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Progress Requires Empowering Youth, Not Deriding Them

Need to rethink assumptions about Arab work ethic

Jessica Ashooh, deputy director of the Atlantic Council’s Middle East Strategy Task Force, took aim at several of the comments about Arab youth made by President Obama in his now famous interview in The Atlantic. While decrying the overall dismal state of the political life in the Middle East and North Africa (MENA), the president remarked that Arabs, frankly, weren’t up to par with their counterparts in Southeast Asia, which, he said, “is filled with striving, ambitious, energetic people who are every single day scratching and clawing to build businesses and get education and find jobs and build infrastructure.”

The president is, of course, entitled to his opinions. But given his stature, these somehow get translated into truth, which, in this case, supports stereotypes that disparage a generation of Arab youth, who are similarly engaged in a significant struggle to build value, create jobs, and improve their quality of life. This feeds into the common misperception that somehow “Arabs” do not share American interests in the MENA region.

Yet time and time again, from the high level of joint military cooperation such as the annual African Lion exercises to the multitude of education, training, capacity-building, and entrepreneurship projects the US supports though economic assistance funding, we indeed find significant alignment with our friends, such as Morocco, in the region. Despite the fact that being a “friend of America” entitles you to be on the ISIS/ISIL/Daesh hit list, we find youth throughout the Arab world actively engaged in challenging the status quo and building quality life options.

Contrast what the president had to say with a recent World Bank blog posting. “As you walk through the ancient market in Fes or that of any other medina in Morocco, pass a vibrant hair salon in downtown Casablanca with the feel of a beauty mega-factory, or see young people on a street corner in Rabat waiting to be picked up for a day job in construction, you cannot but be impressed with the entrepreneurial spirit on display. The young people hard at work across the country are part of a huge army of Moroccan youth, many of whom have less than secondary school degrees, stuck  in the informal sector with limited opportunities for a good, steady income.”

women cashiers WBThroughout Morocco, which is emblematic of the vast majority of Arab youth, young people are striving to find the means to acquire skills, financing, teams, and markets that will change their futures for the better.  As Ashooh writes, “Beyond the noise of the ISIS horror show, young Arabs are seeking education and starting companies at record levels, using technology to improve not only their personal prospects but also their societies.”

Morocco provides a multitude of examples of start-ups that are nurtured in facilities and labs with resources that support entrepreneurial teams of men and women working in collaboration to redefine how technology can benefit sectors from small-hold farms to mature information systems. Combined with the country’s dedication to renewable energy and improved health services, opportunities for enhancing quality of life are increasing daily.

The government senses that it has a key role to play but, rather than regulate how entrepreneurism should evolve, instead is listening to the youth and their allies in the private sector to encourage and abet an entrepreneurial eco-system. With increased access to early and second stage financing, business fairs to demonstrate new applications and technologies, and increased attention from private investors, youth are reaching for opportunities that simply did not exist even five years ago.

And while developing and using technology require a defined skill set, there are many other technologies that can be applied by those with a less formal education in areas such as agriculture, hospitality services, small-scale energy, home and health care, and artisanal crafts. These latent skills are accessible to previously illiterate village women, poorly educated rural youth, and those enmeshed in the informal economy. It is about options; it is about change. Remarkably, women make up some 35% of the start-ups in Morocco, 10 times the ratio of women-led tech startups in the US.

So if President Obama wants to see what the majority of MENA youth are focusing on, he should visit one of the dozens of tech fairs held each year in Morocco; or visit incubators that are borne of university-private sector partnerships. He should listen to the aspirations of those who every day are striving to make a difference in their lives and their communities.

Morocco Continues to Polish Its Green Credentials

Unique Partnerships for a “Greener” Morocco

Thanks to a State Department-funded program, Virginia Polytechnic Institute and State University, better known as Virginia Tech, and a Moroccan NGO – the Industrial Cluster for Environmental Services (CISE) — have developed a partnership that won a contract to promote “green” entrepreneurship” in Morocco. The background to the relationship is quite interesting. Selma Elouardighi, born and raised in Rabat, came to Tech’s School of Public and International Affairs in August 2010 as a PhD student in Planning, Globalization and Governance. As she tells it, “My research interests centered on corporate environmental responsibility…and I decided to focus my work on the transfer of environmental best practices from developed to developing countries.”

Her key findings were that environmental best practices (EBP) are most effectively adapted when market pressures engage corporations and their supply chains. “Networking, which often leads to the identification and capitalization of synergistic opportunities between various firms, is an important facilitator of a systematic adoption of EBP.” Selma decided that the best way forward in Morocco was to set up CISE, an association of producers and consumers of environmental services and technologies.

As Selma puts it, “CISE provides a platform for sharing of best practices and partnership development between various constituencies [companies, public sector, higher education and research institutions, and environmental NGOs] to collectively pave the path for cleaner production and corporate environmental responsibility…and aims to promote research activity…and an incubator for green enterprise.”

Both sides play critical roles in CISE. The producers, by attracting more members from the industrial sectors, increase the spread of Morocco’s green programs. Consumers of these services help identify the technologies needed in the market, which help set priorities for producers and at the CISE incubator for environmental projects. CISE sees itself, eventually, as a bridge between academia and industry in that university facilities “serve as R&D labs for small and medium sized enterprises,” which in turn work with graduate and doctoral students to bring their innovations to market.

After registering CISE in Morocco in June 2014, Selma reached out to her colleagues at Virginia Tech and found a professor who was trying to start an educational program with Morocco. After some discussions, they agreed to collaborate. Michael Mortimer, Director and Senior Fellow at the Center for Leadership in Global Sustainability (GLiGS) at Virginia Tech College of Natural Resources and Environment became that counterpart for CISE. Always on the lookout for broadening the school’s international ties, he was already developing programs in China, India, South Africa, Turkey, Indonesia, and now Morocco.

When he saw a State Department request for proposal to fund a “Green Entrepreneurship” project in Morocco, the collaboration with CISE became a viable entry point for a joint proposal, which won the grant competition. CISE then engaged its stakeholders to identify the value chains in recycling and energy efficiency that appeared to be priorities. These included recycling of used oil, used tires, dangerous/toxic wastes, plastics, construction waste, and fish waste, with energy efficiency of construction materials also targeted. Requests for proposals were then sent to entrepreneurs throughout Morocco to identify strategies for how they would create green projects in these areas or others.

Those whose proposals are chosen will receive funding and support from business coaches who will work with the entrepreneurs and monitor their progress. The coaches are professors working in entrepreneurship at HEM, the highest-rated business school in Morocco and a CISE partner.

An interesting feature of the GLiGS program is that all graduate students must spend at least 10 days abroad conducting research. As Professor Mortimer said, it is a “marvelous opportunity” for students to learn about challenges in other countries and give back to the hosts by undertaking case studies or other small-scale projects. Since the Tech graduate students are professionals who have work experience, this means that they bring their expertise to bear on environmental and health-related issues in the host country.

World Bank Steps Up, Again

After, the international conference on climate change COP21 finished up its work in Paris last year, it passed the challenge of delivering global consensus on a way forward to COP22 — to be held in Morocco this coming November. And Morocco is relishing the challenge. The King has already appointed a senior-level task force to manage the logistics and agenda-building for COP22, and members have been holding meetings with their counterparts in many countries to move the agenda forward.

Not content to just be a great host, Morocco, with the help of its partners, is ramping up its concrete commitments to reduce emissions through a variety of projects, which, in addition to the Virginia Tech-CISE partnership, are playing a role in promoting a sustainable green environment in Morocco.

The World Bank, through several of its funding mechanisms, is supporting a major recycling project that aims to ramp up the rate of recycled materials from 5% today to 20% by 2022, while giving employment to waste-pickers and providing greatly improved working conditions including health care, access to a bank account, regular wages, and housing support.

Another World Bank project supports the sustainability of agriculture, tourism, and fisheries by promoting, for example, better groundwater management practices, soil conservation, improved information for farmers, and preservation of fish stocks; at the same time it encourages the diversification of employment “through the promotion of industries that have less negative impact on the environment, such as eco-tourism and aquaculture.”

These projects, funded by donor organizations, demonstrate that Morocco is deeply engaged on its COP21 commitments as well as its energy use goals for 2020 and beyond. By partnering with fund sources, NGOs, and the private sector, Morocco is opening opportunities for entrepreneurs and workers to find new opportunities in “Green” Morocco.

 

World Bank Joins Morocco to Improve Transportation Networks

Rural Roadways and Urban Systems to Benefit

Morocco’s commitment to enhanced public access through improving public transportation and roadways was underscored in two recent events. The World Bank recently agreed to assist in Morocco’s efforts to undertake an extensive overhaul of its public transportation network to serve its growing urban population. More than 60% of Moroccans now live in cities, and there are chronic complaints of traffic tie-ups, dislocations caused by tramways in Rabat and Casablanca, and lack of sufficient public facilities. At the same time, Morocco’s Transportation Ministry announced plans to upgrade local and rural roads.

Part of the challenge is the lack of planning and management of public transport systems. The World Bank has been active in the transportation sector for several years. In 2011, it awarded a $136.7 million Development Policy Loan (DPL) “to improve the sector’s governance and increase urban transport and infrastructure. This was coupled with regular technical assistance for the Moroccan government’s transport strategy, along with research to deepen its knowledge of the sector.”

The current allocation is a grant of $200 million to upgrade the quality and management of urban transportation systems. Given that the government of Morocco is implementing its regionalization plan devolving more local decision-making to local authorities, this provides timely and critical support to local municipalities that “have struggled to provide good roads, and with the limited resources and capacity they have to manage public transport.”

As detailed in the World Bank’s announcement, “The transport program  will focus on cities of over 100,000 inhabitants in nine regions, aiming to strengthen the capacity of local authorities to plan and monitor public transport, centrally and locally. A central goal is to improve the quality of urban transport services, with a large reduction in travel time. This program, a Program for Results (PforR), will disburse funds only when milestones agreed upon in advance are completed.”

world bank 1Marie Francoise Marie-Nelly, the World Bank Maghreb Country Director, noted that “An efficient urban transport system is essential for urban mobility, which will underpin the development of Moroccan cities. Improved public transport systems will mean increased productivity and better access to economic opportunities and key services such as health and education, particularly for the most disadvantaged citizens.”

The Moroccan government has projected that financing for the urban transport sector alone will require $3 billion over the next ten years. “The government’s goal is two-fold: to improve the sector’s management and make it financially sustainable; and to build a web of urban transport corridors within larger cities. The Bank will support the government’s plan with expertise and global knowledge.”

On the Back Roads

The announcement of more funding for urban transportation came as the Moroccan government’s Equipment and Transportation Minister Aziz Rabbah spoke in the Chamber of Deputies (Parliament) on the country’s plans to upgrade and modernize rural and local roadways. Of a total highway budget for 2016 of approximately $6 billion, more than $4 billion will be spent on rural and isolated areas in the next seven years.

In line with the country’s National Initiative for Human Development (INDH), priority will be given to areas underserved or poorly connected to regional traffic. Out of a need for some 30,000 miles of upgrades, the current program will impact more than 10,000 miles of roads in previously marginalized areas. Minister Rabbah also noted that some $300 million has been allocated for emergency repairs to distressed bridges, since recent engineering studies show that 100 are in critical condition at the present time, with 200 more warranting major attention.

Without this kind of partnership with international institutions, it would be difficult for Morocco to meet the public transportation development challenges of a country that has many difficult and demanding terrains and locations. Given Morocco’s increased emphasis on generating jobs in diverse locations around the country, the need for efficient and cost-effective public transportation and highways becomes even more critical and smart. Diversifying industrial centers will help Morocco meet its climate change goals while ensuring that urban areas do not become too dense, thereby taking steps to avoid a recurrence of the current problems.

Morocco Gains Important Support for Reform Agenda

World Bank Group and Millennium Challenge Corporation Stay the Course

As Morocco moves ahead with implementing the results of its historic regionalization elections held in September, international organizations continue to support measures to increase government accountability and capacity to manage. This is particularly critical at this time, when a massive transition is underway to redefine how local government and regional bodies will interact to better serve the needs of their constituents. Not only are regional bodies now directly elected, but Morocco has also reduced the number of regions from 16 to 12 provinces in an effort to focus decision-making at the regional level with support from the central government for national projects.

This is matched on the national level by the geographic redistribution of new economic development zones to bring more balance to the overall growth of the country, decentralizing overextended industrial urban areas such as Casablanca while creating incentives for greater mobility to populate these new areas. It is a comprehensive and multifaceted strategy that will take years to implement, yet Morocco shows no signs of weakening its resolve to make it happen.

I have often wondered how multilateral organizations such as the World Bank Group and bilateral assistance program such as the Millennium Challenge Corporation (MCC) undertake their program formulations in specific sectors, especially if the goal is some years in the future. Two recent cases give some insights into their processes for building a suite of project recommendations with funding parameters unique to each country’s conditions.

World Bank Sustains Accountability Projects

It was recently announced that the World Bank would provide a $200 million loan to Morocco to promote government efficiency, transparency, and accountability. It is called the Transparency and Accountability Policy Loan (DPL) and is the second segment in a longer-term program to enable the government of Morocco to achieve its governance goals as outlined in the 2011 Constitution. What is not explained in the press release on the program is how the World Bank, working with the government of Morocco, decided that this project was a priority over others that might have a more immediate impact, such as drafting new health policies, or developing higher standards for teachers in the public school systems.

World Bank Continues to Support Morocco's Reforms

World Bank Continues to Support Morocco’s Reforms

Going back over the World Bank’s regional “Reading Room,” I found two studies highlighted in this blog. The first, “Trust, Voice, and Incentives: Learning from Local Success Stories in Service Delivery in the Middle East and North Africa,” concluded “that a cycle of poor performance has emerged in much of the region as a result of state institutions lacking both internal and external accountability mechanisms.” Thus the seed was sown for initiating projects focused on improved government accountability both in terms of internal functions and staffing, and mechanisms for delivering services.

This is of particular concern to King Mohammed VI, who consistently calls for a government responsive to its citizens and encourages increased efforts on behalf of constituent services. The initial emphasis in the DPL program was a set of reforms to heighten citizen awareness of and access to government services. This included greater on-line access to government ministries and information on services provided, increased openness on the national budget and budgeting process, and more details of the operations of Parliament in drafting and discussing bills.

According to the World Bank, “The second DPL provides further momentum through deepened support to policies for fiscal transparency and citizens’ access to information and the right to petition. The new operation also promotes increased efficiency in the overall handling of public funds, with a focus on better financial management at the central and local government, as well as state owned enterprises.”

A critical feature of the program, dubbed “Governance,” or “Hakama” in Arabic, is capacity building for administrators, managers, and information centers to make sure that staff acquires the skills needed to implement the reform protocols. As Marie Francoise Marie-Nelly, World Bank Country Director for the Maghreb commented, “What matters now, however, is that Moroccans see the results of change, and that reforms lead to greater participation of citizens in public life.”

The World Bank is joined in this effort by the EU and the African Development Bank, which together have invested a further $250 million in support of the program and its reform agenda. Training and technical assistance is being provided to the central and local governments, and to parliament, in the areas of performance budgeting, monitoring and evaluation, fiscal decentralization, and citizen engagement.

MCC Initials Second Compact with Morocco

The second World Bank report, “Jobs or Privileges: Unleashing the Employment Potential of the Middle East and North Africa,” feeds directly into its programs in support of workforce development in Morocco and complements the recently announced second MCC compact with Morocco in the amount of close to $450 million.

MCC Board Votes Second Compact with Morocco

MCC Board Votes Second Compact with Morocco

According to the report’s editor, “This report argues that Middle East and North Africa (MENA) countries face a critical choice in their quest for higher private sector growth and more jobs: promote competition, equal opportunities for all entrepreneurs and dismantle existing privileges to specific firms or risk perpetuating the current equilibrium of low job creation.” It is this nexus that is addressed in part by the MCC compact.

Recently released results of the “Call for Ideas” regarding the Morocco Private Sector Engagement Work Stream section of the second compact emphasize the need for equitable access to workforce development programs. It promotes public-private partnerships as the most efficient way to meet the goals of the program. The overall goal is two-fold – to improve the delivery of training services, especially in technical and vocational training, and to increase the effectiveness of intermediary services that link workers to jobs in the marketplace. It is anticipated that requests for proposals will be released in 2016.

Morocco is marshalling impressive national and international support for its economic growth and job creation strategies. Adapting lessons learned in other countries and utilizing a broad range of creative options are valuable mechanisms for accelerating the investments in people, training, and projects that will advance Morocco’s efforts.

Morocco’s Long-term Water and Power Strategies are Paying Off

photo credit: Marta P

Moving ahead at Regional and National Levels

Despite continuing warnings of ongoing water crises through the Middle East and North Africa (MENA), there are valuable examples for the region coming out of Morocco to combat evident shortages in groundwater supplies and related food and energy issues. This is a national priority for the country, and for several years now, through the efforts of OCP Group affiliates, more attention is being focused on the food-energy-water nexus that the US government has identified as one of the strategic areas to be addressed for reducing conflict and promoting development.

Through its Plan Vert Maroc, the government has instituted a broad range of programs for small and pmv 3large farms to increase the use of water conservation technologies, crops, and methods to husband the variable water resources that have a significant impact on Moroccan agriculture, which accounts for upwards of 20 percent of the country’s GDP.

Recent media reports also highlight what is going on in Morocco in both the energy and water sectors to plan more efficiently for the future. It is well known that “Morocco’s national energy strategy is targeting to raise the share of renewable energy to 42% of the total installed capacity in the country by 2020, with solar, wind and hydro each contributing 14%,” as detailed by seenews.com.

What is most important in its report is that the cost of solar-generated electricity is falling rapidly and may soon “achieve ‘grid parity,’ meaning that it will be able to generate power at a levelized cost of electricity (LCoE) at or below the cost of purchasing power from the electricity grid.” Given that subsidies for renewable technologies are a major barrier to utilizing more solar-based technologies, this is good news for the government and even better news for consumers.

Solar power presents opportunities for entrepreneurs

Solar power presents opportunities for entrepreneurs

There are many benefits of solar power, generated both by large facilities and smaller technologies being introduced to reduce energy costs for food producers. If costs are competitive with hydrocarbons, it has a broad impact, from reducing costs of harvesting, production, and distribution of crops, to conserving vital water resources – the nexus of food-energy-water.

According to the World Bank, “Water over-use is also a concern for Morocco, where farmers have increasingly shifted from diesel pumps to liquefied gas subsidized by the government.  Solar pumps could reduce costs for farmers by as much as two-thirds, depending on the regional cost of fuel.” This is part of a larger government strategy that ties subsidies to farmers for cost-saving solar equipment with micro-irrigation systems designed to reduce water consumption. “This way, the government ensures the efficient use of depleting water resources…In areas where water is scarce, the government could reduce equipment subsidies and encourage farmers to generate solar power for sale to the grid, like a cash crop in order to repay their portion of the loan.”

It is strategic policies put into action that encourage investors to look to Morocco, which again is a leader in Africa in attracting Foreign Direct Investment. According to MEED, Morocco is “regarded as safest and most stable in North Africa “despite being both smaller and less hydrocarbons-rich than its neighbour Algeria. Last year, Rabat was Africa’s third-largest recipient of FDI. The 67 projects it attracted accounted for 9.1 per cent of all new schemes in Africa and 9.5 per cent of all jobs created.”

Morocco’s has a remarkable and long-term commitment to dealing with issues such as energy costs and the efficiency of its agricultural sector; it also has an overall strategic vision as well as projects across sectors ranging from food and energy to tourism and technology. It is this that gives the country the competitive edge to be a leader in promoting economic growth in Africa.

Reframing Development Assistance

Photo: Pejman Parvandi

How NGOs, Agencies, and Governments are Reshaping Development Policy Assumptions

In the wake of the Arab Spring, and the subsequent challenges in the Middle East and Africa brought about by non-state actors bent on destabilizing governments and countries, a consensus seems to be emerging around the need to reframe development policy. Taken together with long-standing conflicts in South Asia and elsewhere, economic and human development is increasingly seen as vital to increased global stability and security. This is as true for liberalizing countries with stable political systems such as Morocco and Botswana as those racked with severe internal strife driven by local or transnational extremists.

As my colleague Jordana Merran noted in a recent blog, a body of research is increasingly showing that the West has some notable victories – such as the Marshall Plan – but has not really done development all that well, either because of the politicized nature of many foreign assistance projects, the preference of donors to deal with institutions rather than people, and the disconnect between projects and the metrics that supposedly measure outcomes to shape future programs.

The Foreign Policy.com article that she referenced, which was an outgrowth of a workshop on “Doing Development Differently,” broadly assessed foreign aid programs and noted,“Too many development initiatives have limited impact. Schools are built but children do not learn. Clinics are built but sickness persists. Governments adopt reforms but too little changes for their citizens.”

“This is because genuine development progress is complex: solutions are not simple or obvious, those who would benefit most lack power, those who can make a difference are disengaged and political barriers are too often overlooked. Many development initiatives fail to address this complexity, promoting irrelevant interventions that will have little impact.”

Many of the obstacles that hinder effective development policy reflect the desire of host countries to provide leadership in how funds are allocated and projects are prioritized. While in some cases this mirrors the host government’s message that it is responsible for improving people’s lives. With others, the emphasis is on partnerships to drive development. As Jordana pointed out, King Mohammed VI of Morocco has placed human development at the core of his strategic vision for his country, and his strategies to promote economic growth, equality, and accessibility are similar to those raised by Tom Carothers’ work at the Carnegie Endowment for International Peace on the need to incorporate accountability, transparency, participation, and inclusion in development programs, tying together development as an economic issue with a country’s reform agenda.

Changing Perspectives from the Ground Up

The latest voice to be raised in this dialogue is the annual World Bank “World Development Report 2015: Mind, Society, and Behavior,” which argues that “Interventions need to take into account the specific psychological and social influences that guide decision making and behavior in a particular setting. That means that the process of designing and implementing effective interventions needs to become a more iterative process of discovery, learning, and adaptation.” The Economist’s review of the report noted that the World Bank’s concern that “Development experts have their biases and blind spots, like anyone else.”

Understanding how these biases affect policy planning and implementation should lead to more effective development assistance options, some of which are already underway. A recent article on the announcement that Rajiv Shah, USAID’s Administrator is stepping down, mentioned some shifts that happened at USAID. “Rather than dropping billions of taxpayer dollars into sprawling programs designed to reduce poverty, USAID pivoted to directly funding foreign development groups, offering loan guarantees to local banks and launching contests aimed at solving specific global challenges.”

Yet, as Nathanial Myers wrote in the National Interest, USAID has a programming crisis looming as it tries to pursue longer term efforts while being increasingly taxed to respond to in the crises du jour in Yemen, fighting Ebola, and countering Boko Haram, etc. Myers contends that “The agency’s move into this short-term strategic space is undercutting its long-term development impact…ongoing long-term development programs are being repurposed to target the new priority problem…funds are being pulled…Local credibility is being eroded by suspicions that USAID values Washington’s interests more than local needs.”

Taken together, these critiques point to the need to integrate stakeholders into the process of discovery and implementation, generate models that rely on mobilizing public and private sector partnerships, and more rigorous assessments of results that include social, psychological, and behavioral inputs.

 

 

Morocco’s Progress Makes Regional Integration Even More Vital

European Union Supports Greater Cross-border Cooperation

A recent article in Magharebia, “Morocco: European Union Backs Moroccan Reforms,” focused on the latest grant from the EU in support of a wide range of ongoing reforms. Yet the subtext of the article, emphasizing the need for greater regional collaboration, hints at the EU’s concern for sustainable economic growth as the strongest antidote to radicalism.

 

credit: damienpoussier.com

credit: damienpoussier.com

The story starts by noting that “The grant is aimed at three [programs] improving governance and rule of law, jobs and sustainable growth, access to basic services, and support for civil society.” As the EU continues to redefine its social, economic, and political links to its southern neighbors, its emphasis has shifted from funding good intentions to rewarding positive outcomes. This “results” focus has reshaped how the EU determines what kinds of and how much assistance it will extend, moving it away from platitudes and vague notions of accountability to a more realistic set of metrics for determining the targeting and impact of programming.

The agreement with Morocco, signed November 5, makes Morocco the largest recipient of EU programs and signals, along with the EU’s growing support for Tunisia, that the EU is quite serious about seeing direct benefits to the citizens of those countries. Moroccan Finance Minister Mohamed Boussaid told Magharebia that the funding shows that Morocco is making the right, if difficult decisions across a range of policies, from subsidies and pension reforms to revisions proposed for its judicial and media laws.

Rupert Joy, EU Ambassador to Morocco  credit: map.ma

Rupert Joy, EU Ambassador to Morocco
credit: map.ma

Rupert Joy, the EU Ambassador to Morocco, echoed Minister Boussaid’s sentiments. “These new grants for the period 2014-2017 represent the EU acknowledgement of the uniqueness of its partnership with Morocco.” They “reflect EU determination to support the Moroccan government in its efforts to meet people’s aspirations and to turn the reforms initiated in 2011 into tangible progress,” the ambassador added.

Analysts were quick to point out that the EU is using its support programs to nudge the North African countries towards greater cooperation and cross-border economic integration. A Peterson Institute study in 2008 showed the promise of regional integration; since then, a number of additional studies by European and international organizations indicate the benefits to be had from closer economic cooperation.

The broad outlines of the future are taking shape daily. The Maghreb countries are complementary in terms of their core economic strengths (Morocco and Tunisia in services, tourism, agri-business, and manufacturing; Libya and Algeria in hydrocarbons/energy; Mauritania in mining and transportation). The future prospect of a region-wide consumer market fueled by a growing middle class is evident as private sectors play a larger role in both human and economic development across borders.

Ahmed Charfi, a noted economist, told Magharebia that greater regional integration will speed up the pace of development in all of the countries and generate even greater opportunities to meet their needs. “There are two things that are fundamental to development: democracy and promotion of the regional economy,” he said. “If the countries of the Maghreb combine their efforts, they can jointly tackle social problems such as unemployment, regional and social inequalities and poverty . . . Together, they can make rapid progress.”

Morocco does not see its progress in isolation from its neighbors. From the World Bank’s latest report lauding Morocco’s sustainable development strategy, to recent agreements with Tunisia that bring the countries closer together across a broad range of development initiatives, to its growing role as a platform for business in Africa, Morocco has truly transformed its mission from one of domestic growth and stability to becoming a key player in the security and stability of the region. Objective policy analysts agree that only a vibrant economic Maghreb union will have the resilience and strength to meet the aspirations of the region.

Morocco Continues Growth on Strong Economic Fundamentals

Will it be enough to provide needed jobs, improve GDP performance?

During the past week, several reports and interviews provided insights into Morocco’s economic performance, including challenges and strategies to expanding opportunities for growth. An article in the Business Standard noted an interview with World Bank Managing Director for Finance, Bertrand Badre, who said that “Morocco showed great institutional and economic stability amid the turmoil that has been going on over the past few years regionally.” He was referring to the financial meltdown of 2007-2008, resulting in a continued global slowdown, as well as the Arab Spring.

The article mentioned that “Badre also highlighted the construction of infrastructure and the advanced urbanization taking place in Morocco, which are ‘very important’ for the World Bank because of Morocco’s pivotal role in the West African and sub-Saharan region.” He also noted that the country must do more to diversify its economy to create more centers for growth and enable more stakeholders to participate in the formal economy. The reporter concluded that “Besides its macroeconomic, institutional, and economic stability, Morocco has an asset of location in the crossroads of sub-Saharan Africa and Europe, in addition to openness on the Atlantic.”

blog success

Another look at Morocco’s performance came from Fitch Outlook, the ratings agency. Under the headline “Fitch confirms Morocco’s Investment Grade with Stable Outlook,” Morocco’s state news agency reported that Morocco’s grade remained stable as a result of its “macroeconomic stability in an unstable international and regional environment and the resilience of GDP growth, despite a drop in the foreign demand of Europe.”

Once again, Morocco received recognition for its ongoing efforts to decrease its budget deficit, due to controls on current expenditures, reductions in subsidies, falling energy costs, “the consolidation of public finances, acceleration of exports by new industrial sectors, and improvement in the overall” business environment.

Strong Economic Medicine while Forward-leaning into Africa

Morocco’s exception to the tumult in the region was also noted in a Financial Times interview with Finance Minister Mohamed Boussaid. “Good news is a rare commodity in the Arab world these days. Violence is raging across Syria and Iraq, Egypt has retrenched into authoritarianism and Libya is in chaos. Even Tunisia, which is managing its transition to democracy with aplomb, is facing huge economic challenges. But in the far west corner of North Africa, Morocco has so far been spared much of the pain of the last four years.”

Morocco has managed to reduce its fiscal deficit from 7.4 percent of GDP in 2012 to 5.5 percent by the following year, “and remains on target for further reduction this year, as Rabat slashes subsidies and reforms its economy. The country’s economic and political stability – rare commodities in the region – have already brought returns. Tourists numbers were up by 7 per cent in 2013 as many Europeans, scared off by the unrest in Egypt and Tunisia, traveled instead to Morocco.”

blog growth 2The article went on to note the growth of automotive manufacturing and the positive response to the government’s “€1bn Eurobond – its first euro-denominated bond in four years,” as additional indicators of Morocco’s success. While the rest of the Arab world, racked by falling oil prices and increasing instability due to the impact of the conflicts in Syria, Iraq, Yemen, and their spillover to neighboring countries, “Many analysts predict Morocco will be North Africa’s best performing economy in coming years. Although growth slowed slightly this year because of low agricultural yields and weak growth in Europe – Morocco’s main export market — the International Monetary Fund (IMF) estimates GDP will grow at around 4.7 percent in 2015.”

Boussaid credits this success to “reforms begun more than a decade ago, including investment in major infrastructure projects and programmes for industry and renewables, particularly solar energy.” The minister also talked at length about Morocco’s partnership strategy in sub-Saharan Africa. Its goal is to become “a platform for production and export to African countries through Casablanca Finance City (CFC), a new regional finance hub.”

More than 60 multinational banks, insurance companies, professional and legal services, private equity, and asset management companies have signed up for offices in the CFC. Already headquarters for the African Development Bank’s new $3bn Africa50 Fund that will finance infrastructure on the continent, CFC hopes that up to 100 companies will be based in its special zone.

Still Tough Going Ahead

While the IMF has projected healthy growth for Morocco in 2015, the outlook for the rest of the region is not as positive, according to Marketwatch. Regional instability coupled with the continued weakness is the global economic system, are a drag on economic expansion, and Morocco feels this impact directly.

“One major contributor to recent socioeconomic ills has been double-digit unemployment rates in many Middle Eastern countries. But the IMF’s baseline gross domestic product growth projections aren’t high enough to reduce unemployment in a meaningful way, it said. Unemployment is of special concern among oil importers such as Egypt, Jordan, Morocco and Tunisia, which have some of the highest jobless rates in the region, especially among young people.”

The government has implemented a broad range of incentives to encourage agencies and investors to accelerate the pace of training and education to align workers’ skills with market needs. Yet the slowdown in FDI and the need to increase domestic private investment are constraining opportunities for job growth. “To solve the jobs riddle, Middle Eastern countries needed ‘deep, multifaceted transformation’ that buttressed the private sector and raised living standards. The region needs sustained, stronger and more inclusive growth to markedly reduce unemployment–a critical issue facing nearly all countries in the region,” said Masood Ahmed, IMF’s Director of the Middle East and Central Asia Department.

To maintain its momentum, Morocco is implementing a multifaceted growth strategy that focuses both on key sectors and driving job growth. It is tackling government policies and regulations to maximize flexibility in labor markets, property ownership, and public expenditures so that the private sector and people of Morocco have access to resources needed to expand economic opportunities and build a healthy, sustainable, and inclusive job market.

What is driving the remake of how Morocco does business?

Its recipe for growth is changing the country’s economic profile

Recent reports on growth trends in Morocco focused on the seismic shifts in the make up of its economy. Now less reliant on the

A leading business review cites Morocco's progress

A leading business review cites Morocco’s progress

export of agricultural commodities, growth is spread across many sectors, reflecting both the goals of raising job quality and promoting valued-added and downstream products in existing sectors.

For example, Zawya e-News identified how manufacturing in the automotive and aeronautics sectors have become engines for moving Morocco’s new economy forward. Building on its latest industrial development plan, the country has seen automotive

exports jump 37.2 percent year-on-year, electronic exports up 25.2 percent, and aeronautical exports up 14.1 percent. Exports rose more than five percent during the period despite a drop of 13.3 percent in phosphates exports and little expansion in agricultural exports.

According to the Financial Times, there are multiple benefits to the growth of automotive manufacturing. “The country’s auto sector will help push GDP growth up 4.5 to 5 per cent in 2015-2016, from 2.5 per cent in 2014, predicted Capital Economics in a note, making Morocco ‘North Africa’s best performing economy over the coming years’.” Despite this trend, agriculture still has a significant impact on the economy, providing 15-20 percent of GDP, depending on rainfall and market conditions. So the government continues to push ahead with agricultural reforms as well, promoting better water and crop use, accommodating changes in water supplies, and improving access to regional and international markets.

Growth continues across multiple sectors

Minister Lahcen Haddad

Minister Lahcen Haddad

At a recent tourism conference in Rabat, Minister of Tourism Lahcen Haddad gauged the progress made from 2010 to 2013. Revenues grew more than 78 percent, to $1.3 billion. Flight capacity increased by 10 percent and some 50,000 jobs were created. While the rest of the region was experiencing turmoil, Morocco’s tourist arrivals increased by eight percent and bed capacity grew by 30,000 units. The national tourism master plan is being reset to diversify both the types and locations of tourist destinations in order to spread the impact of the sector to benefit other regions.

According to World Bank data, just under 30 percent of the 2013 GDP was generated by manufacturing, which underscores the importance of Morocco’s continuing progress in economic reforms and incentivizing foreign direct investment. This is reflected in the government’s industrial investment strategy, wherein 34 percent of the funds are directed towards training Moroccans in market-focused skills and 24 percent is allocated to the incentives programs. Additionally, the central bank announced a new policy easing financing access for small and medium-sized firms engaged in industrial sectors or exports.

The IMF commented that “The newly developed industries will play even bigger roles in years to come and will further improve the resilience of the economy to external shocks.” Traditional industries are also re-tooling their market strategies. OCP, the country’s largest company and global phosphate leader, has signed multiple agreements to extend its production and distribution facilities in Africa and elsewhere, creating products that focus on the continent’s specific needs from cocoa to undernourished soils.

Morocco’s economic growth strategy is strongly supported by multilateral institutions such as the World Bank, International Monetary Fund, various Gulf sovereign wealth funds, the European Bank for Reconstruction and Development, and others. The African Development Bank, for example, recently approved a $125 million loan to support an ongoing program to upgrade Morocco’s financial sector – a key component in building a vibrant private sector. Beginning in December, the program will build on previous efforts in 2009 and 2011 that “focus on creating requisite conditions for inclusive economic growth.” In practical terms this includes: improving access to financial services by individuals and small and medium-sized firms; deepening capital markets by enabling the creation or broadening of financial instruments to raise capital and support loans; and strengthen governance in the financial sector through efficient regulations that enhance business development. According to the Bank, “The program is expected to benefit all Moroccans by improving conditions for sustainable and inclusive economic growth that would positively impact their living conditions.”

From the largest manufacturing facilities to the grassroots entrepreneurs, Morocco is undertaking a significant transition to a modern, diverse economy that will have a beneficial impact across all regions of the country, provide much-needed jobs, and reduce the country’s reliance on foreign assistance and energy imports. At the same time, Morocco is using this growing capacity to build and expand its footprint in Africa and elsewhere, through a balanced and inclusive economic growth strategy.

Reports to Results: Dealing With Youth Unemployment in Africa

http://www.fairobserver.com/region/africa/reports-to-results-dealing-with-youth-unemployment-in-africa-57014/

How should Africa deal with millions of young people entering the job market each year?

With more than 290 million people between the ages of 10-24, Africa is the youngest continent in the world. Youths constitute about 60% of Africa’s entire population, yet their participation in the formal economy is greatly limited. “Although the youth population constitutes two-fifths of the continent’s working-age population, they make up three-fifths of the unemployed,” according to Foresight Africa. In 2011, 82% of African workers were working poor, more than twice the world average. In southern Africa, 51% of young women and 43% of young men are unemployed.

Youth Unemployment in Africa

Three major factors coalesced to garner this attention. First, the people factor: Demographics of growing young populations are forcing policymakers to address employment issues that will not be solved by public sector hiring. Second, people are more educated, yet they find fewer opportunities due to the mismatch between education and available and prospective jobs — supply does not even approach demand. Finally, governments are generally ill-equipped in terms of expertise or management, or both, to address employment issues when it means upsetting those who control much of the economic activity of a country.

The future of Africa needs action now

The future of Africa needs action now

These trends occur within a shifting global marketplace dominated by spiking commodity demands, increased competition in semi-skilled production and technologies, and great pressure for opening up the labor force through higher private sector investment. Although sub-Saharan Africa faces similar problems as the rest of Africa and many emerging economies, others are unique to the continent, such as the potential superstar role of the agricultural sector.

While the overall macroeconomic indicators are up and generating optimism, this is based on the continued expansion of African economies, largely due to exploitation of commodities and expansion of telecommunications infrastructure. Yet the picture is far bleaker, if factoring in actual improvements in the quality of life of most Africans.

According to a McKinsey update on the continent:

Africa is harnessing its natural wealth, and … sectors across the economy are growing rapidly. These sectors include agriculture, manufacturing, and local services such as retail, banking, and transportation and communications, in addition to the natural resources sector, which was the largest single contributor to growth … Income inequality, however, remains unacceptably high and is falling in only about half of Africa’s countries; hundreds of millions remain trapped in poverty. Africa’s growth needs to be inclusive if it is to improve human welfare and ensure increasing social and political stability.”

People are more educated, yet they find fewer opportunities due to the mismatch between education and available and prospective jobs — supply does not even approach demand.

The International Labour Organization (ILO) reflects this theme of inclusive growth in a number of its publications, and calls for “job-rich growth” that does not ignore the youth, women and unskilled in terms of economic opportunities. “High levels of youth unemployment, poor structural and labour market transformation call for more employment-friendly policies to promote a job-rich growth in Africa’s development strategy.” Its Global Employment Trends 2014 report stated:

“Employment growth remains weak, unemployment continues to rise, especially among young people, and large numbers of discouraged potential workers are still outside the labour market … As a result, the demographic change characterised by a growing young population is considered to be a burden on the economy rather than an asset due [to] the scarce job opportunities in the region and [the] necessary conditions required to absorb and employ this growing young population [that] are absent.”

Less than 14% of the working-age population is in paid employment, which limits the growth of a consuming middle-class. When combined with the low contributions of manufacturing and agriculture to national gross domestic products (GDP), this challenging outlook calls for proactive partnerships among stakeholders to advance the employment landscape.

Africa’s Unique Opportunities

There are at least six major targets in improving youth employment in sub-Saharan Africa:

1) Relevant and widespread education and training at all levels

2) An integrated ecosystem to support entrepreneurs, including financing, mentoring/training, access to markets, protective and supportive regulatory regime, and available infrastructure

3) Pro-business policies by governments, so investments in infrastructure, services, commercial law and related regulations are timely and transparent

4) Sustainable programs built around competitive advantages and cultural acceptance

5) A stable political environment that does not exclude new entrants or restrict sectors based on existing power relationships

6) A mindset about labor that values work as a path to a career and provides the means to acquire additional skills to progress

All eyes on agriculture in Africa

All eyes on agriculture in Africa

The African Development Bank (AfDB), among others, is very active in building programs that target many of these concerns. In a series of papers, it has tracked programs aimed at building youth employment in sub-Saharan Africa that provide important models for member countries. There are several variations, for example, of entrepreneur promotion efforts that address financing, training and mentoring issues, but lack sufficient scale to generate the number of jobs needed to dent the growing employment deficit.

One theme focused on by the AfDB, and others, is the importance of reviving and building the competitiveness of the agricultural sector. Nowhere in the world is there as much underutilized arable land as in Africa. Significantly, the least skilled and literate populations are in the rural areas. With the ever increasing demand for food, experts believe the agricultural sector offers benefits to feed locals and supply overseas demand.

Shantayanan Devarajan, chief economist for the World Bank’s Africa Region, articulated this need for understanding the roles of the formal and informal labor forces: “The challenge of youth employment in Africa, therefore, is not just to create more wage and salary jobs — important as this may be — but to increase the productivity, and hence earnings of the majority of young people who will be employed in informal farms and household enterprises.” He emphasized that:

“…because most Africans will work in informal farms and household enterprises, the challenge of increasing their productivity needs to be met by first, increasing their basic skills, which they can then take with them when they move to the new enterprises; and second, creating jobs in the formal sector by improving the economy’s competitiveness, so that this sector can absorb more qualified workers into a productive workforce.”

According to Busani Bafana, writing for Africa Renewal: “Despite the negative perceptions, the agricultural sector employs as much as 60% of Africa’s labour force … and accounts for only 25% of the continent’s gross domestic product (GDP).” He cites experts who see agriculture as an important engine of growth, if the government and private sector act together to build the supply chain and distribution infrastructure that will turn today’s deficits into jobs and income. As importantly, it is a sector that can absorb large numbers of youth and women in productive jobs.

Turning Good Intentions into Results

The broad consensus among the private sector, international donor community and host governments about the need to aggressively pursue youth employment policies is an opportunity. Such an initiative could scale-up existing effective programs and help absorb the 10-12 million annual new entrants to the job market in sub-Saharan Africa. By implementing a broad strategy that incorporates rural as well as more traditional manufacturing options, utilizing technology across all sectors to improve productivity, and including women and youth in employment programs that increase their skills and employability, Africa has a viable and realistic opportunity to diminish its employment deficit and build a strong middle-class.

Moreover, if the countries of sub-Saharan Africa can understand the regional and local benefits that can be obtained from labor mobility, resource sharing, better distribution and power infrastructure, and streamlined business procedures, the task of generating worthwhile jobs becomes less onerous and reflects the deep commitment needed to propel Africa forward.

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