taehil, the Idmaj and Moukawalati programs.” The Taehil program provides pre-employment training partly paid by the government with private sector partners. The Idmaj provides employment training for those with disabilities; and the Moukawalati project is the core entrepreneurship program in Morocco that is built on a public-private sector partnership.

Through greater collaboration with the private sector, more involvement of industry in boosting local sources and skills, and with increased joint investments in training, education, and entrepreneurship development, Morocco can generate the growth in jobs that will meet its needs in the coming decade.