Partners can make a difference in driving economic growth

Over the past several weeks, I have been looking at media coverage of events and activities related to how Morocco is confronting its challenges in driving economic growth. One particular theme that merits more attention is how external partners, whether bilateral or multilateral, can play a significant role in enabling Morocco to maximize its reform efforts.

On March 18, the Carnegie Endowment for International Peace (CEIP) held a panel on “Economic Turmoil in Arab Countries – Can Partners Help?” that raised several key points. First of all, the drive for sustainable development must be internally driven; otherwise the needed political will is absent. Without national leadership, the longer term efforts to reform are marginalized and politicized. Secondly, greater stability in the MENA region benefits donor countries and agencies by supporting an environment in which growing prosperity, jobs, and opportunities reduce conflict and promote greater cooperation within and among countries.

While it is too soon to make conclusive assessments of these partnership arrangements, details of recent programs provide insights into their priorities. The first example is a recent press release on projects funded by the World Bank in Morocco. The funding has two components. The first is a $160 million loan to improve the competitiveness of Moroccan companies. It includes simplifying the regulatory environment and strengthening the capacity of Moroccan agencies tasked with business and investment development. Interestingly, as reported in my blog last week, this follows on a European Bank for Reconstruction and Development trade facilitation funding agreement with BMCE bank in Morocco. The programs should be mutually supportive.

Simon Gray, the Maghreb Country Director for the World Bank, commented, “Morocco has engaged in a number of promising reforms to liberalize and promote investment in key sectors over the last decade. The impact of these reforms on growth and job creation will be further enhanced by addressing the remaining rigidities in the institutional and regulatory business environment especially as they pertain to small and medium enterprises.” The reforms include addressing government payment delays, bureaucratic red tape, unfair competition, and lack of predictability in implementing rules and regulations.

Also approved by the World Bank is a $6.44 million grant to help small farmers implement land and biodiversity conservation measures in targeted regions. An interesting component of this project is using animal feed generated from by-products from agri-food chains including olive oil, cactus, and argan. This is the latest project by the World Bank in support of the Plan Maroc Vert program, which targets doubling the added-value and jobs in the agricultural sector by 2020.

A Zawya article, “Strong macro drives Morocco’s investment appeal,” notes, “Morocco has emerged as the most stable North African country, after King Mohammad VI navigated through a tricky period during the Arab Spring. A new democratically elected government with powers has led to a relatively stable country compared to the painful transitions in North African peers Tunisia, Libya and Egypt.” It goes on to list hallmarks of EU-Morocco cooperation:

  • Morocco is the first North African state to embark on Deep and Comprehensive Free Trade Agreements (DCFTAs) with the European Union.
  • An EU-Morocco Association Agreement came into effect in 2000.
  • Negotiations for a new European Neighborhood Plan (ENP) for the period 2013-2017 were concluded in November 2012 and a formal adoption process is under way.
  • An agreement on liberalization of trade in agriculture came into force on October 1, 2012.
  • The guidelines for a new Fisheries Partnership Agreement were adopted by the EU in February 2012, and negotiations are ongoing.
  • Morocco remains the largest recipient of EU assistance in the ENP-south region with EUR 580.5 million earmarked for 2011-13 with a focus on social and economic development, environmental protection, and institutional support (i.e. justice and human rights).

A recent IMF report pointed out that higher economic growth, lower unemployment, better health and educational outcomes, better access to basic infrastructure, and a marked reduction in poverty rates are tangible evidence of Morocco’s progress in fostering inclusive growth. The only black mark is youth unemployment, which remains particularly high.

It is too soon to write the headlines for Morocco’s economic future, yet it is clear that providing a platform in support of solid political, social, and economic reforms is a key role for external partners. Targeted and results-focused assistance programs, developed through frank and constructive dialogue with recipient countries, are keys to achieving tangible outcomes that promote inclusive growth and enhance stability. In this period of budgetary constraints among all the partners, it is helpful for American taxpayers to know that the US is not alone in working hard to promote security and prosperity in the MENA region.