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Economy Notes: Morocco Emphasizes Role of Women in African Development; World Bank Notes Concerns with Morocco’s Economic Growth; Draft Budget Identifies Investment Priorities; Morocco Seeks PLL Extension – Jean R. AbiNader

Jean R. AbiNader
November 1, 2018

Jean R. AbiNader, Moroccan American Center

Morocco at the Summit on Women in Africa

During the annual Women in Africa Summit held in Marrakech the end of September, there were a number of statements made and policies promoted that can greatly impact the advancement of opportunities for women across social, economic, and political spheres, and it is up to African leaders to take implementing actions. No one at the Summit expressed this better than King Mohammed VI of Morocco who has long championed women’s rights and empowerment.

In remarks delivered to the Summit, which hosted some 400 participants from 70 countries, “He called on all stakeholders in Africa, government, the private sector, and civil society to spare no effort to consolidate the leading role of women as key drivers of development,” according to a report in the North Africa Post, stating, “Any obstacle to the empowerment of women is in itself a stumbling block, impeding the continent’s development.”

He noted that despite some many initiatives to promote gender equality in policy-making, women still lack concrete opportunities and basic rights. “Given the injustice African women are still suffering from on the ground, we are all duty-bound to work to promote women’s roles and make African women a central element in national plans for social and economic development, thereby strengthening their leading role in society.”

The king noted that gender equality is vital to any sustainable development strategy, and called for additional efforts “To promote women’s participation in development and decision-making in order to make the most of their ever-growing role as entrepreneurs and business leaders on the continent,” as mentioned in the article. He repeated a theme that he used early in his reign that “No country, economy, business, or society can tackle today’s challenges, nor ensure optimal use of its resources and energies, without the full involvement of women.”

World Bank Looks at Morocco

The World Bank is concerned with Morocco’s capacity to deal with its unemployment, poverty, and socio-economic disparities according to its latest biannual report. In particular, it believes that the country’s economic model, which emphasizes industrial growth as a top-down stimulus to the economy, may not have the effect of generating broader employment that would strengthen the middle class, generate expansive job opportunities in related sectors, and create greater opportunities for reducing differences in wealth and consumer spending.

Acknowledging the many advances in the economy over the past decade, the report used terms such as fragile, unsustainable, and vulnerable to describe the country’s economic performance.

Given this scenario, the Bank believes that Morocco can overcome current obstacles by taking key steps to “lower corporate tax rates, improve public investment management, and better enforce tax payments by the self-employed and liberal professions.” There is also concern that the level of corruption is hindering growth as regulations are not uniformly applied, there are too many cracks in the tax code that lead to exemptions that hurt the country’s income stream, the lack of judicial independence creates uncertainty in enforcing contracts and procurement regulations, and other contradictions between vision and implementation.

This was well summed up by the World Bank’s vice-president for the MENA region when he said recently, “Over the years, there have been serious efforts in terms of reforms and infrastructure. That is why I see Morocco full of potential. But there is another Morocco that is facing enormous difficulties, namely of resource redistribution and social cohesion…There is something a bit upsetting: there are so many possibilities and achievements that make Morocco a regional exception, but there are also some lapses. These need to be tackled at their roots.”

Government Lays Out Investment Priorities

After the parliament’s investment committee held its meeting to confirm the country’s investment projects for the coming year, Minister of Industry, Trade, Investment, and the Digital Economy Moulay Hafid Elalamy reported that the agreements will generate 9,266 direct jobs. He said that the industrial sector will receive $2.25 billion, transportation and infrastructure $1.14 billion, energy/power $810 million, and tourism $620 million. He predicted that the industrial and tourism projects will create around 5,700 jobs, while fishing and agri-food will snare 2,038 jobs, and telecoms will increase by some 607 jobs.

On a regional basis, the Laayoune-Sakia El Hamra region in the south garnered 30% of the investment valued at $1.79 billion; the Rabat-Sale-Kenitra region receiving $880 million (14%); the Casablanca-Settat region receiving $840 million (14%), while the remaining $1.25 billion (20%) will be spread to some or all of the nine other regions. The current distribution points to a gradual distribution of investment equity among the 12 administrative regions as called for by the king. Of the funds to be invested, $3.79 billion (63%) will come from the government, and joint ventures will fund 29% of the projects.

Morocco Set to Renew PLL with IMF

By the end of the year, Minister of Economy and Finance, Mohamed Benchaaboun, expects to reach an agreement with the IMF on another Precautionary and Liquidity Line (PLL), which will “Give the country’s foreign lender, investors, and rating agencies reassurances over the country’s economic policies, allowing it to tap international capital markets at favorable borrowing terms,” Reuters reported.

The PLL is a credit line that the country can utilize to guard against unforeseen cost issues such as the rising cost of energy imports, which have risen by 40% compared to last year. In addition, Morocco is set to issue an international bond in 2019, and having a PLL lends stability to its financial status. The article also noted that “Spending on subsidies will increase to $1.8 billion in 2019, up by $520 million from this year, as Morocco continues to subsidize cooking gas, sugar and wheat. The 2019 draft budget, submitted to the parliament, expects to curb the budget deficit to 3.3%, down from 3.8% this year. Growth is expected at 3.2% in 2019, down from 3.6% this year while inflation is seen below 2%.”

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