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Facing Challenges in the Food-Water-Energy Nexus

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.

Unlocking Morocco’s Potential: Hearing from the Experts

A panel organized by the Financial Times on growing business opportunities in Morocco was held in New York this week. It was part of a series of programs done in association with the Moroccan Agency for Investment Development (AMDI) to highlight Morocco’s geo-strategic and geo-economic importance as a platform for accessing markets of close to a billion consumers in Europe, Africa, North Africa, and the Middle East.

The impressive panel was moderated by Ed Crooks, former BBC economics correspondent, currently the US Industry and Energy Editor for the FT. He opened the program by pointing out that Morocco has enjoyed consistent growth and stability that is attractive to international investors, a point echoed by Adil Chikhi, the Director of Development & Strategic Marketing at AMDI.

A veteran international player, Mr. Chikhi has broad experience in managing business transactions on all continents. He utilizes his extensive background in “creating a new environment for investors in Morocco,” by focusing AMDI resources on supporting “new companies and partners” for the country.

Adil pointed out that Morocco has developed national plans in key sectors, including tourism, automotive and aerospace parts manufacturing, ITC, pharmaceuticals, and value-added agro-industry.

Hildegard Gacek, Managing Director for the Southern and Eastern Mediterranean at the European Bank for Reconstruction and Development (EBRD), addressed her organization’s priorities in Morocco, including support for the economy by reducing risk exposure for equity investors through financing, and providing long-term loans to support new projects.

Hildegard noted that Morocco, unlike other countries in the region, has a market economy and strong financial sector. She endorsed private-public-partnerships (PPPs) as a useful vehicle to attract Foreign Direct Investment (FDI) and commented that the government, which dominates some sectors of the economy, should allow more space for the private sector, for example, in renewable energy, where there are many opportunities along the value-chain from the mega-projects awarded by the government.

An indicator of how far Morocco has evolved in advancing its financial sector was clear from the presentation by Hamid Tawfiki, CEO of CDG Capital, in which he spoke about the changes that CDG has undergone.

Since he arrived from the private sector just two years ago, CDG has greatly expanded its role as both a steward of savings (pension funds) and an investor/developer in the Moroccan economy.

As a quasi-government institution, it is committed to having a strong social impact through its investment activities, acts as an incubator for new projects, and attracts co-investors from around the world.

It has moved beyond managing pension funds to participating in the banking sector as an investor and through its own bank, and in being a co-investor in mega-projects such as the Tangier-Med port and Renault’s manufacturing facilities.

A key presentation was by Najwa El Iraki, the Head of Business Development at Casablanca Finance City (CFC). If anyone has questions about Morocco’s focus on building business in Africa, CFC is the place for answers. Established three years ago, its primary mission is to serve as the hub for financial services to the south, including francophone and other sub-Saharan countries.

With more than a decade of experience in the financial sector, Ms. El Iraki is a good example of the strong team that supports Morocco’s growth strategies. Specialized investment funds, boutique financial services companies, and financial services providers will find a welcoming home at CFC.

Since its creation in July 2009, AMDI has become the leading source of information and data on investment in Morocco, providing services that enable prospective investors and companies to gather market information on opportunities, meet prospective partners and investors, contact the right government offices, and provide technical expertise on establishing businesses and registering to do business in Morocco.

AMDI also plays an important role as an advocate for the private sector, making recommendations to the government regarding policies and procedures to support investors.  The panel will visit Frankfurt, Seoul, and Tokyo during the remainder of the year.

– See more at: http://moroccoonthemove.com/2013/10/10/unlocking-moroccos-potential-hearing-experts-jean-r-abinader/#sthash.ZRtFo4cO.dpuf

Morocco in a rising Africa: Expand opportunities, extend friendships

Last week, the annual meetings of the African Development Bank (AfDB) were held in Marrakech, Morocco under the theme “The Structural Transformation of Africa.” It has been 29 years since Morocco last hosted the meeting and the event and its location demonstrate how few divides now exist between north and sub-Saharan Africa.

In the past, policy analysts and companies treated North Africa as part of the Middle East; to many, Africa began at South Africa, and extended upwards to Nigeria and Kenya, encompassing the largely English-speaking areas of the continent.

While that is still the dominant perspective, leaders in the Maghreb have increasingly forged closer and more robust economic, commercial, and political ties with their counterparts in central and West Africa.

Some of these efforts were clearly political, as with Gaddafi’s investments throughout the continent. Other ties have grown out of the need to have common efforts against smugglers, militants, terrorists, and extremists who populate the poorly guarded territories along common borders. The bottom line is that building long-term south-south relations is now a permanent feature of intra-African affairs.

In his message to the annual meetings, King Mohammed VI of Morocco emphasized that Africa’s human capacity and natural resources are great assets in the economic and social development that is occurring. He also noted that “we must root out the causes of national and regional conflicts so that peace may prevail throughout Africa.”

The King called for “major projects at the level of sub-regional groupings, and to insure the sustainability and optimal management of our resources, for the mutual benefit of our populations.” In outlining his vision, the King calls for Africans to take the leadership in the development of their countries without becoming dependent on foreign entities.

King Mohammed VI also spoke to the need “to ensure food security for all our African peoples and to reduce our dependence…through the creation of a common African agricultural market. Finally, we should promote support and assistance programs to reduce social and spatial inequalities and ensure inclusive, shared growth.”

These challenges echo themes of conferences held earlier this year in Morocco on south-south dynamics, most recently the 8th Morocco International Exhibition of Agriculture in Meknes, where attendees discussed topics related to regional markets, food security, and innovations in agriculture.

Yet the AfDB’s mission is built around the capabilities of its 79 members (54 African, 25 non-African) to not only grow their GDPs but put into practice the means of further reducing poverty, inequality, and discrimination. Despite a doubling of GDP since 2000, great disparities remain and there is an over-reliance on FDI to drive growth that is often uneven among and within countries.

As reported in the final communiqué of the meetings, there is a need to use the current UN discussions on revising the Millennium Development Goals (MDG) to set realistic goals regarding the inclusion of youth, women, and other vulnerable groups.

The final AfDB statement included a strong emphasis on committing higher levels of investment in human and infrastructure development, promoting strategies that accelerate economic growth including support to small and medium-size enterprises (SMEs), improving human capacity and skills development especially for youth, and renewed efforts to build efficient regional markets through joint public-private investments.

In his remarks at the closing session, Nizar Baraka, who was named “Minister of Finance of the Year” in Africa, pointed out that a key outcome of the meetings was to review, evaluate, and discuss AfDB’s activities to better develop strategies to mobilize financial resources for the structural transformation of Africa so as to better serve the African people and “meet their expectations for a dignified life, social mobility, and job opportunities.”

Morocco garnered additional awards including Best Bank of North Africa to Attijariwafa Bank and Best Development Financing Institution to Credit Agricole, which was cited for “working hard…to build a model of sustainable and efficient financing for development in rural areas, with good management practices.”

These institutions and their counterparts throughout Africa are key players in the fact that 13 of the 20 fastest growing countries in the world in 2012 are in Africa. In its third annual financial review, the AfDB noted that regional economic integration is the “key factor” for African producers to develop regional value chains, to achieve economies of scale, and become competitive internationally.

And for AfDB, the private sector is the main engine of growth and poverty alleviation, providing 90% of the jobs, two-thirds of the investments, and 70% of the earnings growth on the continent.

Morocco and the rest of the Maghreb will gain mutual benefits from a heightened involvement in Africa, one that shares a common vision for dynamic human and economic growth.

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.

Understanding Morocco: Opportunities for Business and Trade

Jean Abinader, speaking at the Global Economics and Business Seminar of the Washington Semester Program of the American University.

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These videos were originally posted on Morocco News Board.