This is the first installment of a periodic blog, “Maroc Business Matters,” which will review news that highlights Morocco’s economic progress with a particular focus on what moves trade and investment forward. Unlike much of the region, which continues to experience political turmoil eroding business confidence, Morocco continues to build its bona fides as the platform for business in Europe, Africa, and the Middle East. This is Morocco’s story.
Morocco continues to improve economic basics – report card from the IMF
This past month, a high level IMF staff team visited Morocco to assess its performance as called for under the Precautionary and Liquidity Line (PLL) agreed in August 2012. This 24-month agreement makes available around US$6 billion as a support mechanism for Morocco’s liquidity. The delegation also gathered data to prepare a comprehensive profile of the performance of the Moroccan economy.
According to the statement issues by the head of the team, Jean-Francois Dauphin, Morocco’s economy is improving “Despite an unfavorable regional and global economic context…” He cites a low inflation rate, a decline in the external current account deficit, and expected 4-5 percent GDP growth rate, among other factors. Mr. Dauphin noted that the Moroccan economy needs to “strengthen competitiveness, ensure stronger and more job-rich growth, and improve social protection, particularly for the most vulnerable segments of the population.”
As part of its strategic economic policy, the government of Morocco has a full agenda in Parliament including a new organic budget law, reform of the judicial system, strengthening the powers of the transparency agency, and broadening support for entrepreneurs and small and medium-sized enterprises.
Attracting new manufacturing partners through expanding free zones
Indicative of Morocco’s push to create jobs by attracting foreign direct investment (FDI), good news is coming from Midparc, one of the primary new-generation industrial parks, which has already landed Canadian aircraft manufacturer Bombardier. This new free zone covers more than 300 acres close to the seaport and Mohammed V International Airport in Casablanca.
GCC continues to invest in Morocco – Qatar latest to step up
As part of its commitment under a Gulf Cooperation Council (GCC) agreement to provide US$5 billion to Morocco over five years, Qatar signed a US$1.5 billion agreement this past month. As Reuters reports “Four Gulf states – Qatar, Saudi Arabia, Kuwait and the United Arab Emirates – agreed in 2012 to provide aid worth a total $5 billion to Morocco in the period 2012-2017 to build up its infrastructure, strengthen its economy and foster tourism.”
The welcome assistance pact was signed during a recent visit of the Emir of Qatar to Morocco and will help the country reduce its budget deficit by 10 percent in 2014. Details have yet to be announced although previous packages from Saudi Arabia, Kuwait, and the United Arab Emirates (UAE) have focused on investments in key growth sectors such as agriculture, tourism, and financial services.
Morocco committed to become regional financial center
The emphasis on investing in financial services is putting smart money on smart business, considering Morocco’s deep and broad commitment to this sector through Francophone Africa. Over the past five years, Moroccan banks have greatly expanded their footprint throughout the region and the government has launched the Casablanca Financial City as the nexus for regional financial services. A recent Forbes article credited Morocco’s strategic geographic position and political stability, especially when compared with the rest of North Africa and the Middle East, as key reasons that foreign manufacturers were flocking to Morocco to establish factories — among them Renault, Bombardier Aerospace, and Dell.
A paper prepared by the Wharton School concluded that tax incentives for expatriate companies and employees, lack of customs duties, proximity to Europe, and less government regulations, “along with Morocco’s position as a stepping stone to the rest of North, West, and Central Africa, are expected to drive much of the interest in the CFC.”
Morocco ups efforts to go green, abetted by the World Bank
Morocco recently garnered a US$300 million loan from the World Bank to promote a “more sustainable and inclusive development model.” Simon Gray, Director of the World Bank Maghreb team pointed out that “Morocco is putting the green agenda at the forefront of its development priorities to secure a resilient and strong economy providing opportunities to vulnerable populations. The Program will introduce sustainable practices in agriculture and develop new sectors such as eco-tourism and aquaculture which have the potential to create jobs and diversify revenues in rural areas, where 70 percent of Morocco’s poor live.”
Andrea Liverani, World Bank Task team leader noted that “The shift to green growth is a homegrown strategic agenda, deeply rooted in the minds of policymakers. The Development Policy Loan series backs this policy priority and complements the World Bank’s package of support in areas such as such as energy, water and agriculture.”
This comes as no surprise to Morocco-watchers as it has set an ambitious target of more than 40 percent of its energy from renewable sources by 2024. According to a recent article, after a slight decline worldwide in 2013, wind power is expecting strong growth in 2014 in Morocco, the US, and South Africa.
Look for more economic news on Morocco in the next posting of Maroc Business Matters.