Connection efforts: New transport infrastructure to link the country

Adapting to the opportunities and challenges of a growing economy, Morocco’s transport sector has improved significantly in recent years, benefitting from an influx of capital and a number of major upgrades. While there is still scope for further improvement, private investment initiatives have contributed to the government-led development programme, and more importantly, been maintained despite a difficult external environment. Exogenous shocks, including a slowdown in Europe – the kingdom’s major trading partner – as well as a decline in global lending volumes have not prevented the kingdom from pushing ahead on expansion plans for roads, ports, railways and airports.

The country has grappled with tight budgetary constraints in recent years, but authorities gave a sign of continued commitment by allocating Dh37bn (€4bn) for general infrastructure development projects in 2015, most of which will go to the transport sector. The biggest slice, at Dh12.8bn (€1.4bn), will support the port segment, followed by roads and highways, set to receive Dh9.7bn (€1.1bn), and the railway network, which will benefit from Dh4.7bn (€511.4m) in investment. Airport infrastructure will be allocated Dh1.1bn (€120m) under the same budget, and logistics improvement will get Dh161m (€17.5m), according to the Ministry of Equipment, Transport and Logistics.

FIGURES: Investment over the years has improved the quality of infrastructure, though some remote areas of the country remain less accessible than the more populated transport axes along the Mediterranean and Atlantic coasts in the country’s north.

The “2014-15 Global Competitiveness Report”, published by the World Economic Forum (WEF), ranked Morocco 55th out of 144 countries for the quality of its overall infrastructure, considerably higher than Algeria (102nd) and Tunisia (83rd). Within the WEF assessment the kingdom’s railroad network is the star performer, ranking 34th, followed by the country’s port facilities at 43rd, and its air transport and road infrastructure network, both of which were ranked 51st.

ROADS: Automotive transportation remains essential in Morocco, accounting for up to 75% of transport of cargo and passengers, according to the National Road Transport Federation (Fédération Nationale du Transport Routier au Maroc, FNTRM) – lower than the average for Africa, but coupled with a growing population and a rise in private vehicles, the volume of traffic has been adding pressure to the country’s road network.

By late 2014, the amount of highways in Morocco totalled 1511 km, according to figures by the Autoroutes du Maroc (ADM), with the government aiming to reach 1800 by end-2015. In recent years, the national road programme has built several major highways, including the 233-km link between Marrakech and Agadir, as well as the highway section between Fez and Oujda, close to Morocco’s border with Algeria, running for 328 km. Other connections are soon to be operational, with three main highway projects in the making.

Set to open in 2015 is the €494m, 143-km highway that will link the city of El Jadida to Safi, south along the country’s western coastline. The highway is an extension of the northern links that connect Tangiers, Rabat and Casablanca, and will help unite Morocco’s main urban and business centres with a new port currently being built in Safi. A €529m link to the interior, the 173-km highway between the city of Berrechid, near Casablanca, and the town of Benni Mellal, is also under way to help open up the central region of Talda-Azilal.

To improve traffic flows on some of the country’s most crowded roads, work has been progressing on the extension of the existing Rabat ring road. The project will add an extra 41 km to the thoroughfare at a cost of €242.8m, and help traffic in the north to south highway axis to avoid the capital city. Al three projects are expected to be completed by 2016. These efforts fall within the National Motorway Reinforcement Scheme, which has driven an enlargement of the existent highway network by establishing road connections aligned with expected growth in traffic along new urban and industrial zones, as well as the linking of the country’s hinterland to the more developed and densely populated coastal areas. The planning, building and operational exploration of new highways is done through ADM, the state agency in charge of overseeing the country’s 1800 km of existing and planned highways. The agency, under the Ministry of Equipment, Transport and Logistics has been operating for 25 years. New highways in Morocco have traditionally been financed through loans and the charging of toll payments from users. However, transport authorities have expressed the need to move Morocco’s current highway construction model to a more sustainable programme, bringing in a higher level of participation from the private sector under the use of private-public partnership (PPP) agreements.

INNER ROADS: To connect the more isolated areas of the country, authorities have also raised investment to develop the rural road network over the past 15 years. Two phases of the National Rural Roads Programme, which ran from 1997 to 2012 and built over 25,000 km, and the third and fourth phases of the programme, set to be finalised in 2016 and 2021, respectively, are aiming to add an extra 20,000 km of roads.

Road management in Morocco often includes the challenge of keeping up with maintenance, with some part of the existing infrastructure constantly in need of repair. Extensive damage to the country’s road network was also caused by heavy flooding that took place in late 2014. The Ministry of Equipment, Transport and Logistics announced in early 2015 that it would require an additional Dh5bn (€544m) in addition to its annual budget to be able to support needed repair work. Transport authorities have also stated that up to 200 structures across the kingdom, including roads, bridges and dams, are in need of urgent repair work.

Besides improving road infrastructure, authorities are also launching a strong push to establish new logistics areas. These are already being built on land made accessible by the state. Overall a total of 3300 ha will be turned into logistics areas throughout the kingdom (see analysis), and linked to freeways, railway networks and the country’s essential port infrastructure.

MARITIME TRANSPORT: With a valuable geographic position on both the Atlantic and the Mediterranean, Morocco is well placed alongside Europe-Africa trade routes, as well as shipping traffic that connects the Mediterranean with the Americas and Europe. The kingdom has been trying to leverage its fortuitous geography by developing its port infrastructure. Morocco’s international trade is growing at a rate of 6% to 7% annually on average, and the Ministry of Equipment, Transport and Logistics has predicted that by 2030 total cargo going through Moroccan ports will grow to reach between 280m and 370m tonnes a year.

This is a considerable increase from the 115.1m tonnes of cargo handled in 2014, according to figures by the National Ports Agency (Agence Nationale des Ports, ANP) the public entity in charge of overseeing all of Morocco’s ports, except Tanger Med, which is managed under a PPP agreement. Despite being hit by a decrease in trade volumes with the EU in recent years, cargo traffic saw a considerable improvement in 2014. According to ANP figures for December 2014, global traffic through Moroccan ports rose 14.3% compared to December 2013. Trans-shipment is increasingly becoming an important part of maritime traffic going through Morocco, accounting for 27% of traffic in 2014, compared to 17% two years before. This is in large part due to the positive performance at the Tanger Med port.

PERFECT PLAN: The maritime sector is being galvanised by a revamping of infrastructure, outlined under the Port Strategy 2030, which aims to align capacity increases with the growth in handled cargo. Authorities are investing Dh6.3bn (€684.4m) during 2014-16 to establish new port facilities and expand existing ones (see analysis). Safi, on the Atlantic, and Nador, on the Mediterranean coast, are set to get new ports, both of which will support surrounding industrial areas, there this a plethora of factories, as well as act entry points for energy imports. Expansion work is also taking place in Casablanca, the largest port in the country, which is set to get a new container handling terminal.

While infrastructure has seen an increase in capital spending and revenues in recent years, Morocco’s shipping firms have been grappling with exogenous pressures. The global slowdown led to an easing of trade volumes and a surplus of global capacity, while the 2007 liberalisation of the maritime business led to an increase of foreign participation in service lines to and from the kingdom. According to a 2013 report by consultancy ALG Transportation Infrastructure & Logistics for the Ministry of Equipment, Transport and Infrastructure, Moroccan shippers’ market share was 2% in terms of freight cargo services and between 30% and 40% for passenger services. Overall, the Moroccan fleet was reduced from 40 ships in 2000 to 15 in 2013, according to the same report quoted in local media.

RAILWAY EXPANSION: Morocco has one of the largest railway networks on the African continent, at 2210 km, but only 1284 km are electrified and the majority of the system is based on a single line, except for 600 km that have been doubled. The size of the network has been a boon for internal transport, but efficiency has been increasingly compromised by a rising amount of cargo flowing to and from Moroccan ports, as well as growing numbers of passengers, enhancing the need to invest heavily in the network.

Over a five-year investment plan running from 2010 to 2015, the National Railways Agency (Office National des Chemins de Fer, ONCF), which manages the nation’s system, has set aside Dh33bn (€3.6m), a large proportion of which, Dh20bn (€2.2m) has been channelled towards the upcoming high-speed connection between Tangiers and Kenitra, which when completed will be the continent’s fastest rail link with an operational top speed of 320 km per hour, besting the 160-km-per-hour Gautrain commuter line in South Africa.

The remaining Dh13bn (€1.4bn) in the ONCF’s investment plan has been used for the modernisation of the existent network. Since September 2012 important revamping work has focused on the Casablanca to Kénitra railway, which will allow for the doubling of passenger capacity on the existent line and the addition of a third line for cargo. The 140-km single railway line between Settat and Marrakech is also being doubled.

HIGH-SPEED RAILS: The high-speed rail link is one of the kingdom’s flagship transport projects. The 200-km line has been under construction since 2011 and is expected to cost up to $4bn. When completed the new railway line is expected to reduce travel time between Tangiers and Casablanca from roughly five hours to two hours and 10 minutes, and reduce the pressure on the road and standard railway networks. Passenger numbers using the traditional rail link across the northern coastal strip of the country have risen, jumping from 14m to 34m annually between 2003 and 2014, according to ONCF figures. The new high-speed line will be serviced by 14 high-speed duplex trains built by French manufacturer Alstom at a cost of €400m.

The project to establish a high-speed train line in Morocco started to take shape in 2007, when ONCF singed a cooperation agreement with its French counterpart, Société Nationale des Chémins de Fer, to develop the railway. The costs of the project have meant that the country had to source loans coming from France, Saudi Arabia, Kuwait and the UAE, which together contributed with about $2.7bn in funding.

Unsurprisingly, the project has grappled with some opposition from concerns over the limited benefits the train will confer, and from delays caused by longer than expected expropriation procedures on some of the necessary land. However, the Ministry of Equipment, Transport and Logistics has announced that the railway system will be operational by the 2018. While it is two years later than initially expected, compared to similar projects elsewhere, the progress has been impressive, and will form but one of several high-speed railway links in the country over the coming two decades.

Transport authorities have estimated the whole system to cost up to Dh100bn (€10.9bn), extend for 1500 km and be completed by 2035. Under the Schéma Directeur du TGV Marocain, ONCF envisions two highspeed railway lines crossing the country on its main northern routes. One, which includes the initial high-speed train project, will ultimately connect Tangiers to Agadir, passing through Rabat, Casablanca, Settat, Marrakech and Essaouira. The second high-speed railway would link Rabat to the east of the country, through Meknès, Fez, Taza, Taouirt and Oujda, right before the Algerian border. Plans for further expansion of high-speed train services across the country will ultimately depend on available financing over the coming decades.

URBAN TRANSPORT: Alongside intercity rail, efforts to promote urban development in a sustainable manner have also opened the way for mass transit systems to service larger Moroccan cities. The Casablanca tramway was inaugurated in late 2012, and as of December 2014 had transported over 30m passengers along its 31-km line. The Dh5.9bn (€642m) system was developed and is operated by Casa Tram, a consortium made up of RATP Dev, part of the French group that operates the Paris metro, Morocco’s Caisse de Dépot et de Gestion du Maroc and the Transinvest Holding Company.

The tramway has alleviated pressure on the road network. However, due to the city’s high population density of about 8600 people per sq km (in the metro area), finding additional solutions to traffic congestion has been a priority, with an elevated train system at one point under consideration. However, the project was abandoned in July 2014, due to the high investment that would be needed – between Dh8bn (€870m) and Dh9bn (€979m) – as well as the project’s footprint.

Instead, a second tramway line will be built to expand the reach of the system. In December 2014, Casa Transport, the city’s transport authority, awarded the initial feasibility studies for both a second line as well as the extension of the existing one to French transport infrastructure consultancy Systra. A budget of Dh500m (€54.4m), meant to cover initial studies as well as preparation work for the new link, was included in the 2015 state budget, according to local media reports, but overall project cost could be as high as Dh16bn (€1.7bn). The city’s transport authority states that Casablanca’s second tramway line will have 15 km and two additional tramway lines are planned over the medium term.

In the capital city of Rabat an extension of the existing tramway line was approved in early 2015. The current Rabat-Salé tramway transports an average of 100,000 passengers per day, according to November 2014 figures by the Société du Tramway de Rabat-Salé, which manages the system. The tramway cost Dh4.7bn (€511.4m) to set up, and has been operational since May 2011, extending for 19.5 km and 31 stations in two separate lines, linking the capital Rabat to the nearby city of Salé. The extension project, set to take place between 2015 and 2018 in two separate phases, will add an extra 20 km to the current system and cost up to Dh3.5bn (€380.8m). Further north, the third city in the kingdom to have a mass transit system will be Tangiers. Studies for the design of its first tramway system are to be completed by the end of 2015, according to the mayor of the city, quoted in local media.

TAKING TO THE SKY: With tourism arrival figures flattening on the back of more modest growth in tourism in recent years (see Tourism chapter), the number of passengers going through Moroccan airports displayed a measure of near-stagnation, hovering between 15.2m and 15.8m in 2011 and 2012. However, 2013 and 2014 numbers show a clear return of confidence. According to figures by the National Airport Agency (Office National des Aéroports, ONDA), the state agency in charge of managing Morocco’s airports, traffic reached 17.4m passengers in 2014, up from 16.6m in 2013. Despite the lull at the start of the decade, passenger numbers in Morocco have overall increased steadily, rising an average of 5.4% annually from 2009 to 2014.

The growth in the country’s visitor figures is the result of a slight bump in traffic from Europe, as well as a growing share of traffic to and from Africa and the Middle East – overall more minor contributors to the country’s passenger mix, but ones that are growing noticeably. According to figures by ONDA, 70% of air traffic in Morocco over December 2014 came from Europe, followed by domestic connections at 10.5%, links from sub-Saharan African destinations at 7.6% and from the Middle East at 5.6%. ONDA has allocated Dh4bn (€435.2m) to be invested in 2015 alone to ensure capacity matches the increased demand. With expansion work on facilities around the country, Morocco’s total passenger capacity will rise from 24m in 2015 to 50m in 15 years, according to ONDA. Nowhere will this increase in capacity be more important than in Casablanca’s Mohammed V Airport, the busiest of the country’s 21 facilities, with 7.9m passengers over 2014, compared to 7.5m in 2013. With close to half of Morocco’s traffic passing through Casablanca, 90% of which is international, capacity is overstretched and completion of an expansion project is a priority.

CAPACITY CHALLENGE: Despite the progress, difficulties with expanding capacity have arisen after an initial master plan for the expansion was finalised in 2009 but shelved due to concerns over the management passenger flows within the proposed terminal. As a result, ONDA contracted a new study for the project in 2011, but work only restarted in November 2014. The expansion will increase the size of Terminal 1 from 32,000 sq metres to 72,000 sq metres, and Terminal 2 from 66,000 sq metres to 117,000 sq metres. ONDA expects Terminal 1 to be completed by September 2016 and the extended Terminal 2 to open in 2017. Overall capacity at the Mohammed V International Airport will rise from 7m to 14m, once completed.

Another important capacity expansion project is the Dh1.3bn (€141.4m) extension of the Marrakech Airport – the nation’s most popular tourist destination – accounting for over 4m passengers in 2014. Work includes the building of a 67,000 sq ft terminal, to be complete by March 2016, and the revamping of Terminal 1, to be finalised by 2017. Work will increase capacity to 9m-10m passengers a year.

Capacity expansions are also taking place at smaller facilities. In May 2014 the revamped Beni Mellal Airport opened and the Dh479m (€52.1m) expansion of the Fez airport will be completed in 2015, raising its capacity from 500,000 passengers a year to 2.5m.

FORMAL EFFICIENCY: The country’s heavy investments in infrastructure are being paired with efforts to better streamline domestic logistics and distribution chains, improving competitiveness and safety and reducing travel time. One such example is the road transport sector, where 45% to 50% of the market operates informally, according to the FNTRM.

“This informal sector means unfair competition for the formal sector, and degrades prices, because they have no costs with road security, taxes, or qualified human resources,” Hamid Zhar, advisor at the FNTRM, told OBG. “Harmonisation of Morocco’s legal texts to match those of the EU in terms of road transport would be important, especially now that a certain level of economic agreements are being established.”

The FNTRM has been in discussions with the Ministry of Equipment, Transport and Logistics to review the laws in order to reduce the amount of informality and fragmentation in the sector, where 75% of companies operate with less than two vehicles. A new regulatory document or contract-programme for road transportation is being prepared by the FNTRM and the Ministry of Equipment, Transport and Logistics, and an initial draft should be finalised during the first semester of 2015. Part of the private sector’s demands are about increasing the amount of enforcement of rules, through more regular checks of transport companies, as well as the establishment of a professional diesel price for transport operators. Another measure being discussed is the obligation to reflect fuel price increases on contracts between transport operators and clients.

Legislative efforts could have knock-on effects that help improve inter-city passenger transit as well. Alberto Pérez, general manager at the bus company ALSA, told OBG, “Interurban transport, particularly by bus, is in need of regulatory reform. The sector is fragmented, wasting potential, even while there is readily-available transport that could improve passenger volumes.”

OUTLOOK: Morocco’s transport sector has been an important priority for governing authorities. This has translated into large-scale projects that are impacting the country’s economy and helping to reduce regional discrepancies in the kingdom. An important part of this process has been achieved through heavy investments into road construction, which are helping to link populations in rural areas and ease the cost of doing business for companies by connecting industrial areas with port infrastructure. The ongoing investments will strengthen the sector and allow for the reduction of transport costs. An increased role for the private sector in financing and managing transport infrastructure will also help to further the sector over the coming years.

As the success of Tanger Med port has proven, Morocco’s geographic position and favourable economic environment are strong characteristics supporting the development of profitable, large-scale transport projects. The country’s transport sector is expected to continue expanding over the next several years, and if the government’s plans to involve more of the private sector come to fruition, Morocco’s remaining infrastructure gaps are expected be solved at a faster pace.