Morocco: Time To Think Local?

Morocco is a beautiful country: seen in its colours, handicrafts, cuisine, architecture, aesthetics and people. I have visited many times in different capacities – for work and for leisure – and each time it leaves a magical impression. Travelling around the country, the disparity is clear – rural and urban, inland and seaboard – but at every turn, there is a keen work ethic and entrepreneurial spirit. Women have a key role to play, both within the family and as a productive force. But more can be done overall to promote a more equitable distribution of wealth, wider participation in the economy and better governance through business and policy leadership. This would allow the people and the country to continue to serve as a bridge between three continents – North America, Europe and Africa. The data-driven analysis that follows looks at how Morocco’s leadership pursues trade with Africa and Europe and, more importantly, the potential that lies closer to home, among its near neighbours in the Mediterranean.

Illustration by Costas Mantzalos

Morocco has long been one of the Mediterranean’s most open and trade-integrated economies, with commercial ties to Europe, the USA, parts of North Africa and, increasingly, sub-Saharan Africa. Its economy, from one vantage point, is a rarity in Africa – its humming industrial zones have secured its place in the automotive and aeronautics sectors, with investors including Renault and Bombardier, from Tangier to Casablanca-Settat.[1] The data visualisation tool of the Mediterranean Growth Initiative (MGI) portal puts Morocco in the top-five nations for value-added industry as a percentage of GDP.

Its ties to Europe have fuelled Morocco’s trade and industrial strategy; its largest trade partner accounts for around 61 per cent of exports and 52 per cent of imports. This is thanks largely to the history between the two, their proximity and a long-standing free trade framework.[2] Morocco is also a member of the Euro-Mediterranean Partnership (Euromed), a flagship initiative that promotes trade, democracy, human rights, rule of law and good governance. It has also been the connecting point for Africans seeking to migrate to Europe – although increasing numbers of migrants from Ivory Coast, Guinea and Cameroon are now choosing to stay in Morocco rather than risk the dangerous trip to Europe’s shores, and are generally being welcomed.[3] Morocco has also developed trade agreements with the UAE and Turkey, plus, through a 2006 deal, the USA, in what was only the second US trade pact with an Arab nation, and its only one in Africa.[4],[5]

Morocco’s relations with North Africa and the Middle East are, however, patchier. The Agadir Agreement is a free trade pact between Egypt, Jordan, Morocco and Tunisia, while the Maghreb Arab Union, bringing together Algeria, Libya, Mauritania, Morocco and Tunisia, was created 25 years ago to forge a powerful economic bloc. These are doing little in reality: trade between the Maghreb countries represents just 4.8 per cent of their trade volume.[6]

This is partly the result of conflict in these countries, which depresses commerce and trade. But Morocco also has long-running tensions with Algeria. The World Bank believes their two economies would have doubled in size if the Maghreb Arab Union had advanced as envisioned.[7] In reality, Africa’s northwest tip is the least-connected part of the continent.

Morocco has shown its ambition to re-establish relations despite political challenges. It left the African Union (AU) in the early 1980s over the contested Western Sahara region that it owns – but which some believe it should not – and re-joined last year as part of a charm offensive. It enjoys linguistic and religious commonality with Francophone West Africa, and is reportedly seeking membership of the Economic Community of West African States (ECOWAS). Direct investments in sub-Saharan Africa have risen from 66 per cent in 2008–2013 to 85 per cent today, primarily in banking and led by the likes of Attijariwafa Bank (AWB), Groupe Banque Centrale Populaire (BCP) and Banque Marocaine du Commerce Extérieur (BMCE).[8] Morocco’s prospects could improve substantially were its near-neighbour relations more cordial. Algeria and Morocco share an Arabic dialect, are mostly Sunni, and once enjoyed easy borders with no visa controls and free trade.[9]

But there is a second trend, even closer to home, that Morocco needs to address: inequality within its own borders. It avoided the Arab Spring reaching its shores, but the social fabric is frayed. Protests about economic marginalisation in the cities of Al Hoceima, Sidi Kacem, Khouribga and Ain Taoujdate, and the continued controversy over the Western Sahara, are signs of domestic challenges. Regional economic divergence is not surprising, as investors prefer large coastal cities with port access.[10] Greater investments in infrastructure – such as the $2 billion Tangier-Casablanca high-speed rail line – might help reduce those disparities over time, although they focus on the larger population centres and tourism-relevant destinations. A decade-long rural road rehabiliation programme, to build all-weather roads for those outside the cities, was evaluated to have been successful in reducing poverty, along with having gender and institution-strengthening effects.[11]

Morocco’s employment data, available through the MGI portal, does not immediately cause alarm. Indeed, the unemployment rate, at around 10 per cent, is low for the region, putting it in the six best-performing countries, marginally behind France. But the time series data show that Morocco’s GDP growth, which reached double digits during the 1990s, has been muted over the past decade. Its health expenditure per capita, while increasing, is less than half that of Algeria and Tunisia (the May 2017 Ain Taoujdate protests came after a 12-year-old child died due to a lack of emergency facilities at a hospital). Inequality, ranked by share of income held by the highest 20 per cent of the population, is rated at nearly 50 per cent – higher than Tunisia – and Morocco has the second-highest ‘vulnerable employment’ rate in the region, at around half of total employment; only Albania, at 57 per cent, fares worse.

Morocco has great promise as an economically liberal, outward-looking nation building high-tech industries. It must not ignore those regions and populations beyond the industrial zones, however. Indeed, greater efforts to integrate its own economic regions, and improve relations with its neighbours, can only create new growth engines and ensure that the benefits of its leading sectors flow through to the country at large.

Cleopatra Kitti was in conversation with Adam Green

[1] https://www.howwemadeitinafrica.com/establishing-manufacturing-hub-morocco-getting-right/57027/
[2] http://ec.europa.eu/trade/policy/countries-and-regions/countries/morocco/index_en.htm
[3] http://www.dw.com/en/sub-saharan-africans-trade-europe-for-morocco/a-38949695
[4] https://www.export.gov/article?id=Morocco-Trade-Agreements
[5] http://ec.europa.eu/trade/policy/countries-and-regions/countries/morocco/index_en.htm
[6] https://www.weforum.org/agenda/2017/06/five-ways-to-make-maghreb-work/
[7] https://www.economist.com/news/middle-east-and-africa/21725576-fences-make-neighbours-poorer-morocco-and-algeria-keep-building-more-barriers
[8] https://globalriskinsights.com/2017/05/morocco-continues-to-invest-in-sub-saharan-africa/
[9] https://www.economist.com/news/middle-east-and-africa/21725576-fences-make-neighbours-poorer-morocco-and-algeria-keep-building-more-barriers
[10] https://www.moroccoworldnews.com/2017/06/220562/moroccan-government-wants-reduce-regional-inequalities/
[11] http://documents.worldbank.org/curated/en/508571521841925640/pdf/Morocco-MA-Rural-Roads-II.pdf