Toronto - In the entire region, Morocco is distinguishing itself as the most attractive production base in the auto industry.
Toronto – In the entire region, Morocco is distinguishing itself as the most attractive production base in the auto industry.
According to a report from BMI Research, a Fitch Group Company, there is still work to be done by all MENA countries, particularly in the area of risk and logistics if they hope to develop their manufacturing sector.
The region still registers toward the bottom on BMI’s Autos Production Risk/Reward Index, with a score of 40.1, out of a possible 100. “This ranks ahead of only Sub-Saharan Africa which scores just 35.0 and behind the Americas on 48.5,” the report says.
The element of “risk” represents the major reason for the region’s lackluster score of just 25, out of 100. Thanks to Morocco’s “strong industry policy,” it has managed to outperform other MENA countries who are burdened with economic and political risk.
In terms of growth opportunities, the MENA’s regional average is 46.6 out of 100. On a global scale, Morocco appears first out of all MENA region’s countries, falling into 34th place. “Morocco scores just above the regional average for rewards, thanks largely to its projected production growth, and scores well above the MENA average for risk, due to relative political stability and a strong industry policy,” says the report.
Auto Sector is Key
Morocco is clearly outperforming in the auto sector. The Kingdom’s score is 46.4 out of 100, while the regional average sits at 40.1. It still falls short, however, of the global average of 50.0.
BMI sees Morocco’s outperformance trend continuing, due to its favourable standing with regard to risk and reward scores. “This puts Morocco in the most attractive ‘high reward, low risk’ section of the scoring matrix.
“Morocco stands out from its peers. This attractiveness is borne out by the amount of investment the country has been winning, making it a new regional hub for vehicle production, both in North Africa and the wider MENA region,” BMI explains.
BMI agrees that all MENA countries have one thing in common. They all “score poorly for country risk and logistics risk, suggesting these are key areas for improvement if manufacturing is to develop successfully.”
Thanks to Morocco’s ongoing strategy to become a manufacturing hub between Europe and Africa, the Kingdom recorded the highest score for logistics network. The score of 30.8 out of 100 is, however, still leaves plenty of room for growth and continued improvement.
In conclusion, BMI has a few words to offer about short-term economic risk, for which all MENA countries recorded a low score. “All countries are far below the global average of 50.0, based on such factors as economic growth, employment and monetary and fiscal policy. As emerging markets, however, this is generally balanced out for investors by lower costs and higher growth potential.”