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Join on Telegram In November 2019, King Mohammed VI appointed an ad hoc commission to launch a large national consultation and elaborate a vision to build a “thriving and prosperous” Morocco by 2035. In late May 2021, the commission released a report containing the conclusions of its various workshops and interviews.
The new development model, which constitutes a non-binding framework, sets long run goals for the Kingdom, including the most essential takeaways from COVID-19 crisis. While this long-term is laudable by most measures of governance and policy-making projections, it may look “disruptive” in a region where “day-to-day management” seems to be the prevailing rule.
The need for a new development model
Over the past decade, Morocco’s economy has experienced a growth rate between 1.5% and 4% – a slower pace compared to the strong economic performance the country achieved between 2000 and 2010. The Moroccan government made tremendous efforts to equippe the North African country with strong infrastructure in transportation and green energy to foster the mobility of people and goods.
The main goal was to enhance Morocco’s connectivity to the world and to put the country on a sustainable development pattern. Currently, Morocco’s Tanger Med Port is the largest port in the Mediterranean Sea. These infrastructure breakthroughs helped the country attract foreign investors in many sectors such as the automotive and aircraft industries, and play a growing role in fostering trade in the region.
However, the pandemic has shown the need for a new generation of projects and reforms that would boost per-capita income, strengthen the middle class, reactivate social mobility, and alleviate precariousness. In fact, Morocco’s revenue per capita had almost tripled from 1998 to 2019. On the other hand, social inequality, as measured by Gini coefficient, has slightly dropped to 0.39 over the same period, before rising again due the COVID-19 crisis.
Main goals
The New Development Model Commission identified a comprehensive set of goals to foster inclusive growth and improve daily life conditions of Moroccan people. According to its report, reaching those targets relies on achieving a strong annual growth rate (between 6% and 7%) and undertaking reforms in education, healthcare, and justice systems in the coming years.
Among the top priorities is the overhauling of administration through digitization and efficient governance. Recently, the parliament passed a bill to increase the efficiency of the state-owned companies and ensure a better synergy between public and private sectors. It is a good step on the right path.
The commission’s report emphasized the importance of doubling the private sector’s share in total investments and decreasing the reliance on state-led investments (30% of GDP), that happened to be capital consuming compared to the results they generated. In fact, the ICOR indicator, a measure of investment efficiency, has reached a ratio of 7 in Morocco while some emerging countries such as Chile have been able to reach a ratio of 4.
As far as financing is concerned, the commission reckons the resources to finance Morocco’s vision for inclusive development could stem from an efficient reorientation of fiscal exemptions, foreign investments, revenues from the integration of the country’s shadow economy, which accounts for 30% of national GDP. Increasing the treasury debt level, which reached 75% of GDP in 2020, to finance the start-up period seems inevitable.
First undertaken steps
Afew months ago, the government launched an ambitious project of providing healthcare benefits to 22 million Moroccans within two years. Additional social measures are scheduled by 2025, including ensuring unemployment benefits and providing family allowances.
On the economic front, Morocco looks forward to continuing diversifying its economic partners. In the wake of its recognition of Moroccan sovereignty over Western Sahara, the US pledged $4-billion to finance projects aiming at creating jobs and promoting youth and women in Morocco and Africa. The free trade agreement between the two countries will help the US strengthen its economic footprint in the African market, especially after the African Continental Free Trade Area took effect in January 2021.
Recently, Morocco signed a partnership with the Chinese company Sinopharm in order to enhance its autonomy regarding the production of vaccines. This initiative could attract European and American companies to invest in the Kingdom’s biotechnology sector. In the foreseeable future, Morocco could become a platform to provide Africa with jabs and medicines.
Major challenges to overcome
Transforming Morocco into an emerging country that escapes the “middle income trap” will not be an easy task. First, the strategic orientations brought by the new development commission should be validated by major political parties to secure their commitment in the long run. Then, this strategic vision needs to be implemented through successful public policies, which should be shaped by the governments that will be in command for the next 15 years.
With the erosion of confidence in political parties, King Mohammed VI’s leadership is fundamental not only to bring the necessary momentum to this project but also to secure the steering and monitoring aspect. The general elections, set to take place this year on September 8, could be an opportunity to spark a reconciliation between citizens and their political representatives.
With a growing budget deficit and a rising debt level, securing financing in an unstable and unpredictable global economy may unfold in less convenient conditions than used to be the case. Attracting foreign investments and fostering countries’ exports through an accurate positioning in the post-pandemic supply chain seems to be the inevitable way to generate the level of growth projected in Morocco’s new development model.
Finally, structural reforms cannot be implemented overnight. As such, an approach that combines quick-win solutions and long-run programs may be accurate to meet Morocco’s urgent expectations. Initiatives could include planning intensive training sessions focused on youth to fast track their capacity to create their startups or to find jobs in promising sectors like information technology and medical care. Venture capital and private equity funds may catalyze startups’ creation and take advantage of such opportunities. The government could also reallocate a part of public investments’ budget to enhance R&D and to stimulate companies in biotechnology, digital and export-oriented fields.
COVID-19 is reshaping economic, social, cultural, and geopolitical landscapes across the world. Morocco has major assets to secure its transformation and to well position itself in the post-pandemic world. King Mohammed VI’s leadership is a source of stability to the country. And while the need for change appears to have turned into a total mess in some countries in the region, Morocco has remarkably been able to start a smooth new chapter without undermining the pillars of its national identity and aspirations. The tricky challenge is to figure out the pace at which a sustainable and inclusive development could be achieved given the country’s resources, constraints, and ambitions.
