Ce rapport est un travail de groupe dont je ne suis pas le seul acteur. Nous étions 6 à le produire.
Throughout the last century, Morocco has come a long way to be considered one of the most attractive countries in the Middle East & Africa region, and that, mainly because of its stable economy and geo-political situation. In addition, Morocco also enjoys a strategic geographic situation vis a vis of Europe, America and Africa. It distinguishes itself from other countries in the region by its infrastructure of international standards, and its skilled and efficient human capital. These factors combined certainly put the kingdom under the spotlight and attract huge worldwide companies that are considered potential foreign investors in Morocco. The country has triggered a dynamic that has improved the country’s attractiveness to foreign investments and favored the emergence of the global professions in Morocco.
In this regard, there are several reasons that encourage global corporates to invest in Morocco; in a nutshell here are some of them ( Moroccan Investment Development Agency, 2019) :
- Cost competitiveness ( wages , taxes , logistics costs)
- Strong & stable macroeconomics performances (Moroccan GDP growth ~ 4.9% Vs world GDP growth ~ 3.7%)
- Free trade access to more than 1Bn consumers
- Infrastructure at international standards
- Qualified labor force
- Sectorial plans
- Constantly improving business climate This is, at this effect, with a great ambition that Morocco has set itself to accelerate the emergence of a competitive and resilient domestic industry and, consequently, respond to the needs of the economic and social development of the country. Through this paper we will try to present a clear idea about the general business climate in morocco and also emphasize the role that government is playing by putting in place some strategies that come according to the kingdom’s ultimate vision. Despite all the strategies put in place, Morocco is struggling to take off since its economic development is still weak compared to its high ambitions, what are the reasons behind it?
II. Business climate in Morocco
1. Brief overview of Moroccan Sectoral strategies
While several North African countries are going through certain instabilities and security challenges, Morocco is focusing on its transition by combining reforms and plurality. And thanks to the efforts made by the authorities in term of budget consolidation, the country has considerably improved its macroeconomic situation during the period of 2013-2016. Nevertheless challenges are still there preventing the growth to be more resilient and inclusive.
Since 2004, and as an answer to the king’s speeches, some priorities have been put in place. These priorities are translated into four axes of development throughout the law of finance of 2017 and diverse sectoral strategies. Those axes are, according to Habib EL Malki and Othman EL Ferdaous:
- Acceleration of the economic transformation through industrialization and exports;
- The reinforcement of competitiveness and the promotion of private investment;
- Improvement of human resources and the reduction of disparities
- Institutional strengthening and good governance.
Therefore, morocco has established several ambitious and detailed sets of sectoral policies in order to promote activities where it has the best comparative advantages and to rebuild a competitive production potential, and this, in partnership with the private sector. Here are the different strategies:
- Tourism : “Vision 2020”
- Agriculture: “le plan Maroc vert”
- Industry: “le Plan d’Accélération Industrielle 2014-2020”
- Energy : “stratégie Energétique Nationale Horizon 2030”
- Business : “Plan Rawaj 2020”
- Logistics : “Stratégie Nationale de Développement de la Compétitivité Logistique”
- Ports : “Stratégie Portuaire Nationale horizon 2030”
- Craft : “la vision 2015 de l’artisanat”
- Corruption : “Stratégie de Lutte Contre la Corruption” The ultimate goal of these sectoral strategies is to allow morocco to position itself as a key platform for foreign investors. As of today, the first results of these strategies have shown that it has been a real leverage to our economy, to the development of its productivity and competitiveness, to the increase of public and private investments, to job creation and to the setup of integrated regional poles of development. Thanks to these strategical choices Morocco was able not only to stand still against the consequences of the world financial crisis but also to reinforce its position of privileged destination for foreign investments. However, the picture is not as positive and utopic as it looks, since there are some hurdles and challenges that make the efficiency and effectiveness of these strategies very limited. As per the figure above, it’s obvious that these strategies have been done on a very long term basis, (10/15 years) without taking into consideration the changes of our economical behaviour. Also some of them are targeting overrated goals compared to the context and the capacities of the Kingdom and sometimes they are even contradictory. Two of these strategies could be cited as examples, the one regarding tourism “vision 2020” and the one related to logistics. The first one had the ambition to welcome 20 million tourists by 2020.
However, arrivals to Morocco in 2016 have not exceeded ten million. That’s just what was planned in the 2010 Vision.
In addition, there is a telescoping of at least three sectoral strategies: the logistics strategy (platforms), Halieutis (agropoles) and the industrial acceleration plan (P2I). There is no connection between the three types of platforms. Some have not had the desired success because of their location and their rates.
So we can agree to say that these strategies have been put in place without any consultation between the different local and regional partners. Ministries are working toward the vision and a common goal but the concretization of this vision is difficult because of the non-convergence of the action plans in terms of prioritization of the projects and deadlines.
2. Business climate
As mentioned above, Morocco put in place several strategies to boost its economic and social development and to confirm its positioning as an economic hub. The implementation of these strategies requires the mobilization of the public funding as well as the private one.
In this context, the kingdom put in place complementary measures aiming to improve the business environment and to encourage national and foreign investment. These measures are mainly related to the improvement of the current investment chart, the facilitating of the financing and investment access and the development of strategic projects meeting international standards.
In terms of investment chart: according to Othman EL Ferdaous, this chart consolidates the achievements to date and foster further improvement and progress related to the current business climate. It contains more than 11.000 words and new keys of success such as innovation, entrepreneurial spirit, research and development job Creation and inclusive development. This chart is currently under negotiation with the main public and government stakeholders
In terms of facilitating of the financing and investment access: several state guarantee funds were created and a bank agreement was signed to facilitate the access to financing. Moreover, structural reforms were adopted to boost investment access basically in terms of setting of new business which allowed Morocco to improve its ranking by doing business (60 in 2019 vs 69 in 2018)
In terms of strategic project development: For the past ten years, Driven by a very ambitious royal vision, the kingdom of Morocco has made huge progress in its structural infrastructure development. Indeed, all the national players, public as well as private ones, have actively contributed to the development of structural projects meeting international standards to improve the attractiveness of the country. For example, the Rabat theatre which is considered as an architectural icon, the port of Tangier and the high-speed rail road to strengthen logistics competitiveness of the kingdom. They also participate in the upgrading of many basic equipments such as the highway network and the existent roads and ports.
Despite of all these reforms, The Minister has emphasized the various current problems that slow down the country’s development process and the implementation of Moroccan strategy. Among these problems:
- – The lack of strategies convergence
- – The lack of communication between public-public and public-private players in the launch of national development strategies. Therefore, a lack of common vision and correlation between both of them and loss of trust appeared. Furthermore, according to Habib EL Malki, Morocco has an integration rate of 30% which weakens the country in terms of competitiveness as an economic hub.
III. Public-Private Partnerships
1. Public sector investments and roles
During the last decade, the public sector investments and strategies were basically oriented to make Morocco one of the most important destinations for national and international investors. The public sector investments were mainly focused on strategic infrastructures: Highways, Ports, and airports. These kinds of infrastructures are heavy and generate a low profit making. The Public sector invested also in education and human resources in different fields: Hotels, industry, information services, etc.
Despite all the incentives given, the leverage granted and the strategic infrastructures deployed, the private investments remain poor. The economic operators adopted a wait-and-see attitude, due to the lack of visibility and communication with the public sector, which drastically reduces the probability of a significant economic growth. The public sector invested 195 billion dirhams in 2018. This budget is based mainly on taxes and international aids. Still, this budget was not fully consumed due to low execution rate (less than 60%) (MASMOUDI, 2018).
On another side, the private sector investments are mainly based on the local operators rather than the international ones. This situation explains the Moroccan economy resilience during the last economic crises.
The lack of visibility and communication between the public and private sectors is one of the biggest problems the Moroccan government needs to face. Another issue, discussed with His Excellency Secretary of State in charge of Investments- Othman El Ferdaous, is the public investment strategies deployment and convergence. The lack of skilled resources in public administration generate a high rate of external consultant use (McKinsey ,BCG..).
The major problem with external consultants is that these companies draw strategies while their missions never exceed a three month terms. thus, their strategies are neither followed nor reported the way they ought to be. Indeed, the continuity of those strategies cannot be ensured.
2. Public sector intervention model
The public sector acts as an influential body and catalyst for private initiatives. It supports the economic growth of destinations through the initiation and the development of strategic and structural projects with high added value.
The financing of these structuring projects is done through public companies. These companies are mainly in the form of public limited companies wholly owned by the public funds or in the framework of a PPP model with the private actors. In this case, the public funds are at least 34% of the capital of society created in order to keep the right of decision-making process and to ensure a good governance.
These public enterprises become key players in the Kingdom’s economic and social development growth. Casa Transport, Société du Tram de Rabat Salé and the Moroccan agency for the development of the Bouregreg valley are three examples of the PPP results (Société de développement Local). The first one is 60% owned by the state, 30% by the local municipality and 10% by the private sector.
The main difference between the two first SDLs is that the “Casa Transport” has a large scope than “Société de tram de Rabat Salé”. The first one manages transportation in Casablanca (Tramway, bus etc.) and organization of public space and areas and the second one is only responsible for the tramway. The first model permits to this public company to be more efficient and effective in the development of their projects.
But for the both structures, the process of decision making is complex due to the wide range and multitude of stakeholders involved in this process.
Indeed, in Morocco, one of the bottlenecks in the implementation of strategies and the development of strategic projects is the decision-making process that involves many players from central government and local ones such as the municipalities.
Aware of this problem, the kingdom has launched the process of regionalization in order to decentralize the power of decision towards the regions and local authorities. This will give them sufficient legal power as the first step for simplifying the process of decision making and the facilitation of the development of PPP projects in line with local needs.
IV. Conclusion: Suggestions and recommendations
In terms of the lack of strategies convergence:
– The creation of an autonomous and non-governmental structure whose main missions are to
o the convergence between the various public policies o the evaluation and monitoring of the achievements
- – The creation of a database regrouping and consolidating all the projects foreseen in the action plans for setting up the various sectoral strategies. This database will provide a global vision of all structuring and complementary projects as well as better planning.
- – The involvement in upstream of the various public and private partners necessary for the implementation of strategies
In terms of the simplifying the process of decision making:
- – The acceleration of the process of regionalization
- – Providing each region an extraction from the database mentioned above of the projects that they should develop and launch (they should be involved in upstream of the creation of the global database) In terms public managerial competencies:
- – Recruiting competent individuals without political affiliation and revise the salary scale
- – Providing training sessions for managers in public sector to build skills
Key takeaways: Brief overview
Territorial attractiveness; this module could easily have been called this way, in addition to the definition of attractiveness as mentioned in the introduction. Nowadays, it takes a real global approach to successfully position itself compared to other territories. Zaha HADID’s theater in Rabat is a perfect example of what can be called a visible part of this attractiveness. This exceptional building, mostly made by Moroccan firms and competences, is more than a building; it is an edifice with the ambition to give the city of Rabat an international renown just like other masterpieces of architecture such as the Gugguenheim of Bilbao (Frank O’Ghery), the Gugenheim of New York (Frank Lloyd Wright), the Beaubourg of Paris (Renzo Piano and Richard Rogers) … Buildings that make the fame of the cities that host them. They are also elements of a complex mesh that crowns a real substantive work to valorize a given territory.
Let us illustrate this with the example of the CasArts with its theater(Christian de Portzomparc) which,
once completed, will give a new identity to the place of Mohammed V and will definitely participate in the cultural
development of the city of Casablanca, along with the amenities of the cornice, the Arab League Park, the
velodrome, and the ambitious project of the Avenue Royale. All these components, once merged, will undeniably
contribute to the attractiveness of our economic capital. The latter, in addition of being famous for business, will
become just as pleasant to live in (Mission of the Governor); a little more of security will also be welcome.
Linking all these amenities together, serving them, and making them accessible became of a big importance. It is hard to imagine the Sydney Opera House or the Times Square not being well served; one of Casa Transport’s missions which must be efficient and lead projects structuring with all other stakeholders of local governance. The approach is almost identical with the development of the Bouregreg valley if we add up the great theater, the Marina, the big tower, the tramway … all this leaves us dreamers; a dream that is gradually materializing in front of our eyes thanks to the perseverance of the local leaders and local competences.
However, how about structuring projects? Economic attractiveness? Creating local values? His Excellency Mister Habib EL Malki speaks of a 180° turnaround and a need for an export-oriented industry, another very ambitious dream. Mister Othman EL Ferdaous quickly reminds us of the harsh reality of the field with the difficulty we might have to fairly upgrade the entire territory of the Kingdom, as well as the great gap in terms of governance and competence that separates the two major pillars of our economy (the public sector versus the private sector).
Mister Dardouri also reminded us of the harsh reality of the gap that we can have in terms of education, health, and all efforts made to focus on human development, which is the basis of all other growth/progress. While some of our public competences play firefighters, the other part of the private sector tries to apply the most ultra models that can be found in terms of governance but which ultimately must adapt its pace to the honeyed pace of the leaders ! He remains a major player and not least; that of politics. The intervention of the Chairman of the Finance Committee of the Chamber of Advisers gave us an idea of the efficiency we can have in our mode of governance.
Today, even with all what has been mentioned, a territory is still not enough, it needs a well-structured marketing plan. We attended a shy WeCasablanca that has fallen into oblivion, far from I Amsterdam, Only Lyon … we also talk about country branding like Incredible India. Territorial attractiveness has been able to go beyond conventional boundaries thanks to political will and pragmatism. The synergy between the Business Industry and
Government, doing politics and the mode of governance is a necessity to achieve a major breakthrough for
Morocco of the future.
Moroccan Investment Development Agency. (2019, 02 28). Why Morocco . Retrieved 03 05, 2019, from Kingdom of Morocco – Moroccan Investment Development Agency: http://www.invest.gov.ma/?lang=en&Id=3
MASMOUDI, K. (2018, 09 25). Coup de frein à l’investissement public. Retrieved 03 04, 2019, from leconomiste: https://www.leconomiste.com/article/1034043-coup-de-frein-l- investissement-public