Indicators Up Yet Gaps Remain in Morocco’s Economic Growth

Over the past two weeks, several stories seem to indicate that Morocco is on the right track for economic growth in 2013. As with the other Maghreb countries, Morocco faces many challenges ranging from quality of labor to a somewhat confusing regulatory environment in attracting foreign investment. Yet, tourism is up over last year, the EU has launched talks for a free trade agreement, a major Moroccan bank has signed a trade finance credit line with the Europeans, and, at least on the economic side, most analysts believe that GDP growth will exceed 3 percent.

Reuters carried the story on the EU’s intention to negotiate a free trade agreement with Morocco as part of the EU’s response to the Arab uprisings. It is significant in that the first treaty will be negotiated with Morocco, another indicator of its perceived stability and commitment to opening its markets further. Trade between Morocco and the EU topped 24 billion euros in 2011, and the EU is hoping to further expand its activities in the services sector as well. The EU’s goal was well stated by Marielle De Sarnez, a French member of the European Parliament, “Smooth negotiations of the free trade agreement are crucial because they serve as an example for other countries in the southern Mediterranean…this agreement will also allow in the long term greater regional integration for the Maghreb countries.”

Her sentiments were echoed by Vice-President of the European Investment Bank (EIB), Philippe de Fontaine Vive, on the sidelines of the EIB’s annual review. He noted that Morocco is the first recipient under a new program of the FEMIP (Facility for Euro-Mediterranean Investment and Partnership) that commits nearly one billion euros of financing “to support the transition to a new form of innovative and more inclusive growth in Morocco.”   More than a dozen major projects were funded in 2012, in areas as diverse as transportation infrastructure (including the extension of rural roads), agriculture, technological innovation, solar energy, education and health sectors, in addition to the medina renovation programs in Fez and Meknes, and coming to Casablanca. He went on to say that “This shows both that the EIB is there to support the process of democratic transition and that Morocco has the capacity in diverse sectors to be able to mount innovative projects, the most emblematic in the year 2012 has been the solar project at Ouarzazate, for which we coordinated the European funding.”

It is the capacity of local agencies and institutions that is the focus of a $75 million trade finance facility between the European Bank for Reconstruction and Development (EBRD) and Banque Marocaine du Commerce Exterieur (BMCE Bank). The financing line is to support international and intraregional trade transactions with both guarantee and cash advance facilities. It will support trade activities by “facilitating the distribution of imported goods and contribute to the overall growth of small and medium-sized enterprises (SMEs).” How this growth is perceived in-country was the focus of an article in the Financial Times by Chris Wright that highlighted the perceptions of fellow travelers on the train from Casablanca to Rabat. Comparing the views of a Brit, a Saudi, and a Moroccan leaves one with the impression that while Morocco is doing better than others affected by the Arab uprisings, it still has many challenges ahead before its recovery and growth are assured.

A key insight into what needs to be done came from Oussama Romdhani, former Tunisian minister of communication. In an article in the World Affairs Journal, he proposed that “A durable recovery will require far-reaching policy reforms addressing the chronic mismatch between educational training and the job market. In this particular concern, US advice and assistance could help North African countries modernize their inefficient higher education and vocational training systems.” The gap between jobs and skills in Morocco continues to draw the attention and resources of both the government and the private sector. It is difficult to attract foreign direct investment without an available qualified workforce that operates within a relatively open and free labor market. The government has initiated a series of programs that address the skills side but still lags behind in freeing up its regulatory environment to facilitate a more dynamic labor sector. Hopefully, as the growth prospects continue to improve, there will be time to address the structural reforms needed in the labor market that will accelerate the trend towards greater prosperity.

Breaking the cycle of “educating for unemployment” in MENA

The Audit Court (Cours des Comptes) in Morocco recently issued a critical report on the country’s vocational training system. At the same time, the World Economic Forum was focusing on youth under/unemployment at its annual conference in Davos. This is no coincidence, as the demographic realities in emerging markets create a demand for very high levels of job growth in the next decade to absorb high school and university graduates.

In fact, key demands emanating from the Arab uprisings are for jobs, greater transparency in employment practices, and sufficient resources for market-oriented training and education.

Jamie McAuliffe, president of Education for Employment summarized the challenge quite accurately: “But it is much easier to describe the problem than to advance concrete solutions. Both within the Middle East and North Africa (MENA) and beyond, there are still few examples of large companies and national governments putting the necessary muscle and resources behind solving the problem.”

Effective program management, qualified human resources, and sufficient budgets will provide a baseline for developing and delivering solutions to reverse the complacency and ineffectiveness that characterize training programs in the region. Looking at the Audit Court’s report helps provides a starting point to discuss the challenges to technical/vocational training in the MENA region.

The Moroccan Office of Vocational Training and Employment Promotion (OFPPT) is charged with orientation, education, and placement of students, as well as providing opportunities for continuing education for adults who wish to change career paths. Ideally, OFPPT maintains relationships with potential employers since it has the critical responsibility to be familiar with the needs of the workforce and adapt curricula and training to meet those needs.

OFPPT has its equivalents throughout the MENA region, some of which focus specifically on vocational and technical skills training for recent middle school and high school graduates, while others are similar to community colleges that provide “white-collar” education and training programs for the services industries. Whatever the agency’s mission, the goal is the same—to graduate employable young people for the workforce.

After decades of acquiring academic degrees that held out little prospect of jobs and careers, young people recognized that their educational systems did not make them employable, and governments are scrambling to respond.

It is too soon to tell how the new programs will turn out, but observations of actions over the past two years raise several critical issues. Let me say, from the outset, that this is a lifelong issue for me. I have been working on training programs in the Middle East since the late 70s, starting in Iran, moving then to the Arab Gulf countries, and continue today providing services to both US employees assigned to the MENA as well as to Arab trainees at all skills levels across a broad range of sectors. So while youth employment has become a regional priority due to the Arab uprisings, there are experienced professionals and best practices available that can help guide the determination of flexible yet accountable solution options.

One of the key concerns that I have is the quick fix notion of turning Arabs into entrepreneurs. Yes, Western mercantilism and international trade definitely had its roots in the Mediterranean, as Phoenicians (from Lebanon, of course) were the pioneers in sea-borne trade throughout the region. But that does not mean that one’s DNA equates with modern day commercial success; in fact there are many obstacles to ensuring an enabling environment for entrepreneurs.

A country’s legal, financial, regulatory, and cultural norms, among others, must be coordinated in order for enterprises to succeed. As this “eco-system” advances, concurrent efforts are needed to enable companies at all levels to expand their capacities to compete in the contemporary marketplace. And of course, the point of this enterprise is to develop the human resources to lead, manage, and staff the companies of today and tomorrow.

In my assessment, there are six “demand” factors that should shape the “supply” of labor generated by vocational/technical training programs.

  1. The skill/labor needs of the market today and projected for a decade.
  2. The interests/aspirations of youth and how this matches #1, and how to close the gaps that exist.
  3. Flexible and targeted curricula that provide core technical, language, and soft skills, as well as specific skill sets linked to jobs, with a strong emphasis on practical training based on partnerships with potential employers. Courses should reflect local demand and opportunities.
  4. The careful allocation of funding so that training programs are sustainable rather than becoming unsustainable subsidies.
  5. Government policies that take a holistic approach to job growth, involving a broad range of stakeholders and supporting outcomes based on results.
  6. Ensuring that entrepreneurship programs are balanced with efforts to enlarge the competitive capabilities of medium and large-sized firms.

With these “demands” in mind, a concerted, coordinated, strategic campaign involving various groups of stakeholders will go a long way in meeting the challenges not met by previous vocational/technical training regimes.

D-PAD: A checklist for framing training content and delivering sustainable results

The Arab uprisings are the clearest indicator to date of the region’s need for more and better jobs, better matches between what goes into education and comes out to the workforce, and restoring a sense of value to skilled and semi-skilled jobs critical to maintaining a well-functioning social and physical infrastructure.

While there is much emphasis on the integrating digital technology into training methodologies, a more effective approach focuses not only on the tools, but on the solutions. In the US alone, there are three million jobs waiting to be filled by people with the rights skills and the motivation to work and to work in new locations. Just as there must be an eco-system for entrepreneurship to thrive, a similar eco-system must be constructed for workers so that they add value to the process as products and services are brought to market.

So, not being fluent in I-PAD, I thought it might be useful to derive a framework, which I call D-PAD, to focus attention on the key content and context (environmental) issues in any skills-centric/jobs program. It is a checklist that will guide various stakeholders (potential employers, decision-makers, regulators, reformers, trainers, students, management, consumers, etc.) to smart decisions for defining content and context for recruiting and motivating the current and next generation of skilled workers.

First caveat: this thinking is not ground-breaking. I’m taking the charts, models, and paradigms of some top companies and translating them into something that hopefully is easy to digest without a consultant’s playbook. Second caveat: although this posting reflects the work of companies in Middle East and North Africa, the concern for more effective and durable training solutions is global and touches all levels and sectors of public policy and economic development.

 D-PAD is actually 5D-PAD.

In my experience, to begin the process of corralling market needs into a sustainable training regime, there are five steps:

  1. Define the goals as precisely as possible and include as many stakeholders as possible from the private and public sectors, and the institutions
  2. Discover the factors that promote and inhibit the goals (SWOT works) and discuss timeframes and constituencies that are relevant to the process
  3. Determine priorities, resources, and various cost-benefit parameters including gender, urban/rural, minorities, accessibility, and other relevant issues that influence decision choices; get sign-off from funders/regulators
  4. Design the learning objectives for both hard and soft skills and the work environment that is both the goal (where to work) and the process (how to work, ethics, career orientation, retention, performance, etc.)
  5. Develop the specific training materials, train the trainers, agree on the metrics, and move to the PAD

Of course these five action categories have multiple subsets and much fuller descriptions but that is for another article or two.

 The PAD – Acquiring skills for a lifetime

We now know that there are very few lifetime positions, although vocational self-employment still has great potential in that regard. Every job, from maintenance to programming, requires periodic if not continuous updating to be relevant to the marketplace. So the PAD has two functions: outline a learning/training regime that is both skills and career focused (hard and soft skills), and build in an emphasis on sustainability, that is, a flexible format that enables graduates to develop over time their own learning goals to have staying power in the economy.

  •  Preparation takes the results of the 5D process and defines what intellectual and physical capabilities the students and trainers need to make the program regime worth the effort. The most interesting challenge is working with prospective employers to define today’s job requirements without losing sight of how jobs in some sectors are evolving continually.
  •  Acquisition focuses on the learning/training materials and methodologies. Is there one-size that fits all? Considerations include quality of trainers, gender issues, embracing both soft and hard skills in a limited period of time, availability of mentoring/apprentice/OJT programs, counseling (why do so many want to own their own business; few succeed), and dozens of other concerns such as amount and accessibility of equipment, status/cultural factors, etc., etc. A critical key is developing cost effective solutions that are scalable and efficient, relying in large part on private-public sector partnerships; but it’s only one key.
  •  Demonstration deals with trainee and trainer performance. Societies in the Middle East and elsewhere still have a heavy cultural emphasis on avoiding shame so performance issues, in classes/labs, at the prospective employer, and elsewhere have to consider both the metrics and the process of achievement.

Okay, that’s the snapshot of D-PAD and a summary of what to consider in defining priorities and resource requirements to develop market-ready job seekers.