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Business Brief: Good Domestic Energy News, A Slowing Informal Sector, and Continuing Rise of Moroccan Boeing Executive are Top Stories – Jean R. AbiNader

Jean R. AbiNader, MATIC
October 25, 2016

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

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

It takes time for an economy to mature enough to compete globally. The signs are positive for Morocco as it expands its basic business culture to adapt to the challenges of competition in export markets and attract new foreign direct investment (FDI). There is good news on the energy front, where Morocco may soon become a commercial gas producer, which would help diminish its need to import supplies. Elsewhere, the growth of the informal sector is slowing a bit, generating a need for more efforts to combat unemployment throughout the economy. And Morocco continues to provide top-ranked talent to international companies working in the kingdom.

Informal Sector Stalls: According to statistics published by Morocco’s Higher Commission for Planning (HCP), the rate of growth of the informal sector has slowed.  From 1999-2007, the rate was 25%; from 2007-2013, it was down to 8.4%. While no specific reasons are given, there is some indication that this is only slightly impacting its contribution to the country’s GDP. In the handicrafts sector, GDP value in 2007 was 12.4%, while it was 13.3% in 2013, and the informal economy currently represents more than 60% of the value of the trade sector.

The HCP put the number informal entities at 1.68 million, generating some $41 billion in untaxed revenue, according to estimates. “The commission defined the informal sector as including all non-agricultural economic activity conducted underground, without the authorization of the relevant authorities. The scope excludes illegal black market activities, however…More than half of the operators did not have a fixed place of work – especially those employed by the construction, services and trade sectors under the table.”

Additional data defined several interesting characteristics of the informal workforce. For example, in industrial manufacturing, most of the workers live at their place of work or work from home; and 60% of those working from home are women. The survey, conducted in 2013-2014, found that workers in the informal sector are severely undereducated: “More than two-thirds of the workers have only completed preschool or elementary education, 28.4 percent finished secondary education, and a mere 3.3 percent pursued higher education.”

The HCP did not reinforce the oft-repeated recommendation to systematically absorb the informal economic activity though formal channels “because the sector provides a buffer zone for temporarily unemployed people to afford basic living expenses.” Despite concerns about tax revenues, the report pointed out that incomes in this sector are often too low to be taxed. In fact, it found benefit in that “The informal sphere appears therefore as a suitable medium business windfall benefiting consumer demand…insecurity of supply, and the quality of the working hands in the labor market.”

Energy Futures UP and COP22 Rising: According to a report from The Sound Energy Company, a leader in energy development in Africa and Europe, it announced success in drilling for natural gas in its concession at Tendrara at a depth of 3500 meters. It will soon sink an additional well to provide additional volumes of gas to bring it up to commercial levels. Sound Energy estimates that the site cold hold between 3-4 trillion cubic feet of gas.

The publisher Research and Markets has announced its latest publication, “The Future of Morocco Oil Markets, Investments, Projects and Companies to 2025- Exploration, Oil Production, Oil and Product Pipelines, Storage, Refineries and Supply Demand.” It identifies key trends and drivers of Morocco’s oil markets with detailed assessments of the pros and cons of the industry, as well as a view of the competitive regional energy assets.

“The research work identifies the key moves being taken by government, companies and investors to cope with global changes and minimize the risks in current market conditions. Further, the research also identifies the strategies being taken by oil and gas players to ensure growth and beat competition in the long run.”

COP22 is soon upon us, and there is a special pre-conference meeting of African leaders on the future of renewable energy, as well as the implementation and financing of sustainable projects. From November 2-4, the first edition of the annual African Forum on Renewable Energy, organized by EnergyNet, Global Nexus, and the Institute for Research on Solar Energy and New Energy (IRESEN) will discuss how various stakeholders can build sustainable strategies for extensive development of renewables.

Ihssane Mounir New VP of Global Commercial Sales for Boeing: Ihssane Mounir will become the Vice President of Global Sales and Marketing for Boeing Commercial Airplanes starting in 2017. His new responsibilities including running a division that handles sales and leasing worldwide, including sales strategies, operations, and customer relations, according to Boeing. After joining Boeing in 1997 as an aerodynamics engineer, he has risen quickly through the ranks. He holds a Masters degree in Aerospeace Engineering from the University of Wichita, Kansas.

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