OBG talks to Abdelaziz Rabbah, Minister of Equipment and Transport

Interview: Abdelaziz Rabbah

In what ways does the logistics sector need to be reformed given its fragmented nature today?

ABDELAZIZ RABBAH: The logistics sector in Morocco is at an intermediate stage of its development, made up of many companies that are not very sophisticated and marked by a lack of advanced infrastructure. Streamlining is key to modernising the sector to ensure efficient flows of goods through dedicated logistical zones. We also want to introduce a certification system for operators and encourage firms to outsource their logistics activities to help professionalise the sector. Finally, informal and very small operators need to be consolidated to increase efficiency, and the Moroccan Agency for Logistical Development will coordinate these activities.

Another issue is road safety. While we do not have exact figures for the impact of road accidents on operating costs, we have worked out that it has amounted to about Dh14bn ($1.24bn) in costs, or 2% of GDP. Traffic accidents not only have a human and material toll and lead to delivery delays, but also affect the sector’s image among its clients. To improve conditions, our national logistics strategy includes a training programme for truck drivers, instructing them on road safety, and a mandatory course on road safety laws.

How can investment in public transport and the construction of new roads and motorways be balanced?

RABBAH: At first glance, it may seem like an inordinate amount of funds are being used to finance motorway projects at the expense of other infrastructural needs. However, the funds committed to this purpose are a relatively small part of the total budget for infrastructural investments. In addition, part of the cost is being recouped by levying tolls on main motorways, so part of the cost is covered by the end user. In the end, the construction of the motorway network could have been achieved at a lower cost – especially in light of two failed public tenders. By the end of 2011 investment amounted to Dh41bn ($3.64bn), to which the state contributed Dh11bn ($977.9m) through the Treasury and the Hassan II Fund, and Dh3.7bn ($328.9m) has been recouped through value-added tax (VAT) on construction activities. For the 1800-km motorway network, total investment will amount to Dh54bn ($4.80bn), with the state committing Dh15.7bn ($1.39bn), minus Dh6bn ($533.4m) from VAT returns. The funds earned through tolls can then be put towards other infrastructure projects, including in public transport.

In what respect is the financing of large infrastructure projects proving to be problematic?

RABBAH: In spite of the difficulty securing financing for large projects, the government continues to look for innovative ways to finance the works it deems necessary. One of these methods is to use public-private partnerships (PPPs), which should help to speed up the development of our transport infrastructure and increase our attractiveness for foreign investors. A raft of projects is being proposed to be undertaken as PPPs, including extending the motorway network and modernising the railway infrastructure. For the latter, a contract programme has been concluded for the 2010-15 period, amounting to Dh33bn ($2.93bn). Some key investors for this project are development institutions such as the French Development Agency and sovereign wealth funds from other Arab countries.

Regarding upgrades to the existing railway network, another mode of financing has been created that includes contributions from the African Development Bank and bond emissions. The key is to secure long-term loans, which is what we will be looking for when seeking to finance projects such as the newly planned Regional Express Network for Casablanca.

While we recognise that we are in competition with other countries in Africa and Asia, the incentives package that Morocco offers should continue to make the country an attractive destination. As we see it, with African countries we are not as much in competition as we are in “co-petition”, by which I mean cooperating and competing at the same time.