OBG talks to Saïda Lamrani Karim, Vice-President, Groupe Safari

Interview: Saïda Lamrani Karim

What impact has the economic crisis in Europe had on the development of Morocco’s industry?

SAIDA LAMRANI KARIM: First of all, Morocco has had a privileged partnership with the EU for some time, drawing benefit from its “advanced status” agreement. To some extent, the crisis in Europe does in fact present an opportunity for Morocco. Already we are seeing that investors are coming to Morocco and looking for new markets or new locations for production facilities.

We have also made a great effort to become a shipping hub for countries in sub-Sahara Africa and the Maghreb that wish to export to Europe. This is an old strategy, but one that could be fully developed now that Europe is experiencing an economic slump. In the long term, this strategy could certainly continue, if only because Morocco offers certain advantages. It is too early to say whether the European crisis has led to accelerating industrial development in Morocco.

How do free trade agreements (FTAs) affect the export sector, given that imports exceed exports?

LAMRANI KARIM: It is clear that among certain sub-sectors, companies are struggling to respond to mass imports from some of our more developed FTA partners, such as Turkey. It is easy to say that we are getting inundated by imports, but we also have the desire and the duty to develop our exports. This is the best way to re-establish a reasonable trade balance.

Meanwhile, Morocco does have some disadvantages. For instance, having no energy resources of our own means that production costs are relatively high. We cannot renege on existing agreements, but we also can’t accept that goods are being dumped on our markets. We must develop market access criteria so that industry can be protected during the economic crisis.

We need to take well-planned measures to stop anti-competitive actions. This involves preventing products from being imported whose prices do not even cover the cost of the raw materials. In the end, World Trade Organisation rules have to be respected and we need to use the legal means that are at our disposal. Morocco has, in this regard, been among the countries that have been most respectful of international trade rules.

How can the textiles sector maintain its competitiveness in the face of global competition?

LAMRANI KARIM: In terms of competition, the situation is even more worrisome for textiles compared to other industrial sectors. There is a lot of pressure from countries that are far more competitive. This is not only the case with nations with which we have signed FTAs, but also with countries such as Pakistan and China.

In the face of this competition, we need to continue to produce textiles from the raw materials through to the finished products. Furthermore, Morocco needs to diversify its product range. The textile sector is one that is very labour-intensive and which also has to deal with artificially low prices due to imports and competition from the informal sector.

To what extent does the informal sector interfere with the growth of the industrial sector?

LAMRANI KARIM: Informality is a big issue in terms of industrial development. In rural areas, this is even more complicated because business is so fragmented there.

Pushing back informality begins with ensuring that all employees and sales are being registered.

It is an ongoing process of education that has to be pursued; however, it is also important that formalisation be made more attractive. This means, for instance, that fiscal charges do not put a large burden on companies and that administrative procedures do not unreasonably slow down business. Finally, the tax burden needs to be shared more equitably.

The textiles sector, for example, is now better organised than before, which has helped to push back the informal sector. It is in our interest to choose the right means to combat the informal market, and not just via repression and sanctions. These approaches instil fear and may push businesses further towards informality.