Morocco is considered as one of the most important countries in North Africa, because of the variety of cultures, its location, and because it is considered as one of the most popular tourist attractions in the world. However, not many people know about the business culture and market in Morocco. Morocco has an important domestic and international market nowadays, and a promising economy. Morocco is bordered by the Mediterranean Sea in the north, the Atlantic Ocean in the West, and Western Sahara in the South, and Algeria in Southeast. Because of this strategic location, Morocco was always looked upon, through history, as an important port for the business routs from Europe to Africa. Morocco still has a good economy because of its various industries, agriculture, fishing, international trade, and most importantly, tourism.
Facts:
The kingdom of Morocco is located in the northwest corner of Africa. It has an area of approximately 280,000 square miles and a very long coast line of approximately 2,120 miles that faces the Mediterranean sea from the North, and the Atlantic ocean from the West.
Morocco is known for its rich and diverse culture and history. For several centuries the Northern part of the country was populated by Berbers, who were to some extent urbanized, and adopted the Latin language, Christianity, and a way of life influenced by Rome and Byzantium. After the arrival of the Arabs in 681 AD, the Arabic language was brought and the Islamic religion and way of life, which was accepted by the majority of the population. After that, the country was ruled by different powers, whose authority extended over areas of varying size, such as the Portuguese and Spanish in the eleventh and twelfth centuries. Many coastal cities (Tangiers, Casablanca, Eljadida, and Essaouira) were occupied at different times for many years by European powers, notably Portugal, Spain, and England. In the twentieth century, France and Spain, who influenced the culture and the language there until today, colonized Morocco. In 1912, Southern and Northern Morocco became French and Spanish protectorates.
Today Morocco has an estimated population of 28 million inhabitants with 51 percent being urban. The population in Morocco is considered to be very young, in fact, according to the last census held in 1993, 60 percent of the people are under the age of 25 years. The workforce represents 56 percent. Practically the entire population is Muslim, and there is a small Jewish community. The official language in Morocco is Arabic, however, business is conducted in several other languages such as French, Spanish, and English.
Economy:
Morocco has an up-rising and a relatively stable economy. Its various resources, different societal classes, and diverse tastes and cultures developed a mature and somehow firm market, which led to a more secure economy. Economic stability, coupled with relatively slow economic growth, has characterized the Moroccan economy over the past several years. In addition, Morocco has the largest phosphate reserves in the world, a diverse agricultural (including aquaculture) sector, a large tourism industry, a growing manufacturing sector, and considerable inflows of funds from Moroccans working abroad. Most of Morocco's trade is with Europe.
The Moroccan government has pursued an economic reform program, supported by the International Monetary Fund (IMF) and the World Bank, since the early 1980s. It has restrained government spending, revised the tax system, reformed the banking system, followed appropriate financial policies, eased import restrictions, lowered tariffs, and liberalized foreign exchange regulations. Hopefully, this effort by the government is going to accelerate the economic growth in the long run, and, as a result, reduce Morocco’s main economic challenge and lower the high unemployment rate in the country, which is currently estimated at 23%.
GDP in 2002 amounted to US $33.3 billion, of which agriculture made up 16.1%, industry 31% and services 35%. The regional unrest, and the significant drop in tourism, have resulted in economic hardship for Morocco. Economic growth has been troubled by an over-reliance on the agricultural sector. Agricultural production is extremely susceptible to variations in rainfall levels, ranging from 13% to 20% of GDP. Given that almost 50% of Morocco's population depends directly on agriculture production, droughts have a severe and unexpected effect on the economy. Over the long term, Morocco will have to diversify its economy away from agriculture to develop a more stable economic basis for growth. In addition, through a foreign exchange rate anchor, and a well-managed monetary policy, Morocco has held inflation rates to industrial country levels over the past decade. Inflation in 2000 and 2001 were below 2.5%. Despite criticism among exporters that the dirham has become badly overvalued, the current account deficit remains modest. Foreign exchange reserves are strong, with more than $7 billion in reserves, the equivalent of 11 months of imports at the end of 2001. The combination of strong foreign exchange reserves and active external debt management gives Morocco ample capacity to service its debt. Current external debt stands at about $13.9 billion or about 30% of the GDP.
Industries:
Morocco has a limited industrial market, however; and it is striving to develop it to meet, and even surpass, the domestic need to export goods and services. Manufacturing industries mainly take place in Casablanca, Fez, Rabat, Tangiers, and Settat. In recent years, considerable investment has been made in cement works and sugar factories to meet the major part of local demand. Moreover, the government is making some new plans to increase the production of chemicals and fertilizers in Eljadida region, in addition to existing plans to develop Nador, where a steel rolling mill has already been in operation since 1984. Food processing for export and domestic consumption, pharmaceuticals, cement and building materials, textiles and leather goods, and vehicle assembly are the main industries in the manufacturing sector in Morocco, which contribute about 19% of the GDP. Moreover, the service industry is a very important economic sector; it makes about 40% of the GDP and employs the same proportion of the total working population. The food-processing sector plays a very important role in the Moroccan economy, and includes the transformation of agricultural production, the supply of basic products for the country and the development of exports. Foreign investment in the food processing industry represents 27% of the total investment input and 17% of the sector's workers population. Leading areas of foreign investment in recent years included vegetable canning, the extraction of essential oils, greenhouse cultivation and industrial cold processing (frozen and deep-freeze).
Examples of major foreign investments in this sector include:
• NESTLE, which has developed a large range of products for both the local market and for export: dehydrated soups, evaporated and powdered milk, baby food, etc.
• LUKUS, which farms several thousand acres for the production of oil resins, powdered tomatoes and powdered red pepper, mainly for export.
• THE SAUDI EL BARAKA GROUP, which invested in fish canneries and greenhouses.
• BEL CHEESE- producing group.
• LE SAFRE, specializing in baking yeast.
The mining industry is also a very important sector in Morocco’s economy. In fact, it might be the most important because of Morocco’s phosphate reserves. Morocco possesses nearly three-quarters of the world's estimated reserves of phosphates. Moreover, it ranks as the 3rd producer and 1st exporter in the world (one third of international trade). Furthermore, Morocco is the leading exporter of phosphoric acid (50% of the international market). The diversity and value of exploited phosphate reserves have enabled the Moroccan mining sector to play a key role in the national economy through its impact on the value and quantity of exports (30%), and its induced effects on the creation of jobs (47,000 employees), as well as on the basic economic and social infrastructure. The development policy pursued in the field of prospecting, promoting mineral projects, diversifying production, modernizing extraction methods, processing minerals as well as training, has given Morocco a leading position among major mining nations. Other minerals of lesser importance are also extracted, including, iron, ore, barite, lead, zinc, copper, and coal. The phosphate industry has been a major source of phosphate rock, however, export earnings have been depressed over the last decade due to low world market prices. This situation is being offset by the increasing emphasis placed on the export of phosphate derivatives, particularly phosphoric acid. Mining provided 5% of metallic and non-metallic mineral production for export in 1995, excluding phosphates. Furthermore, Morocco’s oil industry is an important sub-sector in the economy. It has two oil refineries at Sidi Kacem and at Mohammedia. In addition to its oil industry, Morocco has an active chemical industry, as well as being one of the larger markets in the African lubricants industry.
Agriculture:
Morocco’s landscape is extremely diverse and is dominated by some mountain ranges, the Rif and the Atlas, that rise to over 13,000 feet and form the country's backbone. The coastal surface between the mountains and the sea is rich and receives generous amounts of rainfall to support the important agricultural industry, which, together with most of the large cities, is concentrated mainly in this region. The area to the South and East of the mountains is largely dry, much of it forming part of the Sahara Desert. The climate varies considerably from region to region and from one season to the next. The coastal plane enjoys a temperate Mediterranean-type climate, with temperatures ranging from 46 F to 63 F in winter, and from 66 F to 81 F in summer. The mountainous areas are generally cooler, and above a height of about 5,250 feet, receive considerable snowfall in winter. To the South and East of the mountains, rainfall diminishes, becoming negligible in the desert areas, where the range of temperatures is significantly wider- from a minimum of 37 F to a maximum of 111 F. Because of such geography and climate, Morocco has a very important agricultural market. Agriculture plays a major economic and social role in Morocco and contributes largely to the economic takeoff that the Kingdom has been experiencing for some decades. The agricultural sector employs about half of the active population, and contributes 17% of the GDP. Major events that marked the history of agriculture in Morocco constituted decisive steps for the sector's development and modernization: launching of projects to build irrigation dams, allocation of land plots as part of agrarian reforms, enactment of the agricultural investments code, development contract between the state and farmers, building of a large number of agro-industry plants, creation of several agriculture training schools and institutes. Furthermore, the country's area is estimated at about 7.1 million hectares, including 40 million hectares of agricultural land plots. Efforts undertaken in studies and construction of water-supply facilities have resulted in the construction of 90 large dams with an overall capacity of 14 billion cubic meters. The existing water facilities presently supply about 13.7 billion cubic meters of water (11 billion cubic meters of surface water and 2.7 billion cubic meters of underground water). The goal set by the public authorities, in the early 1960s, was the irrigation of 1 million hectares. This figure was exceeded some years ago. Overall, areas irrigated by large, middle and small dams are presently estimated at more than 1,004,000 hectares: including 332,300 hectares irrigated by large dams and 671,700 hectares by small and middle dams. Production of the three major cereals (hard wheat, soft wheat and barley) reached in 1996 around 100 million quintals, which is a 100% increase in comparison with the average production of the 1991-1995 period. Thanks to this output, 115% of the consumption needs were met in comparison with a previous average rate of 80%. Citrus fruits are grown over an area of 74,700 hectares, or 10% of the total area where fruit trees are grown. Most of the citrus fruit fields are located in the regions of Souss, Gharb, Moulouya and Tadla which hold together more than 80% of the total area. A percentage of 44 % of the national citrus fruit output is destined for exportation, 10% are processed and 46% are consumed fresh at the local market. Regarding animal production and byproducts, the year 1996 recorded a production of 850 million liters of milk (+54% in comparison with 1995), 250,000 tons of red meat (-16%) and 230,000 tons of white meat (+20%).
Fishing:
The fishing industry is comprised of two distinct sectors: the costal fishery and the high seas. Moroccan coastal fishery is made up of primarily smaller, wooden boats. These boats catch, mainly, low-priced fish including sardines, mackerel and anchiovies. Morocco's boats are older, poorly managed and lack technical equipment, such as fish finding gear. Therefore, the boats engaged in this fishing only stay out at sea for up to three days at a time. Due to their lack of technical accoutrement, specifically coolers, they often times bring back damaged catches. The coastal fleet consists of approximately 2,609 vessels, of which 378 are trawlers equipped with mechanisms that assist with catching deep dwelling fish, such as octopus and squid. This sector of the Moroccan fishing industry is facing stiff competition from more modern, better equipped, European boats, primarily from Spain. Morocco's high seas fishing is somewhat more modern, and consists of mainly steel boats equipped with freezing facilities which allow them to stay out at sea longer. These boats are usually between 100 and 150 feet long and make about 5 trips, lasting 60 days, each year. There are currently 280 Moroccan registered high sea cephalopod operating trawlers. Catches by Morocco's high sea fishing fleet are smaller in tonnage than its coastal fishing fleet, but they account for the largest return in value since their catches are comprised mostly of high-priced cephalopods and white fish. These catches are usually exported immediately after arriving at Moroccan ports. Japan is the number one importer from Morocco of these catches. In 1990, the Government of Morocco began a series of measures, including port improvement and financial incentives, that would increase a move by Moroccan fishing fleets to Moroccan ports. Before 1992, the majority of Morocco's high sea fleet was based in Las Palmas, in the Canary Islands, and its contribution to the Moroccan economy was limited. Thanks in part to the aforementioned measures, by 1992 all but one or two of Morocco's high sea fleet were based in Moroccan ports. The port city of Agadir is home to most of the fleet, while Tan Tan also maintains a number of boats. The relocation of the high sea fleet underscores the evolution of the Moroccan fishing industry and its development into a rival for Spain. Moreover, this development posited Morocco for confrontation with other fleets in her waters, which is exactly what occurred between Morocco and Spain.
Tourism:
One of the biggest markets in Morocco’s economy is the tourism sector. Because of Morocco’s nice weather, its location, which is very close to Europe, and its huge coastline and the beautiful nature, huge numbers of tourists from all over the world, especially Europe, visit morocco every year. By the end of the year 2000, Morocco received 2,462,933 international tourists. This number is expected to grow by more than 10% for the next 5 years. Tourism receipts were $2.1 Billion, which represents an increase of 10.3% from 1999. The tourism sector is expected to perform even better this year, since the receipts up to April 2001 increased by 62% compared to the same period of 2000. Besides its diversified natural resources (with more than 3500 Km of coasts , 2 mountain chains, extended miles of deserts and moderate climatic conditions), Morocco is also known for the following aspects:
• Its geographical proximity to most of European capitals;
• Its multi-faceted history illustrated by its imperial cities;
• Its authentic culture and gastronomy;
• Its political stability and warm hospitality
Government projects include six coastal tourism resorts, of which five will be subject to international tenders for the selection of private competent developers. The government also intends to upgrade the level of its transportation and telecommunication infrastructure as well as the competencies of the human resources required for the future projects. US companies would find large investment opportunities once the tenders for the resorts' development are lunched by March 2001. US manufacturers of Tourism and Hospitality equipment will also find in Morocco an attractive market to enter. The best prospects for equipment include security equipment, food service and hotel equipment and airport ground equipment. Morocco succeeded in attracting 4,281,969 visitors by the end of the year 2000, which represents an increase of 4.7 % compared to the year 1999. This figure includes 2,462,933 international tourists, which increased by 8.3% from the year before. Meanwhile, tourism revenues generated $2.1 billion, which improved by 10.3% compared to 1999. The comparison of these numbers implies that tourist spending per person has increased by more than 2%. International arrivals, in 1999, were dominantly from Europe, where France occupies the biggest share with 34 %, followed by Spain (11 %), Germany (10 %) and Great Britain (6%). The US ranks fifth with a share of 5.5 %. The peak tourism season is identified as the period between March and May, July and August, and also the one starting by late October and ending by mid-December. In 1999, this time period accounted for 70% of total arrivals. Local tourism accounted, by the end of 1999, for 24.5% of total hotel arrivals, resulting in 9,513,220 overnight stays, representing a decrease of 7 % from last year. The number of overnight stays at graded hotels, for 1999, for international tourists, totaled 10,845,778, representing an increase of 11.8% with respect to 1998, corresponding to an average journey of 4.6 days. This average is only 2.1 days for local tourism. Being located at the beginning of the southern coastal area, Agadir enjoys warm weather 7 months over the year and offers state-of-the-art beach resorts. It remains the most popular destination, especially among German tourists, who represent 38.6% of its visitors, followed by French tourists (13%). The latter seem to have a preference for the city of Marrakech, the gate way to the central southern region. It attracts 27.1% of the tourists, of which 55% are from France. Casablanca is mainly a business destination whose visitors are 20.9% French, 19.4% Moroccans and 10.9% Middle Eastern. Fez is a cultural destination that is visited by French (26.6%), Moroccans (21.8%) and Germans (9.3%). The tourism industry, the second most important source of foreign currency contributed, in 1999, to 7% in the GDP. It also accounts for more than 620,000 jobs, a 5.8 % share of the employed population. Egypt, Tunisia and Turkey represent the major competitors of Morocco as a tourism destination. Due to the lack of a clear and sound government strategy, Morocco's market share among the four countries regressed from 12.4% in 1993 to 9.8% in 1997.
Sports Tourism: Mainly golfing, according to a survey done by the National Golf Foundation, golfers spend between $ 2,500 and $3,000 a year, and they travel twice a year. With 16,200 golf courses in the US and 5,700 golf courses in Europe, the climatic conditions make golf practicable only 7 months a year. During the remaining 4 months, Morocco still enjoys moderate temperatures that would attract vacationing golfers. With only 18 golf courses, Moroccan developers intend to provide most of their upcoming tourism facilities with golf courses. It is important to note that Morocco was distinguished as the first emerging golf destination worldwide. In addition, having failed the 2006 and the 2010 world cup organization, Morocco is determined to win other future events.
International Trade:
Important structural reforms have already been undertaken in recent years to improve the competitiveness of companies and encourage the development of the private sector. Thus, the business climate has improved and inflation has been contained. The rate of unemployment, public debt and illiteracy has started to recede. Although growth has picked up, it remains insufficient to face up to the geographical challenge and improve the living standards of the population. Furthermore, tourism has suffered from the attacks of September 11 in the United States, but the authorities intend to continue their efforts. Their objective is to reach ten million visitors in 2010 (against 4 million today). The sector generates an important contribution in foreign exchange, as do the funds sent home by expatriates. The lack of infrastructure, especially along the coast, is one of the weaknesses to be corrected. Little by little, industry is: automobile, machinery, agro-food, textiles and at the moment information technologies. The textiles-clothing segment is one of the leading industries in the country, but it suffers from the competition of Asian countries, where the salaries are lower. The craft industries occupy a large place in the economy: 19 % of GDP. Agriculture, which employs nearly half of the active population, remains very dependent on climatic conditions. Morocco is attempting to combat the global warming phenomenon, with an awareness, which has led to a policy of reforestation. Demographic growth is greater that economic growth. One Moroccan in five lives on less than one Euro per day. The same is true for unemployment, aggravated by the massive arrival of young people on the labor market. Illiteracy still affects half the population. Finally, the price of land remains very high and administrative procedures are sometimes very complicated.
Resources:
White, Gregory. A comparative political economy of Tunisia and Morocco. 2001.
Albany: State University of New York Press
National Imagery and Mapping Agency. Africa, plans on the west coast of Morocco. 10th ed., Mar. 7, 1998. [Riverdale, MD: NOAA Distribution Division, N/ACC3, National Ocean Service, distributor, 1998]
Challenges of globalization: Morocco and Tunisia. Washington, DC: Center for International Education. 2003.
Investing in Morocco. 2000.http://www.mincom.gov.ma/english/invest/odi/odi.html.
Morocco. 2002. http://www.infoplease.com/ipa/A0107800.html.