Laying the groundwork: Increasing internet access paves the way for future e-services

In an encouraging sign for a country positioning itself as a bridge between West Africa and Europe, a recent report listed Morocco as having one of the more sophisticated information and communications technology (ICT) sectors on the African continent. Morocco ranked second only to South Africa in terms of internet readiness, an indicator of future growth potential, among the 14 countries compared in the report, which was published by the consultancy McKinsey & Company in November 2013. The findings come on the back of a drive to increase broadband access nationwide by extending fibre-optic networks into more isolated regions of the country and to rollout a 4G network.

PREPARATIONS PAY DIVIDENDS: According to the McKinsey report, the internet contributed roughly $2.2bn to the Moroccan economy in 2012, or 2.3% of GDP. In percentage terms, this placed the country behind Senegal (3.3%) and Kenya (2.9%), although in absolute terms it exceeded Senegal’s $470m and Kenya’s $1.1bn. In calculating the internet’s contribution to GDP, McKinsey took into account private consumption (including revenues from mobile and fixed internet service, smartphone and computer purchases, and e-commerce), public expenditure, private investment and trade balance. Morocco’s score was driven by the trade balance factor, thanks to the exports of its business processing outsourcing (BPO) sector, in addition to private consumption. Along with South Africa, Morocco was identified as having the best growth potential, based on an analysis of five factors: ICT strategy, physical infrastructure, business environment, financial capital and ICT skills base. Morocco scored especially high in the categories of financial capital and business environment.

OFFSHORE TAKEOFF: The report indicated that 40% of the digital economy’s value added came from the BPO segment. The offshore industry, which includes call centres and other BPO activities, generates around $1bn in annual revenue and provides 60,000 jobs, according to McKinsey. The sector should continue to expand in the medium term, with offshoring identified as a strategic priority for development under the National Pact for Industrial Emergence. The government aims to bring the total number of jobs in the sector to 100,000 by 2015. Two major IT outsourcing centres – Casanearshore in Casablanca and Technopolis in Rabat – have already begun operating, while the Moroccan authorities are looking to open three additional hubs. Fez Shore and the first section of Tétouan Shore were both officially inaugurated in mid-12, while the initial phase of the Oujda Shore industrial and technology park opened in mid-2013. Located in Morocco’s Oriental region, the Oujda park forms part of a bid to decentralise the offshoring industry, creating employment and economic opportunities nationwide.

SUPPORTING PRIVATE CONSUMPTION: Private consumption is the second major pillar of Morocco’s digital economy. McKinsey estimated that the segment accounted for 34% of value added from the internet, largely due to a high mobile penetration rate and widespread take-up of 3G service. According to the National Agency for Telecommunications Regulation (Agence Nationale de Réglementation des Télécommunications, ANRT), the number of mobile phone subscribers grew by 7.93% year-on-year (y-o-y) to reach 41.32m at end September 2013, representing a penetration rate of 125.8%, one of the highest in Africa. Over the same period, the number of 3G internet users grew 37.2% y-o-y to reach 4.43m. The number of subscribers accessing the internet via ADSL also increased, rising 21.7% y-o-y. In 2012, ANRT launched a 10-year programme to extend broadband access nationwide, which should increase internet use. Maroc Telecom has plans to spend $1.2bn upgrading infrastructure and extending fibre-optics in preparation for the introduction of 4G service in 2015. The high level of internet access in Morocco – 51% of the population in 2012 – should boost its contribution to value added in the future, as services are moved online. However, as McKinsey’s report noted, the country will require more staff to realise the benefits of further digital services.