One of the lead articles in an upcoming OBG report on Morocco is an interview with Mohamed Boussaid, the Minister of Finance and Economy. He shed light on the country’s ambitious goals for the next year and outlined what he believes are the most daunting challenges ahead. In the exclusive interview, Boussaid noted five limitations that “block the path to better performance,” which are: employment lagging being economic growth, gender inequalities in the labor force, trade agreements and uncompetitive exports that drag growth, a lack of skill-centric labor, and poor economic and social governance.
Thanks to a rebound in the performance of the agricultural sector, GDP growth is expected to top 4% in 2017, which, although good, does not provide the level of growth needed to bring unemployment under control or increase per capita income for most Moroccans.
The article puts in this way, “The simultaneous challenges and opportunities facing the country are, in fact, more suitable than they may appear. While it is on the right path, Morocco needs to undertake a series of reforms to boost its manufacturing industry, recover high levels of liquidity – and thus financial dynamism – and ensure long-term economic success through educational measures to improve its human capital.”
These baseline conditions were some of the issues examined by OBG in its second survey of Morocco CEOs after the launch of the first in June 2017. More than 100 Moroccan CEOs participated and “are markedly optimistic when it comes to investing in the country and forecasting its short-term potential.”
“However, top executives know – and say – that much remains to be done with regards to access to finance, tax competitiveness, and working with local suppliers. The focus should remain on surmounting these challenges; that is the way for Morocco to consolidate its regional leadership and achieve further social development,” according to the preview article.
In looking at Morocco as a regional business center, 80% of the 100 respondents said they were likely or very likely to expand into regional markets, either through existing or new operations. While this includes both offices of international companies already committed to Morocco as a hub for regional business as well as Moroccan companies, there was a divergence in how they view local suppliers.
Although 50% express high or very high levels of satisfaction, of the 28% with low levels of satisfaction, “more than half were international companies, suggesting more may need to be done to meet multinationals’ expectations [as] Efficient supply chains are crucial to any hub, and in particular when it comes to industrial logistics such as Customs clearance and cross-docking storage, among others.”
Regarding access to financing, it is still rated as difficult to very difficult for some 50% of those surveyed, testament to a lack of liquidity in the market. This is particularly onerous for SMEs, and often complicates options for external financing. As this is one of the Finance Minister’s priorities, it will be telling to see what steps will be taken in 2018 to improve access.
Overall, attitudes regarding business conditions are quite bullish as 70% of respondents have a positive outlook while 16% are very positive. Given key pieces of legislation introduced in Parliament regarding labor mobility, pension reform, clarifying environmental and health regulations, and other important reforms, there is some cause that some expectations for improvement are well-founded. Addressing the five conditions listed by Minister Boussaid are an excellent start to enhancing and expanding Morocco’s economic success.