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Morocco gets mixed reviews on economy and corruption and ranks #1 in cannabis production – Jean R. AbiNader

Jean R. AbiNader
July 18, 2019

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

The recent report posted in the Global Corruption Barometer – Africa 2019 presented a mixed picture on Morocco today and when compared to 2015. The survey of 1,200 Moroccans was taken in May 2018and was part of a larger 35 country effort from September 2016 – September 2018, which sampled 47,000 people. On the Morocco infographic, the first item is that 53% of respondents believe that corruption has increased in the past 12 months (previous to May 2018).

Comparing survey results from 2015 and 2018 provides additional interesting points. For example, some 74% in 2018 said that the government is doing badly in combatting corruption, an increase from 64% in 2015. On the other hand, in 2015, 48% said they had paid a bribe to obtain public services, while 31% gave that response in 2018. Some 49% of respondents indicated that they are ready and willing to take action to combat corruption.

The survey noted that perceptions of corruption shifted between 2015 and 2018. In 2018, 39% perceived corruption in the Prime Minister’s office compared with 20% in 2015. Members of Parliament also rose, but not so dramatically from 36 to 41%. While government officials rose slightly from 35% in 2015 to 37% in 2018, the view of corruption by local officials actually declined from 39% to 38%, and the police fell from 34% to 24%, in line with government efforts to improve police behavior and transparency. Finally, views of business leaders improved as the rating for perception of corruption fell from 34 to 28%, but traditional leaders went in the other direction, from 21% in 2015 to 26% in 2018.

Part of the problem in combatting corruption is the continued struggling performance of the economy. Despite a proliferation of national and international programs, job creation is insufficient and economic  growth levels are lagging.

A number of sources noted that the Moroccan High Commission for Planning (HCP) recently lowered the 2019 growth forecast from 2.9% to 2.7%, reflecting this year’s weak agricultural production. It expects a rebound to 3.4% in 2020. “Morocco’s economic growth remains vulnerable to rainfall and the performance of the agricultural sector,” said Ayach Khellaf, secretary general of the HCP. The 2020 growth forecast was also based on estimates of oil prices of $66 a barrel. Inflation should ease in 2019 to .8% from 1.1% in 2018, with declines in the budget deficit and treasury debt.

The current account deficit is expected to stand at 4.9% in 2020, down from 5.3% in 2019 as imports continue to outweigh exports. According to Reuters, quoting the General Treasury of the Kingdom (TGR), gross tax revenues increased 4.5% to $11.4 billion in the first half, against $11 billion in the same period in 2018. State spending was at $19.1 billion between January and June 2019, up 15.4%percent from last year. According to forecasts by the HCP, the deficit should be reduced to 3.6% in 2019, following the proceeds of privatization.

Another program from the government aimed at supporting small business development was recently announced by the Moroccan Office for Industrial and Commercial Property (OMPIC), which certifies that a trade name is not already in use by another company, and can, therefore, be registered on the OMPIC commercial register. Obtaining a ‘negative certificate’ is the first administrative step required to legally set up a business in Morocco.

Under the new changes, a negative certificate is now valid for 90 days, as opposed to one year. Applicants must register their business name on the OMPIC commercial register within 90 days of the negative certificate being delivered. This is another e-government initiative that is part of “a strategy to facilitate the creation of businesses and to promote national and international investments in the country, by digitizing the business creation application process. One of the aims is to boost Morocco’s ranking on the World Bank ‘Ease of Doing Business’ list.”

The basic challenge remains, in any case, that there are simply too many Moroccans with varied skill sets pursuing too few jobs, regardless of skill requirements. A Morocco World News story summarized the dilemma quite well. “One major reason why Morocco’s economy is struggling has to do with the gaping, worrying gulf between employment prospects, and the number of graduates that Moroccan universities and vocational schools produce yearly, according to statistics from Morocco’s High Commission for Planning (HCP).”

The article reflects HCP’s assessment about the “the equally deepening disconnect between big, lofty government promises and the much more gloomy reality of Morocco’s employment market. Starting in 2017, Moroccan education institutions have produced over 290,000 graduates. By contrast, less than a quarter of those fresh, opportunity-hungry graduates have been absorbed into the formal labor sector. Specifically, Morocco’s labor market has only generated a little over 57,000 jobs on a yearly base since 2017.”

Citing HCP statistics, the post notes that “the mismatch has become wider and far more worrying. One reason is that there seems to be no precise governmental strategy to reverse the tide, despite grand promises to lower the discrepancy by 2021, when the mandate of the current ruling party ends.” Although the annual number of jobs created between 2011 and 2017 averaged around 97,000, or about 45% of graduates, since 2017, the ratio has decreased to 20%, which is quite worrying.

According to the HCP, “Factors include a glaring disconnect between the skill requirements of an endlessly shifting labor market and stagnant school curricular; mismarriage between a rapidly growing population and slow economic growth; as well as the contradictions of an apparently thriving industrial sector sustained more by automation than job creation.”

Speaking of job opportunities, two recent articles highlight the disconnect between jobs in the formal economy and Moroccans turning to the informal economy for other options. For a story on how Morocco is the world’s largest producer of cannabis, click here. While the government’s eradication program is showing some signs of success, there is a long road ahead to find alternatives to the cannabis economy.

One equally difficult illegal alternative was highlighted by Max Gallien of The Washington Post who studies smuggling across national borders, in this case, Morocco and Algeria. “States do not simply tolerate or turn a blind eye to certain smuggling activities; rather, states carefully regulate them to maintain social peace in their borderlands,” says Gallien. In this sense, smuggling is the foundation of numerous borderland economies along the northern boundary between Morocco and Algeria. As governments have cracked down on these activities, other problems arise. “Since the market for consumer goods has been reduced, smuggling between Morocco and Algeria has taken an even more lucrative turn: well-resourced trafficking networks are now putting their efforts towards smuggling irregular migrants, weapons, counterfeit medicine, cocaine, and psychotropic drugs.”

 

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