Morocco Market Opportunities
The unexpectedly strong blow that hit the Moroccan economy in connection with the covid-19 pandemic caused the first recession since 1995. Economic output even decreased by 15.1% in the second quarter of 2020.
The reasons that pushed the Moroccan economy down were several in total, especially the drop in income from tourism, the disruption of global value chains and the drop in agricultural production associated with extreme drought. Morocco’s economy shrank by 4.7% in 2020 and unemployment rose from 9.8% to 12.7%.
The need to balance the negative consequences of the pandemic caused a significant increase in investments in the health sector and further increase in budgets for the social protection of the population. Unexpected expenses thus meant a direct intervention in efforts to consolidate budgets in the last few years. In 2020, Morocco’s national debt rose to 76.9% of GDP. To support the affected economy, the so-called Special Fund for managing the consequences of the covid-19 pandemic was established very quickly after the outbreak of the pandemic.
The European Bank for Reconstruction and Development, for example, also participated in supporting the affected economy through loans intended for small and medium-sized enterprises, or the European Investment Bank within the framework of loans aimed at the health sector. The Moroccan authorities presented a rather ambitious support plan. The government intends to mobilize funds amounting to almost 11% of GDP.
The support will take the form of state guarantees, direct capital injections into the private sector or investments in infrastructure in the form of PPP. Thanks to its active industrial policy, Morocco expects to play an important role as a nearshoring destination for multinational companies in the future, seizing a strategic opportunity in the post-Covid era.
Post-covid-19 opportunities for foreign exporters
The covid-19 pandemic, like everywhere in the world, has accelerated the digital transformation in Morocco as well. What was not achieved in the last five years was achieved in the first five months of the pandemic. The banking sector has undergone the greatest change, adapting very quickly to the needs of the digital age. Within the framework of public administration, the judiciary has surprisingly achieved the greatest progress in the field of digitization.
E-commerce, which was somewhat neglected until the pandemic in Morocco, saw a big boom. The government already established the Digital Development Agency (Agence de Développement du Digital) in the pre-Covid era. Hand in hand with the advantages of digitization, however, comes ICT crime.
In the following period, the area of cyber security, data protection and secure digital platforms in the field of e-government will be promising for Czech companies.
Another promising sector is the defense industry. The Kingdom of Morocco is the third largest arms importer in Africa. He then ranks twenty-ninth in the world. The main supplier of defense equipment is the United States of America (91%), followed by France. The annual budget of the Moroccan Ministry of Defense amounts to nearly CZK 120 billion.
Last year, the Moroccan parliament passed a law that laid the groundwork for the creation of its own defense industry. This document sets out the conditions for companies that would like to do business in this sector in Morocco. The opportunity for Czech companies will thus be in the field of cooperation in the newly developing sector.
Healthcare and pharmaceutical industry
Even before the outbreak of the pandemic, it was clear that the Moroccan health sector would need a number of investments and a fundamental reform of the entire system in the coming years. The pandemic has underlined long-standing shortcomings. In 2020, there were 534 hospitals in Morocco. However, only 33 of these hospitals provided complete tertiary services.
According to allcountrylist, the main shortcomings are uneven hospital infrastructure, a lack of trained medical personnel and large differences in access to health care. At the start of the pandemic, the Kingdom of Morocco had a bed ratio of per 1,000 inhabitants, the lowest figure in the entire region.
In 2021, the plan is to build new hospitals and increase bed capacity (up to 2,260 beds). It should specifically involve the construction of 8 new hospital centers in several provinces and also the modernization of the university hospital in Rabat.
Furthermore, the construction of a regional hospital in the north of the country in the city of Oujda. The Moroccan Ministry of Health said that in 2021, investments should reach $2.17 billion.
Agricultural and food industry
The primary sector employs 40% of the population and accounts for 15% of the country’s GDP. However, the greatest enemy of Moroccan farmers in the past year was not covid-19, but the extreme drought that took its toll. Reservoirs and dams reported a 50% drop in supplies. In 2020, Morocco launched a new government strategy called Green Generation 2020–2030.
The plan is based on three main pillars and, in addition to afforestation in the northern part of the country, also includes investments in the modernization of agriculture. Morocco sees great potential in the downstream processing of agricultural products and plans to increase the added value of its final food products.
Opportunities for Czech companies are thus offered in the supply of technologies, e.g. in the digitization of farm operations. Processing machines in the food industry will also be desirable.