Wizdom
02-03-08, 18:25
Morocco
A kingdom located at a crossroads between Europe and Africa, Morocco has maintained stability despite economic hardship in the past and large numbers of migrants passing through on their way to Europe. The government has been working hard over the past few years to develop a sustainable and healthy economy for all of its citizens, including major infrastructure improvements and housing schemes, while working closely with Europe and the US to both ensure regional stability and create open markets for trade and commerce.
ISBN: 1-90202339-76-2
ISSN (Online): 1755-2753
ISSN (Print): 1744-4594
TABLE OF CONTENTS
COUNTRY PROFILE
POLITICS
The Kingdom of Morocco, which sits at a crossroads between Europe and Africa, has had to navigate many challenges since it became an independent country. But the ascension of King Mohammed VI in 1999 has brought a new era of both political and economic liberation to the country. The kingdom has enjoyed relative stability since gaining independence and though the state was characterised by a strong monarchy in the past, the current government has put in place anti-corruption measures among its civil servants and professionalised the military, in part by ending conscription in the near future to ensure recruits are motivated and up to the task of learning the latest in military techniques.
Rabat has also built better relationships with international aid organisations as its military and civilian administrations have noticeably improved in recent years. It has increased its legitimacy among Moroccans and therefore is better able to provide services and enforce tax collection and other activities essential to the functioning of a modern state. Another instance in which Morocco differs from many states in North Africa and the Middle East is that, rather then driving political Islamists underground where they are sure to radicalise, it has allowed them to enter the political realm and participate in parliament. The principal Islamic political party, the PJD, has styled itself as something close to the Christian Democrats in Germany.
All of these facts have allowed Morocco to play its position at a crossroads between Europe, Africa and the Middle East into one of strength. The kingdom has been declared a “major non-NATO ally” of the US, and has won US and French support in its claims on Moroccan/Western Sahara, a large swathe of land in which rebels have been fighting the Moroccan government since 1975. President of France Nicolas Sarkozy has proposed a Mediterranean Union of 16 North African, Middle Eastern and European states, an idea Morocco fully supports as a means of increasing its business ties with Europe.
The chapter includes a viewpoint by Mohammed VI, King of Morocco, on economic and political liberalisation, while Abdoulaye Wade, President of Senegal and Ségolène Royal, former French presidential candidate for the Socialist Party, provide interviews.
THE ECONOMY
The year 2006 has proven to be a prosperous one for the kingdom, with real GDP growing some 8.1%, compared to 2005's 2.4%. Good rains produced growth in the agricultural sector, which remains key to the Moroccan economy, though competition from Egypt and Turkey is increasing in that sector. Mining and other energy activity slowed, however, with less refining and electricity production. Construction continued to show strong growth based on infrastructure upgrades, foreign investment and tourism developments, while the stock exchange registered healthy growth over 2005, particularly in the real estate sector. Increasing consumer demand is also driving growth in construction-related industries. Tourism, transport and telecoms all registered strong growth in 2006 as well. Growing consumer demand in the domestic market has been helping to boost the economy, due in part to higher rural productivity and a tightening job market. Confidence in the local market has also grown, with a substantial increase in consumer credit. Both foreign and local investment continued to rise in certain sectors and unemployment fell as more jobs were created in the service, construction and industry sectors. Exports rose to Turkey and the US, as Morocco has free trade agreements with the two countries. The government also took measures to decrease the numbers of civil service employees in 2006, introducing voluntary retirement and making fiscal reforms, including the new Finance Law, thus improving efficiency while also investing heavily in infrastructure and other projects. Tax collection also improved. Revenues from privatisation and state-owned monopolies fell short of projections however and reduced tariffs also resulted in less revenue, although government revenues improved overall. The authorities have also taken measures to improve transparency and the availability of financial data to further encourage investors. Growth is expected to continue under the Vision 2012 programme, as agriculture becomes less important and other sectors, industry in particular, are expected to become stronger. Energy and mining activities are likely to bounce back in 2007, though overall growth should slow somewhat.
The chapter includes a viewpoint by Hassan Bernoussi, Director of the Department of Investments, on the current need for skilled human resources in Morocco, as well as interviews with Minister of Finance and Privatisation Fathallah Oualalou, former WTO Director-General and current UNCTAD Secretary-General Supachai Panitchpakdi, President of the African Development Bank Donald Kaberuka and President of the Confédération Génerale des Entreprises du Maroc Hafid Elalamy.
BANKING
The banking sector was characterised by strong growth in 2006 as the economy improves and consumer confidence grows. Legislative reforms in the sector and falling interest rates have also allowed for improved financing for small- and medium-sized enterprises. Local banks are offering more products and services than in the past, though they had to absorb some costs as they extended their networks and restructured internally. Implementation of the Basel II accords should also increase Morocco's competitiveness internationally, while the Casablanca Stock Exchange and the country's credit establishments are expected to come into line with the International Financial Reporting Standards (IFRS) by the end of 2007. The kingdom remains underbanked, with banking institutions moving internationally both north and south as they expand their networks and client base. Some Moroccan banks with operations in Europe are catering specifically to Moroccan expats. Poste Maroc, which also offers banking services, will be partially privatised in 2008. As the bank plans to offer more services to an underprivileged market, it aims to become a major player as it increases banking penetration overall. While commerce primarily takes place in cash transactions, this is changing gradually as banks offer more services, increase their accessibility and the public become more educated about their options. Microcredit is becoming increasingly available through private banks, which help to boost SMEs, and the government is working to improve real estate financing. Morocco has had excess liquidity since 2000 thanks to growth in foreign investment, tourism and remittances from Moroccans living abroad. This has led in part to increased competition for the excess funds.
This chapter includes interviews with Abdellatif Jouahri, Governor, Bank Al Maghrib and Tariq Sijilmassi, President, Crédit Agricole du Maroc.
CAPITAL MARKETS
Despite a market correction in May 2007, the Casablanca Stock Exchange performed better than any other Arab capital market in mid-year. This was aided by several IPOs and increased consumer confidence. The Casablanca exchange has a long history, starting in 1929, but only became a major player after financial reforms in 1993. As the successes of 2007 are built on 70% growth in 2006 and reforms remain to be taken, there is some worry about the stability of the market. However strict financial disclosure requirements have been in place since 2000 and substantial tax incentives have been instituted. The exchange still has a relatively modest 68 companies listed, but its market cap is still larger than other markets with more individual companies. The excess liquidity and relative lack of opportunity elsewhere in the kingdom have channeled funds into the stock market. The government is therefore looking at other measures to encourage more companies to list. The kingdom still maintains rigid currency exchange controls but first steps have been taken to allow institutional investors to take some of their capital abroad.
This chapter includes interviews with Amine Benabdesslem, former President, Casablanca Stock Exchange and M'hamed Skalli, General Manager, Dar Tawfir.
INSURANCE
The insurance sector saw massive growth in 2006. As more Moroccans become educated about the benefits of the industry and state-run health care plans may further raise take-up rates, market penetration is increasing. It is already the second largest insurance market in Africa. The sector achieved double-digit growth in 2006, as life insurance has become increasingly popular. Bancassurance, whereby banks can sell insurance policies, is another option for Moroccans since a 2005 amendment of the insurance code. The government still dominates the reinsurance segment but gradual privatisation has begun. The legislation enacted in the sector since 2002 was created with the active participation of insurance providers. The government hopes to have 50% of the population covered in the coming years, up from 35% in 2006. As the economy becomes stronger, the state will likely relax currency controls, making foreign direct investment easier in the sector.
This chapter includes an interview with Ahmed Zinoun, Administrateur Délégué, Société Centrale de Réassurance.
TRANSPORT
Morocco has prioritised its transport sector, which is vital to the continued growth of the economy. Major restructuring has already taken place. Journey times between urban centres have been cut and the airports are well on their way to handling 10m foreign tourists a year by 2010. As the country's economic development is being driven largely by the growth of tourism and exports, efficient ports and links between major points of distribution are essential. Morocco is establishing itself as a regional transport logistics hub. Morocco signed an open skies agreement with the EU in late 2006 that has thrown the air transport market wide open. Logistical support for airfreight is also being improved, while the state aviation authority is preparing to transform into a commercially viable entity as it considers partnerships with the private sector to manage certain platforms at particular airports. The kingdom's location at the open end of the Mediterranean and 15 km south of Spain gives it the potential to be a major maritime transport hub, with the Tanger-Med port as a major component. Goods from Asia and America destined for Mediterranean countries and Africa will be able to travel straight to this port, rather than to northern Europe, where they are currently transshipped south overland to reach the Mediterranean.
This chapter includes interviews with Toufiq Ibrahimi, General Manager, Comanav and Abdelhanine Benallou, CEO, National Office of Airports.
ENERGY
Morocco is working to become more self-sufficient in its energy supplies as costs rise. The country imports the vast majority of its energy but thus far the economy has been healthy enough to absorb the growing costs without increasing its borrowing. A three-pronged plan has been instituted to decrease this reliance on energy imports, consisting of diversifying energy resources, liberalising the downstream sector and developing coping mechanisms to soften the blow of high prices for hydrocarbons. No fewer than 26 oil firms are operating in Morocco, however and there is keen interest in the private sector to discover oil in the kingdom. A new hydrocarbons code regarding drilling, royalties and exploration rights was drawn up in 2000 to increase foreign interest in exploration. Liberalisation of the local hydrocarbons market remains low, as SAMIR still controls some 85%. The government is also looking to increase the share of liquefied natural gas used to power the country. Demand for electricity has grown greatly as the economy has developed and plans are being made for the private sector to enter the scene.
This chapter includes interviews with Younes Maamar, CEO, Office National de l'Eléctricité and Jamal Ba-Amer, CEO, Société Anonyme Marocaine de l'Industrie du Raffinage (SAMIR).
A kingdom located at a crossroads between Europe and Africa, Morocco has maintained stability despite economic hardship in the past and large numbers of migrants passing through on their way to Europe. The government has been working hard over the past few years to develop a sustainable and healthy economy for all of its citizens, including major infrastructure improvements and housing schemes, while working closely with Europe and the US to both ensure regional stability and create open markets for trade and commerce.
ISBN: 1-90202339-76-2
ISSN (Online): 1755-2753
ISSN (Print): 1744-4594
TABLE OF CONTENTS
COUNTRY PROFILE
POLITICS
The Kingdom of Morocco, which sits at a crossroads between Europe and Africa, has had to navigate many challenges since it became an independent country. But the ascension of King Mohammed VI in 1999 has brought a new era of both political and economic liberation to the country. The kingdom has enjoyed relative stability since gaining independence and though the state was characterised by a strong monarchy in the past, the current government has put in place anti-corruption measures among its civil servants and professionalised the military, in part by ending conscription in the near future to ensure recruits are motivated and up to the task of learning the latest in military techniques.
Rabat has also built better relationships with international aid organisations as its military and civilian administrations have noticeably improved in recent years. It has increased its legitimacy among Moroccans and therefore is better able to provide services and enforce tax collection and other activities essential to the functioning of a modern state. Another instance in which Morocco differs from many states in North Africa and the Middle East is that, rather then driving political Islamists underground where they are sure to radicalise, it has allowed them to enter the political realm and participate in parliament. The principal Islamic political party, the PJD, has styled itself as something close to the Christian Democrats in Germany.
All of these facts have allowed Morocco to play its position at a crossroads between Europe, Africa and the Middle East into one of strength. The kingdom has been declared a “major non-NATO ally” of the US, and has won US and French support in its claims on Moroccan/Western Sahara, a large swathe of land in which rebels have been fighting the Moroccan government since 1975. President of France Nicolas Sarkozy has proposed a Mediterranean Union of 16 North African, Middle Eastern and European states, an idea Morocco fully supports as a means of increasing its business ties with Europe.
The chapter includes a viewpoint by Mohammed VI, King of Morocco, on economic and political liberalisation, while Abdoulaye Wade, President of Senegal and Ségolène Royal, former French presidential candidate for the Socialist Party, provide interviews.
THE ECONOMY
The year 2006 has proven to be a prosperous one for the kingdom, with real GDP growing some 8.1%, compared to 2005's 2.4%. Good rains produced growth in the agricultural sector, which remains key to the Moroccan economy, though competition from Egypt and Turkey is increasing in that sector. Mining and other energy activity slowed, however, with less refining and electricity production. Construction continued to show strong growth based on infrastructure upgrades, foreign investment and tourism developments, while the stock exchange registered healthy growth over 2005, particularly in the real estate sector. Increasing consumer demand is also driving growth in construction-related industries. Tourism, transport and telecoms all registered strong growth in 2006 as well. Growing consumer demand in the domestic market has been helping to boost the economy, due in part to higher rural productivity and a tightening job market. Confidence in the local market has also grown, with a substantial increase in consumer credit. Both foreign and local investment continued to rise in certain sectors and unemployment fell as more jobs were created in the service, construction and industry sectors. Exports rose to Turkey and the US, as Morocco has free trade agreements with the two countries. The government also took measures to decrease the numbers of civil service employees in 2006, introducing voluntary retirement and making fiscal reforms, including the new Finance Law, thus improving efficiency while also investing heavily in infrastructure and other projects. Tax collection also improved. Revenues from privatisation and state-owned monopolies fell short of projections however and reduced tariffs also resulted in less revenue, although government revenues improved overall. The authorities have also taken measures to improve transparency and the availability of financial data to further encourage investors. Growth is expected to continue under the Vision 2012 programme, as agriculture becomes less important and other sectors, industry in particular, are expected to become stronger. Energy and mining activities are likely to bounce back in 2007, though overall growth should slow somewhat.
The chapter includes a viewpoint by Hassan Bernoussi, Director of the Department of Investments, on the current need for skilled human resources in Morocco, as well as interviews with Minister of Finance and Privatisation Fathallah Oualalou, former WTO Director-General and current UNCTAD Secretary-General Supachai Panitchpakdi, President of the African Development Bank Donald Kaberuka and President of the Confédération Génerale des Entreprises du Maroc Hafid Elalamy.
BANKING
The banking sector was characterised by strong growth in 2006 as the economy improves and consumer confidence grows. Legislative reforms in the sector and falling interest rates have also allowed for improved financing for small- and medium-sized enterprises. Local banks are offering more products and services than in the past, though they had to absorb some costs as they extended their networks and restructured internally. Implementation of the Basel II accords should also increase Morocco's competitiveness internationally, while the Casablanca Stock Exchange and the country's credit establishments are expected to come into line with the International Financial Reporting Standards (IFRS) by the end of 2007. The kingdom remains underbanked, with banking institutions moving internationally both north and south as they expand their networks and client base. Some Moroccan banks with operations in Europe are catering specifically to Moroccan expats. Poste Maroc, which also offers banking services, will be partially privatised in 2008. As the bank plans to offer more services to an underprivileged market, it aims to become a major player as it increases banking penetration overall. While commerce primarily takes place in cash transactions, this is changing gradually as banks offer more services, increase their accessibility and the public become more educated about their options. Microcredit is becoming increasingly available through private banks, which help to boost SMEs, and the government is working to improve real estate financing. Morocco has had excess liquidity since 2000 thanks to growth in foreign investment, tourism and remittances from Moroccans living abroad. This has led in part to increased competition for the excess funds.
This chapter includes interviews with Abdellatif Jouahri, Governor, Bank Al Maghrib and Tariq Sijilmassi, President, Crédit Agricole du Maroc.
CAPITAL MARKETS
Despite a market correction in May 2007, the Casablanca Stock Exchange performed better than any other Arab capital market in mid-year. This was aided by several IPOs and increased consumer confidence. The Casablanca exchange has a long history, starting in 1929, but only became a major player after financial reforms in 1993. As the successes of 2007 are built on 70% growth in 2006 and reforms remain to be taken, there is some worry about the stability of the market. However strict financial disclosure requirements have been in place since 2000 and substantial tax incentives have been instituted. The exchange still has a relatively modest 68 companies listed, but its market cap is still larger than other markets with more individual companies. The excess liquidity and relative lack of opportunity elsewhere in the kingdom have channeled funds into the stock market. The government is therefore looking at other measures to encourage more companies to list. The kingdom still maintains rigid currency exchange controls but first steps have been taken to allow institutional investors to take some of their capital abroad.
This chapter includes interviews with Amine Benabdesslem, former President, Casablanca Stock Exchange and M'hamed Skalli, General Manager, Dar Tawfir.
INSURANCE
The insurance sector saw massive growth in 2006. As more Moroccans become educated about the benefits of the industry and state-run health care plans may further raise take-up rates, market penetration is increasing. It is already the second largest insurance market in Africa. The sector achieved double-digit growth in 2006, as life insurance has become increasingly popular. Bancassurance, whereby banks can sell insurance policies, is another option for Moroccans since a 2005 amendment of the insurance code. The government still dominates the reinsurance segment but gradual privatisation has begun. The legislation enacted in the sector since 2002 was created with the active participation of insurance providers. The government hopes to have 50% of the population covered in the coming years, up from 35% in 2006. As the economy becomes stronger, the state will likely relax currency controls, making foreign direct investment easier in the sector.
This chapter includes an interview with Ahmed Zinoun, Administrateur Délégué, Société Centrale de Réassurance.
TRANSPORT
Morocco has prioritised its transport sector, which is vital to the continued growth of the economy. Major restructuring has already taken place. Journey times between urban centres have been cut and the airports are well on their way to handling 10m foreign tourists a year by 2010. As the country's economic development is being driven largely by the growth of tourism and exports, efficient ports and links between major points of distribution are essential. Morocco is establishing itself as a regional transport logistics hub. Morocco signed an open skies agreement with the EU in late 2006 that has thrown the air transport market wide open. Logistical support for airfreight is also being improved, while the state aviation authority is preparing to transform into a commercially viable entity as it considers partnerships with the private sector to manage certain platforms at particular airports. The kingdom's location at the open end of the Mediterranean and 15 km south of Spain gives it the potential to be a major maritime transport hub, with the Tanger-Med port as a major component. Goods from Asia and America destined for Mediterranean countries and Africa will be able to travel straight to this port, rather than to northern Europe, where they are currently transshipped south overland to reach the Mediterranean.
This chapter includes interviews with Toufiq Ibrahimi, General Manager, Comanav and Abdelhanine Benallou, CEO, National Office of Airports.
ENERGY
Morocco is working to become more self-sufficient in its energy supplies as costs rise. The country imports the vast majority of its energy but thus far the economy has been healthy enough to absorb the growing costs without increasing its borrowing. A three-pronged plan has been instituted to decrease this reliance on energy imports, consisting of diversifying energy resources, liberalising the downstream sector and developing coping mechanisms to soften the blow of high prices for hydrocarbons. No fewer than 26 oil firms are operating in Morocco, however and there is keen interest in the private sector to discover oil in the kingdom. A new hydrocarbons code regarding drilling, royalties and exploration rights was drawn up in 2000 to increase foreign interest in exploration. Liberalisation of the local hydrocarbons market remains low, as SAMIR still controls some 85%. The government is also looking to increase the share of liquefied natural gas used to power the country. Demand for electricity has grown greatly as the economy has developed and plans are being made for the private sector to enter the scene.
This chapter includes interviews with Younes Maamar, CEO, Office National de l'Eléctricité and Jamal Ba-Amer, CEO, Société Anonyme Marocaine de l'Industrie du Raffinage (SAMIR).