Wednesday, Dec 13, 2017
Finance | Africa | Morocco

A strong economic model


5 years ago

Nizar Baraka, Moroccan Minister of Economic and Financial Affairs
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Nizar Baraka

Moroccan Minister of Economic and Financial Affairs

Moroccan Minister of Economic and Financial Affairs, Nizar Baraka, meets with Globus Vision to discuss the country’s economic strategies and its achievements in maintaining financial stability and raising levels of FDI

In the midst of a global economic crisis and political turbulence in the North African region, Morocco has proven to be an alternative for economic growth and political stability. Growth rate has averaged 4.5% in the last three years, international trade increased by 20% in 2011, direct foreign investment has doubled, and political stability has been maintained whilst social progress inevitably continues.

Mr Baraka, what is your point of view on this economic growth? What role has the political stability being enjoyed by the country played in reaching this economic growth?

Let me first of all point out that Morocco has benefited from a number of assets; The country in the first place embarked on a democratic transition in the mid-90s due to the social unrest of the youth in the region, which led to the voting in of a new constitution under the guardianship of the Sovereign leadership and subsequently early elections, meaning the change of government could occur only through the ballot box. This important change, which is inevitable for the political stability of any country, is a key factor in attracting foreign investments in our country. It has been nurtured by the holding of a social dialogue with the different trade unions in April 2011 to ensure social harmony over the next three years, social harmony which is considered the second advantage for economic and social peace of our country. This trend can firstly be attributed to our economic model, characterised by the consolidation of inner sustainable growth through the opening of a number of major construction projects, and secondly to diversification in production defined in the sectoral policies in different cycles. It thus provides visibility to different businesses thereby improving and accelerating competitiveness of our economy.

On the other hand, we have been able to record a second consistent economic growth, and you mentioned that that growth has exceeded 4.8% during the last five years. During the crisis, we were able to reduce the unemployment rate from 10% in 2007 to 8.9% in 2011. Also, we were able to maintain inflation at 1% with public debt level not exceeding 53% of the GDP in 2011. This good performance really helped Morocco to benefit from the Investment Grade in 2010 and 2011 awarded by the two credible international rating agencies, namely Fitch Rating and Standard & Poors. We were also able to position ourselves on the financial market in 2010. The interest rate applied in Morocco recorded an interesting growth, allowing us to generate 1 billion euros (4.5% only). This shows confidence in the Moroccan economy and we have also been able to improve the attractiveness of our economy through these different advantages you pointed out by improving the business environment. This has been proven through the Doing Business report of 2012, in which Morocco was considered to be the country that has implemented the most reforms in the world in terms of business environment. We currently occupy the 21st position in the world ranking of business environment for which we once occupied the 94th position.

So Honourable Minister, could you share with us your economic strategy for the kingdom that enabled you to reach all these goals?

I think one of the main advantages is having agreed on and accepted a blueprint embedded with sectoral strategies, having adopted the Green Economy Scheme through the development of a solar energy programme, and having implemented a project to develop wind energy, which should be the source of 42% of our electricity production from renewable energy by 2020. The development of these strategies has allowed us to have new sectors of activities – such as the automobile with the investment of Renault in the country, who will make and export 400,000 vehicles annually, and aeronautics with the development of a substantial investment from Canada that will boost this activity in our country.

We also plan to develop other sectors linked to electronics, electricity, and agro-industry that have witnessed a real passion in our country, without however, forgetting to mention the construction industry and public works which have been consolidated through major construction projects and policies promoting housing – mainly public housing units in our country to meet the needs of our people.

Moreover, there have been a number of reforms specifically aimed at improving competition. These measures mainly concern logistics, which partially or totally exonerate products used as raw materials or intermediate products from customs duties to reduce production cost. These developments have gone hand-in-hand with setting up a number of training plans in the different sectors to enhance effective and efficient productivity through these sectoral strategies.

We have also set up a committee to oversee the public-private business sector. This committee which is chaired by the head of the government, is responsible for drafting an annual roadmap to improve the sector, streamline administrative procedures, improve good governance, upgrade the legal system so that it can uphold and defend the common interest of the society since Morocco is benefiting from the advanced status, and moreover develop alternative methods of conflict resolution outside the court and of course strengthen method that will make use of mediation and arbitration mechanisms.

Concerning foreign direct investment (FDI), after two years of downturn due to the economic crisis, the influx of FDI into Morocco recorded a rise in 2010 at a rate of 28% amounting to 32.2 billion dirham as compared to 2009.

Sir, what do you think is the key in continuing to attract foreign investments into Morocco? What is the significance of these investments?

We have put in place a number of measures to accompany investments, i.e. reinforcement and modernisation of the regional investment centres or the setting up of different commissions to monitor investments in our country, mainly foreign investments by facilitating investment processes that will enable them undergo substantial growth. It should also be noted that the Government has adopted generally acceptable modern business laws and good governance policies to provide a business climate conducive for the different investors that may express interests in our country. The Government has greatly augmented the quality of its services and has focused on the development of a full programme on e-government intended to reduce or eradicate discretionary decisions in helping citizens and improved transparency in public procurement procedures by amending decrees on public tenders. This has, in no doubt, improved transparency and leave room for recourse actions in the case a bid is rejected. This has however helped strengthen the development of the public-private partnership through the institution of a legal framework, laws and an accompanying system in several sectors like health, education, energy and infrastructure.

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