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Morocco is a significant market opportunity for US companies and investors for many reasons. Morocco’s strategic trading location, large consumer class, potent economic growth, more than $50 billion annual gross domestic product (GDP), and successful implementation of financial restructuring programs supported by the World Bank, International Monetary Fund and the Paris Club, make this North African nation very attractive to American investors.
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Economic Reform
Morocco has implemented dozens of economic reforms since 1980 to bolster the country’s microeconomic balance and accelerate its integration into the world marketplace. The measures are boosting per capita income, lowering fiscal and current account deficits and are credited with subduing the country’s rate of inflation to a modest 2.2 percent.
Reforms have modernized the stock market, eased the availability of credit, repealed the Moroccanization Law (a measure that imposed rigid hiring practices and other restraints on foreign-held businesses), revised laws that regulate corporations, relaxed foreign trade and exchange systems, protected intellectual property rights, established commercial law courts, and opened all economic sectors to foreign investment.
Many of these reforms were implemented to enable Morocco to qualify for trade agreements with the European Union (EU) and the United States. Most notably, Morocco’s newly signed EU Association Agreement offers the country tariff-free access to European markets; the 2004 U.S. –Morocco Free Trade Agreement offers American exporters greater access to markets in Morocco and -- by extension -- the EU. Morocco also maintains a number of trade agreements with other African and Arab countries, providing a ready platform for U.S. companies for penetrating markets throughout the region.
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Privatization
The engine of Morocco’s steady economic growth is privatization, which has been underway for more than two decades. Components of the energy sector were among the first state-run businesses to be sold off to the private sector. Later, the 1989 Privatization Law accelerated the commercial acquisition of 114 public enterprises.
At the urging of the World Bank and the International Monetary Fund, Morocco has also opened its increasingly market-oriented economy to investment in telecommunications, water distribution, energy production, textiles, information technology, and road construction.
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Economic Growth
Growth of Morocco’s real GDP was 4.4 percent in 2004, down slightly from the previous year. Last year’s depressed growth rate was due to a poor wheat crop (which experts predict will again be smaller than usual in 2005), and because of increased foreign competition with the country’s textile industry. Economists at the U.S. Department of Commerce project Morocco’s GDP will grow at a rate of 4.2 percent in 2005 and a more robust 5.1 percent in 2006.
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Agriculture
Morocco’s strongest economic sector is agriculture, which includes fish, wheat, barley, citrus fruit, vegetables, olives, and livestock. Moroccan farmers have lately carved a large niche in Europe’s booming organic foods market.
With the major portion of its agricultural produce being exported to Europe without processing, the country is missing out on a significant opportunity for increasing its value.
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Manufacturing
Other strong sectors in the Moroccan economy include mining (phosphates, manganese, lead, silver, and copper), energy, manufacturing (which includes handicrafts), construction, services, and tourism.
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Mining
Morocco’s mining sector is experiencing continued growth overall, with a particularly large surge in the production and export of phosphates. Domestic consumption of phosphate derivatives (phosphoric acid and fertilizers) jumped 12 percent in 2004, while raw phosphate exports in the same period climbed over 3 percent. Morocco and Pakistan have recently agreed to build a $200 million phosphoric acid plant 100 miles inland from Casablanca that will annually export up to 375,000 tons of urea and di-ammonium phosphate to Pakistan when it is operational in 2006.
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Energy
Economists predict that Morocco’s energy sector (which includes electricity production) will sustain a growth trend that began in 2002. Electricity output in 2004 rose nearly 9 percent, largely as a result of an ambitious rural electrification program and a significant cut in power prices. Growth in the energy sector is also being propelled by the resumption of operations at the Samir refinery at Mohammedia. While Morocco has a new state-of-the-art power plant serving the urban population, remote areas of the country require expanded service, so the country is actively recruiting suppliers of renewable energy.
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Manufacturing
Although key sectors within Moroccan manufacturing are experiencing growth (notably food-processing and the assembly of electrical and mechanical goods), the country’s textile industry has seen a slight decline due to strong competition from Chinese and Indian competitors. Although recent textile production has experienced a drop in domestic demand for finished wearing apparel due to a flood of duty-free imports from the EU, there is good news for the sector. Citing rising wages and higher operating costs in Ireland, U.S.-based Fruit of the Loom recently announced plans to relocate all of its Irish spinning, knitting, and dyeing operations to Morocco. Its facilities will assemble underwear, sportswear, and children’s clothing. The FTA provides opportunities for this industry and Moroccan firms are already certified and supplying major American brands such as Banana Republic and the Gap.
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Construction
The country’s construction industry has lately experienced a boost from major infrastructure improvement projects, including government-financed port facilities and roads, the creation of public housing, and the development of several coastal tourism destinations. The government’s earmarking of $303 million to rebuild the Mediterranean port city of Al Hoceima, which was heavily damaged by a 2004 earthquake, is also fueling growth in the construction sector.
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Growth Markets
MATIC has undertaken a countrywide survey of trade and investment opportunities in Morocco. Business sectors that may be attractive to American companies include:
- Pharmaceuticals: A study of almost 2,000 American pharmaceutical companies has yielded 16 that have Phase 2 or 3 drugs under clinical trials, most of the companies with these drugs will have to build new facilities
- Electronics: With ST Microsystems already successfully employing more than 4,500 people, Morocco has demonstrated its cost-effective capabilities
- Call Centers: Dell Computer has established its French-language call center in Morocco as have many French-owned firms, with a list of more than 100 American firms operating in France, these companies will be approached
- Fish/Fish Processing: Morocco is a major exporter of fish to Europe and Asia, it is presently looking for opportunities to add value through the processing of fish oil for the export market
- Motion Picture Industry: Morocco’s exotic scenery has appeared in many famous films; however, with the construction of major sound stages in Ouarzazate the country is ready to move into more sophisticated fields
- Stone: Morocco presently exports large volumes of unprocessed marble, there is an opportunity to increase value added through processing in the country
- Telecommunications and Insurance: Also predicted to see near-term growth. This is largely due to privatization opportunities and government incentives.
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Tourism
Although the numbers of tourists and tourist nights stayed have not recovered to levels enjoyed by the Moroccan hospitality industry prior to September 11, 2001, tourism continues to be a vital component of the national economy, contributing nearly $3 billion each year to the country's GDP. “Morocco 2010,” an initiative underwritten by the Ministry of Tourism, has poured millions of dollars into the country’s hospitality infrastructure. By 2010, the program is expected to double Morocco’s total number of hotel beds to 230,000.
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