Business Brief: More Reporting on Morocco’s Regional and Global Standing – Jean R. AbiNader

Jean R. AbiNader, MATIC
June 8, 2017

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

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

The United Nations and World Bank published reports that looked at global growth and projections for economic performance in the coming years. Bright spots for Morocco include progress in retooling its economy while still facing challenges in job creation, reducing urban sprawl, and enhancing overall economic performance going forward.

World Bank looks to Morocco to continue growth. Based on its continuing analysis and assessment of Morocco’s strategic and tactical steps to grow its economy, the World Bank, in its “June 2017 Global Economic Prospects – A Fragile Recovery,” noted that Morocco has benefited from fiscal consolidation programs, focusing on reducing public expenditures, reforming energy subsidies, and restructuring taxes.

The report also noted the steps the country has taken to compensate for declining tourism from Europe by opening up markets in China and other expanding sources. It pointed out that the rebound in the agricultural sector in 2016 portends greater GDP growth of 3.8% in 2017, 3.7% in 2018, and 3.6% in 2019, which will make it the top performer in North Africa and second overall on the continent.

UN Economic Report on Africa features Morocco’s ports as key to growth. The UN Economic Commission on Africa released its latest report at its headquarters in Addis Ababa entitled “Urbanization and Industrialization for Africa’s Transformation.” It includes data on the pace and quality of urbanization throughout Africa and then examines how industrial tools, such as Special Economic Zones (SEZs), can facilitate rapid and effective economic growth strategies.

More specifically, the authors looked at how Africa is growing and what policies are needed to sustain the best aspects of the changes that are taking place. For example, while Morocco has increased the gross domestic savings portion of its GDP to 34.8%, very little of these funds are made available for domestic investments. And while Tunisia and Morocco have the lowest gap between wealthy and poor (2013 figures), the Maghreb region as a whole has the lowest level of female participation in the workforce on the continent. And despite the rise in foreign direct investment in the manufacturing sectors, services continue to be the fastest growing component of the economy.

Morocco has experienced rapid urbanization—more than 60% of Moroccans live in cities, which creates demands on the social infrastructure – housing, education, access to potable water, transportation, and similar needs – that the government is striving mightily to assuage. It now ranks third in Africa in housing construction, employing some 10% of the workforce. More than 60% of Moroccans own their own homes.

The report noted that “Morocco has had notable success in upgrading slums and relocating slum dwellers…Through a three-pronged approach, the programme [Cities without Slums] has moved slum dwellers to new housing (mostly apartment blocks), provided them with serviced plots to build their own homes and conducted on-site upgrading of infrastructure and services.” This, along with tax incentives to builders, has also spurred growth in the housing construction industry through increasing demand.

On the industrialization side, Morocco gets high marks for its growing manufacturing sectors. “The [automobile] industry is now the country’s largest export sector, dethroning phosphates.” A critical side benefit of this growth is the extensive infrastructure in place for the transportation and distribution of parts and vehicles, as well as hundreds of supply chain companies. This also serves the aeronautics industry and its suppliers, as well as light-manufacturing and offshoring activities, which require easy access for both labor and supplies.

Overall, Morocco appears to have built sufficient platforms for continued growth and expansion through proactive government policies, as well as support from international donors, international investors, and public-private partnerships. The only caveat is to increase the number of skilled, market-ready workers to keep pace with growing economic expansion in the services and manufacturing sectors.

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