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Tough Love Economic News Requires Array of Strategies

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Jordanians are chattering about how the interim government is facing a number of difficult choices, none of which are of its own making. There is painful medicine for Jordanians in the prescription agreed with the IMF this past week, and people felt it immediately in prices paid for energy and power. No one argues that Jordan needs to take immediate steps to stop its slide into even lower growth, and there is little disagreement among leading Jordanian economists about how to move forward. However, medium and long term reforms will not do much to alleviate the pressure felt by consumers.

This is the dilemma facing oil producers and non-oil producers alike: How to bring about long-needed reforms that will ameliorate inadequate planning and decision-making by past leadership. One approach is HRH Mohammed bin Salman – high visibility, high energy, let’s take on entrenched interests approach while continuing to coddle citizens, which Saudi Arabia can afford to do.

On the other, there are Jordan and Morocco, balancing competing economic interests among potentially volatile political constituencies. Their way forward is constrained by internal and external factors that are not easily controlled. Morocco is in a more favorable neighborhood that encourages FDI and a more stable domestic political structure. Jordan faces both short and long-term challenges that are intertwined with all of their neighbors.

An article in The Jordan Times on the reaction to the IMF  tough love agreement noted, “This means there are more hard times ahead for Jordanians…the targets set by the government seem too difficult to achieve within the framework and the time schedule agreed on with the IMF.” The government is in a quandary inherited from the previous administration. With a public debt equal to 93% of the country’s gross domestic product, “and the stubborn problems of poverty and unemployment,” former finance minister Mohammad Abu Hammour blamed the fact that “There have been no real economic reforms over the past years in Jordan. Reforms should have been incremental, because they cannot be done overnight.”

The former minister said that the situation is already gloomy as exports dropped by 10% in 2015, foreign direct investments declined by 35%, and “unemployment rose to the unprecedented 14.2% mark.”

While Arab countries face similar dilemmas – a demographic bulge, inadequate education resulting in a mismatch between education and employment, and stagnant to slowing growth, the political dynamics of each country require avoiding a single remedy formula.

In Saudi Arabia the focus is on economic restructuring to promote jobs for men and women and soak up all those Saudis who are being educated abroad since there are few excellent universities in the Kingdom. This, of course, does not resolve the issue of those young people who are not university bound but still want jobs.

Jordan is different. It has no sovereign funds to bridge its economy to a brighter tomorrow. It hosts hundreds of thousands of refugees that have absorbed any spare capacity to deliver services. And it has to rely on infusions of foreign funds and loans to maintain its operations.

jordan flagSo what should Jordan’s government do? Given the obstacles of growing an economy burdened by providing services to citizens and refugees, here are three paths to follow, each with its own consequences. First, Jordan needs to cut government spending – always tough when there are so many vested interests in the current system. Secondly, Jordan needs to move more proactively to create a more business-friendly environment, promoting transparency, reducing corruption, and building public-private partnerships focused on short to medium term results.

One area that needs more emphasis is on convincing wealthy Jordanians at home and abroad to make significant job-creating investments in their country. Real estate aside, there must be more productive sectors for Jordanian, and Moroccan investors. Jordan and Morocco have wealthy citizens that could contribute to the country’s growth if they were incentivized properly. Investment capital is notoriously risk averse so this will take the most persuasive power of both monarchs.

Local investment funds, properly incentivized, can be quite powerful in the near term for targeting job growth for unemployed university graduates as well as those in the vocational/technical skills groups. When under- and unemployed youth believe that they can get jobs with wages for more than basic necessities, they will take advantage of many programs available to equip them for jobs in commerce and industry…but they must see a way forward.

Jordanian economist Hosam Ayesh summed it up best when he said “Increasing prices of water and electricity as of next year will push up the prices of many commodities. Citizens are always asked to tighten the belt, but shortly, there will be no belt to tighten.” Long days ahead.

Security in the Sahara Not a Shell Game

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Threat not Overstated; Remedies Require “Losing Old Paradigms”

Contradictions are not rare in the Middle East and North Africa (MENA) region when it comes to politics and diplomacy. This is particularly evident in the continuing efforts to resolve the Western Sahara conflict. While all of the parties voice concern over the lack of a resolution, most, namely the Polisario and Algeria, are unwilling to offer credible options for how to do so, essential for regional cooperation needed to address extremist threats emanating from ungoverned spaces and, unsurprisingly, a lack of regional coordination.

The stalemated negotiations atrophying in the UN Secretary General’s office have underscored these concerns about how this situation impacts regional security and yet have offered little in the way of realistic options for resolving the conflict.

From the UN perspective, one needs look no further than the UN Secretary General’s report on his trip to the region. Secretary General Ban Ki-moon noted “The frustrations I witnessed among Western Saharans, coupled with the expansion of criminal and extremists’ networks in the Sahel-Sahara region, present increased risks for the stability and security of all the countries of this region. A settlement of the Western Sahara conflict would mitigate these potential risks and promote regional cooperation in the face of common threats and regional integration to bolster economic opportunity.” And yet, rather than use the security imperative to spur action towards a resolution, Ban Ki-Moon’s actions prior to the report put a negotiated political compromise further out of reach.

The Security Council’s response has been to once again reiterate the importance of working with the parties on a negotiated political settlement. One can only hope that the future of the UN’s presence in the territory will move forward toward a realistic settlement that would not rely on dead initiatives like a referendum, but engage in discussions built on achievable solutions. Only then will the region be able to revive some sort of effective security coordination among all the state actions.

This has yet to be realized despite clear deterioration of security in the Sahel-Sahara region, largely because of ongoing regional rivalries and the antiquated thinking of Algeria and the Polisario. As Professor Mohammed Benhammou, President of the Moroccan Center for Strategic Studies, noted in recent article, “Regrettably, in the Maghreb the conditions for cooperation do not always exist due to antiquated thinking, particularly over the Sahara. The closed border between Morocco and Algeria has impacted most regional relationships. For example, Tunisia, Libya, and Mali are forced to develop security strategies with both countries separately at the expense of a more effective coordinated regional strategy.”

Some of the challenges to developing such a regional strategy, particularly with regard to Algeria’s role, are outlined in a recent article in the Sada Journal about the reconstitution of Algeria’s security forces. As the author indicates, the restructuring of the security services (DRS) over the past two years, designed at least in part to improve counterterrorism capabilities, has done little more than eliminate a competing power center to the presidency.

Another part of the current strategy – highly visible counterterrorism operations to “rebuild popular confidence in the Algerian military’s ability to maintain public security,” thereby, “sending a message to France, its neighbors in the Sahel, and other countries interested in regional security that Algeria is still the dominant player,” also rings hollow given Algeria’s increasing difficulty in securing its own borders. Not to mention when one considers the failure of Algerian regional initiatives such as the Joint Military Staff Committee (CEMOC), which purported to be a regional security mechanism that was convened without Morocco, largely because of the dispute over the Sahara issue.

This is hardly a recipe for effectiveness and conflict resolution. Unless the old paradigms dissipate in order to activate true regional security cooperation including all stakeholders, Ban Ki-moon’s fears will become even more tangible and immediate.

 

 

 

Stevens Initiative Launches Grassroots Global Conversations among Youth

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The first group of awardees of the Chris Stevens Virtual Exchange Initiative competition, limited to US NGOs in its first year, was announced this week in Washington, DC. The program is part of a multi-year effort to generate cross-cultural communications among young people in the US. Middle East, and North Africa (MENA). An international public-private partnership, the Stevens Initiative is named in honor of Ambassador Chris Stevens, who was killed in Libya and had been a Peace Corps Volunteer in Morocco.

The Aspen Institute is hosting the Initiative and managing the process of awarding grants through competitions to be held annually, beginning in the US and then extended throughout the MENA region. A defining feature of the Initiative is the central role played by technology to create virtual exchanges, according to the Aspen Institute, “to improve understanding, respect, and dialogue across cultures and equip young people with the skills they need to succeed in a global economy.”

The exchanges focus on creating virtual classrooms where students connect from different parts of the world to learn and work together on a variety of defined subjects, and through this interaction, to develop better understanding and respect for each other and their cultures. Recognizing that in most countries, access to the Internet could be limited by economic and social factors, the Initiative places special consideration on projects that reach into underserved and marginalized communities.

The Initiative is providing $5 million to support the new online programs, which aim to bring more than 20,000 young people together to engage in cross-cultural learning experiences in 17 countries in the Middle East and North Africa and in 25 American states.

As Elliot Gerson, Executive Vice President of the Aspen Institute noted, “Our goal is to spark conversations between students in countries around the world – conversations to exchange ideas and information and to work together on addressing important issues. We are excited at the prospect of helping to prepare a new generation of global citizens.”

Most programs will launch in spring 2016 and continue for a period of two years. Among the projects:

  • Online English and Arabic language exchange between students in California and their peers in Morocco and Saudi Arabia
  • Using media tools, including virtual reality, as a springboard for conversation and social learning among middle and high school students, including Syrian refugees, in Kentucky, New York, and Jordan
  • Environmental studies projects for students in the United Arab Emirates and the United States
  • A virtual “study abroad” program for students in Iraq, Illinois, North Carolina, Oklahoma, Washington, and Wisconsin

Evan Ryan, Assistant Secretary of State for Educational and Cultural Affairs at the U.S. Department of State, added that “By creating opportunities for engagement among students, teachers, and professionals, the Stevens Initiative honors Ambassador Stevens’ legacy.”

The next round of the competition, scheduled for later in 2016, will be open to applicants from the MENA and the US. It will focus on sharing best practices and on research into how to measure the impact of the Initiative and how to grow the program.

The awardees of the first Stevens Initiative grant competition are:

  • Chicago Sister Cities International
  • Eurasia Foundation
  • Global Nomads Group
  • iEARN-USA
  • National Democratic Institute
  • Soliya
  • State University of New York – Center for Collaborative Online International Learning
  • University of California – Berkeley
  • Wofford College
  • World Learning

An interesting sidebar is that Ambassador Stevens attended UC Berkeley, and its Center for Middle East Studies (CMES) administers the Ambassador J. Christopher Stevens Memorial Fund for Middle Eastern Studies to support UC Berkeley student travel and research in the Middle East and North Africa.

According to the Center, “The new CMES program will provide an opportunity for Berkeley undergraduates to interact with peers at institutions in rural Morocco and Saudi Arabia, with subsequent exchanges planned in Iraq and Jordan.”

CMES Chair Emily Gottreich pointed out that “Ambassador Stevens spent his undergraduate career studying history here at UC Berkeley before starting his service career in Morocco with the Peace Corps. We are honored to have been entrusted with the important work of continuing his legacy through these exchanges.”

The Stevens Institute is a collaboration among the Stevens family, the US Department of State, the Bezos Family Foundation, the MacArthur Foundation, the United Arab Emirates, Qatar, Algeria, Morocco, Microsoft, Twitter, Mozilla, and GoPro.

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.

Abdeslam SeddikiStart-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.

Saad Jennane, founder of Kipintouch (left), with Abdelhamid Chakiri of Shorein, Mehdi Tamli of Secret4sale, and Meryem Bennani of Creative Group. Wamda

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.

Originally posted at Morocco on the Move. Slideshow photo of Twin Center in Casablanca by YoTut/Flickr.

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.

irrigated field in Morocco

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.

Originally posted at Morocco on the Move.

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.

King of Morocco speaking“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.”

map of north AfricaHis 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.

Originally posted at Morocco on the Move.

USAID Expands Civil Society Capacity Building Programs in Morocco: Part 2

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In my previous posting, I previewed some of the key features related to youth employment programs in the recently announced Country Development Cooperation Strategy (CDCS) 2013-2017 for Morocco launched by USAID during the November visit of His Majesty King Mohammed VI with President Obama.

The major sections of the strategy with the relevant goals and objectives are:

 CDCS Goal: Advance Moroccan initiatives for peaceful reform

Development Objective 1: Employability of target youth enhanced

  • Access to quality employability services improved
  • Improved alignment of workforce programs to market needs

Development Objective 2: Increased Civic Participation in Governance

  • More responsive and representative political parties
  • Civil society contribution to public policy increased

Development Objective 3: Enhanced educational attainment for children at primary level

  • Reading skills of primary level students improved
  • Learning delivery systems improved

Youth employment efforts include providing mechanisms for increased data and metrics to assess training efforts being made by the government, NGOs, and the private sector; more programs focused on enabling women and youth to acquire market-ready skills; and greater stakeholder engagement to “collaborate with the Ministry of Employment and other relevant actors in identifying and advancing creative and flexible working arrangements that incentivize the hiring of Moroccan youth.”

In the section on increased civic participation, USAID mentions its long-time support for civil society in Morocco and its assessment that the quickening pace of political reforms opens additional space for public policy engagement. Its particular focus is on enabling civil society, especially the political parties, to play a more robust and responsible role as outlined in the 2011 Constitution.

Engaging civil society in building Morocco’s future

As the CDCS notes, “Article 12 of the new Moroccan Constitution states that “The associations [and NGOs] interested in public matters … contribute, within the framework of participative democracy, in the enactment, the implementation and the evaluation of the decisions and the initiatives of the elected institutions and of the public powers.” Given this mandate, “Thus, civil society and political parties are now constitutionally empowered to participate in governance. By increasing the capacity of civil society to engage the government on behalf of citizens and facilitating the development of institutionalized mechanisms of civic participation in government decision-making, Morocco will be better situated to implement its reform agenda in a peaceful and sustainable manner.”

The key targets defined by USAID for capacity building are women, NGOs, and political parties. It bases its priorities on the initiatives included in the 2011 Constitution as well as the public’s simmering dissatisfaction with the political parties. As the report notes: “Moroccan citizens have long been detached from political parties due to a lack of clear policy vision or consideration for citizen involvement, particularly by women and youth, in public-policy making.” To repair this situation, “USAID will help political parties to improve their credibility by increasing the transparency and accountability of their internal operations, developing platforms reflective of citizen needs, and enhancing the involvement and leadership of youth and women in politics.”

Among the various tools that USAID has defined as part of its agenda with political parties are “the effective use of public opinion to inform policy agendas, the development of youth and women branches at the national and local levels and the development of individual plans to strengthen internal party capacity.” It is critical to Morocco’s reform aspirations that political parties become more focused on building constituencies that coalesce around specific political platforms that address local, regional, and national issues, as well as facilitate greater inclusiveness across age, gender, and ethnic lines.

The CDCS is in many ways an affirmation of the long-standing friendship and cooperation between Morocco and the US.

It also highlights the central importance of implementing the initiatives in the 2011 Constitution for broadening citizen participation in public policy making, including regionalization, enhanced roles for women and youth, and increased stakeholder engagement across all areas of human development.

While other North African states are struggling to maintain secure and safe public spaces, Morocco is moving ahead with its second decade of political reforms. Its results to date have earned support from the US and the international community, and the CDCS and other agreements both confirm Morocco’s path and offer partnerships to proactively move ahead.

US partnering with Morocco to support its human development – Part 1

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What better way to start a new year than to review events of the last quarter and see what the indicators tell us about how Morocco is progressing. The highlight of 2013 was, of course, the meeting in November between President Obama and King Mohammed VI to renew and upgrade the bilateral partnership. The well-crafted diplomatic statement that was released detailed modes of cooperation and coordination between the two long-time allies, and several agreements were signed or announced that defined the way forward.

One of the agreements that addresses key issues discussed by the King and President Obama is the USAID Country Development Cooperation Strategy (CDCS) 2013-2017, which describes how USAID will help support Morocco’s efforts “to improve workforce development practices, enhance citizen participation and increase the quality of primary education.” Some useful facts: the first US economic assistance agreement with Morocco was signed on April 2, 1957; the CDCS —is part of the larger framework of the US-Morocco Strategic Dialogue launched on September 13, 2012. “one of only six such bilateral agreements in existence.”

Supporting the reform agenda

There are numerous references in the CDCS to the importance of Morocco’s reform agenda and the constructive actions of King Mohammed VI in response to the Arab Spring. It points out that while the entire region experienced some level of unrest, “a reformist constitution and strong political will have positively positioned Morocco for accelerating progress towards development goals.” The CDCS places continued political reform at the center of Morocco’s development agenda and welcomes the dynamic link between reform and progress that is evident in Morocco’s 2011 Constitution. “Given this unprecedented democratic opening, Morocco is well positioned to make significant improvements to democratic processes, allowing the country to implement its reform agenda in a pluralistic and sustainable manner.”

The momentum of political reform includes broadening opportunities for greater civic engagement by Moroccans at all levels, complemented by increased economic activity that deals with the central issues of unemployment and market related education. For most of the last decade, Morocco’s economic performance has been steady, and the CDCS links continued political progress and sustained economic growth. “Implementing the needed reforms to create more inclusive growth is therefore essential to preserving solid economic performance in a challenging external environment.”

The Moroccan economy has been negatively impacted over the past three years by the decline of investments from and exports to the Eurozone, as well as fewer remittances from Moroccans working abroad. To offset these trends, Morocco is greatly expanding its presence in Africa and broadening its development agenda to support greater political and economic participation. And it is in the areas of employment promotion, greater opportunities for women, capacity building for civil society, and political party reform that USAID is poised to make important contributions under the new plan.

USAID focuses on short and medium-term workforce empowerment

As detailed in the CDCS, USAID believes that it can work with partners throughout the country to help reach Morocco’s development goals. “Due to the experience of past projects in Morocco and civic participation best practices from work done around the world, USAID is in a unique position to help Moroccan Civil Society Organizations (CSO) and public institutions nurture civic participation in public decision-making during this critical juncture in Morocco’s democratic evolution. From issues of workforce development to civil society capacity building, USAID has worked with stakeholders throughout Morocco to define a multifaceted strategy on the issues of employment and capacity building.

“USAID is proposing to enhance youth employability by focusing on the transition from education to employment for university and vocational students and recent graduates. The Mission will take an integrative approach to help Morocco adopt demand-led education and training systems that are both flexible and aligned to high-impact sectors and industries.” Projects described in the CDCS supplement existing programs, collaborate with a variety of stakeholders, and have a particular focus on raising opportunities for women. Among its many efforts, “USAID will work closely with the Ministry of Employment to strengthen its planning and monitoring and evaluation capabilities, while advocating for flexible hiring practices beneficial to youth.” Rather than focus on specific sectors, which is being done by other donors, government agencies, and private industry, USAID resources will target potential employees regardless of their industry or service.

Drawing on its global experience, communicating broadly and collaborating with stakeholders, providing data and metrics that will facilitate best and sustainable practices and taking an integrated strategy in delivering its programs and projects will enable USAID and Mission Director Dana Mansuri to further enhance their effectiveness as proactive partners in Morocco’s development.

Education and Employment: Bridging the Divide (Part 2/2)

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East and North Africa, rates of unemployed young women are eight times that of men. This is the last of a two part series. Read part one here.

As Jamie McAuliffe, president and CEO of Education for Employment (EfE), remarked at the WEF conference in Jordan: “We are trying to get governments and businesses to identify job-creating sectors and encourage investors to engage in them.” He also spoke of the need to encourage entrepreneurship and facilitate ways for young people to start small businesses through micro-financing programs. He went on to emphasize with regards to women that: “The rates of unemployment are as high as eight times that among young men,” and that “getting young women into the work force and supporting opportunities for them to become entrepreneurs is one of the critical challenges and opportunities.”

Entrepreneurship, however, due to the hesitation of financial institutions and inadequate legal structures, is more attractive than attainable at this time in the Middle East and North Africa (MENA). Even in the Gulf Cooperation Council (GCC) countries, enabling business start-ups largely remains tied to one’s status and social connections rather than the business prospects of the product or service.

So in addition to the four factors listed above, one could add a fifth: the role of the informal economy, which for many is the only accessible outlet for entrepreneurship since official channels are full of obstacles for those with little experience or education to manage the multiple steps for launching a business.

Another concern expressed in The WEF program was engaging youth to perceive employment as more than work and more as a career, that is, acquiring skills that over time enable one to reach higher levels of achievement and compensation – critical in societies that place such a high premium on marrying well and being able to provide for a family. With the concern that public payrolls can no longer support inefficient labor practices, and the lack of diversity in most MENA economies, the IMF has issued a report on the need for greater private sector absorption of new job entrants. This will require a long-term, multifaceted program working with governments in hands-on technical and vocational training projects, as well as higher quality and better targeted secondary and tertiary education.

A sotto voce topic that relates to youth attitudes towards work is their perspectives on the kind of work and on-the-job behaviors that they value. Dealing with the expectations of job applicants is a nagging complaint across the MENA, especially about those with university educations and few practical skills. With few role models to emulate that are not tied to “the old ways,” young people range from those who are poorly or partly educated and unskilled and semi-skilled through experience, to those who are educated and unskilled with expectations that are not aligned with prospects in their economy.

It is no wonder that when youth across the region are polled about their job choices, more than 30 percent believe emigration is their best alternative. Joe Saadi, chairman of Booz and Company and managing director of its Middle East practice, painted the stark consequences of lagging youth recruitment: “Every year you don’t have the capacity to absorb newcomers into the labour force, you’re compounding the unemployment issue and, given the social and economic pressure in the region, there is this sense of urgency setting in.”

An interesting and in some ways compelling recommendation from someone whose company recruits young people, is to institute a form of compulsory service for six months in order to change the mindset of young people unwilling to consider certain jobs. This would instill values consistent with the workplace, according to Mohammed Al Mady, CEO of Saudi Basic Industries Corporation (SABIC), which has more than 20,000 employees. He believes that this approach will: “Teach them resilience, teach them modesty, teach them how to work and take the ladder step by step until they reach what they want.” Al Mady pointed out that even the recent Saudi labor policy to force the private sector to employ more nationals – nitaqat – did not necessarily address the problem of improving the quality of youth for employment purposes.

Case: Youth Employment Challenges in Morocco

Morocco has yet to experience significant economic dislocations as a result of the Arab Uprisings, and its subsequent actions may serve as a potential case study of a North African country that has undergone the least amount of turmoil while advancing economic reforms that in no small part are focused on the labor force.

The Arab World Competitiveness Report 2013 identifies education and the inefficiency of the labor market as the most obvious drags on the kingdom’s competitiveness and social cohesion. Not only is the public education system not aligned sufficiently with the needs of business, “the labour market structure needs to allow for an efficient use of talent and sufficient flexibility.”

As in other Arab countries, youth between the ages of 15 and 29 account for about 30 percent of the population and 44 percent of those of working age. “Official statistics indicate that about 90 percent of young women and about 40 percent of young men, who were not studying in the past couple of years, are either unemployed or part of the economically inactive groups.”

In a thoughtful analysis, Lahcen Achy, an economist specializing in the MENA, adds a less visible, yet critical piece of analysis: “Young people spend on average 80 percent of their time hanging out or doing personal and recreational activities that are highly unproductive.”

He challenges the stereotype that the situation is most critical for unemployed university graduates. “Most of the unemployed youth in Morocco have either low education levels or haven’t studied at all… those who are least educated are left without any help… and only 8 percent of unemployed youth have benefited from [the National Agency for the Promotion of Employment and Skills] services.”

His argument is that the marginalized youth, whose numbers far exceed university graduates, must be targeted for both employment and social integration. Involving the private sector has had some success, but the pace of generating jobs with wages that meet living needs (including prospects for marriage and family) is woefully short. Morocco is aiming at a more systematic and integrated employment strategy in partnership with a number of international agencies. For example, the European Training Foundation (ETF) has brought together business and civil society groups to exchange views on options “to improve human capital in the country’s small business sector.”

Across the board, recommendations include a more integrated framework for promoting entrepreneurship from primary through university education; women’s entrepreneurship as a national priority; and better access to finance, training, and coaching services as well as data collection on the impact of these programs that would allow for policy formulation – a necessary component if the informal sector is to evolve into a dynamic part of the nation’s economy.

Recent programs in the US and a joint certification program developed with French technical assistance provide opportunities for workers who have gained skills outside the formal system to receive certification of their accomplishments, which will enable them to move up the value chain, perhaps even become an entrepreneurial offshoot from existing industries.

It is in this environment of accelerating demands for youth employment and bringing greater efficiencies to workforce development that underlines the importance of coming to grips with the challenges before they become widespread regime liabilities. The government’s inability to date to move its agenda of economic reforms through parliament has resulted in a stalemate that threatens progress in facilitating economic growth.

King Mohammed VI’s insistence that the educational sector be insulated from political volleyball may help renew a national debate and progress on strategies to move forward more aggressively on measures to improve Morocco’s competitiveness — a key factor in attracting the domestic and foreign investment critical to generating the jobs so badly needed in the country.

Worker incentives: Are MENA employee stereotypes shifting?

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 In reviewing comprehensive strategies for closing the gap between education and employment—an unresolved agenda of the Arab uprisings—one area where there is no ready agreement is non-monetary compensation. Everyone acknowledges that money is the chief incentive for attracting employees, but there is a dilemma when taking a longer view of the “employee value chain,” that is, from graduation to employment to career, what matters for recruiting and retaining good workers? In looking for possible answers, there are clear differences between countries that have plenty of people and plenty of funding, such as Saudi Arabia, and countries that have plenty of people and limited funding, such as Morocco. In both countries, young people assert that they want to and are ready to work. Yet in both countries there are wide gaps in expectations between those with secondary and university educations, which preclude a “one size fits all” approach.

The case of Saudi Arabia

In Saudi Arabia, where hundreds of thousands of new jobs are needed annually over the next 5-10 years to fill employment needs of locals under 25, the clear preference is for white collar jobs, even though industrial workers are in high demand throughout the country. While there has been extensive research on the categories of jobs available to Saudis, the most difficult step—motivating young people to fill the potentially available slots, has yet to be taken.

The kingdom has a three-pronged approach: 1) pushing the private sector to hire more Saudis and provide incentives for companies to have in-house training programs; 2) upgrade government coordinated training programs to enable young Saudi men and women to acquire skills linked to the rising demand centers for employment; and 3) educate and motivate Saudis to take seriously employment as a career.

The majority of the general population as well as university graduates are female, who, while seeing a gradually growing number of workplace opportunities, are also facing a dwindling pool of eligible husbands. This fact impacts the career aspirations of both men and women and cannot be overlooked as a normative peg is promoting employment.  

 

The case of Morocco

Morocco has different challenges since its young people are attracted by both blue and white collar jobs but the labor supply exceeds demand, especially if potential employees are reluctant to relocate. University graduates who prefer government-related jobs are disappointed in that few are being chosen under the accelerated hiring program of the current government. Since it has limited funding, the government is incentivizing the private sector through subsidies and grants to train in specific sectors. This is especially important since government training facilities are limited in number and unable to carry the full burden of training across a range of jobs. While there is an increasing emphasis on entrepreneurship and start-ups, the overall environment for promoting new businesses is still difficult to navigate. There is a large pool of entrants into blue collar work if they can access effective training programs.

Non-monetary incentives

Given the challenges in both countries, another motivational tool is identifying non-monetary incentives that could be part of an effective recruit and retain policy. Offering some ideas are two articles. McKinsey & Company just republished a seminal article on the topic “Motivating people: Getting beyond money.” And IESE Insight published “Remuneration Tips for a More Motivated Workforce,” which covers a study conducted by this Spanish economic institute. Both are based on surveys done with a variety of companies, ranging from mid-size to large corporations.

The McKinsey article found that:

“…praise from immediate managers, leadership attention…, and a chance to lead projects or task forces—[are] no less or even more effective motivators than the three highest-rated financial incentives: cash bonuses, increased base pay, and stock or stock options. The survey’s top three nonfinancial motivators play critical roles in making employees feel that their companies value them, take their well-being seriously, and strive to create opportunities for career growth.” 

The IESE Insight article found that:

“variable remuneration schemes, although increasingly widespread, do not always achieve their main objective: to motivate people.” In these schemes linking benefits to company profits (however measured), the author found that the relationship between variable remuneration and motivation is too complex as “numerous factors that cannot always be controlled influence the equation.”

In the MENA countries, using Saudi Arabia and Morocco as examples, both the financial and non-financial motivators cited in the two articles are not common practice. Yet the McKinsey article noted that “…in developing markets…[respondents] cited employee motivation as a key reason for modifying incentives.”

The Way Forward

So where to begin? Promoting one’s initial job as an entry into a career will be a major culture change in how Moroccans and Saudis perceive employment. Too often, either the job in industrial settings has defined limitations, or traditional job security has meant that there was little turnover to allow movement upwards for young, talented employees. Senior management must become committed to integrating their traditional role as benefactor/bureaucrat with a balanced style that demonstrates appreciation for talent, initiative, and loyalty.

Both articles warn that nonfinancial compensation schemes must be fair, objective, and realistic to discourage employees from “gaming” the system by working for the reward and not the overall benefit of the company. Discussions about how to motivate through nonmonetary rewards are a very useful device for engaging employees, if the option for these benefits is available. In addition, until middle management and supervisors also adapt their behaviors to support a corporate culture that recognizes and rewards teamwork and respect for diverse skills, talents, and personalities, any incentive-based motivational program will be eroded by a “do as I say, not as I do” credibility gap.