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“How Can Morocco Improve Its Economy Through Trade and Investment?”

by Richard J. Coyle, Executive Director, EMI (2/4/14)
Richard J. Coyle, Executive Director, EMI

From January 3 through 12, 2014, a class of Johnson students visited Morocco as part of a study trip. Upon completion of their tour, students were assigned the task of writing recommendations for the Moroccan Minister of Economy & Finance, Mohamed Boussaid, as to how Morocco can improve its economy through trade and investment.



Emerging Markets Institute and the participants in Study Trek to Morocco (NBA 5920)


All trekkers in Merzouga dunes, Desert

From January 3 through 12, 2014, a class of Johnson students visited Morocco as part of a study trip. Details of the highly rated visit were organized by Hamza Bennani, MBA ’14. Upon completion of their tour, students were assigned the task of writing recommendations for the Moroccan Minister of Economy & Finance, Mohamed Boussaid, as to how Morocco can improve its economy through trade and investment. Students were encouraged to undertake independent research in conjunction with their own observations and discussions while in country. Below are excerpts of their analyses and recommendations:


“Morocco's economy is predominantly services-based. To gain an understanding and to put some perspective through numbers on the country, agriculture accounts for 14.6% of GDP and employs 39.2% of the population. Manufacturing and industry accounts for 29.6% of GDP and employs 21.4% of the population. Services accounts for 44.6% of the GDP and employs 35.7% of the population. Morocco's total exports in 2012 were USD 21.4 billion while its total imports were USD 44.8 billion. Morocco has a large tourism industry and a growing manufacturing sector as well.”

- Channi Singh, MBA ‘14
                                                                                                                                        

“The current government policy strongly emphasizes foreign direct investment, and abides by IMF article VIII, which calls for privatization of 112 public entities, such as manufacturing enterprises, hotels, and financial institutions. The economy is stable and thanks to the support of IMF, the government will never go into default, despite public debt of 60% of GDP. Key economic challenges for Morocco include fighting corruption and reforming the education system, the judiciary, and the government's costly subsidy program. Despite Morocco's economic progress, the country suffers from high unemployment, poverty, and illiteracy, particularly in rural areas.”

- Amol Patnaik, MBA ‘14



With Ismail Douiri, CEO of Attijariwafa bank, in Casablanca


“According to Adil Douiri, chaiman and founder of CFG group, a leading investment bank, Morocco has been focusing heavily on building its trade relationship with neighboring countries.  It signed both the Open Sky Agreement and Free Trade Agreement, which basically minimize government intervention, eliminate unnecessary trade barriers, and improve commercial opportunities between Morocco and other countries.  This explains how proactive and aggressive Morocco has been in order to further pursue more business growth opportunities.  In addition to establishing trade-free zones, the government has also begun to expand its economic infrastructure and production platform by improving its transportation system.  It is currently pursuing projects which will build high-speed trains to popular cities and rebuild ports and airports to further fit the needs of tourists and the business people.  This modernization and enlargement of the transport sector will ensure that people find Morocco easily accessible and convenient to travel to.”

- Jean Choi, MBA ‘14

“Located in Northwestern Africa, Morocco has a population of more than 32 million people. Only 14 km from Europe, Morocco has been able to avoid a violent Arab spring through capable government and a popular king. Morocco has seen successful and steady economic growth for many years that is expected to continue in the future. The official languages are Arabic and Berber, but French is a widely used language, especially in business.Morocco has been able to avoid inflation haunting many other African countries by pegging their currency, Moroccan Dirham (MAD), to the Euro (approx. 80%) and the U.S. Dollar (approx. 20%). The result has been a successful monetary policy with only 0.9 % inflation in 2011 and an average inflation rate of 1.9 % between 2000 and 2010. The GDP growth has been around 5 % every year since 2006.”

- Name Withheld by Request

“Recently Morocco revealed that economic growth is expected to drop to 2.4 percent in 2014 due to its poor performing agriculture sector. Although Morocco has focused on growing other industries, the country remains heavily dependent on its agriculture production and is therefore, sensitive to poor weather conditions such as the dry conditions recently experienced. In order to thrive in the future, Morocco will need to continue to refocus its economy away from agriculture. Exploring a variety of cities and corporations in Morocco revealed various opportunities to continue the development of industries the country has already begun to invest in including automotive, electronics, and aerospace.  By further developing port accessibility, maintaining an affordable workforce, investing in non-manufacturing industries, taking steps to ensure political stability, and increasing awareness Morocco can fuel investment into the country. Furthermore, improving economic conditions will allow for an increase in tourism and consequently, further non-agricultural economic growth. “

- Cristina Andre, MBA ‘14

“Morocco has decided to focus on key sectors - strategic sectors like agriculture, fishery, mining, renewable energy, logistics and promising sectors such as automotive, aerospace and services with high added value. Continuing to maintain a stable, well run country will be key to success, as it will decrease the risk profile of the country. Of the key sectors, it was clear that the ability to provide low cost, high quality services was a sector which needs to be developed even further. Morocco could look to pursue partnerships like they do in manufacturing to increase the amount of foreign investment in the space. This would help them achieve scale quickly, which in turn will increase their reputation as a high quality service provider and decrease the perceived riskiness of investment in Morocco.  Similar strategy should be applied to logistics – with the development of Tanger-Med port, Morocco has an opportunity to increase its market share in this sector. In regards to Agriculture, increasing farm size via consolidation should be encouraged. Over the course of traveling throughout the country, it was clear that the wine was excellent. Encouraging expansion of this sector and promoting Moroccan wine abroad would both directly increase GDP growth as well as promote the country as a place to travel and invest. This will allow the GDP to increase and become more stable. Finally, the manufacturing we saw in Morocco was very high end, and high value. This goes to bolster the market position of the country. Continuing to invest in attracting these firms and training a versatile workforce is key.”

- Laura Corush, MBA ‘14
                                                                                                                                   

“Renault opened North Africa’s largest automotive plant in Morocco in 2012.  The plant has been a huge success with production expanding and expected to reach 340,000 vehicles in 2014. Additionally, the plan employs 5,000 people and investment so far has been about one billion euros.  Morocco was able to accommodate Renault by building direct train lines from the plant to the pier, as well as providing various other tax and labor incentives.  Based on the success of this relationship, Morocco should be aggressively pursuing similar relationship with other firms.  Some ideas for areas to target are other France-based companies (because of the language and location synergies) or consumer goods companies who are expanding into Africa.  As many markets have already become saturated with consumer packaged goods, Africa still provides lots of opportunity to these companies as it demonstrates larger GDP growth.  Morocco provides a strategic vantage point for the African market and would no doubt be an attractive location for many consumer goods companies to build headquarters or manufacturing plants.”

            - Sarah Herse, MBA ‘14

“Despite the problems that the Moroccan economy faces there is great potential for growth.  Morocco has a very strong and efficient infrastructure and its proximity to Europe allows for easy trade to major markets such as France and Germany.  One area of investment that I feel should occur is that of manufacturing, specifically for electronic components, similar to that of Zodiac Aerospace whom we had the privilege to visit, who manufacture parts for Airbus jets and export directly to France.  Due to low labor costs throughout the nation, I think the ground is extremely fertile for a type of “Industrial revolution” within Morocco.  We know from observing economies such as Japan and China that using low cost labor to establish a manufacturing sector, starting with lower skilled items such as clothing and materials and advancing on to electronics and components, allows for nations to shift from agrarian to service based economies which is where Morocco wants to be to climb out of 3rd world status.  With China and other fast developing economies shifting away from manufacturing and their labor costs increasing, markets will seek other countries to manufacture their goods, a space which Morocco can easily fill if it positions itself accordingly.”

           - John Gooden, MBA ‘14



Vising La Mamounia, Marrakech

“Another sector of the economy deserving of investment and focus is tourism. Tourism continues to drive a large portion of the GDP and foreign direct investments into Morocco. With its long history of Arabic and Islamic culture as well as recent European influences, Morocco stands as a unique combination of cultural intrigue and modern amenities. According to World Bank, as much as 33% of foreign direct investments are directed towards tourism, making it the single largest sector receiving foreign money.

King Mohammed VI initiated an investment project called Plan Azur in 2001 with a vision to develop six resort towns along the coastal regions, with five on the Atlantic and one on the Mediterranean coast. The vision was to attract 10 million visitors by 2010, from 2 million in 2001. The six resort towns along the coast were identified for their natural beauty and untapped tourist potential. Each area would be given a designated theme such as culture, sustainability, or sport to act as a coherent strategy for development. Although the 2008 financial crisis put a damper on this project, it is set to continue development with a renewed vigor post-crisis. The plan is expected to create over 150k new beds and over 600k new service jobs.

           - Kevin Qian, MBA ‘14

“One way for Morocco to simultaneously tackle growing income disparity as well as maintain the beauty of their country would be to create a publics work program designed to employ people to keep their country clean. Due to the distribution of the main population centers, the majority of these jobs would thus be created in the rural parts of the country that lag the major cities in economic development. One could organize a proposal like this in a number of ways but the method I propose I believe would limit overheard and bureaucracy and democratize the opportunity to allow for the largest number of people to participate, and thus to keep the areas as beautiful as possible.”

            - John Snipes, MBA ‘14

“One of Morocco’s greatest strengths is its competitive labor market.  Workers are increasingly skilled while still being low-cost relative to Europe, making Morocco an attractive location for industry.  However, in order to promote continued growth and training of the labor market and support the education of the growing middle class, the kingdom’s educational quality must be improved.  While 10-15 years ago, Morocco faced much more of a ‘quantity’ problem – in terms of just getting more school-age children to attend schools – today the kingdom faces more of a ‘quality’ problem in terms of boosting the quality of its large and growing higher education network.”

            - Julia Matsudaira, MBA ‘14


“In order to help the Moroccan economy continue to improve, I believe that the government needs to implement strategies to help continue to attract companies overseas. However, that is simply not enough. In addition to attracting more companies overseas to do business in Morocco, the government can’t abandon the agriculture industry which has supported them for such a long time. Finally, I believe that the government needs to continue to focus on the tourism aspect of their country and help increase the amount of visitors that come to the country every year.”

            - Ryan Elzas, MBA ‘14

“The last but the most important thing is improving the education and the quality of life in whole nation.  Although Morocco already executed the National Initiative for Human Development (INDH) for building better life condition, there is a huge gap between urban area and rural area, and the poor and the rich. They need to establish foundation for improvement of quality of life. Also their education level is only high in urban area so they need to enforce public education system. According to the Sixth Five-Year Economic Development Plan (1987 – 1991) in South Korea, the government emphasized on Manpower Training and Research and Development. We moved concentration from the heavy and chemical industries, to technology-intensive industries. For achieving this plan, the most critical factor was education. Nowadays, Korean education fever has become a huge problem but no one cannot deny the fact that strong education system was a strong pillar of economy development in Korea. For this reason, I recommend to invest more in public education of Morocco.”

            - Jason Lee, MBA ‘14

“Another idea for the government of Morocco to expand the economy is to spur or foster domestic consumption. Given the current state of the economy and standard of living however, this may be a far-fetched idea, one that should be delayed into the future until the average living condition improves, and the economy is to be taken off the training wheels. This situation closely resembles China economy today, as they attempt to move away from their export heavy economy and slowly transition into a domestic consumption/ import-led model.

As alluded to earlier however, the government must do a lot to foster the environment that will enable this transition to happen. Providing a basic standard of living that is composed of adequate food, shelter, and stable employment to continue the current state of living is essential.  Food is already being addressed through government subsidies, and unemployment is manageable at approximately 9% throughout 20133. There has been a conscious effort to build new real estate (such as the new developments we visited in the city of Sale), but in my opinion, the number of affordable housing for low to middle income families is still few and far between.  In my opinion, building expensive condos and villas where the rich will buy as a vacation home will not benefit the economy and the general welfare of people. The government should provide sudsidies for low to middle income families to purchase a better home for themselves. Once all basic necessities are fulfilled, then Morocco can follow the path of China and begin thinking about spurring domestic consumption."

- Anthony Bow, MBA ‘14



Visiting Tanger-Med Port, Spain behind. From left to right:

Anthony Bow, Amol Patnaik, Alexander Elboth, Ross Natoli, Jason Lee, Jean Choi, Cristina Andre, Ryan Elzas, Kevin Qian, Channi Singh, Laura Corush, John Gooden, Hamza Bennani, Sarah Herse, Mohamed Dahmane (Director of Operations at Tanger-Med Port Authority), Julia Matsudaira, John Snipes






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