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Business Brief: From Fashion to Falling Unemployment, Morocco Cycles On – Jean R. AbiNader

Jean R. AbiNader, MATIC
November 9, 2016

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

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

While the process of forming a new coalition government continues, Morocco is moving ahead with projects to make it the distribution center of choice for Africa. One key sector is textiles and fashion, where investments create many jobs even though it has become highly mechanized. While the recent unemployment figures are improving, they are far from adequate to fully utilize the supply of semi-skilled workers and university graduates. And international companies are not the only ones expanding from Morocco into Africa — local companies are leading the way in penetrating the Africa market.

Fashion Industry Draws International Players: An article in Fashion United recently featured the growth of the Moroccan textile and fashion sector as a new powerhouse. Given the turmoil in many of the usual textile producing locations such as SE Asia, Tunisia, and Turkey, companies are increasingly drawn to Morocco due to its stability and global distribution facilities. Its trade enhancing agreements, modern logistics infrastructure, and short lead time production capabilities have made it a favored destination.

According to Zahra Maafin, Managing Director of The National Agency for the Promotion of Small and Medium Enterprises (Maroc PME), the intention is to reach a 23% growth rate in foreign direct investment by 2020. The textile sector is the leading industrial employer in the country, with 175,000 direct jobs, more than $3 billion in revenues, and 1600 companies producing 1 billion garments in 2015. “Morocco is predicting a rosy future, thanks to globalization and the increased demand for fast-fashion products. The Moroccan textile market should double by 2025 to reach turnover of $10 billion, thanks to the emergence of the middle class” explains Maafin.

Morocco has set an ambitious goal of adding 100,000 textile jobs by 2020, utilizing government, private sector, and agency expertise and funding for training. Maroc in Mode and Maroc Sourcing are currently the only export fashion showcases in the region. These two fairs, dedicated to fashion, fabrics, and accessories, are organized by the Moroccan Textile Industry Association (AMITH) and this year attracted 107 international exhibitors, hosting some 350 global buyers.

Brighter Employment News: Reuters noted a government report that the jobless rate fell to 9.6% in the third quarter of 2016. The decrease is due primarily to new construction jobs, which accounted for 52,000 jobs, partially offsetting the 125,000 jobs lost in the agricultural sector due to the severe drought experienced earlier in the year. The hardest hit were seasonal and agricultural production and processing workers, as the cereal harvest fell to 3.3 million tons after last year’s record 11-million ton harvest.

Continued Growth in African Markets: Foreign companies aren’t the only ones benefitting from Morocco’s ties with Africa. The initial forays into sub-Saharan Africa were made by Moroccan banks and insurance companies, now active in 32 countries. According to a report in Le360, the pioneers were the banks that moved in the 80s to Central Africa and Guinea, where Banque Popular made its initial investments. With economic development in Africa a priority for King Mohammed VI, others banks have joined in, and today there are 45 subsidiary banks on the continent. This promotes Moroccan investment in the target countries and also supports Moroccan companies wanting to do business in Africa.

The story is the same for the insurance sector. Sahar Assurance has operations now in 23 countries, and other Moroccan companies are also expanding their operations. Again, these branches serve both local and international companies operating in the countries, making Morocco a hub for financial transactions in the region.

Kenitra Port and Cement Products Expansion Mark Growth: An $800 million investment has been announced for Kenitra Atlantic Port; $500 million will go to harbor expansion and new terminals, and $300 million to additional port facilities. Located north of Rabat, the port’s development, according to Morocco World News, has been accelerated by the King to serve new industries coming to the regional industrial park.

It is located on a large parcel of land along the local rail line and will have access to the planned expansion of transportation facilities and the industrial park. Situated on the Atlantic, it will help ease congestion at Casablanca Port by taking on bulk shipments for the central region, and host new projects including construction, ship repair, and the Peugeot factory and its suppliers.

Other good building news came from the firm LafargeHolcim, the largest manufacturer of building materials in the world, which is introducing two new environmentally friendly construction materials to Morocco, specifically for the local market. The first is Aariom Thermochip, a replacement for concrete as an enhanced heat insulator, keeping homes warm during winter and reducing the need for heating devices. The second is Agilia Seoul C, a cement product used for soundproofing rooms. Both products were developed in response to needs expressed by local companies. In its third quarter report, the Swiss-French company said it was raising its earning projections as a result, in part, of its activities in Morocco. It is also embarking on a venture with Saint-Gobain in Morocco for gypsum production for building materials.

Going Green Takes a New Turn in Marrakech: Just in time for COP22, Morocco launched Africa’s first bike-sharing scheme in the host city of Marrakech. It’s not known if the more than 3000 people attending will get discounted rates for the 300 bikes at 10 docking stations, but Smoove, its French operator, is optimistic.

The project, Medina Bike, is funded by the Global Environmental Facility, and reflects King Mohammed VI’s commitment to making Marrakech the leading green city in Morocco. Laurent Mercat, CEO of Smoove, said in a statement that “Bikes were once one of the main means of transport in Marrakesh, but have gradually lost ground. We hope that Medina Bike will bring about a cycling revolution.”

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