African expansion: Working to position itself as a gateway to African markets

Morocco has long been a cultural and economic crossroads between the Middle East, Africa and Europe. Waves of immigration from the Middle East from the 7th century onward have largely shaped the country’s distinctive heritage, and sizable capital flows from the Middle East continue to have an important role in financing development projects today. Morocco is also working to further deepen its economic ties with its primary trade partner, the EU, through its Association Agreement with the body, while the cultural and social links the country shares with France and Spain remain strong.

However, with high-growth markets just to the south of the country, Morocco is increasingly using its favourable location and training its sights on sub-Saharan Africa and the region’s broader potentially significant trade and investment opportunities.

POLITICAL ENGAGEMENT: The ability of Morocco to strengthen its presence in Africa – and North and West Africa in particular – is contingent in large part on efforts by the government to improve diplomatic relations. Although Morocco formally withdrew from the Organisation of African Unity, the predecessor to the African Union (AU), in 1984 over the admission of the Sahrawi Arab Democratic Republic (SADR), the Polisario’s state-in-exile – making it the only African country that is not a member of the AU – the kingdom has nonetheless been a prominent diplomatic presence at in both bilateral and regional discussions, with the king having made extensive trips to major markets throughout the region, including Côte d'Ivoire and Mali.

Closer to home, the country is a member of the Arab Maghreb Union (Union du Maghreb Arabe, UMA), a regional body established in 1989 that also counts Algeria, Tunisia, Libya and Mauritania as members. The UMA’s initial goals for regional integration included the creation of a Maghreb common market and policy convergence on macroeconomics and key sectors, but plans were scaled back as they repeatedly met obstacles. Today, efforts to strengthen economic ties among the countries of the northern and southern Mediterranean may hold the most promise, although the impact of the organisation is definitely affected by the ongoing impasse between Morocco and Algeria over the Western/Moroccan Sahara. Despite tensions on the national level, several Moroccan cities participate in the Association of Mediterranean Chambers of Commerce and Industry, which encourages private sector cooperation.

REGIONAL TRADE: On the whole, intra-Maghreb trade remains well below its potential. A study conducted by the World Bank in 2006 concluded that the low level of regional integration in the Maghreb results in the loss potential trade revenue equivalent to 2-3% of regional GDP each year. The volume of goods exported within the Maghreb, all countries combined, rose quickly from $1.5bn in 2001 to $7.6bn in 2011, but remains marginal compared to the total regional export volume of $170.6bn. While intra-regional trade volumes accounted for just 3% of annual trade in the Maghreb in 2008, they accounted for 63.6% of trade in the EU, 24.6% in the Association of South-east Asian Nations and 15% in the Latin American Common Market. Even within Africa, the region lags, with other regional organisations, such as the East African Community, seeing intra-regional volumes rise as high as 13% of total trade.

A number of non-political barriers exist between the Maghreb states, including insufficient transport links, high transport costs and the absence of an integrated value chain, but the lack of political consensus has been a key obstacle. Efforts to strengthen regional commerce have multiplied in recent years, particularly after the onset of the eurozone crisis. New infrastructure corridors, such as the Maghreb highway, look set to facilitate cross-border transport and maritime capacity is on the rise. A series of regional ministerial meetings held in the last three years, with support from the World Bank, outlined proposals for greater economic, fiscal, and commercial integration. In 2010, ministers from UMA member countries signed an accord to implement an agricultural free trade zone that will help to ensure regional food security, and a preliminary list of products was drawn up in May 2012. However, progress to implement these measures is still slow, and has been further complicated by the withdrawal of Morocco’s ambassador from Algiers in October 2013.

SUB-SAHARAN AFRICA: Morocco’s commercial ties with sub-Saharan Africa are improving at an increasingly rapid pace, even though in absolute terms trade volumes are lower than those achieved with Europe, Asia and North America. In 2012, trade with sub-Saharan Africa grew by 31.6% year-on-year (y-o-y) to reach Dh20.4bn (€1.8bn), or 3.5% of Morocco’s overall trade. These relationships are based primarily on export; Morocco sourced 2% of its imports from sub-Saharan Africa in 2012, while the continent absorbed 7% of Morocco’s exports, approximately Dh12.8bn (€1.13bn).

In addition to basic trade ties, Morocco has emerged as a key partner for the development of South-South ties in Africa. Morocco can bring critical resources and experience to bear in areas such as agriculture, tourism, industry, professional training and local governance, and the number of agreements with African partners has multiplied in recent years. Most recently, King Mohammed VI and a delegation of ministers and business leaders embarked on a three-week tour in February and March 2014 to strengthen political and economic ties with Mali, Guinea, Côte d’Ivoire and Gabon. The kingdom signed over 80 partnership agreements during this trip, ranging from ministerial-level cooperation agreements to private sector joint ventures.

STRENGTHENING SOUTH-SOUTH TIES: Mali was the first stop of the four-country tour. Morocco is already the largest African investor in Mali, and the two countries signed 17 new partnerships covering a number of sectors, including health care, transport and finance. Officials also signed conventions to advance security and defence by expanding mechanisms for information sharing and training in Moroccan military academies. In addition, Moroccan real estate developer Alliances Group signed agreements with local partners to build new military housing and social housing units for retired personnel. In November 2013, Morocco agreed to train 500 Malian imams in its religious schools. In Côte d’Ivoire, the two countries discussed new opportunities for joint investment, particularly in transport infrastructure, and signed 26 new partnership agreements in the fields of investment protection, banking cooperation, financial guarantees for small- and medium-sized enterprises, agriculture, social housing, industrial zones and higher education, among several others. In Guinea, another 20 accords touched on key sectors such as hydroelectric power, mining, energy, tourism and fisheries. Guinea, Mali and Gabon are all looking to increase agricultural production and stand to benefit from Morocco’s experience in implementing the Green Morocco Plan. Agricultural cooperation agreements have been signed with the governments of all three countries.

Morocco’s strong relationship with Gabon stretch back decades, and the two countries already cooperate closely in areas such as health and education; Morocco is the primary destination for Gabonese students studying abroad after Europe and provides technical assistance in health care training and administration to Gabonese institutions. Five new accords signed in 2013 strengthened cooperation on Customs and administration, including agreements that pave the way for streamlined Customs processing for bilateral trade, establish reciprocal recognition of drivers licences, and waive visa requirements between the two countries for visitors with ordinary passports. The state visit to Gabon in early March saw the signature of 24 new agreements, with a heavy emphasis on joint ventures. Most notably, Morocco’s Office Chérifien des Phosphates (OCP) agreed to develop two fertiliser production plants in partnership with Gabon, which will export fertilisers adapted to African soils to the continent. OCP also has a programme to share its expertise in fertilisers with the aim of boosting agricultural productivity; so far, it is working with Mali, but it has plans to include Guinea and other African countries.

These partnerships will open up new markets for Moroccan businesses, which are already working to expand their footprint on the continent. Moroccan companies in telecoms, banking and insurance, to name a few, have seen strong growth in West and Central Africa – indeed, it is possible to fly to Gabon on Royal Air Maroc, withdraw money in Libreville at an ATM owned by an Attijariwafa subsidiary and make a phone call on a network shared by Maroc Telecom. As the country’s relationships in North Africa improve, Morocco is also looking to take advantage of the opportunities available to the south.