Reimaging its Economic Model – Can Morocco Shift to Better Outcomes? – Jean R. AbiNader
Jean R. AbiNader
May 26, 2020
The impact of COVID-19 has yet to play out in the global economy as supply chains shift, priorities on domestic industries emerge, food security becomes a dominate concern, and the recognition that recovery must focus on more and better jobs in the short and medium term for the local population. In a country like Morocco, this entails more than sustaining the current economy and workforce. Although these are critical immediate measures, the status quo is inadequate as a response for addressing the growing needs for sustainable prosperity with equitable growth and new sources of revenue for individuals and for the state.
Ironically, the limited success of gas and oil exploration is forcing the government and the private sector to retool their assumptions about the future. This has led to a series of initiatives, building on past successes and decisions, that have the potential for remaking what Morocco does best, tourism and agriculture, and leading the way to upgrading and expanding its services and manufacturing sectors. The pandemic has only accelerated this process. As Morocco continues to put in place needed business reforms and social services strategies, it will be poised to achieve balanced and long-term growth that is the purpose of the Sustainable Development Goals campaign.
The first step is to recover current capacity. The government is already moving ahead with plans to enable businesses to reopen. As recently announced, a program is being put in place to help companies to develop plans for reopening safely and securely. It covers six main functions: Preparing crisis management and relaunch plans, managing liquidities and finances, training human resources, securing and developing sales, optimizing production and the supply chain, and digitizing the company.
In parallel, the Economic Monitoring Committee (CVE) has put in place a loan guarantee program financed by the state to ease financing access for public and private companies. The plan will allow businesses to apply for loans to finance operations with a maximum interest rate of 4%. The repayment of the loans can be spread over a period of seven years, with a grace period of two years. The program is targeted on ensuring rapid economic recovery after restrictions are lifted by encouraging business growth leading to jobs, meeting payment deadlines, and maintaining relations with suppliers and customers.
As importantly, the CVE has created a new mechanism to accelerate the payment of the debts of public institutions’ debts to micro-sized businesses. A new plan calls for public agencies to prepare lists of payable accounts which will then become eligible for special loans dedicated exclusively to the debt payments and guaranteed by the state. When approved, funds will go directly to the businesses rather than through the agencies in order to reduce payment delays. As the government and private sector reestablish strong foundations to move ahead by the end of 2020, the country can then begin to build on its new-found capacities to diversify and strengthen its economic model.
Among the many medical capabilities that Morocco has developed, which are now exportable around the world and would benefit its African partners in particular, are the manufacture of PPEs ranging from masks and gowns to shields and sanitizing products, medical devices including infrared thermometers and ventilators, and expanding applications of digital technology to information sharing, data collection and analysis, and tracking.
According to Mohamed Faical Nebri, at Morocco’s Digital Development Agency, “Morocco has embarked on a major digital transformation agenda that has been accelerated by COVID-19, particularly at the level of public administration, where the main challenge has been twofold: on the one hand ensuring the continuity of public services, and, on the other, ensuring remote work for public sector employees and civil servants during lockdown.” These experiences enhance the country’s capabilities to integrate digital applications throughout the government and the private sector to improve efficiencies and reduce costs.
Since close to 60% of Morocco’s workforce is in the informal sector, the CVE set up a digital database on which people without a social security number are able to register for economic support. Using their national ID cards, some 2.4 million workers will receive a text message authorizing them to withdraw a lump sum, calculated according to the size of their household, at one of 10,000 banks and ATMs across the country. Going forward, it has been speculated that this initiative could be leveraged to incorporate more informal workers into the formal economy.
In his interview with the Oxford Business Group, Nebri said, ““Today the momentum has been unleashed but there is still work to be done to avoid the risk of going back to old habits in the aftermath of the pandemic. Therefore, it is crucial to pursue digital transformation and hedge against a potential slowdown, all the while supporting partners in order to instill a digital culture in Morocco and enhance value added.”
While many believe that Morocco’s tourism infrastructure, from airlines and bookings to services and facilities, will rebound as demand rebuilds, companies and agencies supporting the industry can assure a strong recovery by consolidating and improving communications platforms that accurately update tourism information. Uncertainty is the bane of travelers who will respond positively to easy access to up-to-date information on opportunities in the country. Perhaps some of Morocco’s many digital wizards can multiply the effectiveness of tourism promotion by launching apps that fill gaps in the current info-sphere on tourism.
Not to be overlooked as post-pandemic recovery engines are the agricultural, pharmaceutical, and manufacturing sectors. As I mentioned in a previous blog, Morocco should set its sights on broadening its regional role by looking at opportunities to build supply chains for companies wanting to end their dependence on uncertain suppliers. Amine Laghidi, a well-known specialist in globalization told MAP that Morocco has the potential to become a hub for the transformation of African agricultural and industrial exports after the COVID-19 pandemic releases its global chokehold. He pointed to food security, processing and transportation of agricultural and industrial products, and continuing to collaborate with counterparts throughout West and Central Africa as key priorities post-COVID 19 where Morocco is well positioned to build on its existing strengths and capacities for innovation.