MOroCcO
2014
Samia Mansour /
[email protected] Vincent Castel /
[email protected]
www.africaneconomicoutlook.org
Morocco
MOROCCO • The Moroccan economy proved resilient in 2013 with a growth rate of 4.7%, buttressed mainly by domestic consumption and public investment, but also by a good agricultural year. • The reforms that have been underway for several years in favour of the private sector were strengthened in 2013 by a fiscal reform and the continuation of the reform of the compensation fund, which represents a key step in reducing public spending. • Morocco has invested in consistent sectoral strategies to accompany the reforms undertaken since the early 2000s, which helped accelerate the economy’s structural transformation and promote new products. New industries, such as aeronautics and automobiles, are now drivers of growth and areas of innovation for the Moroccan economy. These areas can help Morocco overcome the difficulties encountered by certain traditional sectors such as textiles.
Overview The Moroccan economy consolidated its growth in 2013 with GDP rising 4.7% compared to 2.7% in 2012, despite the slowdown in world growth. This was due to a vibrant agricultural sector, in particular, with non-agricultural activities somewhat less dynamic, compared to 2012. Overall goods exports were down by 4% because of a decline of almost 28% in exports of phosphates and their derivatives. The only exports to benefit from the recovery of external demand were capital goods, in particular electric cables and wires. Sound macroeconomic and fiscal management continued into 2013. A cautious monetary policy held inflation at 1.9% and the current account deficit at 7.2% of GDP, compared to 10% in 2012, while foreign-exchange reserves reached 4.5 months of imports of goods and services. The fiscal deficit, however, reached 5.3% of GDP. In response, the government undertook corrective measures to improve revenue collection and lowered public investment for 2014 with a view to bringing the fiscal deficit down to 3% of GDP by 2016. It should also be noted that the reform of the compensation fund and the application of an indexation system for petroleum products will be needed to achieve that objective. Overall, Morocco’s performance has been encouraging and benefited from a context of political and social stability. The business environment has improved and the country has moved up eight places in the annual World Bank Doing Business report, climbing from 95th to 87th in one year. In addition, 2013 was marked by improved tourism revenue (+2%), transfers from Moroccans living abroad and a significant increase in foreign direct investment (+20%). Despite these positive results and the overall economic improvement, Morocco has not been able to solve the problem of youth unemployment (ages 15-24), which reached 19.1% in 2013. For 2014, Morocco is going to continue to implement its reform programme (subsidies, taxation, retirement, social protection and the fiscal system), with two objectives: i) to improve the efficiency of public finances; and ii) to support the development of an inclusive growth model supported by the private sector and that generates jobs for young people. Morocco has invested in targeted sectoral strategies to accompany these reforms and to accelerate the transformation and diversification of its economy, leading to more employment creation. The National Pact for Industrial Emergence (PNEI, 2009-15) aims to revive the industrial sector and to boost its competitiveness, and is thus an important framework for launching industries in which Morocco can be considered more competitive. From this perspective, the objective of creating 220 000 new jobs seems feasible for 2015. The new aeronautical and automobile industries represent an important source of economic growth and innovation for Morocco.
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Figure 1. Real GDP growth Northern Africa (%)
Real GDP growth (%)
Africa (%)
% 10 9 8 7 6 5 4 3 2 1 0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013(e)
2014(p)
2015(p)
Source: AfDB, Statistics Department AEO. Estimates (e); projections (p).
Table 1. Macroeconomic indicators 2012
2013(e)
2014(p)
Real GDP growth
2.7
4.7
3.2
4.6
Real GDP per capita growth
1.3
3.2
1.7
3.3
CPI inflation Budget balance % GDP Current account balance % GDP
2015(p)
1.3
1.9
2.7
3.0
-8.6
-5.3
-5.5
-4.9
-10.0
-7.2
-7.8
-7.3
Source: Data from domestic authorities; estimates (e) and projections (p) based on authors' calculations.
Recent developments and prospects The Moroccan economy improved in 2013, with overall growth of 4.7% supported by good agricultural results. Indeed, agricultural value added increased by 21%, compared to a fall of 2.5% in non-agricultural activities. The primary sector benefited from good rains and, therefore, from a very good agricultural year. Cereal production rose by 86% compared to 2012 with 20.42 million quintals at the end of October 2013, 99% of which consisted of common wheat. Thanks to the improved 2012/2013 harvest, cereal imports fell by 42%. As for other agricultural sectors, livestock farming and offshore fishing also experienced sustained growth, benefiting from sectoral public investment programmes, in particular the Morocco Green Plan and the Maritime Halieutis Plan. In all, the agricultural sector’s value added grew by 21% in 2013, contributing to nearly 15% of GDP. It should be noted, however, that unfavourable weather conditions and low levels of precipitation for the current year are expected to impact results negatively for 2014. The manufacturing industries experienced weak and irregular growth in 2013. They contributed less than 15% to GDP and grew by 0.6% compared to 2012, with value added varying wildly across different manufacturing sectors. Certain industries – mainly the automobile and aeronautical industries – experienced significant increases in exports: more than 20% and 14%, respectively. Conversely, real estate, construction, textiles and leather had negative growth rates, having been strongly affected by the fall in European demand. The results for the agri-
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food and pharmaceutical industries were more positive, contributing to exports. The reform of the Moroccan industrial sector, supported by the PNEI, helped revive and diversify the country’s industrial fabric. As of the time of this analysis, prospects for 2014 are positive for certain sectors, in particular for the automobile and aeronautics sectors. More specifically, the automobile sector has proven very dynamic since the inauguration of the Renault factory in February 2012. Its exports have grown significantly, to the point of overtaking textiles for the first time. In aeronautics, the other Moroccan high performer, activities are diversified across the whole value chain, covering everything from production and dedicated services to maintenance and engineering. Although it did not yet exist in 2002, Morocco’s aeronautical industry now consists of about 100 companies, including some of the biggest groups in the world, such as Bombardier, EADS, Safran, Aerospace and Aircelle. The industry employs more than 100 000 highly skilled workers and brings in turnover of more than 8 billion Moroccan dirhams (MAD), with an annual growth rate in turnover of 25% over the last five years. Growth in non-manufacturing industries was very weak in 2013 and at times was even negative for certain sectors. Phosphate production, a stronghold of Moroccan industry, fell by more than 2%, reflecting lower external demand. Export turnover for the Office Chérifien des Phosphates (OCP), the state-owned phosphates monopoly, was MAD 34.8 billion at the end of November 2013, down by 22% compared to 2012. This under-performance is due to the significant fall in sales abroad; if external demand rises in 2014, a recovery could be expected. As for the secondary sector overall, growth of 4.5% is forecast for 2014, after a small rise of 0.6% in 2013. This recovery is based on three elements: i) a recovery in the extractive industries (5.6% in 2014 compared to 0.4% in 2013); ii) improved growth across all processing industries (4% in 2014 compared to 1.8% in 2013), in particular in the textile-clothing sector; and iii) a return to growth in the building and construction sector (4% in 2014 compared to -1.6% in 2013). The tertiary sector continued to support Moroccan growth in 2013, but at a slightly slower rate than in 2012, reflecting the slowdown in the growth of value added in the public sector. For the most part, telecommunications and commerce were the basis for growth in value added in the tertiary sector. Thus, the development of telephony and Internet networks has been positive and telecommunication service coverage has expanded. Overall telephony stock was strengthened by a growth rate of 6.6% and 44.3 million subscribers, while Internet services rose by 34.7% or 5.2 million subscribers at the end of October 2013. As for tourism, value added continued to improve, reaching a growth rate of 4.8% in 2013. Overall overnight stays and travel revenue also rose by 5% and 13%, respectively. In 2014, the tertiary sector is expected to continue this pattern of growth at an estimated rate of +5.1%, boosted by strengthened telecommunications, commerce and transport. The tourism sector could also continue to improve slightly.
Table 2. GDP by sector (percentage) 2008
2012
14.6
14.4
of which fishing
1.2
1.0
Mining
7.3
5.3
Agriculture, hunting, forestry, fishing
of which oil Manufacturing
14.2
15.9
Electricity, gas and water
2.6
2.6
Construction
6.2
6.5
14.0
13.0
of which hotels and restaurants
2.6
2.6
Transport, storage and communication
7.3
6.7
14.0
14.1
Wholesale and retail trade, hotels and restaurants
Finance, real estate and business services Public administration, education, health and social work, community, social and personal services Other services Gross domestic product at basic prices / factor cost
8.7
9.7
11.1
11.8
100.0
100.0
Source: Data from domestic authorities.
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Morocco
A slowdown in economic growth is nevertheless forecast for 2014, with an estimated growth rate of 3.2%. According to the Moroccan High Commission for Planning (HCP), this is due to several factors: i) a poor start to the 2013/2014 agricultural year due to a significant lack of rainfall over the last three months of 2013; ii) the cost of agricultural production, which has been affected by the jump in fuel prices; and iii) the impact of taxation on the agricultural sector. Given that Morocco still depends on the agricultural sector, economic recovery will be contingent upon the implementation and carrying out of ongoing reforms in the sector. Exports also depend on the recovery of the world economy, in particular that of Europe.
Macroeconomic policy Fiscal policy In 2013, Morocco had to make its fiscal policy stricter so as to tackle the increase in budgetary expenditure present since 2011. The fiscal deficit was thus reduced to 5.3% of GDP in 2013. To counterbalance additional expenses that were due mainly to a rising wage bill, the government undertook a reform of the compensation system and began a process of fiscal modernisation, with the objective of bringing the fiscal deficit down to 3% of GDP by 2016. In 2013 the government therefore adopted a partial indexation system for petroleum products which led to prices being revised by MAD 0.69 per litre for diesel oil and by MAD 0.59 for gasoline. These initial efforts helped bring the fiscal deficit down from 8.6% of GDP in 2012 to 5.3% in 2013. Moroccan public finances for 2013 were characterised by a fall in public revenue due to lower fiscal income, in particular from corporate taxes (a fall of nearly 13% compared to 2012) and customs duties. Expenditure rose slightly, despite the 23% decrease in spending on salaries, mainly because of the higher cost of goods and services and debt interest charges. The authorities’ desire to boost transparency and good governance, in particular by preparing public accounts on time and by publishing them, was a significant factor in 2013. In order to ensure a more equitable distribution of financial resources, the government, reformed budgetary nomenclature in order to take regional considerations into account when determining the distribution of budgetary resources. The objective is to ensure optimal distribution of central government efforts across the different regions.
Table 3. Public finances (percentage of GDP) 2005
2010
2011
2012
2013(e)
2014(p)
2015(p)
Total revenue and grants
23.9
25.4
26.5
26.6
27.2
26.2
25.5
Tax revenue
21.5
22.7
23.0
23.7
23.1
23.0
22.8
0.5
0.0
0.6
0.3
1.5
0.6
0.2
Total expenditure and net lending (a)
29.7
29.8
33.6
35.2
32.5
31.7
30.5
Current expenditure
25.9
23.8
26.9
28.7
26.7
26.5
26.0
22.6
21.5
24.6
26.3
24.5
24.3
23.8
11.7
10.3
11.1
11.6
11.2
10.8
10.3
Interest
3.3
2.3
2.3
2.4
2.3
2.1
2.2
Capital expenditure
3.9
6.0
6.7
6.5
6.3
6.3
6.4
Primary balance
-2.5
-2.1
-4.7
-6.2
-3.0
-3.4
-2.7
Overall balance
-5.8
-4.4
-7.0
-8.6
-5.3
-5.5
-4.9
Grants
Excluding interest Wages and salaries
Note: a. Only major items are reported. Source: Data from domestic authorities; estimates (e) and projections (p) based on authors' calculations.
The fiscal deficit is forecast to be 5.5% of GDP in 2014. Whether this objective is achieved or not will depend, however, on the implementation of reforms. In order to limit public expenditure, the government intends to continue its modernisation of the social-protection system in order to bring compensation expenses down from 6% to 3% of GDP in 2014. Recurrent expenditure in the public finances is expected to fall by 3.3%, reaching 26.5% of GDP in 2014, in particular because of a fall in overall expenditure. Recurrent revenue, excluding income from privatisation, is expected
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to suffer a slight decrease of about 1% in 2014 compared to 2013, as a result of a fall in fiscal revenue, in particular that from corporate taxes and customs duties.
Monetary policy In a difficult international economic context, Morocco followed a cautious monetary policy based on controlling inflation, which remained relatively stable in December 2013, at 1.9% versus 1.3% for the same period in 2012. This was consistent with the forecasts of the Moroccan central bank (Bank Al-Maghrib). In the absence of any inflationary pressure, in December 2013 the board of Bank Al-Maghrib decided to hold the reference rate steady at 3%. Changes in prices in 2014 will nevertheless depend on the implementation of the new indexation system for the price of a number of petroleum products in 2013/2014, and on the scheduled compensation costs in the 2014 budget proposal. Although the price at the pump of the indexed petroleum products is calculated on the basis of international prices, forecasts for 2014 and 2015 are, in fact, for relatively restrained inflation of 2.7% and 3%, respectively. It should be noted that these forecasts are in line with the objective of mid-term price stability. The money supply (M3) has grown slightly, ending 2013 up by 1.4% compared to 2.9% in 2012. This is mainly due to the increase in international reserves (4.9% compared to -20.0% in 2012). In contrast, credit to the economy and net credit to the central government slowed considerably compared to 2012, however: +1.9% and +22.2% respectively in 2013, compared to +5.5% and +25.1% the previous year. The deficit in bank liquidity worsened again in 2013, due to the slow growth of the money supply. The dirham’s nominal effective exchange rate, which is calculated based on a basket that includes the currencies of Morocco’s main partners and competitors, remained relatively stable in 2013, compared to 2012, appreciating by less than 1% at the end of 2013 compared to the previous year. It depreciated by almost 0.3% compared to the euro, and appreciated by nearly 1.5% compared to the dollar.
Economic co-operation, regional integration and trade Morocco chose to follow a trade policy based on regional integration and strong economic co-operation, both with the Mediterranean region and sub-Saharan Africa. Morocco has signed numerous bilateral and multilateral free trade agreements so as to allow its economy to integrate into global trade; these have included agreements with the European Union, the United States, Turkey, and several Arab countries through the Agadir Agreement and the Arab Maghreb Union (AMU). These agreements helped to galvanise Morocco’s external trade and to reduce its significant trade deficit. In 2013, the foreign trade balance improved to the tune of MAD 5.7 billion, bringing the trade deficit down to about MAD 196.39 billion, compared to MAD 202.06 billion a year earlier. The improved balance of trade is mainly due to a 2% reduction in imports in 2013 (MAD 379.22 billion, compared to MAD 386.95 billion one year earlier) and a 1% drop in exports (MAD 182.84 billion versus MAD 184.88 billion in 2012). The fall in imports was spread across almost all products, with the exception of capital goods and semi-finished products. The downturn in exports mainly affected phosphates and phosphate derivatives (-21.7%) and the textiles and leather sector (-4.4%). The export-import ratio therefore reached 48.2% in 2013, compared to 47.8% in 2012. In 2013, foreign direct investment (FDI) flows recorded gains of nearly 20%, compared to 2012, due to the improved business environment, and Morocco alone was able to attract 25% of all FDI going to North Africa. According to FDI Intelligence, part of the Financial Times group, Morocco became the second most attractive country for FDI in Africa in 2013-14, attracting 8.3% of all such flows to the continent. Remittances from Moroccans living abroad (MREs) remained relatively stable in 2013, totalling MAD 58.3 billion, compared to MAD 58.8 billion in 2012.
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Table 4. Current account (percentage of GDP) 2005
2010
2011
2012
2013(e)
2014(p)
2015(p)
-13.8
-19.4
-19.4
-20.8
-25.1
-26.0
-26.9
Exports of goods (f.o.b.)
18.0
19.6
21.8
22.3
21.3
20.1
19.5
Imports of goods (f.o.b.)
31.7
39.0
41.2
43.1
46.4
46.1
46.4
7.2
9.6
5.4
5.6
5.7
6.4
8.2
-0.5
-1.6
-2.0
-2.4
-0.6
-2.5
-1.8
Trade balance
Services Factor income Current transfers
9.1
7.4
8.1
7.7
12.8
14.3
13.2
Current account balance
2.0
-4.1
-8.0
-10.0
-7.2
-7.8
-7.3
Source: Data from the Central Bank and domestic authorities; estimates (e) and projections (p) based on authors' calculations.
Debt policy In 2013, outstanding public debt increased to 61.8% of GDP, against 59.6% in 2012. Public debt has continued to rise since 2009, when it was 49% of GDP. This trend is expected to continue in 2014, with forecasts that it will climb to 63% of GDP. Outstanding external debt also grew, reaching 27% of GDP in 2013 compared to 25% in 2012. Interest charges on the external debt, therefore, rose by nearly 16% in 2013, compared to 2012, caused by the first interest payment on the USD 1.5 billion loan contracted in December 2012 on international financial markets. Nonetheless, the Moroccan public debt remains sustainable, as long as sufficient growth is maintained and the government’s reform of the subsidy policy continues. Nearly half of the public debt (49.2% of the total) is held by international institutions. The remainder is held by bilateral lenders (34%), commercial banks and international financial markets (together 16.8%). Almost 74% of the external debt is denominated in euros, 11.1% is in dollars and 4.6% in yen. Most (76.8%) of the public debt is in fixed-rate loans, while the remainder (23.1%) is based on floating rates of interest.
Figure 2. Stock of total external debt (percentage of GDP) and debt service (percentage of exports of goods and services) Outstanding debt (public and private) /GDP
%
Debt service/Exports
35 30 25 20 15 10 5 0 2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: IMF (WEO & Article IV).
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In order to meet its financing needs, and in the context of chronic budget deficits, the 2014 budget law authorises the Treasury to raise MAD 3.34 billion from abroad and MAD 23.93 billion on the domestic market. Although the government will continue to rely mainly on the domestic market, Morocco will also be able to count on international institutions in the coming years, through a new series of loans from the World Bank to the Moroccan government totalling MAD 4 billion for the period 2014-17.
Economic and political governance Private sector In 2013, the Moroccan government continued with reforms (legislative, regulatory, institutional) intended to improve the business environment and galvanise the private sector. The National Business Environment Committee (CNEA) placed special attention on simplifying administrative procedures, improving the legal framework for business and facilitating access to property. Several other legislative and regulatory texts aimed at strengthening good economic governance were adopted and will be implemented in 2014. In particular, these texts include the reform of the decree on public procurement, the reform of the law regulating price and competition liberalisation, and the proposed law relating to the national agency on probity, prevention of graft and the fight against corruption. Morocco has, indeed, moved up several places in the world rankings of ease of doing business and economic competitiveness. In the World Bank’s report Doing Business 2014, Morocco was placed at 87th in the general ranking on the ease of doing business (out of 189 countries), up 8 places from the year before, and 39th for starting a business, an improvement of 14 places. This progress was mainly due to improvements in the ease and speed with which businesses can be created. These positive results could be reinforced in 2014 thanks to initiatives taken by the Moroccan authorities, such as the ongoing reforms. Similarly, in the Heritage Foundation’s 2013 Index of Economic Freedom report, Morocco scored 76.4 out of 100 in the “business freedom” category and was 46th out of 185 countries, ahead of Luxembourg, Thailand, Indonesia and Russia. Despite this improved ranking and the simplification of procedures to create and register businesses, improvements to the support system for the private sector are needed and must still be implemented, in particular for land management, training, financing (especially for SMEs) and removal of bureaucratic red tape, as well as in the fight against corruption. In Transparency International’s most recent annual corruption perceptions index, Morocco lost three places in the 2013 ranking, ending up in 91st place.
Financial sector The Moroccan banking sector is stable, well capitalised and shock-resistant. Financial intermediation has gradually grown, and efforts undertaken by the banking system for financial inclusion helped raise the bank account penetration rate to 60% at the end of 2013, while the strategic plan of Bank Al-Maghrib (the central bank) aims to bring that rate up to 75% of the population in 2014. Non-performing loans remained low at about 5% in 2013. In 2013 the bank liquidity deficit in the Moroccan banking system widened, reaching MAD 78.1 billion. This continuing liquidity deficit led to the need for repeated intervention by the central bank. In order to allow the banking system to become more organised and stronger, Bank Al-Maghrib will, therefore, implement a directive on banks’ own resources which will apply from 1 January 2014 through 2019, while also continuing its policy of reform, as required under the Basel III Accord.
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Despite a slightly weakened national economy, Morocco was able to cover its financial needs in 2013 by borrowing USD 750 million in long- and very long-term debt (with maturities of 10 and 30 years, respectively) on the international financial market. Access to financial services for very small, small and medium-sized enterprises (SMEs) remained weak in 2013, leaving Morocco somewhat backward in this regard. Poor access to credit is a limiting factor for SME development; indeed, while they represent 93% of all companies in the country, loans to SMEs only represent 24% of all those granted by the financial sector. Part of Bank Al-Maghrib’s strategy for 2013-15 is a specific system for monitoring financing to SMEs and very small enterprises. In addition, microfinance also remains only weakly developed in Morocco. Although it has existed for nearly 20 years, in 2012 the microfinance sector implemented its very first national strategy, which provides for government assistance to the sector with a view to reaching 32 million beneficiaries by 2022. Compared to the main international stock exchanges, Casablanca’s performance was amongst the most disappointing in 2013: the Casablanca Stock Exchange came in second to last out of the world’s stock exchanges, down by 4.3% and ahead of only the Tunisian stock exchange. In 2014, the stimulation of capital markets will depend on the implementation of associated reforms, in particular by the creation of a financial futures market and by the introduction of new products, such as collective real estate investment funds (OPCIs).
Public sector management, institutions and reform In recent years Morocco has begun to strengthen and modernise the public sector. These efforts continued after the completion of the fourth phase of the Public Administration Reform Support Programme (PARAP) in 2010 with the adoption of the new Constitution in 2011 and with the commitment to strengthen government and reform the administration. The main objective of all of these reforms is to operationalise the principles of good governance: i) by improving the quality and efficiency of public services; ii) by reinforcing attentiveness to public opinion; and iii) by modernising human-resource management. The implementation of the government’s legislative plan and the strengthening of participatory democracy, through the drafting and proposal of several organic laws intended to provide an operational framework for the new Moroccan constitution, were significant events in 2013. These laws mainly regulate the organisation of government work and that of the Constitutional Court. They also concern the adoption of texts governing the Economic, Social and Environmental Council, the Competition Council and the Higher Education, Training and Scientific Research Council, as provided for in the new Constitution. Other reforms were also implemented to ensure enhanced regionalisation and greater administrative decentralisation, and to improve governance over public policies. The enhancement of regionalisation will face challenges, however, in particular in terms of institutional capacity and the availability of human resources at the local level. Work on new fiscal reforms has also begun, the objective being to set up a fair and equitable fiscal system that favours competitiveness of enterprises and confidence building between the tax authorities and the people. The progressive implementation of recommendations is expected to take place in 2014.
Natural resource management and environment Environmental fragility and the effects of climate change are sources of weakness for the sustainable development of the Moroccan economy. Indeed, studies of climate evolution indicate that aridity is worsening, due to both a decline in precipitation and to the significant increase in temperatures across the entire country.
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Aware of the consequences of the degradation of natural resources on the population, the Moroccan authorities have made access to a healthy environment a fundamental right of its citizens under the new Constitution. Since 2011, numerous environmental improvement programmes intended to raise standards of living have therefore been implemented: protection of water quality, regulation of air pollutant emissions, waste management, development and renewal of protected areas including both the coastline and soils, and access to environmental information. Morocco has also set itself the ambitious goal of raising its installed capacity of power generated from renewable sources up to 42% by 2020, compared to the current 32%. The viability of fish stocks is one of the cornerstones of the country’s fisheries strategy, and Morocco has highlighted its natural heritage as a strategic asset for tourism. Morocco’s Green Plan was one of its main priorities in 2013 as a means of establishing a resilient and sound economy that is a source of opportunity for vulnerable populations. This plan will lead to the adoption of sustainable agricultural practices and to the development of new sectors, such as ecotourism and aquaculture, that could generate jobs and diversify sources of revenue in rural zones where 70% of poor Moroccans live.
Political context Morocco enjoys good political stability. The November 2011 elections resulted in a victory by the Islamist party, the Justice and Development Party (PJD), whose Secretary General, Abdelilah Benkirane, was named head of government. Following that appointment, a coalition government was formed on 3 January 2012. Since its arrival in power, however, the PJD has been confronted with significant attacks on social policy in the form of protests and strikes, as well as attacks on political, legislative and regulatory issues. Several protests and a general strike took place in September 2013 in response to price increases and the imposition of a partial indexation system for liquid petroleum products. In response to those attacks, the government continued its reforms in 2013 so as to strengthen participatory democracy and the governance of public policies and to guarantee more administrative devolution. Despite a worrying regional security situation due to terrorist activity in 2013, the security situation in Morocco is under control. Indeed, Morocco has reinforced its security services, allocating more human and logistical resources to it, and has safeguarded its borders so as to fight the rise of terrorism. Elsewhere, after having served a year as a non-permanent member of the United Nations Security Council, Morocco joined the UN’s Human Rights Council for a three-year term, as well as the UN Committee against Torture, the Council of the International Maritime Organisation (IMO), and the Executive Board of UNESCO. Morocco was also chosen to host the second World Forum on Human Rights in 2014.
Social context and human development Building human resources In 2009 Morocco launched an emergency education and training programme. Primary-school enrolment rose from 91.4% in 2007-08 to 99.6% in 2012-13 and for junior secondary school the rate of enrolment rose from 71.3% to 85.1%. The number of beneficiaries of literacy programmes climbed from 180 000 in 1998-99 to nearly 763 000 in 2012-13. In addition, efforts under literacy programmes led to a gradual reduction of the illiteracy rate for ages 10 and up, falling from 43% in 2004 to 28% in 2013. In order to achieve the UN’s Millennium Development Goals (MDGs) and to bring the illiteracy rate down to 20% by 2016, in 2014 Morocco will create a new national agency to fight illiteracy.
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Public health and the use of health-care services indicators did not show the improvement that would have been expected on the basis of the country’s per capita GDP. Infant mortality is higher than in some countries with a comparable per capita income. The maternal mortality rate reached 112 for 100 000 live births in 2013, and the rates of prenatal and postnatal care and of births at medical facilities remain relatively low. In addition, significant disparities in healthrelated issues exist depending on urban/rural location, gender and income quintile. Morocco’s goal is to improve access to basic social services for the entire population by developing social safety nets. The Medical Assistance Regime (RAMED), intended for those most in need, and the extension of medical coverage are part of the Kingdom’s poverty-reduction and social-development policy. In 2013, however, access to health care remained limited to only 49% of the population. Only 34% of Moroccans are covered by the Obligatory Health Insurance (AMO), employer schemes, mutual insurance associations and insurance companies. The RAMED covered about 15% of Moroccans as of the end of July 2013. The fight against tuberculosis has always been a priority in Morocco. Care is free for everyone throughout the entire country, which has led to a treatment success rate of more than 85%, while the detection rate is 95%. In 2013, efforts continued on this front and the Ministry of Health established a national, three-year antituberculosis strategy in order to eradicate the disease.
Poverty reduction, social protection and labour Morocco made significant progress in reducing poverty and vulnerability between 2001 and 2011. According to data from the High Commission for Planning, absolute poverty fell from 15.3% to 6.2% nationally; broken down, it fell from 7.6% to 3.5% in urban areas and from 22% to 10% in rural areas. Vulnerability fell from 22.8% to 13.3% nationally, and from 16.6% to 9.4% in urban areas and from 30.5% to 18.7% in rural areas. Public expenditure is now also more in line with poverty-reduction priorities. The National Initiative for Human Development (INDH), under which several projects were undertaken between 2005 and 2011 in favour of people living in precarious situations, paved the way for considerable progress in improved standards of living and in working toward the fulfilment of the MDGs. Indeed, Morocco has surpassed the 2015 targets for the first MDG (eradicating extreme poverty and hunger), though, despite its best efforts, regional disparities remain and represent a significant challenge for the government. To meet the challenge, the second phase of the INDH, with a budget of MAD 17 billion for 2011-15, has as its priority reaching mountainous regions and rural communities where the poverty rate is still high. INDH2 is financing activities that generate revenue and improve access to basic services and essential infrastructure in the poorest areas of Morocco. Morocco has been committed since 2011 to a broad programme of modernisation of the various social safety nets. Dialogue between the government and economic and social partners led to pensions, rising from MAD 600 to MAD 1 000 per month, and to an increase in family allowances for the first three children (MAD 200). In 2013 social protection was also strengthened by the introduction of an employment insurance scheme (IPE) by the board of the National Social Security Fund. Medical insurance for the economically disadvantaged was extended to cover the whole of Morocco in April 2012, and about 5.1 million people were covered by the RAMED at the end of July 2013. Other measures targeted wage increases and one-off promotions following social dialogue between the Moroccan government and trade union movement.
Gender equality Morocco has made undeniable progress in terms of gender equality: it has ratified the main conventions on human rights and has harmonised its laws with international instruments in this field. The government has also committed itself to several programmes in order to ensure gender equality in terms of civil, political, economic, social, cultural and environmental rights. It also committed itself in its 2012-16 programme to strengthen the representation of women in
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all spheres and to make gender equality and the fight against discrimination against women a central concern. The government plan for gender equality, IKRAM, provides the frame of reference for these efforts. It should also be noted that significant efforts have been made in favour of women’s education. In 2012 this brought the enrolment rate of girls up to 97% in primary schools and to 78.3% in secondary school (ages 12 to 14), compared to 47% and 16.5%, respectively, in 1990. The female illiteracy rate fell to 38% in 2012, compared to 78% in 1982 and 54.7% in 2004. These rates are nevertheless too low to meet the second MDG’s target of bringing the illiteracy rate down to 20% for children aged 10 and older by 2015. To conclude, Morocco still faces considerable challenges in order to reduce gender inequality; for example, at 30% the percentage of women working in public administrations and local authorities is still low.
Thematic analysis: Global value chains and industrialisation in Africa In recent years, Morocco’s trade balance deficit has widened due to the entry into force of numerous free trade agreements, while the country’s export profile, in particular of advanced technology products, has become a problem. The policy of import substitution that lasted from independence to the mid-1980s led to specialisation only in products with low value added and low labour costs. The objective of the National Pact for Industrial Emergence (PNEI), in force since 2005, is thus to attract new international investment to Morocco. The goal is to develop skills in demand internationally and in which Morocco has a comparative advantage, while redirecting exports towards high-growth markets. The PNEI is expected to achieve growth of 6% by 2015, creating value added of MAD 53 billion and generating more than 250 000 direct jobs. In line with the PNEI, the introduction of new industrial strategies oriented toward Morocco’s internationally marketable skills has accelerated industrial growth. Led by the automobile and aeronautical industries, the industrial sector saw average growth of 7.6% per year from 2005 to 2011, compared to 1.5% between 1999 and 2004. Overall employment creation in industry has only risen slightly despite this growth, however, because the jobs created in the dynamic sectors are lost elsewhere in industries suffering from contraction. In addition, it should be noted that the structure of exports changed between 1998 and 2011, and although the chemical and parachemical sectors and electric and electronic sectors benefited (growing from 32% to 43% and from 5% to 19% of exports, respectively), it was at the expense of the traditional textile and leather sectors, which fell from 41% to 15% of exports. In recent years the government has created a programme dedicated to making industry more dynamic, the Moroccan Emergence Plan. This was launched in 2005 and updated in 2009, to become the National Pact for Industrial Emergence (PNEI). This pact sets specific objectives for increasing industrial GDP and turnover from exports and for creating additional jobs by 2015. Six economic sectors – known as Morocco’s Global Jobs (Métiers mondiaux du Maroc - MMM) – have been identified and supported due to their strong potential for growth: aeronautics, offshoring (sub-contracted activities from outside the country), agrifood, textiles, electronics and automobiles. The pharmaceutical and chemical and para-chemical sectors were added to the list in February 2013. The choice of sectors was motivated by a re-casting of the country’s natural strategy from being based on geographical location and availability of cheap labour to one based on logistics and competitive offer. Despite these efforts, Morocco’s industry still contributes little to the valued added of other sectors, in the absence of any true structural transformation. Improvements have been achieved only in the metallurgy, mechanical and electromechanical industry, through its links to the automobile and aeronautic sectors, and in the agrifood industry: the two industries recorded respective growth rates of +32% (increasing from 16.7% in 1998 to 22% in 2012) and +4% (increasing from 26.3% in 1998 to 27.4% in 2012). The textile and leather sectors, in contrast, suffered a net dip
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in their contribution to industrial value added of 22% for the period 1998-2012, while the chemical and para-chemical sector’s contribution fell by 21%. Currently, Morocco’s main industries are phosphates, agri-food, automobiles, and aeronautics. The phosphate industry has developed across the entire value chain, covering everything from extraction to fertiliser and phosphoric acid production as well as that of other derivatives. The Office Chérifien des Phosphates (OCP), which initially had just a few hundred employees and turnover of USD 3 million, employed nearly 23 000 people in 2012 with a turnover of USD 7.1 billion. The agri-food sector also plays an important socioeconomic role in Morocco through the “contract programmes” introduced with the Morocco Green Plan in 2008. The goal of these is to restructure all value chains in export industries, in particular through better organisation of those involved in structured inter-branch organisations. These contracts require an investment of nearly MAD 70 billion, mainly for four sectors: citrus fruits, arboriculture, fruit and vegetable market gardening and olive cultivation. The fact that such a large percentage of Moroccan exports is intended for the European market means that the Kingdom is very vulnerable to the economic situation in the European Union countries. The low levels of diversification, in terms of market outlets, and a policy that stresses increased production at the expense of promoting and seeking new markets, represent significant challenges for the sector. Morocco’s automobile sector has enjoyed significant potential for growth for more than a decade, with double-digit annual growth rates for investment and exports. The best example of the sector’s emergence in Morocco is the opening of the Renault-Nissan industrial complex in Tangiers in 2012, which has an annual production capacity of 340 000 vehicles, 90% of which are intended for export, in particular to Europe. Since the Renault group began operating in Morocco it has continued to implement a policy of local integration aimed at increasing the number of components that are locally sourced. This is due to savings achieved through lower logistics costs. Finally, the development of the aeronautics sector, a very promising global value chain, has been aided by specific government measures, such as that which created MidParc, the integrated industrial platform inaugurated on 30 September 2013 near Casablanca; other examples are a newly created pool of skilled human resources and public financing of up to EUR 2.7 million through the Hassan II Fund for Economic and Social Development. With 100% of its production aimed at exports, the Moroccan aeronautics sector comprises nearly 100 companies of international scope involved in activities covering production, services and engineering, which are the main components of the global value chain for aeronautics. EADS, Boeing, Safran, Ratier Figeac and, more recently, Eaton and Hexcel, are all present in Morocco. Despite the contribution made by the PNEI, Morocco’s industrial model remains vulnerable. Four factors illustrate this vulnerability: i) persistent shortcomings in the basic prerequisites (effective industrial and sectorial policies, and a high-quality transport infrastructure, in particular) for the integration of Moroccan companies into global value chains; ii) limited progress in industrialisation and the country’s overall competitiveness; iii) the failure of the education and training system to produce enough highly skilled human resources for the needs of production; and iv) the limited contribution of industry to economic growth.
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