Morocco Improved its Economic Competitiveness

Morocco Improved its Economic Competitiveness

Morocco has jumped markedly high from the 73th rank in 2011 to the 70th rank in 2012. This noticeable advancement is ascribed to the creation of the national committee for business environment in 2010.

The World Economic Forum (WEF) published it annual Global Competitiveness Report that measures the economic performance of more than 140 economies. The report offers a wealth of valuable data about the progress of world economies.

Morocco has jumped markedly high from the 73th rank in 2011 to the 70th rank in 2012. This noticeable advancement is ascribed to the creation of the national committee for business environment in 2010. In the span of three years, Morocco gradually moved upward from the 75th rank in 2010 to the 73th rank in 2011 and 70 in 2012.

The WEF defines national competitiveness as the set of institutions, policies, factors that determine the productivity level of a country.  There are various factors at play in the discernment of competitiveness. The Global Competitiveness Report measures 12 parameters   ranging from institutions and infrastructure to business sophistication.

For the fourth consecutive year, Switzerland tops the overall rankings followed by Singapore, Finland and Sweden in the fourth position. The three last ranks are occupied respectively by Haiti, Sierra Leone and Burundi.

Morocco ranks the eight Arab country in terms of competitiveness, after  the State of Qatar which tops the list of Arab countries, as it ranked in 11th rank, Saudi Arabia (18th), United Arab Emirates (24th), Oman (32th ), Bahrain (35th), Kuwait (37th) and Jordan (64th)

The first pillar considered in the measurement of competitiveness pertains to the legal and administrative context in which firms and government interact to create wealth. It includes national institutions, infrastructure, the Macroeconomic environment in addition to health and primary education.

The Global Competitiveness Report revealed that economic prosperity in Morocco is significantly impeded by corruption, bureaucracy and lack of financing.

On the other hand, Morocco ranked 101 in the assessment of higher education and training and the 63rd rank for the financial market development.

Morocco needs to boost its private sector that still falls short from being a counterweight to a feeble public sector.

The results related to the labor market in Morocco were not surprising.  Morocco is ranked in the 122nd position for labor market facility. Among the most problematic factors for business initiatives in Morocco figure also the inadequacy of the workforce and high tax rates.


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SMALL BUSINESS SUPPORT IN MOROCCO

SMALL BUSINESS SUPPORT IN MOROCCO

SBS started operating in this prospective recipient country in 2012 with funding from the European Union through the Neighbourhood Investment Facility.

Country Strategy

SMEs form the backbone of Morocco’s economy. They account for more than 95 per cent of all enterprises and 48 per cent of total employment.

The business environment has improved over the past five years due to continuous reforms, but regional discrepancies remain pronounced, especially outside the golden triangle of Casablanca, Rabat and Marrakech.

MSMEs are predominantly family-owned and small in size. Access to finance is a major challenge due to the lack of dedicated MSME products on the banking side and financial illiteracy on the MSME side. The MSME market is characterised by a large informal sector creating unfair competition, lower productivity and limited access to finance and export.

MSMEs also face internal challenges that constrain growth, such as excessive centralisation of management and lack of corporate governance – common issues in family-owned businesses. Underdeveloped value chain is more pronounced in agribusiness and is a major concern for export-oriented MSMEs.

SBS operations in Morocco started with activities to raise awareness of the benefits of accessing well-designed advisory services. The SBS team has identified priority sectors such as agribusiness, textile and apparel, ICT, engineering and electrical.

Operations began in the Great Casablanca area and will extend to less-developed areas. Low female employment and high youth unemployment, particularly in rural areas of Morocco, can hinder economic growth. Therefore the SBS programmes are designed to help address these and other cross-cutting issues – such as energy and water efficiency – once a good operational level is reached.

SBS operations in Morocco focus on:

increasing efficiency and productivity of enterprises
improving management practices
promoting corporate governance and transparency
improving the quality of advisory services
developing the consultancy market, especially in the rural regions
strengthening the existing infrastructure and contributing to the institutionalisation of the business advisory market
promoting energy efficiency
supporting larger agribusiness companies under the joint EGP-Agribusiness direct industry assistance programme
contributing to policy dialogue between the EBRD and local stakeholders.


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Assessment of the National Business Environment

 Assessment of the National Business Environment
Political, Macroeconomic, Legal and Social Context
The current monarch, King Mohamed VI, has expedited the political reform process since coming to
power in 1999.  The Economist Intelligence Unit predicts that the political outlook will remain generally stable, 
although notes possible government challenges due to a ?relatively weak parliament,? and as well risks of
attacks by Islamic militants, which could disrupt the political process.  This is particularly relevant as the main
moderate Islamist party, which won the second-largest number of seats in the most recent parliamentary
elections, was excluded from the cabinet (EIU Morocco Country Report, 2008).  Given this context, the King
has been careful to make sure social spending a priority in order to minimize social unrest.  
With regards to foreign relations, Morocco has ongoing tensions with neighboring Algeria over the
future of Western Sahara, although a plan for more autonomy for the region is currently being discussed.  The
other foreign policy priority has been improving trade relations with the EU and the US, given the recent
signing of several free trade agreements, including the Euro-Mediterranean Free Trade Area with the EU, the
Agadir Agreement signed with Egypt, Jordan and Tunisia, and the US-Moroccan Free Trade Agreement.
Macroeconomic stability has been increasing, with decreasing levels of inflation, and decreased
government budget deficits which have led to declining public debt in proportion to GDP (see exhibit below).



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