| Morocco | Apr 30, 2022
Morocco has inked a blueprint for its role in the 21st century, one set to galvanize economic momentum and stamp the nation’s hallmark abroad.
If a budget confirms political intent, then Morocco’s 2022 draft budget of October 2021 merits close attention. The New Development Model (NMD) marks a commitment to economic revitalization from root to branch, a comprehensive package of initiatives that promotes economic diversification and entrepreneurial zeal, while shoring up public health and education. In fact, it would appear to be a wholly new model of national development.
Big Things in Small Packages
This year’s white paper lit the runway lights for Morocco’s NDM launched on October 15 by The General Confederation of Moroccan Enterprises (CGEM). Titled “Towards sustainable, responsible and sustainable economic growth,” it envisions an improved environment of investment possibilities to fuel NDM. Among the sectors covered by the 34-article model, renewable energy looms large. Meanwhile, attention is given to promoting youth employment and the country’s SMEs by championing the “Made in Morocco” brand. It is worth noting here, too, that SMEs account for 95% of Moroccan enterprises, 40% of GDP, and close to 50% of overall employment. NDM seeks to reverse a less fortunate number, namely the mere 30% of exports they account for. To achieve this, the new model has opted for strategic protectionism. This notwithstanding, foreign relations have been forthcoming and fruitful.
Sino the Times
While the following events preceded the launch of the new national model, a brief glance at Rabat and Beijing’s bilateral relations provides a useful example of Morocco’s growing international appeal, notably in the wake of King Mohammed VI’s visit in 2016. In fact, in the five years preceding that visit, Chinese FDI in Morocco had soared 195% and close to 100% between 2014 and 2015 alone. These relations merit attention for spanning key sectors beyond Morocco’s more traditional phosphate exports to China. For one, a Chinese presence was established in the Casablanca Finance City when The Bank of China opened shop locally in 2016.
Tourism is another sector where Morocco boasts staggering numbers. In 2016, Chinese forecasts foresaw a 3,500% rise in visa applications to Morocco. Unsurprisingly, perhaps, in July of that year visa requirements were lifted for the Chinese, and by November Morocco had welcomed a six-fold arrival number. The strategic partnership agreement has entailed over 15 public-private partnership deals, including showpiece infrastructure such as Morocco’s Noor Ouarzazate solar complex, the world’s largest solar power facility built by China’s Chint Group together with Saudi Arabia’s ACWA Power.
NMD’s mammoth undertaking has rallied all hands—political ad industrial—on board in a nationwide effort to garner opinions and suggestions on policy and implementation strategy. Small wonder then that the phrase frequently used is, “designed by Moroccans, with Moroccans and for Moroccans.”
…For Empowerment and Participation
A doubling of GDP per capita by 2035 is targeted, as well as greater opportunities for economic participation for rising generations. Social welfare is being targeted at the root. By 2035, 90% of citizens should have completed at least primary education, hence finding themselves at least some way up what the government terms the “social ladder.”
Young entrepreneurs are also set to benefit from soft and easily obtainable credit lines within the framework of the Intelaka program. The program, launched in February, followed the official signing of the business support and financing program. This was a significant step, as a study by the High Commission for Planning revealed that 75% of SMEs’ worries concerned access to financing. The program’s mechanisms feature guarantees of up to 80% supported by the trust fund rolled out as part of the 2020 Finance Bill.
Notably too, banks extending loans are to focus on product-related, rather than personal, guarantees. Moreover, by royal order, the interest rate applied to said credit lines was to be below the central bank’s key rate of 2.25%, namely at 2% and at 1.75% in rural areas. Again attesting to the new spirit of shared participation in economic advancement, the program was the shared brainchild of the Ministry of Economy, Finance and Administration Reform, Bank Al Maghrib, and the Groupement Professionnel des Banques du Maroc.
NDM also takes the informal economy to task, which in recent years has shown a welcome declining trend. Sector research indicates that having been at 40% of GDP a decade ago, it had fallen to 30% by 2018, and the new program targets a figure of 20%. Part of the solution is fostering greater female economic participation, ideally lifting it to 45% of the total workforce from the current level of just over 20% by 2019 figures.
Morocco’s ambitious NDM, then, is all at once a commitment to local business, a drive for greater social welfare and participation, and a strategic initiative to assure the country’s place on the international stage.