MOroCcO

2014

Samia Mansour / s.mansour@afdb.org

Vincent Castel / v.castel@afdb.org

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 economys 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 4.5months 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, Moroccos 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 220000 new jobs seems feasible for 2015. The new aeronautical and
automobile industries represent an important source of economic growth and innovation for
Morocco.

African Economic Outlook

AfDB, OECD, UNDP 2014

Morocco

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 20.42million 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 sectors 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-

AfDB, OECD, UNDP 2014

African Economic Outlook

Morocco

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 countrys
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 February2012. 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, Moroccos 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 100000 highly skilled workers and brings in
turnover of more than 8billion 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 Chrifien des Phosphates (OCP),
the state-owned phosphates monopoly, was MAD34.8billion 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 44.3million subscribers, while Internet services rose by 34.7% or
5.2million subscribers at the end of October2013. 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.

African Economic Outlook

AfDB, OECD, UNDP 2014

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 MAD0.69 per litre for diesel oil and by MAD0.59 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

AfDB, OECD, UNDP 2014

African Economic Outlook

Morocco

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 December2013, 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 December2013 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 dirhams nominal effective exchange rate, which is calculated based on a basket that
includes the currencies of Moroccos 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 Moroccos external trade and to reduce its significant
trade deficit. In 2013, the foreign trade balance improved to the tune of MAD5.7billion, bringing the
trade deficit down to about MAD196.39billion, compared to MAD202.06billion a year earlier. The
improved balance of trade is mainly due to a 2% reduction in imports in 2013 (MAD379.22billion,
compared to MAD386.95billion one year earlier) and a 1% drop in exports (MAD182.84billion
versus MAD184.88billion 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
MAD58.3billion, compared to MAD58.8billion in 2012.

African Economic Outlook

AfDB, OECD, UNDP 2014

Morocco

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 USD1.5billion
loan contracted in December2012 on international financial markets. Nonetheless, the Moroccan
public debt remains sustainable, as long as sufficient growth is maintained and the governments
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).

AfDB, OECD, UNDP 2014

African Economic Outlook

Morocco

In order to meet its financing needs, and in the context of chronic budget deficits, the 2014
budget law authorises the Treasury to raise MAD3.34billion from abroad and MAD23.93billion
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
MAD4billion 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 Banks 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 Foundations 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 Internationals 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
MAD78.1billion. 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 1January 2014 through 2019, while also continuing its policy of reform, as required under
the BaselIII Accord.

African Economic Outlook

AfDB, OECD, UNDP 2014

Morocco

Despite a slightly weakened national economy, Morocco was able to cover its financial needs
in 2013 by borrowing USD750million in long- and very long-term debt (with maturities of 10 and
30years, 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-Maghribs 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 20years, in 2012 the microfinance sector implemented its very
first national strategy, which provides for government assistance to the sector with a view to
reaching 32million beneficiaries by 2022.
Compared to the main international stock exchanges, Casablancas performance was amongst
the most disappointing in 2013: the Casablanca Stock Exchange came in second to last out of the
worlds 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 governments 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.

AfDB, OECD, UNDP 2014

African Economic Outlook

Morocco

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 countrys fisheries strategy, and Morocco
has highlighted its natural heritage as a strategic asset for tourism.
Moroccos 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 November2011 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 3January 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 September2013 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 UNs 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 180000 in 1998-99 to nearly 763000 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 UNs
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.

10

African Economic Outlook

AfDB, OECD, UNDP 2014

Morocco

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 countrys per capita GDP. Infant mortality is
higher than in some countries with a comparable per capita income. The maternal mortality
rate reached 112 for 100000 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.
Moroccos 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 Kingdoms 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 July2013.
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 MAD17billion 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 MAD600 to MAD1000 per month, and to an increase in family allowances for
the first three children (MAD200). 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 April2012, and about 5.1million 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

AfDB, OECD, UNDP 2014

African Economic Outlook

11

Morocco

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 womens 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 MDGs 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, Moroccos trade balance deficit has widened due to the entry into force of
numerous free trade agreements, while the countrys 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 MAD53billion and generating more than 250000 direct jobs.
In line with the PNEI, the introduction of new industrial strategies oriented toward Moroccos
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 Moroccos Global Jobs (Mtiers 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 February2013. The choice of sectors was motivated by a re-casting of the countrys natural
strategy from being based on geographical location and availability of cheap labour to one based
on logistics and competitive offer.
Despite these efforts, Moroccos 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

12

African Economic Outlook

AfDB, OECD, UNDP 2014

Morocco

in their contribution to industrial value added of 22% for the period 1998-2012, while the chemical
and para-chemical sectors contribution fell by 21%.
Currently, Moroccos 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 Chrifien des Phosphates (OCP), which initially had just a few hundred employees and turnover
of USD3million, employed nearly 23000 people in 2012 with a turnover of USD7.1billion.
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 MAD70billion, 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.
Moroccos 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 sectors emergence in Morocco is the opening of the Renault-Nissan industrial complex in
Tangiers in 2012, which has an annual production capacity of 340000 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 30September 2013 near Casablanca; other examples are a
newly created pool of skilled human resources and public financing of up to EUR2.7million 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, Moroccos 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 countrys 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.

AfDB, OECD, UNDP 2014

African Economic Outlook

13