As countries around the world continue to address the consequences of the COVID-19 pandemic, Morocco is a model of crisis management, increasing the daily testing rate from 2000 per day in April to 20,000 per day in June, reducing the key interest rate from 2.25% to 1.5% and providing 20bn dirhams for the recovery. Morocco has not spared any resources dealing with the pandemic, and is looking to the future, restarting the economy and further advancing its state and society. Patricia Cullen reports.
Improvements and progress have not just been made in response to the COVID-19 crisis however. They have been decades in the making, and over the past twenty years, Morocco has achieved significant social and economic progress due to large public investments, structural reforms, alongside measures to ensure macroeconomic stability.
Highlighting this monumental growth, Morocco jumped from 128th position in 2010 to the 53rd spot in the World Bank’s Doing Business 2020 rankings. This positive transformation across the business landscape has been credited to unprecedented, innovative structural reforms in the political, social and economic environments. The Green Morocco Plan, the Industrial Acceleration Plan, the RAWAJ Plan for Trade Development and Distribution, the Solar Plan and the Tourism Strategy are among the many policies that have been instrumental in this significant progress, and have been crucial to the industrial sectors historical growth.
In OBG’s 2020 Morocco CEO Survey, 28% of respondents recognised that the industrial sector has huge potential to drive further growth, followed by ICT and innovation at 24%, and agriculture at 10%. Renewables is another sector in Morocco that has huge opportunity, and the National Energy Strategy 2009 aims to generate up to 52% of the country’s electricity needs from renewables within 10 years’ time. Morocco is also set to be a global player in green energy and opportunities for innovative, spirited companies abound. Key projects include the 580-MW Noor solar power plant, the 800-MW Noor Midelt hybrid plant and the 850-MW Boujdour wind farm.
Though things are looking bright, there are challenges to overcome, and the combined effect of a poor crop year and the implications of the confinement policy due to the COVID-19 pandemic in the secondary and tertiary sectors, has led to a downward revision of the growth rate. Travel restrictions and health concerns have cast doubt on the future of the country’s most dynamic industry, tourism. Morocco reacted quickly and closed its borders in mid-March to curb the spread of COVID-19, and while the county was applauded for its quick thinking, the tourism industry, which accounts for approximately 11% of Morocco’s GDP, took a particularly hard hit.
On 19 May the Minister of Economy, Finance and Administrative Reform, Mohamed Benchaâboun, warned that the lockdown was costing the country US$101m a day and the HCP announced an anticipated 8.9% contraction in GDP during the second quarter of 2020. Various percentages of contraction from 5.2% to 1.7% have been given, as he warned that the emergency fund – which was established to deal with the crisis and had been allocated US$3.75bn – was insufficient to meet the growing costs.
Despite the challenging picture, this country is resilient, with an educated workforce and an innovative spirit. This crisis could present a chance for Morocco to remake its economy and will provide an incentive for greater investment in health and education. The Minister of Industry, Trade, Investment & Digital Economy, Moulay Hafid Elalamy said that the post-COVID-19 situation will provide the Moroccan economy with ‘unimaginable opportunities’. The government and regulatory authorities back these expectations and optimisms. And with good reason, as there are many plans already in place to revive the economy.
While the current priority is to control the pandemic, Morocco has formulated a comprehensive action plan to help finance and support major projects within the framework of public-private
partnerships, and strong action for economic and social recovery is forthcoming, with many relief measures already prepared. The financial recovery plan has a budget worth 11% of GDP, of which 4% will be provided through the Strategic Investment Fund. King Mohammed VI has formally ordered the transfer of MAD 15bn from the state budget, intended to increase investment and improve Morocco’s economy. The Strategic Investment Fund (also known as the Mohammed VI Investment Fund) aims to back productive sectors, help fund key projects through private-public partnerships, and will act as a facilitator, giving new energy to the investment dynamic in the Kingdom. Measures include the generalization of social security for all Moroccans, public sector reform and the introduction of a resourceful plan to boost the economy. The total volume of investment expected under this project over the medium term is estimated to stand at approximately MAD 38bn, and will generate an added value of two additional percentage points of GDP per annum.
There is also an ambitious plan for economic recovery and key structural reform in the social field, including the stepping up of public sector reform. The Ministry of Finance is currently working on an effective restructuring project for the public establishments and enterprises sector. The injection of public funds, in the form of equity in key sectors of the Moroccan economy will also have a positive impact, by making the most of expertise, financial resources and the ability to attract institutional investors and foreign donors. As part of the recovery package the King calls for a general national mobilization and the pooling together of skills and expertise. All of these measures will promote investment, shaping and enhancing the capability of the national economy.
On August 6th, the authorities announced a plan to sustain the economic recovery and employment levels. The encouraging plan envisages the mobilization of approximately DRH 120bn, mainly in the form of credit guarantees to firms and funding for a newly -created ‘Fund for Strategic Investment’, which will finance investment projects (including PPPs) and sustain the capital of firms that needs equity injections to develop their business. Moroccan Prime Minister Saad Eddine El Othmani unveiled an ambitious package of 11 national programs to be implemented in the coming three years. The measures are designed to generate 120,000 new jobs, directly or indirectly, over that period.
Like all economies, the Moroccan economy will see significant consequences from the COVID-19 pandemic. However, the International Monetary Fund (IMF) estimates that Morocco’s GDP will increase by 4.5% next year. Moroccan expertise in a variety of sectors will contribute to a remarkable performance, and this agility and ability to recover, recreate and reinvent, characterises the Moroccan economic fabric. Coming into 2021, Morocco’s business landscape is attractive and more inviting than ever.