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HCP Calls for More Diverse and Value-Added Exports; African Countries Meet on Energy Efficiency in Morocco; and Saham Takes on New Role as Pan-African Investment Fund – Jean R. AbiNader

Jean R. AbiNader
March 12, 2018

Jean R. AbiNader, Exec. Dir., Moroccan American Trade and Investment Center

Jean R. AbiNader, Exec. Dir., Moroccan American Trade and Investment Center

Ahmed Lahlimi Alami, High Commissioner for Planning, recently spoke on the need for the Moroccan economy to become more competitive in global markets in order to generate more employment, distribution of jobs and incomes, and raise the country’s national savings. According to a study done by the HCP, almost 60% of Morocco’s exports are increasingly non-competitive, “Out of 593 products, only 141 are in the top!”

Despite continuing recommendations on economic diversification since the HCP began its comparative studies back in 2012, the private sector has fallen far short of its potential according to Mr. Alami. He is concerned that there is little dynamism in tailoring manufacturing, production, and distribution to compete in regional and international markets, a result which tallies with earlier experiences of the Moroccan-American Trade & Investment Center (MATIC), which noted the low level of risk-taking among Moroccan companies. This was also borne out in a joint study by the HCP and Harvard University, “which classifies the exportable supply of a country according to two concepts: the space produced and that of the complexity.”

In the assessment, product space defines all the current products available in the global market by category in terms of “”know-how, efficiency of the social and institutional environment or capability, which it was necessary to mobilize for its development.” How it utilizes these inputs for future product development gives a country its complexity rating. For Morocco, according to the study, “indicators of economic complexity show that Morocco can still become more competitive, but just for low value-added products because they are closest to its current structure.”

Unfortunately, the bottom line is that 60% of what Morocco currently produces has little effect on the challenges of growing and diversifying the economy. In fact, more than 50% of Moroccan exports can rapidly be displaced by competitors in the global economy. “This is due to the fact that Morocco, during the last two decades, has been able to stabilize only a few of its exports, which are mostly primary products or low technological content,” says Lahlimi. The High Commissioner proposes “to establish a framework for identifying strategic choices based on the current capabilities of the economy to ensure sustainable diversification and sustained economic growth”.

This will require, according to the study, that Morocco go ‘outside the box’ of its existing experience to take on initiatives and transform their production to achieve diversification of “rich and sophisticated products.” The next steps are for the HCP to work collaboratively with export associations and professional groups to strengthen the economy’s capabilities to upgrade the complexity of current production standards and outputs in order to achieve real diversification.

Morocco again asserts environmental leadership by hosting the 3rd edition of the African Meeting on Energy Efficiency beginning March 13 in Casablanca. Under the theme “Energy Efficiency in the Territories: Capacity Building and Green Financing,” this event will focus on issues related to financing and investing in energy efficiency. An effort of the AOB Group under the auspices of the Ministry of Energy, Mines, and Sustainable Development, key international bodies such as the International Energy Agency (IEA), the European Bank for Reconstruction and Development (EBRD), and the African Development Bank (AfDB), among others, will join participants to discuss issues dealing with investments in energy efficiency.

“The event program was designed specifically to meet the energy challenges of Moroccan public and private companies, as well as regions that are more than ever part of the Energy ecosystem. The energy transition needs both a strong and coherent national public policy, a dynamic and concrete international collaboration, but the most important is to invest in energy efficiency everywhere in the territories. The role of regions and cities is particularly important for the deployment of investments and projects,” said a statement from the organizers.

Saham to undergo significant transformation into an investment fund after it was announced that it would be bought out by Sanlam, its South African partner since 2016. Sanlam is the leading provider of insurance products on the continent, which will strengthen its position even more with this acquisition. “SAHAM’s insurance business, which started its strategic development in Africa in 2010, is now present in 26 countries through 35 insurance companies.. SAHAM group attracted a total of $ 1.7 billion of foreign investments to Morocco since 2012, largely through its partnership with Sanlam.”

In order to move rapidly to transform into an investment fund, Saham has the ability to compete for large-scale projects throughout Africa. According to the announcement, “This transformation into an investment fund will strengthen SAHAM Group’s footprint, with over 14.000 employees and several sectors in its portfolio after this transaction.” As noted by Moulay Mhamed Elalamy, the company’s spokesperson, “SAHAM Group’s DNA lies within its ability to bring together leading international investors, such as the World Bank, Kingdom Zephyr, Abraaj, Allianz, Bertelsmann, Wendel and more recently the Sanlam Group. As part of its transformation into a Pan-African Investment Fund, SAHAM will now attract new partners, to break new ground, and invest in future-oriented businesses, development accelerators for our country and our continent.”

A recent Moody’s report noted a projected decline in Morocco’s 2018 GDP. In its assessment, “the economy is well positioned to benefit from an ongoing move toward higher-value exports. Morocco is strategically positioned within global value chains in the automotive and aviation sectors and as a trade hub between Europe and Africa.” The expansion of the country’s banks across Africa and the gradual liberalization of the exchange rate should also help support the expansion of non-agricultural sectors, the firm added.

“Growth, which Moody’s expects to drop to 3.2% this year from last year’s 4.0%, will be constrained by what the firm describes as a ‘skills mismatch,’ which will act as a drag on competitiveness.”

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