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Morocco’s Priority on Developing New Energy Sources Is Paying Dividends

The IEA lauds the country’s national energy policy

It is only natural to think of the Middle East and North Africa (MENA) when talking about global energy issues. Yet aside from informed estimates from national energy institutions and consulting groups, few countries have collaborated with the International Energy Agency (IEA) to assess their national strategies and seek recommendations for guiding their country’s energy policies.

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Morocco, which depends on external sources for 91 percent of its energy, recently asked the IEA to undertake the first-ever detailed review of its energy policies – the first IEA study in all of MENA. The report was released in Rabat at the end of October by IEA Executive Director Maria van der Hoeven, who was quite candid about the progress that Morocco has made in less than 20 years.

“Under political guidance from the highest level, Morocco has shown an admirable determination to play to its strengths, and in our view the National Energy Strategy set out in 2009 has taken Morocco very much in the right direction.” The comprehensive assessment was quite broad in scope, including attention to the challenges of climate change, priorities for hydrocarbon and renewable energies, government regulatory regimes and reforms, and cooperation with international and regional bodies.

According to a story published by the IEA, Morocco was an early advocate of developing long-term strategies to deal with climate change. It ratified the UN Framework Convention on Climate Change in 1995 and the Kyoto Protocol in 2002. It established national goals for reducing greenhouse gas (GHG) emissions as early as 2009. The European Bank for Reconstruction and Development, the World Bank, and the UN are among the multilateral institutions supporting Morocco’s vision for the energy sector.

 Facing Down Energy Dependence

Along with its concern for GHG emissions, Morocco has had a robust energy policy in place since the 1990s, recognizing the impact of energy on economic and social development.

blog energy 2Perhaps the best example of this is the campaign since 1995 to provide access to electricity for rural populations. Today, 98 percent of Morocco has power supplies, compared with 18 percent just 20 years ago. The report noted, “This is a very impressive achievement for which the government of Morocco deserves enormous credit. This development has contributed to a consistent economic growth rate of between 4% and 5% per year, although it has also led to a strong increase in electricity demand.”

 

To respond to this growing demand, the government launched a National Energy Strategy in 2009 with five specific objectives: optimize the fuel mix in the power sector – reducing overall dependence on hydrocarbons; accelerate the development of renewable energy from solar, wind, and hydro-power; promote energy efficiency across the country; provide incentives for foreign investment in energy projects; and promote greater regional integration of power systems and sources.

Regarding the current energy mix, the IEA encouraged Morocco to continue to restructure and reduce energy subsidies, while maintaining a security net for the least affluent. With a new coal fire plant coming on line with high efficiency utilization, the reliance on diesel fuel will decrease, and power costs will come down as global energy prices become more competitive. As a final recommendation, Morocco was advised to set up an independent regulatory agency to facilitate competition, maintain price equity, and provide incentives for future research and development.

Morocco’s willingness to reach out to the IEA for a reality check of its energy policies, its awareness and actions on the steps needed to restructure the energy sector for greater efficiency and cost savings, and its attractiveness to international investors to participate in the sector combine to make Morocco a very attractive partner for decades to come. Taken together with the gradually emerging positive news about on and off shore exploration, the opportunities are quite attractive, especially given the stability and accessibility of Morocco as a regional market leader.

Taking a fresh look at Morocco’s economic development

In the first two weeks of September, I’ll be writing my blogs from Morocco, which will give me a front row seat to see how economic growth is advancing given challenges internally and within the larger international business environment.

Several stories this past month provided greater details of the progress that is being made. There are three that are particularly interesting in that they point to the decisions Morocco is making about how to make its economy more globally competitive.

Growing Saudi-Moroccan business ties

This week, Saudi Arabia and Morocco launched a new round of projects to ratchet up the volume of business between the two countries. It should come as no surprise that the current trade balance favors Saudi Arabia because energy importer Morocco needs Saudi energy supplies to meet domestic demand.

The head of the Saudi-Morocco Business Council, Mohammad al-Hamady, noted that the total volume of trade between the two countries amounted to approximately $4.4 billion in 2011, with Saudi Arabia exporting far more to Morocco than it imports. He added that economic and trade relations between the two countries have been growing steadily, with Morocco becoming Saudi Arabia’s sixth-largest trading partner.

As part of its commitment to Morocco’s overall development, last year Saudi Arabia committed $1.2 billion over the next five years for investments, primarily in tourism development projects, making it the third largest investor in Morocco. Hamady believes that a major obstacle to greater trade is the lack of direct maritime transport lines between the two countries, and this was at the top of the agenda of the Saudi-Moroccan Business Council meetings in Jeddah this week.

Exploring for energy sources

CNBC and Reuters carried stories on expanding oil exploration projects in West and North Africa, with a special nod towards Morocco.

Ken Judge, the commercial director of Gulfsands, which had been active in Syria, said that “As you might imagine, after Syria what we’re looking for is some stability, and Morocco’s got terrific political stability, but it also has the best fiscal terms of any country in the Middle East and North Africa region.”

These efforts complement the expanding Moroccan focus on renewable energies, with RFPs for two more solar projects coming out shortly.

These opportunities and others, both trade and investment, are to be highlighted in the upcoming US-Morocco Business Development Conference to be held November 4-5, 2013 in Rabat.  Later that month, Rabat will host The Morocco Summit with a wide-ranging exploration of Morocco as a hub for inter-regional business across Europe, Africa, and the Middle East.

Young business leaders

BBC carried a very interesting video report that reviewed projects to advance the economic status of women in rural areas, where there is great need to overcome poverty and illiteracy in advancing women’s empowerment. The report details projects that are run by young educated women working to enable women with little education to become family breadwinners through commercializing artisanal crafts and other products for domestic and international markets.

Another story about youthful entrepreneurs recounts how several Moroccans worked for months before receiving their first rate-free loan for entrepreneurs to start up a food delivery service in Morocco.

Their key decision was to build a talented staff from scratch who then acquired their skills by constructing the company from the ground up. Youssef El Kachchani of www.doofry.com, the food delivery company, found great success in recruiting widely via the web and putting potential employees through a two-week intensive reading session before starting.

This was similar to the strategy used by Youssef El Hammal, who launched www.stagiaires.ma in 2012 to connect students with recruiters. He found that hiring recent graduates was better than employing ones with more experience because “they’re highly motivated and excited to learn. Because they haven’t been working for corporations, they’re still open-minded, creative risk-takers.”

So it should be an interesting time to catch up with what’s going on in Morocco. With a new government coalition being formed and an extensive economic reform agenda in the wings, it is a period of great anticipation that the economy will expand and create the jobs so badly needed in Morocco.