Morocco’s king has much to celebrate after 25 years on the thronehttps://en.majalla.com/node/321705/business-economy/morocco%E2%80%99s-king-has-much-celebrate-after-25-years-throne
Morocco’s king has much to celebrate after 25 years on the throne
King Mohammed VI took over a largely agrarian economy and used the country’s location to best advantage by growing its manufacturing industries for export to Europe. What do the next 25 years hold?
King Mohammed VI of Morocco, flanked by his son Crown Prince Hussein and his brother Rachid, August 20, 2022, on the 69th anniversary of an anti-colonial revolution.
Morocco’s king has much to celebrate after 25 years on the throne
Morocco is celebrating 25 years since King Mohammed VI succeeded his late father, King Hassan II, on 23 July 1999.
The North African country feels it has a lot to celebrate, given its recent developmental and economic progress, alongside constitutional achievements.
From being economically dependent on agriculture and tourism when Mohammed took over, with a gross domestic product (GDP) of about $42bn, Morocco is now a major player in global production chains, with an expected GDP $152bn by the end of 2024.
Some estimates think it could hit $200bn by the end of the decade, when it will co-host the 2030 World Cup finals. This represents a growth rate of 31% and is based on the kingdom’s major investment projects and initiatives.
Getting connected
It wasn’t always thus. In 2002, early in his reign, King Mohammed VI launched a bold and ambitious project to build a global port at the entrance of the Mediterranean Sea, along the international maritime trade route through the Strait of Gibraltar.
This was the heyday of globalisation, when a surge in trade and exchange saw a commensurate boost in the significance of maritime navigation. For almost two decades, this trend continued.
According to a Bloomberg Economics report published last November in New York, Morocco has joined what the International Monetary Fund (IMF) calls the “connected countries” club, which refers to global supply chains.
A worker assembles vehicle parts on a production line inside the Renault factory, on the outskirts of Tangier, Morocco, which has grown to become a giant in automobile manufacturing over the past 15 years, April 29, 2024.
Fellow members include Mexico, Poland, Indonesia, Vietnam, and Morocco. Together, they have received 10% of foreign direct investment inflows since 2017, despite representing only 4% of the global economy.
Citing analysis by the IMF, French newspaper Le Monde recently reported that these ‘connected countries’ contributed a surplus industrial value of $400bn in 2022, equivalent to the industrial output of India, Germany, or Japan.
When King Mohammed VI was crowned, Morocco's GDP was $42bn. Now a major player in global production chains, its GDP will soon be $152bn.
The pandemic in 2020 led to crises and difficulties in delivering medical, industrial, and even food supplies due to traded accusations between the US and China over the origins of the virus. Two years later, Russia invaded Ukraine.
In an April 2023 report, the IMF said the US-China trade war and the Russian invasion meant that these connected countries "have transformed into alternative transport channels for faltering globalisation due to geopolitical tensions and the rise of protectionist measures".
According to the IMF, "Morocco's geographical location is an additional element that benefits from the geo-economic fragmentation of the global economy".
Using your geography
Taking advantage of its position at the crossroads of Europe and Africa has been the Moroccan city of Tangier, which has become the largest hub for the automotive and spare parts industry in Africa and the Arab world in less than 20 years.
Tangier Med is a giant Moroccan port on the Strait of Gibraltar, which has long been known as a strategic gateway between the two continents, ever since Phoenician times.
Investment in infrastructure like motorways, airports, and high-speed train networks has followed, helping Morocco's development and attracting some of the biggest multinational companies, who have established big operations in the country.
French President Emmanuel Macron (R) and Moroccan King Mohammed VI (C) attend the launch ceremony of the first High Speed Train to operate in Africa, in Tangier, on November 15, 2018.
This includes around 250 major auto and aircraft manufacturers, some having relocated from Europe. Last year, Morocco exported almost 500,000 new cars to 71 countries.
Around 44,000 vehicles are now exported through Tangier Med every month, while monthly exports of aircraft parts and components are valued at around $400m.
According to Alphaliner, which benchmarks the world's container ports, Tangier is a global top 20 port, with an operational capacity of more than 9 million containers, outperforming many of its Mediterranean, European, and African peers (most of the world's biggest ports are Chinese).
A $63bn behemoth
Morocco's exports of goods and services rose to $63bn by the end of 2023, an increase of more than 5% (or $3.3bn) from 2022. This includes $37bn in industrial exports including cars, aircraft parts, food products, clothing, and electronics.
In the first five months of 2024, Morocco's exports neared $30bn. Of this, $20bn was in manufactured goods. Cars alone accounted for $6.9bn, a 12% increase from 2023.
The success of European car manufacturing in Morocco has attracted Chinese investment. During King Mohammed VI's visit to China in 2016, a strategic partnership with Beijing was signed. Informed sources told Al Majalla that Chinese investment intentions "exceed $10bn".
Every month, around 44,000 vehicles are exported through Tangier, as are exports of aircraft parts and components valued at around $400m.
Eyeing Tangier, owing to its proximity to Europe, Chinese companies say they want to build a 'high tech town' nearby, similar to China Town in San Francisco.
In May of last year, Gotion High-Tech signed an agreement with the Moroccan government to build the largest electric battery factory outside of China, costing around $6.5bn over the course of its life, with $1.6bn in direct investment.
Likewise, CNGR Advanced Material Company is to build a $2bn battery component factory in Morocco, to equip a million electric vehicles (EVs) a year for European markets, while South Korea's LG, Japan's Yazaki, and Nissan have all expanded their factories in the country.
Phosphates and lithium
Asian interest in Morocco is partly explained by the kingdom's large reserves of phosphates and lithium, the latter being used in battery production. Morocco is home to 70% of the world's phosphate reserves.
Morocco's phosphate resources are a key ingredient in the fertilisers that can help increase food production around the world.
China is seeking to resist tariffs on its EV exports, even if they may increase in the US (especially if Donald Trump returns to power there), so it may benefit from the Morocco-US free trade zone agreement on rules of origin, in operation since 2006.
For almost a quarter of a century, Morocco has also had a free trade agreement with the Europe, whose automakers have giant car factories in places like Tangier, Casablanca, and Kenitra, with Stellantis and Renault among the biggest groups.
The free trade agreement with the United States gives Morocco "a significant investment advantage over its other competitors in Asia and Latin America", according to the financial media company Bloomberg.
Moroccan Trade Minister Ryad Mezzour told Al Majalla that the country had "benefited technologically" from the manufacturing operations of European car makers, US and Canadian aircraft parts makers, and Chinese electric battery producers, adding: "Soon we will gain experience in the manufacture of high-speed trains."
Atlantic access
Following the success of the Tangier Med port on the Mediterranean, Morocco is now rolling this model out to its southern Atlantic coast, in particular, the Saharan city of Dakhla, where a large $2bn port complex is being built to cater for trade, energy, fishing, and manufacturing.
Once operational, the Dakhla port will play a strategic and commercial role in the southern Atlantic Ocean, between the African and American continents, enhancing Morocco's position on the global maritime trade map. It also helps to connect the landlocked Sahel countries of sub-Saharan Africa to the rest of the world.
The port project is connected to the 21-state Alliance of Atlantic African States, which is backed by the United States and Brazil, with China's support.
With development, Morocco believes that West Africa could be an economic hub, a market for Moroccan goods, and—in time—a relocation destination for some industries.
For 30 years, Morocco has led investment in 'Atlantic Africa' in sectors such as banking, telecoms, insurance, tourism, aviation, real estate, infrastructure, technology, sustainable development, and agriculture. These investments represent a geostrategic advantage for Morocco within the continent.
King Mohammed VI supports the idea of regional integration to overcome economic and social difficulties of countries that cannot develop on their own.
Morocco's King Mohammed VI delivering a speech to the nation, marking the 25th anniversary of his accession to the throne, in the Royal Palace of Tetouan, on July 30, 2024.
In this context, he launched a transatlantic gas pipeline project with Nigeria. This would create an electricity market for around 400 million people, a major boon, given that the lack of reliable electricity poses a serious challenge for local development and investment in these areas.
Going sustainable
Many of these projects are based on the principle of mutually beneficial partnerships, and significant investments in renewable energy and green hydrogen reflect this proactive approach.
The kingdom's focus on renewables began in earnest in 2009, when investment in the sector was still seen as high-risk. That is beginning to pay off. For example, the world's largest concentrated solar power (CSP) site is in Ouarzazate, southern Morocco.
British company Xlinks has ambitious plans for four high-voltage underwater cables between a solar and wind farm in Morocco's Guelmim Oued Noun region and the coast of Devon, England. Its aim is to supply up to 8 million UK homes with electricity.
Germany is also interested, having signed a partnership agreement in June to produce and export green hydrogen from 2026. Morocco aims to become a top five exporter of green hydrogen by the end of the next decade.
Good news is welcome in Morocco, where debt has risen, growth has slowed, and young people now find it increasingly difficult to get a good job.
Speaking to Al Majalla, Finance Minister Nadia Fettah Alaoui said there was a "significant and growing improvement in macroeconomic indicators, which is boosting confidence". She put this down to the government's "reforms and achievements".
Good news is welcome in Morocco, where debt has risen, growth has slowed, and young people find it increasingly difficult to get a good job.
She said: "We are in a phase of accelerating growth, diversifying investments, and strengthening the state's social interventions for those who have not benefited from the fruits of development."
Alaoui predicted that economic growth would rise to 4.6% next year, with reduced youth unemployment, higher wages, and lower inflation, interest rates, and debt levels.
Building the future
King Mohammed VI is keen to ensure that the benefits of the industrial and economic renaissance are felt by all members of society, across all ranges and regions, so has launched direct social support programmes for the poor. This is new for Morocco and gives three million households monthly financial assistance.
It comes as the kingdom starts to build a social state through health insurance coverage, child education, pensions, and unemployment benefits. The finance ministry puts the annual cost of this at around $9.2bn for the coming year.
Commensurately, Morocco's 'Vision 2035' aims to create an inclusive, unified, and sustainable country, with a new development model that aims to raise per capita income to more than $16,000 annually over the next decade.
A big part of this is a tripling of exports to increase the industrial sector's share of GDP. This would rank Morocco in the world's top 40 economies (it is currently 56th, according to the World Bank).
The population is expected to stabilise at around 40 million in the next ten years, according to projections from the Planning Commission.
King Mohammed VI is certainly entitled to look back on the last 25 years with a degree of pride at the country's achievements, but he will no doubt be looking forward to the next 25 years, too.
