Jean R. AbiNader
June 5, 2018
The agricultural sector, still a key component of Morocco’s economy, received some good news from the Oxford Business Group (OBG) in its latest review of the sector. According to the report, “Higher yields and improved product quality are driving investment in Morocco’s agricultural sector, with the country seeking to boost returns on farming output and expand exports.” While the country is still largely dependent on rainfall for its production, the benefits of the Green Morocco Plan (PMV) launched in 2008, is having a very positive impact.
Cereal production for the 2017/18 season was projected to reach 9.8m tons, up 3% over last year. “This increase was particularly notable given that far less land had been planted for grain crops, with 4.5m hectares (ha) against 5.4m ha in 2016/17, making yields per ha 23% higher year-on-year (y-o-y).
This is a remarkable turnaround from earlier this year when predictions were much lower due to poor early rains. The subsequent positive results validate the PMV efforts increase the availability of irrigation and water supplies, modernize farming techniques, promote the aggregation of land, and facilitate cooperation among small farmers and coops to develop economies of scale.
The report noted that “According to data issued by the Ministry of Agriculture in late April, as a result of the PMV the volume of agricultural exports has increased by 65% over the past decade, and 125,000 new jobs have been created in the past two years in primary production and processing.”
Still, only 4% of agriculture’s GDP contribution is generated by agro-industrial processing and value-added input, which indicates great growth potential. As yields continue to increase, Morocco must spend more for logistics and downstream processing capacities, according to Kacem Bennani Smires, CEO of agricultural producer and processor Delassus. “Now it is a question of being able to treat, sell, and export this massive production,” Smires told OBG. “Expanding logistics capacities in this direction is increasingly important.”
Morocco has fully embraced the challenge. In addition to expanding port facilities in Tangier-Med, the Southern Provinces, and Agadir, it has undertaken reforms on other modes of transport. The World Bank ranked Morocco 8th globally due for its capacity to facilitate road transport based on the ease and low cost obtaining cross-border licenses, and 18th globally for ease of doing business in the sector due to its controls over the use and distribution of fertilizers and water.
The IMF has been busy in North Africa, issuing reports on Tunisia and Algeria. To gain the release of a $2.8 billion tranche over four years to support its economy, Tunisia has agreed with the IMF to several economic reforms aimed at controlling the country’s budget deficit. The latest IMF bulletin noted that the reforms are needed even more urgently than in 2016 when an earlier agreement was reached as inflation is at 7.7% y-o-y, the highest level since 1991.
“Tunisia is experiencing an economic recession since the overthrow in 2011 of the regime of Zine El-Abidine Ben Ali. Since then, no less than 9 governments have succeeded each other in Tunis without any success in reducing the budget deficit. In fact, the country needs nearly $3 billion in foreign loans for this year alone. The path forward is not yet clear as the political parties disagree on the options forward to control the economy both to tame inflation and generate growth.
Regarding Algeria, the IMF concluded that much can be done to accelerate current improvements. The report issued by the Executive Board followed recent consultations with the government. Despite the modest increases in hydrocarbon revenues, the “fiscal and current account deficits remain large,” with foreign reserves now standing at $96 billion, from $200 billion in 2014. “Unemployment increased to 11.7% in September 2017 from 10.5% in September 2016 and remains particularly high among the youth (28.3%) and women (20.7%),”according to the report.
Without a more robust and integrated reform strategy, the IMF directors believe that treating symptoms with short-term remedies will “likely exacerbate fiscal and external imbalances, raise inflation, accelerate the loss of international reserves, heighten financial stability risks and, eventually, lower growth.”
Directors encouraged sustained fiscal consolidation and wide-ranging structural reforms to facilitate a more diversified growth model and support private sector development. There was general agreement that central bank financing was not necessary to achieve gradual fiscal consolidation, for example, using external financing for well-designed investment projects. “A gradual exchange rate depreciation, combined with efforts to eliminate the parallel foreign exchange market would support the adjustment efforts,” they also concluded.
Overall, “Directors supported the efforts to raise more nonhydrocarbon revenue, improve public spending efficiency and management, and expand the subsidy reform while protecting the poor.” They support the government’s intentions to promote a more robust private sector by improving the regulator environment, enable better access to financing, and “strengthening governance, transparency, and competition,” as well as opening the economy to traded foreign direct investment.
Morocco and the EU move on a new fisheries agreement before mid-July expiration, which is seen as a setback to those who oppose Morocco’s administration of the Southern Provinces, including the Sahara.
According to a report in North Africa Post, “About 120 vessels from 11 EU countries (Spain, Portugal, Italy, France, Germany, Lithuania, Latvia, The Netherlands, Ireland, Poland, and the UK) are operating in Morocco’s waters.” Morocco’s national plan for fisheries, Halieutis, encourages broader Moroccan participation in the sector, and “facilitates jobs for Moroccan sailors and fishermen by means of 1000 boarding contracts per year.” An independent study found that over 75% of the economic benefits of the current agreement go to people in the Southern Provinces, while the EU countries gain much more than the $35 million its invests in the Moroccan fisheries sector.