Morocco 2013 Oriental Region

ECONOMY TOURISM TELECOMS & IT INDUSTRY CONSTRUCTION EDUCATION TRANSPORT REAL ESTATE AGRICULTURE

ORIENTAL CONTENTS 3

ISBN 978-1-907065-77-4

Editor-in-Chief: Andrew Jeffreys Editorial Director: Peter Grimsditch

Chairman: Michael Benson-Colpi Director of Field Operations: Elizabeth Boissevain

Regional Editor: Robert Tashima Editorial Manager: Willem Oosterveld

Regional Director: Karine Loehman Country Director: Miranda Stobbs

Project Coordinator: Mahmoud El Hafoudi

Chief Sub-editor: Alistair Taylor Deputy Chief Sub-editor: Jennie Patterson Web Editor: Barbara Isenberg Sub-editors: Sam Inglis, Sean Cox, Nothing’s quiet on William Zeman, Danya Chudacoff, Mariah Pittman, Krystell Jimenez, Oliver Ayyildiz, Martin Stegman, Esther the eastern front Parker Contributing Sub-editor: Miia Page 5 23 Living off the land: The region aims to increase Bogdanoff agricultural yields and expand agro-industry for Analysts: Cailin Birch, Yinka Ibukun, The Oriental region’s economy has tradition- export markets Francisco Serrano, Genevieve ally relied on agriculture, industry and mining. Theodorakis, Ruairi Patterson Infrastructure upgrades, including a highway 25 Pushing for industry: Better connected Senior Editorial Researcher: Susan running from Oujda to Fez, implemented over transport infrastructure eases exporting Manoğlu Editorial Researchers: Souhir Mzali, the last 10 years are expected to boost the Thomas Bacon, Adeline Oka, Jenna tourism sector’s contribution to the mix. 27 Digging it up: Legal reforms and added Oelschlegel incentives should boost mining investment Art Director: Yonca Ergin Deputy Art Director: Cemre Strugo Art Editor: Meltem Muzmuz 5 Nothing’s quiet on the eastern front: Growing 29 Funding growth: A new development fund is Graphic Assistant: İlayda Gedik investment and national integration boost the putting small businesses on the map through Illustrations: Shi-Ji Liang Photography Editor: Mark Hammami region equity investment Photographer: Gregory Dziedzic

Production Manager: Selin Bolu 15 Interview: Mohamed Mbarki, Director, Agence de l’Oriental Operations Manager: Yasemin Dirice Logistics & Distribution Coordinator: Esen Bar›n 17 Rural potential: Niche tourism is offering Operations Assistant: Öznur Usta investment opportunities away from beach Field Operations Executive: Meltem resorts Okur Field Operations Coordinator: Zeynep Akdamar 19 Next door neighbour: An open border could further boost economic cooperation

21 A welcome facelift: Revamped centres and development of cultural spaces in the capital

A welcome facelift Page 21

With the Oujda Urban Development Plan 2010- 16, the region's capital city is undergoing a transformation, which will include 56 projects aimed at improving the city at a total cost of Dh2.1bn (€186.7m). Residential and commer- cial spaces will be built to meet demand. The iconic train station is also being restored in the hopes of adding to the city’s historic appeal.

THE REPORT Morocco 2013

ORIENTAL OVERVIEW 5

Some 4% of new projects fall under the category of tourism

Nothing’s quiet on the eastern front Growing investment and national integration boost the region

After a decade of investment, Morocco’s Oriental region A ROYAL INITIATIVE: Much of the drive to equip the In 2012 the Oriental is ready to build a strong reputation in the Mediter- Oriental with the necessary means for development attracted Dh7.9bn ranean. Nestled between the Algerian border and the started in March 2003, with a visit by King Mohammed (€703.2m) of private investment in 256 projects; Mediterranean Sea, Morocco’s Eastern Region is strate- VI. The push by the monarchy, which also sought to the overwhelming majority gically located along the southern European basin. improve development in other previously ignored of these are in the building After decades of underdevelopment, it has become regions, such as the North, represents a new econom- and construction sector. the recipient of extensive governmental investment. ic positioning of the region, with an emphasis on gen- Morocco’s government has often channelled funds erating domestic consumption and output rather than into the central areas of the country, with urban, relying on neighbouring Algeria to galvanise trade-driv- industrial areas in cities like Tangier in the north and en economic expansion. Historically, the Oriental’s econ- Oujda in the east suffering as a result. For years, the omy has been based on agriculture, animal rearing, Oriental, as the Eastern Region is known, suffered industry and mining. It has also benefitted from fish- from insufficient transport connections to the rest of ing along its Mediterranean coastline and had relied the country and a lack of the infrastructure neces- significantly on cross-border trade with Algeria. sary for supporting the development of family-owned In the 1960s, however, in what would prove to be businesses and strategic industries. Adding to this, the the first blow to the region, a large portion of mining closure of the Algerian border almost 20 years ago activity stopped, prompting heavy unemployment (a dealt a serious blow to an area of the country with trend that has continued, standing at 17.7% in 2011). strong cultural and family links with its neighbour. And after a political spat between Morocco and Alge- However, an increased focus by the government on ria following a terrorist attack in a hotel in Marrakech, devolving some decision-making powers as well as which was stoked by ongoing tension over the Moroc- improving both growth and social development indi- can/Western Sahara, the border between the two cators in areas outside of Casablanca and Rabat has countries was closed in 1994, during Algeria’s civil war. led to a shift in policy and the influx of government These factors, in addition to low agricultural yields, support of the kingdom’s regional governments. encouraged a migration wave to both other parts of ADDING INTEREST: As a result, over the past 10 years, the country and to Europe. One-third of Moroccans liv- infrastructural upgrades of road, air and sea transport ing abroad today come from the region. links have greatly improved the business environment COMPOSITION OF THE REGION: The Royal Initiative in the Eastern Region. And with the establishment of for Development of the Eastern Region launched a comprehensive regional development strategy focus- Agence de l’Oriental in 2006, with the goal of helping ing on industrial expansion, tourism promotion and the region’s local authorities to establish development agricultural output, the Oriental is hoping to see a sig- strategies and stimulate economic activity. Additional- nificant expansion in both trade and capital flows over ly derived from the royal initiative was the creation of the medium term. Attracting private investment has the Regional Investment Fund, put in place to support The Royal Initiative for been a main priority. According to figures by the Region- local business growth through equity investment in the Development of the al Investment Centre in Oujda, the Oriental attracted region’s companies (see analysis). Eastern Region created Dh7.9bn (€703.2m) of private investment in 256 dif- The Eastern Region is located in the north-eastern Agence de l’Oriental and the Regional Investment ferent projects in 2012. About 83% of new projects were corner of the kingdom, with a 200-km Mediterranean Fund to help stimulate in the building and construction sector, along with 6% coastline to the north. To the east lies Algeria, where activity and develop local in secondary industries and 4% in the tourism sector. the border is closed only a few kilometres away from businesses.

THE REPORT Morocco 2013 6 ORIENTAL OVERVIEW

The largest city is the the region’s capital and largest city, Oujda. Oujda is the based on 2009 figures. This is a challenge that author- regional capital, Oujda, region’s main urban centre with a population of 500,000 ities face when trying to improve the governance of which is home to the Oujda and Morocco’s easternmost city. It houses the region- local businesses and structures, especially in their Angads Airport and the Al Farabi Hospital, along with al council and it is the Oriental’s centre for business efforts to spur greater investment and activity. Bank- other key infrastructure. and government administration. It hosts the Oujda ing credit and capital investment in equity, which can Angads Airport, the Université Mohamed Premier and be harnessed to help grow local businesses, require strict the Al Farabi Hospital. The city is also undergoing major transparency rules. “Many companies in the region are urban renewal (see analysis). A brand new Dh525m family-owned and have part of their business in the (€46.7m) University Hospital Centre is under construc- informal sector, and it can take a long time to integrate tion and will improve health service provision in the them into the formal sector and encourage them to region and training capabilities for regional health staff. become more transparent,” said Ali Belhaj, the presi- To the west, the Oriental is linked to the adjourning dent of the regional council. regions of Taza-Al Hoceima-Taounate and Fez-Boul- TACKLING ISSUES: Such a high figure for informal mane. To the south-west, is the region of Meknés-Tafi- activity is not surprising nor particularly unique to the lalet. On a peninsula on the region’s Mediterranean region – estimates of the informal economy in Moroc- coast is the Spanish enclave of Melilla. co can range well above one-third of total activity. In a With a population of 2m people and an area of 82.8 sq lot of ways, the challenges of the Eastern Region remain km, the Eastern Region is the second biggest of the king- the same as other regions in Morocco, bar for the fact dom’s 16 regions in terms of area, occupying 11.6% of that, for several years, these have been compounded national land. The region is divided into the prefecture by its isolation and insufficient economic integration of Oujda-Angad and six provinces: Nador, Driouch, with other more developed parts of the kingdom. Berkane, Taourirt, Jerada and Figuig. These include 27 Unemployment is also an issue in a region that has urban communes and 87 rural ones. for years contributed heavily to the Moroccan diaspo- CHALLENGES: The closed border has had a significant ra, especially in Europe, where about 1m emigrating impact on the regional economy, particularly in terms Moroccans are from the Eastern Region. As a result, a of contraband and informal activity. The Regional Strate- number of broader national strategies should also help gic Plan for the Eastern Region, which was published unshackle growth drivers in the Oriental to varying in 2011 by the regional council, estimated that some degrees. The Green Morocco Plan – launched to devel- 46% of commerce activity in the region was informal, op the agricultural sector – is being translated into a ORIENTAL OVERVIEW 7

total of 77 agricultural development programmes across the region. Plan Azur, which oversaw the creation of six beach tourism areas, had an impact on the region’s north coast with the building of the Saïdia Resort. Morocco’s industry development strategy, the Nation- al Pact for Industrial Emergence (Pacte National pour l’Emergence Industrielle, PNEI), was put in place in 2005 to focus on the expansion of industrial capabilities up to 2015, and will manifest itself in the region through the establishment of industrial areas to attract new com- panies and increase production capabilities. HIGH AIMS: The regional government has also been aggressive about setting its own targets for growth. Local authorities want to create 137,500 new jobs and increase the number of people working from 538,700 in 2009 to 676,200 by 2020. To sustain this, the region is aiming to maintain an annual growth rate of 7.3% to raise regional GDP from Dh35bn (€3.1bn) in 2009 to Dh77bn (€6.85bn) in 2020. This goal might be difficult to achieve, considering the economic downturn in Europe and regional instability in neighbouring North Efforts are being made to improve rail and road networks African countries, as well as the kingdom’s overall connected the Oriental’s largest city to the country’s Despite recent turmoil in growth rate, which is half that. Significant work will motorway network. The coastal highway, known as La other nearby North African need to be done to make that target feasible – which Rocade Mediteranéenné, runs from Saïdia to Tangier, nations, the kingdom has set ambitious growth explains in part the extensive work going into the reducing travel time from the resort at Saïdia to the targets, one of which is to upgrading of both hard and soft infrastructure. country’s largest deepwater port at Tangier from some create a total of 137,500 “We need to think beyond the current internation- 11 hours to seven. It was built at a cost of Dh7.2bn new jobs by 2020. al context of financial crisis and make sure that we (€640m). The 120-km dual carriageway from Oujda to establish the infrastructure necessary for receiving Nador, currently under construction, should also ease national and international investment,” said Belhaj. transport of goods into the future Nador West Med port. Agence de l’Oriental, which promotes international Improvement of rural roads in the Berkane cooperation for regional development, has concluded province, the region’s largest agricultural exporting agreements in various areas, both at the bilateral and area by volume of produce, will also improve inter- multilateral levels. "These include a project with UNC- nal congestion and distribution. Investment is due TAD on attracting foreign investment; with UNDP to com- to reach Dh700m (€62.3m) over the next seven bat unemployment; an agreement with the Andalusian years, according to the governor of the Berkane authorities to promote the EU’s neighbourhood poli- province, Abdelhak Haoudi. Should the Algerian bor- cy; and a partnership with the French city of Lille to devel- der open, the region would also be connected to the op rural tourism,” Taoufiq Boudchiche, director of inter- Algerian highway network, facilitating easy access national cooperation at the agency, told OBG. to the nation’s two largest cities, Oran and Algiers. CONNECTING THE DOTS: Some of the largest strides, LIFT OFF: The region now has two airports. The larg- are being made in the area of infrastructural improve- er of these, Oujda Angads, is located approximately 10 ment, particularly to road and rail networks. “Highway km from the capital city. Equipped with two runways, links are definitely helping to bring logistics costs down. Transport spending has traditionally been slightly high- New investment projects by sector, 2012 er for companies based in the Oriental. In our case, some imported products might end up costing us an extra 8% because we have to bring them all the way here,” Ahmed Nasri, the regional director for hypermarket Construction 83% chain Marjane in the Eastern Region, told OBG. Transport has been one of the government’s top pri- Energy & mining 2% orities in the Eastern Region. Over the past few years, Tourism 4% increased connectivity has alleviated the region’s iso- lation and eased access for local industries that need Commerce 3% to send goods to other areas of the kingdom or reach Morocco’s main export points into European markets. Services 2% Much has been accomplished in terms of road trans- port and the regional road network now measures Industry 6% 6000 km. Three projects have specifically affected the

flow of goods and movement of people to the region. Régional d'Investissement SOURCE: Centre A new 320-km highway running from Oujda to Fez has

THE REPORT Morocco 2013 8 ORIENTAL OVERVIEW

The port is nonetheless underused. Its proximity to the Spanish port at Melilla as well the lack of sufficient com- mercial cargo and container lines serving it has changed its focus to passenger traffic; 598,710 passengers and 2.5m tonnes of trade passed through it in 2011. Hop- ing to modify this, a feasibility study is under way by the regional office of the General Confederation of Moroccan Businesses (Confédération General des Entre- prises Marrocaines, CGEM) to assess the tonnage in the region that could be shipped through the Nador Port. “If we do not have enough tonnage, we might be able to work in conjunction with the neighbouring regions of Fez and Meknés,” said the Oriental regional presi- dent of CGEM, Abdelkrim Mehdi. A key component of the region’s attempt to boost maritime trade – and also increase access for both exporters and imports – is the Nador West Med Port, a Dh6bn (€533.4m) project cur- rently in progress that will not only try to replace the existing Nador Port, but also serve as the key maritime conduit for the Oriental to Europe and the Mediter- The Oujda Angads Airport is the larger of the region’s two airports ranean Basin. The project is slated for completion in The Nador West Med Port is the longer running some 3000 metres, it has the capac- five years (see analysis). under development with ity to receive commercial aircraft. Work was recently LAYING TRACKS: Railway links are fairly limited, and the overall aim of replacing completed on a new 30,000-sq-metre terminal that the country’s planned high-speed rail will – at least in the underused Nador Port and allowing improved has increased the airport’s capacity to 3m passengers its first phase – bypass the region. Currently, a 650-km access to Europe and the a year, but airport authorities expect capacity to be railroad links Oujda to Casablanca, and a new terminal Mediterranean Basin. raised to 3m passengers in the coming years. “We cur- station is in the works. An old one-way line established rently operate at one-fifth of potential capacity, receiv- between Oujda and the remote town of Buarfa is still ing some 600,000-700,000 passengers per year. The in operation today, mostly for tourism purposes through airport can thus be a great generator for economic the Oriental Desert Express to the south. The city of development,” said Mohcine Benhadouche, manager Nador is connected to Oujda by a 117-km line. There of Oujda Angads Airport. are plans for Nador West Med Port to be connected to The smaller Nador Aroui International Airport, 24 the national railway grid through the Nador line. km south of Nador, can receive up to 750,000 passen- PLUGGED IN: Over the years, the Oriental region has gers a year and has several daily flights to European received most of its energy from the Jerada coal-fuelled capitals. Also close by is the EU-regulated Melilla air- electricity plant, with a production capacity of 165 MW, port which has daily connections to several cities in as well as two hydroelectric stations in Mohamed Khamis Spain. In the south, the small Bouarfa aerodrome has El and Bou Ateg. It is also connected to the Algerian the potential to serve tourism expansion by cutting the grid, enabling it to receive an additional 950 MW from four-hour drive from Oujda to a short flight. This would its energy-rich neighbour. give foreign visitors easier access to the Figuig Oasis. However, solar energy is proving to be an attrac- UNDER STUDY: Only one small port serves the region: tive resource for both domestic production as well as the Nador Port at Beni Ansar, which can receive ships for export to Europe. Capacity was extended with the of up to 200 metres and is equipped with five quays. building of the Aïn Beni Mathar thermo-solar station, in the province of Jerada. The 472-MW plant was built Breakdown of investment projects by sector, 2012 at a total cost of around Dh4.6bn (€408.9m) and started production in 2010, using a combination of Total solar and gas energy production. The plant was pri- Activities No. of projets Investment (Dh m) Expected job creation marily financed by the African Development Bank in Textiles & leather 1 0.91 21 partnership with the Global Environment Facility and Agro industry 22 419.45 1081 the National Electric Authority. Wood, paper & cardboard 2 6.81 22 Solar capacity will also be increased through the Ironworks & electric enginering 18 57.3 310 construction of a 2000-ha solar park due to be estab- Chemicals 4 30.5 303 lished close to the Aïn Beni Mather plant. The new Construction & public works 58 5067.91 1635 park, which is scheduled to start operations by 2020, Energy & mining 84 157.72 761 will have a 400-MW production capacity and will be one Tourism 8 298.66 225 of the five solar parks to be built under the Moroccan Commerce 27 240.7 653 Solar Plan across the country. Indeed, the Oriental has Services 19 195.29 256 become one of the leading areas in terms of solar ener- Total 243 6475.24 5267 gy production in the country under the kingdom’s SOURCE: Centre Régional d'Investissement objective to increase its usage of renewable energies.

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10 ORIENTAL OVERVIEW

Private and public real Authorities also hope that the added focus on and became majority shareholder of a cement facto- estate operators are renewable energy will spill over into local industrial ry in Oujda in 1992. “Construction activity in the region forming partnerships to capabilities. National renewable energy development has significantly increased since 2004, following the roy- build more than 33,000 affordable homes between plans include the goal of procuring 30% of the nec- al decree. Many of the big projects needed a lot of 2010 and 2020 at a total essary clean energy technology from Moroccan com- cement. Now, more projects are private and of a small- investment cost of Dh8.2bn panies. The Oujda Technopole, which is set to include er scale,” said Khalid Kaaouachi, the director of Holcim’s (€729m). 500 ha for industrial development, has already start- cement production unit in Oujda. ed commercialisation of a 107-ha section, of which Indeed, while it had been public spending that spurred 40 ha will be devoted to clean energy technologies the majority of initial development activity, nowadays and equipment firms (see analysis). construction companies in the region are increasingly CONSTRUCTION: Boosted by the slew of infrastructure catering to more private projects. Much of the Eastern development projects over the past decade, the region’s Region’s urban areas are now being renovated and construction materials sector, which has traditionally increasing the number of affordable housing units has been composed of small and medium locally based been one of the priorities. companies, has seen robust growth in recent years. Partnerships between private and public real estate The increase in the establishment of quarries, which operators are helping to build more than 33,000 afford- grew from three to 12 in the region between 2000 and able homes between 2010 and 2020, at a total invest- 2010 highlights the jump in activity. ment of Dh8.2bn (€729m). In the coming years some “The region has a lot of land available that could be 14,749 housing units will be built in the prefecture of developed for commercial purposes, which presents a Oujda-Angad, along with 11,608 units in the province good opportunity for the region,” said Driss Houar, the of Nador, 4470 in the province of Berkane and over 2000 CEO of Houar Enterprise, a construction firm in Oujda. units in the town of Jerada. The province of Nador, which has long been a cen- FINDING THE EDGE: Smaller roads in a number of the tre for the brick manufacturing industry, now has over region’s provinces are also currently under renovation. 23 local companies, some of which export across the Competition between local construction companies is country. Sonasid is present, with a steel production pushing prices down and affecting revenues. unit in Nador that manufactures 600,000 tonnes a year. “Prices offered for projects have decreased,” said Major foreign players are active as well. Swiss cement Noureddine El Gourdi, the administrative chief for manufacturer Holcim has been in the region since 1979 Société D & CRB, an Oriental-based construction group. ORIENTAL OVERVIEW 11

“There are too many companies active in this sector in the Oriental, so new niches will need to be explored.” Given the surge in government investment that has occurred since 2003, construction firms and materials manufacturers might find it hard to sustain growth lev- els from this period, although the Nador West and Marchica ports and the expansion of the Saïdia Resort should help bring renewed activity to the region. REELING VISITORS IN: With a variety of sites of inter- est that include a 200-km coast, mountainous areas, thermal springs and the southern oasis region of Figu- ig, the tourism sector is not lacking in attractions, but does need an overhaul in terms of hotel capacity and infrastructure. The region’s total capacity is currently around 8000 beds, according to figures from the Region- al Delegation of Tourism in Oujda. The overall goal is to endow the region with a total of 120,000 hotel beds before 2025, a massive increase in capacity. As with the rest of Morocco, tourism is considered a crucial com- ponent to improving the regional economy. The tourism sector is one of the kingdom’s largest foreign curren- The region is not short of sites and attractions to entice tourists cy earners, but the slowdown in its most significant mar- Despite being dogged by a slow start and construc- With the economic ket, the EU, has had an impact recently. tion delays, Saïdia is already having an impact on diver- slowdown in the EU, the Still, the central government has pushed ahead in a sifying tourist arrivals in the Eastern Region. “Before main source of foreign tourist arrivals, attracting bid to entice tourists from new non-traditional mar- the opening of the Saïdia Resort, visitors to the region visitors from non- kets, with the national Plan Azur strategy, which aims were 51% Moroccans and 49% foreigners,” Amine Abdel- traditional markets is to expand beachfront tourism (see Tourism chapter). laoui, the regional delegate for tourism told OBG. “Now crucial. Charter flights are A key part of Plan Azur was the construction of a num- the mix of nationalities is slowly changing, and 67% of increasing access for Polish ber of new resorts, including Saïdia in the Oriental. tourist arrivals to the region in 2012 were foreigners.” and Russian tourists. Over the past four years, most of the region’s tourism SEASONAL EFFECTS: Moroccans living abroad have development focus has been geared towards the Saï- long been an important component of the visitor pro- dia project, the first resort to be developed under Plan file (in fact they are counted as foreigners for tourism Azur. The Saïdia Resort was inaugurated in 2009 through purposes), but the resort has had some notable suc- the opening of its first two five-star hotels. A third one cess in boosting the number of European travellers was eventually added, bringing the total bed capacity over the past two years, with new tourists from Poland to 4000, or half of the region’s total accommodation and Russia brought in by charter flights to the Oujda capacity. In the first three and a half months of activi- Angads Airport in the summer. Seasonality remains one ty, Saïdia received some 37,000 tourists. of the main challenges of the resort, which has an 84% WORK TO COME: But the project is still some steps away occupancy rate in the summer months, but drops to from its final goal of a 30,000-bed capacity, distributed 34% during the remainder of the year, which is consid- over a total of nine four- and five-star hotels and 3000 erably below the average yearly occupancy rates for residential villas. Amenities will also include three golf hotels across the country. “Saïdia is the region’s call- courses and a 1350-berth recreational marina, of which ing card, but we need to develop additional products 750 berths are already open. Original plans have been delayed due to the developer’s inability to secure cred- Regional contribution to national agricultural production, 2011(%) it under difficult financial conditions. Initially, the Society Organisation of Saïdia (Société 14 d’Aménagement de Saïdia, SAS) owned 10% of the project, partnering with the government’s develop- 12 ment agency, CDG Développement, which had 60%, and the state’s investment arm for the tourism sec- 10 tor, the Société Marocaine d’Ingénierie Touristique. The New Company of Installation of Saïdia was set 8 up in 2011 to oversee the completion of the project. 6 SAS pulled out of the tourist side of the development, selling its share to CDG for Dh1bn (€88.9m), but is 4 retaining ownership of the project’s residential com- ponent. CDG has agreed to add the next 3000 beds 2 SOURCE: Ministry of Agriculture with the building of three more hotels by 2014. More 0 public works for the town’s water management Citrus Olives Vine Sugar Red White Almond Dates Honey Milk Cereals network have also helped with improving standards. meat meat

THE REPORT Morocco 2013 12 ORIENTAL OVERVIEW

tourism, several other regional attributes can be devel- oped for smaller-scale niche tourism. This will help diversify tourism in the Eastern Region, protecting it from the volatility that has affected other major tourist destinations such as Sousse and Hammamet in Tunisia, and should also have a positive impact on the more iso- lated areas to the south. Authorities have identified over 30 specific sites that could be developed to expand the benefits of tourism to other areas inland from the Mediterranean coast (see analysis). The size of the Marchica and Saïdia projects can support the region’s economic growth. However, giv- en the hesitant nature of lenders in Europe and the US, authorities might find attracting private capital to be harder than initially planned. This may poten- tially delay the completion of the two projects past their established deadlines. Another challenge for the local tourism sector will be to train enough skilled labour to support the Marchica and Saïdia projects. The Saïdia Hotel School trains between 80 and 100 Human resource training through new hotel schools will be key in the development of regional tourism students a year. Added to this is the country’s Bureau A plan to create seven around the region that will allow the visitors coming for Professional Training and Employment Promotion, tourist towns around the for beach tourism to extend their stay,” said Abdellaoui. which opened an office in Nador to respond to the Nador lagoon is expected Another large-scale tourism resort is set to become future needs of the Marchica Med resort. to create 80,000 direct and OFFSHORING: indirect jobs, with 15,000 one of the region’s most ambitious projects in terms The region’s geographic proximity to of those during the of investment volume as well as with regards to its Europe is advantageous for activities other than tourism, construction phase. sheer size. The Marchica Med tourism zone, which will with the government targeting increased investment Smaller-scale niche tourism include seven newly built towns, is set to transform the in information technology (IT), and in offshoring and is also being explored in an 25-km-long Nador lagoon into a high-end tourism zone nearshoring in particular, which all offer the potential effort to diversify the sector. geared towards local and foreign visitors. With a total for job creation and improved tertiary sector activity. investment of Dh46bn (€4.1bn) and an area of 4000 The expansion of the IT services sector is already part ha, the project will be under development over the of the PNEI, which aims to position the kingdom as a coming years. Total hotel capacity is set to reach 84,000 key destination for the sector, and includes a target for beds after its expected completion in 2025. outsourcing to create 70,000 new direct employment Driving this ambitious project is the Marchica Med positions between 2009 and 2015. Development Company, set up in 2008 with capital In the Oriental region, offshoring activity got a boost totalling Dh500m (€44.5m), divided in equal parts from the arrival of SQLI, a French IT services provider between the state and the Hassan II Fund. For each with operations in several European countries. The of the seven specific tourist towns to be created company arrived in the regional capital in 2005 under around the lagoon, a specific development company an agreement with the Université Mohamed Premier will be created with the input of private investors. The in Oujda, opening an IT services centre as well as a projected impact of the project on the region is sub- research and development unit within the university, stantial. It is estimated the development will create which focused on open source technology. The com- 80,000 direct and indirect jobs, 15,000 of which will pany currently employs over 100 people in Oujda. be brought in during its construction phase. Besides The region expects more activity to come with the several hotels, the resort will also include 2400 apart- opening of Oujda Shore, an industrial park specifically ments, 1000 villas and an ambitious six marinas. for offshoring activities within Oujda Technopole. The Cité d’Atalayoun, the first section of the project, project, managed by MEDZ (a subsidiary of CDG) and expected to be completed in 2014, will be built in a the Ministry of Telecommunications, is set to open in 45-ha area. Its design includes a 360-room hotel, 650 2013, aiming to attract IT outsourcing companies to villas, 2230 apartments and two marinas. The second its 22-ha park. The overall investment in Oujda Shore tourist town, Cité des Deux Mers, will be built close will be €500m, and the government expects that a to the spot where a channel opens the lagoon up to the Mediterranean. It will have 320 villas, 193 apart- Regional development objectives for 2009-20 ments and 280 hotel rooms, for a total capacity of 2009 2020 3252 beds. Completion is set for 2014, and the proj- GDP (Dh bn) 35 77 ect will include the establishment of a new water Employment (active citizens) 538,700 676,200 channel to the sea to reduce currents inside the lagoon Total investment (Dh bn) – 120 and allow for better flow of water. Informal sector's % of local commerce 46% 35% THINKING SMALL: Despite the considerable efforts and SOURCE: Regional Council for the Oriental investment being directed towards seaside mass

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14 ORIENTAL OVERVIEW

years to eventually increase the number of trained human resources (HR) for the growing tourism sector. Morocco’s Bureau for Professional Training and the Promotion of Employment (Office de la Formation Pro- fessionnelle et de la Promotion du Travail, OFPPT), has 25 offices in the region. According to a regional study published by the UN in 2012, the OFPPT was giving train- ing to 17,025 interns in all sectors in 2010-11. Through its regional offices, the bureau has been focusing on more training for tourism, IT and offshoring activities. THE RISE OF RETAIL:The boost in public spending and improved physical infrastructure has begun to stoke local consumption, with domestic trading also on the rise. Authorities expect that the informal sector’s influence on local commerce can be reduced to 35% by 2020. Illegal trading is conducted mostly in petrol and daily- use products such as household items. But contraband activity has become less attractive given the reduced import duties as part of the Morocco-EU Association Agreement and the potential drops in government sub- A greater number of university graduates are staying in the Oriental region to work sidies due to the country’s twin deficits. The region’s university is successful replication of offshoring parks created in Other signs that informal activity is less of a threat designing its curricula Rabat and Casablanca will attract businesses looking have come from the success of newly arrived retail around fields such as agro- to take advantage of the region’s competitive salaries outlets, which have risen in number since 2007. The industry, renewable energies and IT, in an effort and Spanish- and French-speaking workforce. hypermarket chain Marjane was the first to arrive in to give students the skill HUMAN RESOURCES DEVELOPMENT: The ability of the region, and currently has two stores in Oujda, one sets demanded by the local the IT outsourcing sector, along with other secondary in Saïdia, one in Nador and, most recently, a fifth store job market. and tertiary sectors, relies heavily on the region hav- in Berkane. It was followed by Aswak Assalam, anoth- ing a qualified labour pool. There is a disconnect – as er retailer with three stores in the region; Carrefour, there is throughout Morocco – between the skill sets present in Oujda and Nador; and Metro and Label’Vie, of recent graduates and the job market’s needs, which which each have one store in Oujda. has led to a worryingly high youth unemployment rate. The extent to which informal activity contributes to However, the basics are in place to improve the situa- the domestic economy nonetheless skews retail activ- tion, which is crucial given that over half of the region’s ity to a greater extent than elsewhere in the region. Con- population is under 25 years of age. traband products include cooking oil, detergents, flour, FRAMEWORK IS SET: The Oriental’s higher education cookies and kitchen utensils. The same five-litre bot- institution, the Université Mohamed Premier, was estab- tle of cooking oil priced around Dh65 (€5.78) in a Mar- lished in 1978 and currently has over 35,000 students jane store can be found at about Dh50 (€4.45) in the at its three campuses in Oujda, Nador and Al Hoceima. informal market in central Oujda. According to super- The university is designing its teaching policy around market chain’s representatives in the region, more some of the activities prioritised under the PNEI, such choice and better product standards are helping to as agro-industry, renewable energies, civil engineering, move consumers away from contraband products. “Con- transport and logistics, and IT. This will be essential to sumers want what is new and like the availability and create the region’s future pool of professionals, who variety of brands. The establishment of retailers in the are increasingly seeking opportunities in the Oriental region is also helped by the large number of Moroc- rather than in other regions. “It is encouraging that grad- cans living abroad that are used to brands available in uates who initially moved to Casablanca and Rabat to Europe and want the same type of products when they work are now returning to seek opportunities in the East- return home,” Marjane’s Nasri told OBG, pointing out ern Region,” said Aomar Anane, the vice-president for that sales at its Oujda store have been growing at an research at Université Mohammed Premier. annual rate between 4% and 8% since it opened. The university is also focused on cooperation with OUTLOOK: The Oriental region has made a key choice the private sector, by allowing new business ventures to invest in infrastructural development. Over the past to establish themselves at its entrepreneurship centre, decade, this has equipped the region with the neces- Maison de l’Entreprenariat. This opens up basic infra- sary conditions for its companies to expand into oth- structure for new developing companies whilst also er domestic regions as well as to target European mar- allowing university students to get work experience kets. The region’s fortunes will also be enhanced with The Bureau for Professional through internships. “As the country moves into region- further integration with Morocco’s neighbours. An open Training and the Promotion alisation, we also want to decentralise our teaching border with Algeria could have a positive economic of Employment was training 17,025 interns in throughout the region,” said Abdelaziz Sadok, the uni- impact on growth. Sustained investment in new indus- 2010-11, according to a versity’s president. The university is also considering trial zones and the regional focus on strategic sectors 2012 UN study. opening a tourism campus in Saïdia over the coming will also help to foster a strengthened private sector.

www.oxfordbusinessgroup.com/country/Morocco ORIENTAL INTERVIEW 15

Mohamed Mbarki

Great expectations OBG talks to Mohamed Mbarki, Director, Agence de l’Oriental

To what extent does the closed border with Alge- mality to occur. In general though, the economy is grad- ria affect the development of the Oriental region? ually formalising, with more young people being attract- MBARKI: Since Moroccan independence in 1956, the ed to stable jobs in the formal economy. border has been closed more often than it has been open. Economic experts have identified that this caus- What is the best strategy to pursue in tackling the es up to 2% GDP loss across the Maghreb region. How- high rate of youth unemployment in the region? ever, the current rate of economic development in the MBARKI: This is at present a worldwide problem, though area has made it less affected by the closed border, par- more fragile economies are most affected. The princi- ticularly in wake of the launch of the royal initiative for pal cause of youth unemployment is that the number the region’s development in 2003. of graduates has exceeded the number of available jobs At the same time, the region should also prepare for now for some years. There is also the issue that the skills the border to open so as to play a key role in the of today’s graduates do not correspond to those Maghreb – and indeed to partake in the Euro-Mediter- demanded by employers. The Oriental region has dis- ranean region as a whole – as well as to reinforce its tinguished itself for the quality of its university gradu- links with the national economy. Given the importance ates. However, improving basic education levels and lit- of trans-Mediterranean exports, a port like that of eracy rates is not just a regional priority, but a national Nador West Med can play a key role in global shipping one. To address these problems, pre-schooling needs flows and further develop the region as a consequence. to be further developed, and it is also important to nurture a spirit of entrepreneurship. In this respect, the In what way does the informality of the economy agencies concerned now need to take responsibility impact on development in the Oriental region? since the means, the money and the political will are MBARKI: The informal economy is a manifestation of now available, even if implementation is not always a sub-optimally functioning economy. The Oriental is easy. Through these initiatives and in cooperation with not more affected by informality than other border civil society organisations, we have been able to cre- regions in the country, or comparable regions else- ate about 2500 new jobs. where. Up to now, a common strategy for pushing back the informal economy was through repression and con- How can the development of value-adding indus- trol, but this is not a very effective strategy. It would be tries be further encouraged in the region? better to tackle this issue via economic means. MBARKI: For us it is clear industrialisation is key to For instance, contraband can be pushed back when development. In creating a strategy, we have focussed large retail stores arrive giving people more choice at on developing three industrial zones: the first is near competitive prices and with quality assurances. But Nador, which is completed and is being commercialised. people engaged in the sale of contraband also to devel- With the new port of Nador and the Marchica Med, this op certain commercial skills that could be useful if they is a key zone for development. Next is the Agropole of were to work in the services sector for instance. A study Berkane, built around the clementine business in undertaken by the Chamber of Commerce of Oujda has Berkane and aimed at creating value-added products. shown that the informal sector creates jobs and destroys Finally, the Technopole at Oujda provides an integrat- jobs at the same time. However, the balance in that ed industrial zone to bring about renewable energy regard is negative in the end, whereby the difference development and environmentally-friendly technolo- is made by taxation and subsidies that enable infor- gies, and includes an export-oriented offshoring zone.

THE REPORT Morocco 2013

ORIENTAL ANALYSIS 17

The region hopes to draw tourists to its southern provinces

Rural potential Niche tourism is offering investment opportunities away from the busy beach resorts

Much of the Eastern Region’s history was founded on investment is also being directed at training for lodge The publication of a report the variety of its attractions, which range from sandy owners, and will be implemented up to 2015. assessing the region’s beaches to desert oases. Now authorities are keen to According to Amine Abdellaoui, the regional tourism economic potential in 2012 has put added focus on create niche tourism projects that help preserve the delegate, the big challenge is to equip the rural areas ecotourism projects and natural environment while sustaining local communi- across the region with quality accommodation. “The city incentivising the local ties through low-impact tourist inflow. Emulating the of Oujda has 2000 to 2500 hotel beds, but other population to remain in success of other sustainable tourism ventures creat- provinces do not have many beds, or at least, not a lot the area. ed across regions of the kingdom, notably in the Atlas of tourism-qualified hotel capacity” he told OBG. Mountains or the desert area of Ouarzazate, the Ori- TRAIN TO BOUARFA: The first niche tourism project ental is seeking to sustain local traditions and expand in the region is being designed using a railway that was the economic growth to its isolated, southern-most originally built in colonial times. The 350-km line link- provinces via tourism. Although Morocco has several ing Oujda to Bouarfa, 108 km south of the Figuig Oasis, established ecotourism circuits that are international- is the remains of an ambitious project to create a rail- ly recognised, these rarely involve the Oriental region, way connection between the Mediterranean coast and due to its distance from other tourist hotspots and the Niger. The Errachidia-based travel agency Suprateam lack of sufficient promotion over the years. Travel initially tested the railway line as a desert train STAYING LOCAL: In a 2012 report analysing the East- concept with 700 tourists. “The desert train pilot proj- ern Region’s economic potential, the Oujda Chamber ect has had good results and it has the potential to devel- of Commerce, Industry and Services (Chambre de Com- op into a very distinctive tourism product. However, we merce d’Industrie et de Services d’Oujda, CCISO) under- require a better train for this, it needs to be adapted lined the potential ecotourism projects based around for tourism travel,” said Abdellaoui. “Nowadays, all we the desert and its rural communities as effective ways have is one from the National Office for Railways of to promote growth, as well as to encourage rural pop- Morocco, so the government might have to put out a ulations to stay. In the report, the chamber highlight- tender to get someone to supply a tourism wagon.” ed the initial potential to draw 1000 to 5000 visitors a A total of 32 places of interest have been identified year. These numbers are ostensibly small compared as good rural tourism spots. These include the thermal with the potential of the Mediterranean coast resort stations of Sidi Charfi and Fézouane, the forests of projects to the north, but the region’s natural setting Louassa El Hamra and the mountain of Jbel Lakhdar. encourages the development of niche products aimed One of the region’s star attractions is the Figuig Oasis at higher-end travellers from Europe and the US. by the Algerian border in the far south of the region. MEETING CHALLENGES: However, existing infrastruc- The CCISO report showcases opportunities to invest in ture is insufficient to accommodate tourism growth. new restaurants, transport infrastructure and the estab- Although small compared to the huge undertakings of lishment of residential lodges. the Eastern Region’s two beach resorts of Saïdia and The focus on niche rural tourism will help to improve Marchica, the government is already channelling invest- the livelihood of more isolated communities that are Rural tourism attractions ment to the rural areas away from the Mediterranean. disconnected from the major investment drive taking include the thermal areas In 2012, Agence de l’Oriental announced a plan to place in the north. However, by creating improved con- of Sidi Charfi and Fézouane, the forests of Louassa El invest Dh28m (€2.49m) in rural tourism. The main pri- ditions on tourist sites to the south, the region might Hamra and, of particular ority of this investment is to rehabilitate existent lodges be in a position to encourage travellers coming for the importance, the Figuig in rural areas, as well to build new units. Part of this Mediterranean beach resorts to also explore the south. Oasis.

THE REPORT Morocco 2013

ORIENTAL ANALYSIS 19

Trade of goods across the Algeria-Morocco border ended in 1994

Next door neighbour An open border could further boost economic cooperation

An open border between Morocco and Algeria would Libya, Tunisia and Mauritania in 1989, the union has The North African region enhance growth in the Oriental, and raise trade activ- barely held a meeting since 1994. represents a third of ity across North Africa. The closing of the Moroc- CREATING UNITY: A report published in 2012 by the Africa’s annual GDP and a total population of 170m, can-Algerian border in 1994 represented a direct hit African Development Bank (ADB), titled “Unlocking and its enormous potential to the Oriental’s economic prospects, prompting a North Africa’s Potential through Regional Integration”, could be better harnessed fall in trade and the prevention of movement of peo- argues that the low level of economic cooperation through integration, ple between the two countries. Indeed, the impact among countries represents a loss for the entire according to a 2012 report of the event was felt at all levels of the region, with region. “Despite strong ties due to a common histo- by the ADB. implications that extend beyond eastern Morocco ry, religion and language, the North African region and western Algeria. It has been a source of con- remains poorly integrated. The economic cost of this tention that has stalled negotiations aiming for lack of integration is estimated to be around 2-3% stronger regional ties, and has become a touchy of GDP,” the report states. The report further argues subject blocking political and economical coopera- that the North African region has remained one of tion between the region’s countries. the continent’s most important economic regions, The centuries-old trade route that would allow representing a third of Africa’s annual GDP and traders from the old Moroccan capital of Fez to do encompassing a population of 170m. business with what is present-day Algeria was the STILL FEELING THE PINCH: Intra-regional trade source of a strong cultural flow between the Orien- remains weak; as an example, trade with other coun- tal region and cities in present-day Algeria. Nonethe- tries in the Maghreb represents 5% of Morocco’s less, and despite associated economic costs for both total trade and only 3% of Tunisia’s, according to the sides, the closed border is seen more as an issue ADB, among the lowest of any regional economic between the two governments than the two peo- grouping on the continent. The current economic ples. Citizens and civil society on both sides have situation in Europe might help shift focus to stronger expressed willingness for an open boundary. cooperation. North African economies, long depend- In October 2012 Algerian and Moroccan activists ent on European growth to encourage investment staged a peaceful protest, during the second and industrial output, have in some cases been heav- Maghreb Social Forum held in Oujda. The sit-in atten- ily affected by the continent’s economic woes. Fur- dees were demanding the free circulation of peo- thermore, economic consequences of the Arab ple between different Maghreb countries and under- Spring, which have been especially prevalent in lined the benefits of increased trade for the two Tunisia, Libya and Egypt, have also weakened growth nations. The issue is especially pertinent for fami- expectations across the region. This has put an lies that are spread out between Algeria and Moroc- emphasis on the need for closer integration between co, who cannot cross easily to visit their relatives on the neighbours in order to spur growth. opposite sides of the border. The Arab uprisings encouraged regional capitals OFFICIALLY CLOSED: The border between Moroc- to begin engaging again for integration. In February co and Algeria has been closed since 1994. The bor- 2012 the various foreign ministers of the Arab der issue has region-wide implications, especially Maghreb Union countries met in Rabat. It was the regarding the development of the Arab Maghreb group’s first meeting in 18 years. Other steps that Union. Created as a regional trade block to facilitate have already been taken in 2013 might help open a commercial exchanges between Morocco, Algeria, path to eventually solve the border issue. In January

THE REPORT Morocco 2013 20 ORIENTAL ANALYSIS

Steps to support 2013 the five countries of the Maghreb Union it is far from easy to access. However, the flow of infrastructure development (Morocco, Tunisia, Algeria, Mauritania and Libya) investment that has filtered through to the Orien- are already being taken in announced the creation of an investment bank to tal is a sign that local authorities have decided to the Maghreb region, which includes the Oriental. One foster infrastructure development across the region. develop the region rather than relying an open bor- of these was the The plan, in discussions since 1991, had been stalled der to neighbouring Algerian as a precondition for announcement in early by the ongoing dispute between Morocco and Alge- economic growth. 2013 of the establishment ria. The bank will have an initial capital of $100m, in AT THE READY: For the Eastern Region, waiting is of an investment bank by which the five countries participate equally. no longer an option, but nor is it now an obligation. the Arab Maghreb Union. Relations between the two countries were framed The investment in roads, ports, urban renovation, under encouraging signs last year. In January 2012 agriculture and technology training are geared at Morocco’s foreign minister, Saad Eddine El Othmani, transforming the Oriental into a new economic cen- visited Algiers with the goal of reviving the Arab tre in the Mediterranean. Maghreb Union discussions. The trip was the first by “The border could open tomorrow, in six months a Moroccan foreign minister to Algeria in 10 years. or in 10 years,” said Ali Belhaj, the president of the Additionally, in a televised speech, King Mohammed regional council for the Oriental. “Since we do not VI said, “Morocco will carry on with its endeavours know when the border will open, we need to devel- to reinforce its bilateral relations with all its Maghreb op in accordance to the reality today, preparing the partners – including our neighbour and sister nation region so it can survive with a closed border, but be Algeria – in order to respond to the pressing, legit- ready for when the border opens,” he told OBG. imate aspirations of peoples in the region.” The impact of an open border could be consider- LOCAL IMPLICATIONS: For the Oriental, a closed able for all Maghreb countries by facilitating region- border with Algeria has had an impact on the local al integration. Local commerce would be consider- economy, prompting a rise in the exchange of con- ably enhanced and trade between Algeria and traband products between the two sides, and mak- Morocco would also be facilitated. A large amount ing it more expensive and time-consuming for local of exports would begin to pass through the region. industries (and companies in most other areas of Regardless of the border situation, however, invest- Morocco) to export the their products to the large ment in infrastructure and industry looks set to con- and wealthier market next door. For businesses in tinue apace, meaning the Eastern Region will devel- the Eastern Region, Algeria is frustratingly close, as op without having to depend on its eastern neighbour. ORIENTAL ANALYSIS 21

Improved city squares with new shopping areas are being built

A welcome facelift Revamped centres and development of cultural spaces in the capital

The region’s capital city is under renovation with new (€26.67m) will include the building of residential and The Oujda Development roads and low-income housing being built. Located commercial units, as well as office space. A new train Plan 2010-16 seeks to just 15 km from the country’s border with Algeria, and station is also in the works and is expected to be com- upgrade the appearance of the Oriental’s regional home to about 500,000 inhabitants, the city of Oujda pleted by 2015. The old station is due to be restored capital through the has historically been a trading conduit between Moroc- for its historic value, with a museum created. The renovation of city spaces co and its eastern neighbour, and serves as the capi- revamped square will also include new shopping areas. and expanded tal of the Oriental region. The city suffered from a lack AIMING AT ALL SEGMENTS: Developing low-income infrastructure. of public investment throughout the 1980s and 1990s, housing is part of the plan to improve living conditions, which has resulted in deteriorating housing and trans- and authorities expect that up to 14,749 units will be port infrastructure. A component of the regional devel- built in the Oujda-Angad prefecture alone between opment strategy is thus the revamping of the city and 2010 and 2020 with a total investment of Dh3.6bn the surrounding 82 sq km of greater urbanised area. (€320m). To avoid speculation and encourage private PLANS SET: Although work remains to be done, much participation in the construction of low-income hous- is being achieved under the Oujda Urban Development ing, the government sells land to private developers Plan 2010-16. Led by the Oujda Urban Commune, the under the condition that a specific number of homes plan’s stated objective is to give the city a new look and in this segment are included in development projects. improve conditions in some of its degraded areas. For years, the region has been working to eliminate Many challenges outlined in the city’s development shantytowns as part of the government’s broader “Cities plan are the result of organic, unplanned growth that Without Slums” programme, and 95% of them have has shaped the capital. Oujda grew mainly through been cleared away, according to Mohamed Derdouri, internal migration from other more rural areas of the the director-general of Al Omrane in Oujda, a govern- region, which has had a negative impact on some of ment real estate developer that focuses on building low- the surrounding districts, in terms of economic activ- income housing across the country. Since 2008, Al ity and pressure on infrastructure. The disorganised Omrane has been putting up social housing in Oujda urban growth led to insufficient water and electricity units that cost around Dh140,000 (€12,446) each. A infrastructure, as well as a spate of informal construc- total of 5000 of these 50-60-sq-metre units are due tion. The plan also pinpointed road degradation and the to be built in 2013. Another affordable housing initia- prevalence of the informal sector as two major chal- tive is the Ennasr project, which was built by a consor- lenges to the city’s economic development. tium consisting of a joint venture between Morocco’s The plan designated 56 projects budgeted at a total Douja Promotion Groupe Addoha and ALEM, and which cost of Dh2.1bn (€186.7m) to improve the city. These has started to sell 10,500 low-income units in Oujda. range from urban reconstruction to improving the city’s Changing cultural habits is adding pressure on hous- governance structures. It also established measures ing needs, even as supply is rising. “One problem with for employment promotion through the renovation of social housing is that people do not like to live togeth- city spaces and enhancement of its cultural offering. er. So, whereas entire families lived together before, now In line with the wider OUJDA URBA PÔLE: A big push for the city’s urban repo- couples want to have their own home, so a lot more “Cities Without Slums” sitioning will be done through a revamping of one of units need to be built nowadays,” said Derdouri. project, 95% of the region’s shantytowns have been its main areas, next to the city’s iconic train station. The Middle and high-end accommodation is also under eliminated, creating space Oujda Urba Pôle project aims to transform 30 ha of the construction, both in terms of new building and ren- for increased construction city centre. The first phase, budgeted at Dh300m ovated older units. “During the period between 2001 of low-income housing.

THE REPORT Morocco 2013 22 ORIENTAL ANALYSIS

With small businesses and 2004, conditions were more difficult for selling will be spent on building sports facilities and on the accounting for an new houses and apartments; even if prices back then complete renovation of the city’s municipal stadium. estimated 55% of Oujda’s were lower than today. So the economic upswing of EMPLOYMENT MEASURES: Although the city’s urban economy, much effort is planned through 2016 to the region has made a tangible difference on the development authorities have a limited ability to affect register informal business availability of homebuyers,” said Derdouri. Besides employment creation as a whole, the city’s 2010-16 activities and organise apartments, the state-owned developer is also build- strategy is also putting in place several measures to these enterprises into ing villas in the region, with 1910 of a total of 4500 promote family-owned business. There is certainly a cooperatives. projected units already completed. need for this, given that the city’s overall unemploy- NEW LOOK: With such a wide array of public works ment rate is around 22% – and 35% for women – well and private developments under way, the end result exceeding the national average. is that whole neighbourhoods are being improved. According to the Oujda Urban Commune, 55% of the An investment of Dh28m (€2.49m) is being used to city’s formal economic fabric is based on small com- upgrade sanitary conditions in the north-west neigh- merce, which has placed a heavy emphasis on improv- bourhoods of the city, through the expansion of the ing the business environment for small and medium- existent wastewater network of 22 suburban neigh- sized enterprises and increasing formal economic bourhoods around Oujda. Roads are also being fixed activities. Between 2011 and 2016, a total of Dh8m under a Dh350m (€31.1m) programme of road ren- (€711,200) will be spent on registering informal busi- ovation and expansion, which will likewise include the ness activities and encouraging their organisation into city’s public lighting grid and sidewalks. commercial cooperatives. An extra Dh9m (€800,100) Despite the relatively small size of the city, a study will be used to create new markets around the city to will be done to consider the construction of a tram- promote the organisation of commerce. The formali- line. An added Dh80m (€7.1m) will be spent on new sation of trade will have a double impact by increas- public squares, sports fields and parks around the ing the opportunities for formal employment and by town. On the cultural front, the city has put Dh40m raising Oujda’s communal tax revenues. (€3.56m) towards building a new 1000-seat theatre Urban development taking place will have a huge complex. The Sidi Yahia Oasis, located just 6 km from impact not only on Oujda’s economic development, the city, will be revived as a tourism site through the but also on the city’s overall ability to convince new pop- promotion of an annual festival including Bedouin ulations to settle down. This should help the Oriental poetry and shows. Furthermore, over Dh20m (€1.78m) become a regional focus point for economic growth. ORIENTAL ANALYSIS 23

The Eastern Region has 8.5% of the nation’s usable agricultural land

Living off the land The region aims to increase agricultural yields and expand agro-industry for export markets

Although mining and trade have long played a crucial husbandry, milk and almonds. It also puts an emphasis The national strategy for role, the Eastern Region has always depended heavily on the need to attract private investors. agriculture development on its agricultural sector for economic growth. With an Of the total investment under the plan, 63.6% will be calls for an increase in the number of agro-industrial array of different climates and about 8.5% of the nation- government expenditure, with the remaining 36.4% to outfits in the region from al usable agricultural land, the region has the natural be brought in by private companies wanting to set up 65 in 2012 to 142 by 2020. setting for production of several goods. According to shop the region. Authorities expect that cheaper labour the Ministry of Agriculture, it produces 13% of Moroc- compared to other regions and the natural availability co’s fruits, has 10% of its olive trees and 10% of its vine of agricultural inputs for large-scale industrial produc- plantations. The Eastern Region is also responsible for tion will help to attract new business. Under the PMV, raising 8% of the nation’s red meat. The Ministry of the government expects to increase the number of Agriculture estimates there are 134,000 farms in the agro-industrial outfits in the region from around 65 in region, although the majority of them are small plots 2012 to 142 by 2020, according to the Ministry of Agri- using traditional means of production. The total cul- culture. Exports of fruits are targeted to grow from tivable area is about 700,000 ha – 109,236 ha of which 80,000 tonnes to 345,000 tonnes by 2020. are irrigated, according to a UN report on the Oriental BUILDING ON SUCCESS: The key to the plan is the region that was published in 2011. More than 70% of development of existing competitive advantages, rather available irrigated lands are located in the region’s than trying to cultivate new segments. Most of the provinces of Berkane and Nador. projects will be designed to increase the production of SMALL ROADBLOCKS AHEAD: However, agriculture strategic products and bring them closer to industrial in this corner of the country faces a number of similar processing and packaging areas to facilitate expedition issues that affect the sector in other areas of the king- to markets. The biggest single investment per product dom. Irregular rainfall, division of land into small plots class will go towards increasing agro-industrial pro- and relatively low levels of access to credit for purchas- cessing of fruits, which will receive a total of Dh1.2bn ing modern farming equipment have all hindered the (€106.7m) between 2010 and 2015 for six projects process of bringing a boost to agricultural production. aimed at enlarging production areas around packag- As such, encouraging much needed investment to the ing stations. Building on the existing production and region to ensure produce can be taken to markets fur- processing of olives, especially in the region of Taourirt, ther afield, both domestically and outside of the coun- that are largely exported to the US and Europe, the try, remains an ongoing challenge. regional agriculture plan will put in motion 11 projects INVESTING IN THE LAND: Under the Green Morocco that will convert 29,000 ha of cereals cultivation into Plan (Plan Maroc Vert, PMV), the national strategy for olive production in Driouch, Nador and Berkane, with agriculture development, policy devolution is crucial. an overall investment of Dh407m (€36.18m) between There are 16 regional-level schemes known as region- 2010 and 2016. This will be crucial for the growth of al agriculture plans, which allow the overall strategy to olive processing in the region, which is ultimately be implemented locally, thus taking into account dif- dependent on the availability of enough produce. A large share of upcoming ferent agricultural contexts around the country. In the “Over the last two years we have seen the price we investments will go towards Eastern Region, this will translate into the development pay to local producers double because of weaker crop raising agro-industrial processing of fruits in an of a total of 77 projects at a total investment of Dh9.1bn yields and lower availability of produce,” said Naima effort to enlarge (€809m) until 2020. This will benefit the region’s main Essenhaji, the owner of Triffa Conserves, a local olive production areas around agriculture products: olives, citrus fruits, dates, animal conserves manufacturer based in Oujda that exports packaging stations.

THE REPORT Morocco 2013 24 ORIENTAL ANALYSIS

tonnes of agricultural products a year to the US, Rus- sia, Europe and the Middle East. Increases in the total area of irrigated land will ultimately allow the firm to triple production between 2005 and 2014. The group expects to increase value-added products by adding orange juice for export, and hopes to take advantage of government facilities to boost processing activities. AGROPOLE DE BERKANE: A large part of the efforts to attract private investment to agriculture has been directed towards the creation of the Agropole de Berkane. Construction work was started by King Mohammed VI in May 2010, and the total cost for the project is set at Dh473m (€42.05m). This 100-ha zone will be created as an agro-industrial area, focused on adding value to the region’s production through the creation of an agro-industrial cluster. The first 52-ha section has already been completed and 86% of it has been allocated for development by private companies. The key aim is to attract medium to large agro-industrial units, with the biggest plots at Citrus fruits, including clementines, are a major export product around 7000 sq metres in size. Developing irrigation 85% of its annual production to France and Belgium. Work on the next 20-ha section is due to start in ear- systems and aggregating The total olive plantation area in the Eastern Region is ly 2013. The project is set to include an agro-foods sec- land into larger farms are set to double, reaching 119,000 ha by 2020. Interna- tion, an area for the processing of agricultural produce both tactics to help make the sector more attractive tional olive certification programmes have allowed for and a third zone focusing on logistics. Additionally, it to private investors. Agro- small local units to upgrade and start focusing on more will also include research centres dedicated to train- industrial areas are also value-added products such as bio-olives for European ing staff as well as product testing. being developed to create markets. Some cereal plantation areas will also be trans- AGGREGATION: Creating conditions for new invest- added value. formed to create 8250 ha of new almond plantations ment into the region will be important. Increasing land in the provinces of Oujda, Taourirt, Jerada and Berkane, aggregation could also have a positive impact on agri- with an investment of Dh162.6m (€14.42m) by 2014. cultural investment in the Oriental. “The fragmentation OPENING FLOWS: Strengthening the reliability of water of land is posing a problem, in particular for small coop- sources will be essential to sustain an increased agri- eratives. This is discouraging investment, as some 20% cultural output in the future. “The region had issues with of the land is made up of micro-plots,” said Kantari. irrigation, but with the PMV, this has changed,” said Kamal Over the long run, the sector will also benefit from Kantari, director-general of Station Kantari, the region’s increased accessibility to export channels. “In order to biggest clementine exporter, based in Berkane. “Water export our olives we always need to go to Casablanca, supplies are now automated, and water is stored to mit- and use the port there, and this reduces our compet- igate weather and rain patterns. Compared to our itiveness. It is a disadvantage for local companies,” said capacity in 2005, production could be tripled by 2014.” Essenhaji. The region’s agriculture sector will thus need Station Kantari exports between 60,000 and 70,000 to integrate more to take advantage of its attributes. ORIENTAL ANALYSIS 25

Infrastructure upgrades are expected to help attract new industries

Pushing for industry Better connected transport infrastructure eases the export process

Given the need to create employment opportunities “There is need for an industrial transformation. And Efforts are under way to for its growing population and increase manufactur- one of the great advantages, besides our location, is expand the region’s ing output, authorities are aiming to establish new that labour in the Oriental region is cheaper than else- industrial sector. In 2012 the Oriental was home to labour-intensive industries in the Eastern Region. For where in Morocco,” Rachid Slisli, the director of the 300 industrial companies years, overall business conditions, including poor infra- Oujda Chamber of Commerce and Industry, told OBG. employing around 7000 structure, made attracting manufacturing companies THE NEW NADOR PORT: Much of expected increase people, with the majority of a difficult mission. But with rising investment in logis- in industrial output over the coming years is set to industry located in the city tics and a network of sector-dedicated industrial parks originate from the agro-industrial sector, as the region of Nador. being developed across the region, a more inviting works to add value to its agricultural exports. The environment for new businesses is being created. Berkane Agropole industrial zone currently under devel- MED-EST: Under the Emergence Plan, which was opment will house agro-industrial processing firms as launched in 2005, the government established a strat- a way to add value to the agricultural sector. egy to increase Morocco’s industrial infrastructure and However, the government is also focusing on enhance the level of its production units. As part of this, encouraging new industries to reduce the vulnerabil- the Agency for the Development of the Oriental has ity of both output and employment for a handful of created a region-specific industrial development pro- areas. As part of this, there is a move to expand trans- gramme. The national Emergence Plan resulted in the port infrastructure to boost export capacity in non- launch of the Med-Est project, which aims to capitalise traditional areas, such as petroleum products. on the improved accessibility brought about by the While the port of Nador Beni Ansar is already in oper- Tanger-Med port in the north by creating clusters ded- ation, the creation of a new seaport, Nador West Med, icated to technology and industrial development as is under construction on an 850-ha plot of land locat- well as a brand new logistics and distribution site. The ed 30 km from the city of Nador on the Mediterranean ultimate aim is to upgrade the ancillary networks and coast. The first phase alone is set to cost Dh5bn labour pool in the Oriental to allow it to compete more (€444.5m). The new port will include a hydro-carbu- effectively in attracting foreign investment. rant storage zone to manage the transfer of energy DRAWING INTEREST: The region’s industrial develop- exports to Europe, as well as a free trade industrial ment has been minimal over the last few decades. zone to attract local and foreign companies. There are According to a 2012 report by the French Chamber of also plans for a trans-shipment and container handling Commerce and Industry in Morocco, the Oriental is area, although it is still unclear if this will be built straight home to a total of about 300 industrial companies away or if a delay will be considered due to the region’s employing around 7000 people. Most of these are proximity to the larger Tanger-Med port to the west. located in Nador, which has a legacy of small-scale However, Nador West Med port is being billed as an manufacturing, traditionally focused on construction improvement on existent infrastructure for the coun- materials. Despite the existence of a handful of big fac- try’s north coast rather than a replication of develop- tories, such as Moroccan steel company Sonasid’s facil- ments elsewhere. “This project will not compete direct- ity in Nador and Swiss cement manufacturer Holcim’s ly with Tanger-Med, but it will be a complement that facility in Oujda, most of the region’s industrial outfits will impact the region’s attractiveness,” said Ali Belhaj, are small or medium in size. Traditionally, most indus- the president of the regional council of the Eastern trial firms have been in the agro-industrial sector, which Region. Exporting industries will clearly benefit from employs about 30% of industrial workers in the region. having a fully operational port close by. Being in the

THE REPORT Morocco 2013 26 ORIENTAL ANALYSIS

There will be training Oriental increases operating costs because business- construction or already in operation in more tradition- facilities at the industrial es are further from export points. “The port of Nador al economic areas of the country. To improve its attrac- zones to ensure the is underused today. For many companies, raw materi- tiveness to investors, the Selouane park aims to offer availability of qualified labour in the energy sector als are shipped through Casablanca, which drives up lower rent prices than those in other industrial areas. and IT and offshoring, two transportation costs,” Nabil El Harti, the logistics direc- According to figures from Agence de l’Oriental, the key industrial activities. tor at Midi Peinture, told OBG. But this has been chang- basic price to rent a sq meter for industrial production ing with improved connectivity. “Recent investments will be €44 a year, lower than the €58 per year for a in road expansion have helped improve the region's links sq metre of industrial space in Casablanca or the aver- to our targeted export markets,” said Hamid Barda, the age national price of €60 per year. manager of Bled Conserves, an olive exporter based in SERVING A MULTITUDE OF PURPOSES: Another indus- Taourirt that sells 80% of its production overseas. trial area, the Oujda Technopole, is working to become PARKING IT: To promote industrial development, the an anchor for the settlement of new businesses in government is putting land aside and investing in basic technology-driven industries. With a total investment infrastructure that can facilitate manufacturers to move of Dh600m (€53.34m), the zone will eventually cover into the region, providing turnkey facilities and encour- a total area of 500 ha, to be developed in different stages aging clustering. The Med-Est industrial park in Selouane and with separate focuses. Within the Oujda Technopark is being built 12 km from the city of Nador with a total is Clean Tech, an area dedicated to clean energy tech- investment of Dh285m (€25.34m). The project, which nologies. Also operational within the industrial area is is the result of a partnership between MEDZ, a subsidiary the 22,500-sq-metre Oujda Shore, a Dh180m (€16m) of CDG Développement and the Nador Chamber of IT business outsourcing area developed by the Ministry Commerce, Industry and Services, will initially include of Communications and managed by MedZ Sourcing, 142 ha of industrial plots with readily available access a MEDZ subsidiary that began operations at the end to electricity and basic amenities. The park is focusing of 2012 and aims to take advantage of the region’s pool on small to medium companies and relatively undevel- of young graduates to attract IT businesses. oped secondary industries. Each plot is sized between State programmes are set to further develop work- 1000 sq metres and 5000 sq metres. The first section force capabilities. Inside the Oujda Technopole, Moroc- has been finalised with 72 ha of plots. co’s Bureau for Training and Employment Promotion will However, Med-Est is far from the only such facility in create two human resources training facilities, one for Morocco, with a number of new zones and parks under the energy sector and the other for IT and offshoring. ORIENTAL ANALYSIS 27

Phosphate production is strong, with 28m tonnes produced in 2011

Digging it up Legal reforms and added incentives should boost mining investment

Historically, the exploitation of mineral reserves in the about 35,000 people, according to a 2011 report by Despite a downturn that Eastern Region has played a big role in the economic the National Bureau for Hydrocarbons and Mines (Office began in 1990, the mining performance of the Oriental. It has also shaped the social National des Hydrocarbures et des Mines, ONHYM). sector still accounts for Dh53.6bn (€4.7bn) in fabric of communities. For decades, coal mining was Most of the sector is driven by phosphate production, exports and provides jobs essential for the livelihood of whole towns, providing which accounted for 28m tonnes of the 30m tonnes for 35,000 people. jobs as well energy for the region. Despite a reduction produced in 2011, under the management of the in mining’s importance to the local economy, govern- national phosphates company, OCP Group, formerly ment plans to revive the sector and pay homage to its known as Office Chérifien des Phosphates. Over the significance to the region’s identity are set to put the past few years the Moroccan government has been industry back in a prominent position. changing the mining laws to encourage investment in After the discovery of notable deposits in the area, mining other minerals, which exist in lower quantities carbon mining began in 1939. The community of Jera- than phosphate, but have been able to attract some da gained economic growth from mining, initially from foreign investment nonetheless (see Mining chapter). exporting its coal to other regions of the kingdom. In In the Oriental region, the government is aiming to 1971 the new thermo-electric power plant was built garner interest for some of its mineral deposits. Accord- and quickly became the biggest consumer of the region’s ing to a document published in 2012 by the Oujda coal, which allowed the facility to produce about one- Chamber of Commerce, Industry and Services, the lead, third of Morocco’s electricity. zinc and silver deposits at Sidi Lahcen in the Debdou SHIFTING SANDS: Things changed in 1990, however, region, the existent manganese mine in Bouarfa, and with the exhaustion of available coal reserves and the the zinc deposits south of the city of Oujda all present consequent economic downturn. Further exploration opportunities for development. of potential deposits north-west of the original mine REVAMPING EXPLORATION: The government is look- site revealed a disappointingly lower quantity of min- ing to sweeten the deal for companies willing to re- erals than expected. In addition to these bleak prospects, open some of these mineral exploration sites or find the selling price of locally mined coal became 2.5 times new ones. Currently, the mining code is well over six more expensive than imported coal. decades old and in desperate need of an overhaul. The mine was eventually closed in 2001, which had However, a draft law is pending, which, when passed, a pervasive effect on local living standards. A report by will help update terms for exploration and commer- the Oujda Chamber of Commerce, Industry and Serv- cial production, and put in place more rigorous bid- ices classified Jerada as the region’s poorest province, ding and evaluation mechanisms. using 2007 figures, with a poverty rate of 22.8%, sig- Fiscal terms are not particularly onerous compared nificantly higher than the 5.4% poverty rate in the Ouj- to many other mining producers elsewhere on the con- da-Angad province or even the 13.8% poverty rate in tinent. According to the law for non-phosphate min- the isolated oasis town of Figuig. eral exploration, all mineral-exporting companies Despite losing the lustre it had decades ago, espe- operating in the country pay a reduced tax rate of 17.5% cially in the case of coal production in Jerada, the East- tax. Other incentives include 50-70% government ern Region still accounts for 48% of the country’s lead financing for a project’s basic infrastructure needs, production and around 19% of barite output. such as roads, as well as access to utilities such as water LEGAL CHANGES: The mining sector in Morocco and electricity. Although the mining industry’s lobby- accounts for Dh53.6bn (€4.7bn) in exports and employs ing body has long pushed for lower corporate taxes,

THE REPORT Morocco 2013 28 ORIENTAL ANALYSIS

Mining licences are rates remain below those in sub-Saharan countries ment Centre in Oujda registered 84 new projects in the managed by a government like Ghana and South Africa. mining and energy sectors with a total overall invest- body that works with LICENSED TO DRILL: Investment into mining licences ment of Dh157.7m (€14.02m). investors to reduce the risks PICKING UP THE PIECES: often associated with is managed by the ONHYM, which spends between The Jerada coal mine once prospecting. Although the Dh100m (€8.9m) and Dh120m (€10.7m) annually on epitomised the region’s potential for underground rich- government can partner the exploration of potential mineral areas, according es, but its subsequent fall and decline – like coal-min- with private mining firms, it to an investment report about the region published by ing towns from Pennsylvania to Yorkshire – has left the can only own up to 30% of a the UN in 2012. The public entity’s role is to partner area in a poor state. However, there are moves afoot new venture. with investors as well as reduce the risks associated with to try and revitalise the area, including through the exploration through initial prospecting. Companies creation of an open-air museum. Agence de l’Oriental, entering into the sector can partner with the ONHYM, in conjunction with the Ministry of Energy and Mines, but the government arm can only own up to 30% of the Ministry of Culture and Jerada’s Provincial Council new mining ventures. For 2013, the state entity has plans are working to establish the Parc Muséologique Minier to continue to explore for carbon sediments in the à Jerada, hoping to bring increased economic activity central region south of Oujda to develop industrial min- to an area with one of the highest rate of unemploy- eral prospects in the Nador region and to prospect for ment in the entire Eastern Region. precious metals in the Bouarfa region. The initial studies for the creation of the park took Investors have the opportunity to enter the market place in 2010. The old mining area will be protected in two ways, either through the exploration of a cer- from further development and a museum facility will tain region and mining of discovered deposits or through be established, which will showcase old mining equip- the licensing of an existent concession with proven ment and the region’s broader history. It will include mineral reserves. Exploration licences are given for 16- areas for cultural recreation, sporting areas and a hotel. sq-km plots for a duration of three years and can be However, the project will require amending current extended for an additional four years. Mining licences legislation on historical sites. In 2012 Agence de l’Ori- are for a four-year period and can be extended for ental took part in discussions to change the existing three additional four-year periods. This latter method law that regulates the protection of national heritage is the most prevalent in the Eastern Region, where a to allow it to include industrial sites, buildings and number of previously abandoned areas still present equipment and give them the same status as histori- opportunities for mining. In 2012 the Regional Invest- cal monuments in terms of governmental protection. ORIENTAL ANALYSIS 29

A top priority for public spending has been linking infrastructure

Funding growth A new development fund is putting small businesses on the map through equity investment

One of the first consequences of the Royal Initiative credit for entrepreneurs and long-established small Set up with an initial target for Development of the Oriental Region was the estab- family businesses can have an impact on the ability of capital of Dh300m lishment of a fund to invest in the region’s small and local enterprises to trade with and expand into other (€26.7m), an investment fund for the Eastern Region medium-sized enterprises (SMEs). The Investment Fund domestic regions and foreign markets. Using both pri- is providing financing for for the Eastern Region (Fonds d’Investissement de la vate and public money, FIRO’s capital is divided between local enterprises. Région de l’Oriental, FIRO) was designed to buttress gov- national development agencies and funds, as well as ernmental investment in infrastructure. While public an array of private banks and financial institutions. spending has often focused on linking transport to More than half of the funds, 57%, comes from three connect the region, the establishment of the FIRO was public institutions: 20% from the Oriental Region, anoth- geared towards enhancing the private sector and er 20% by Agence de l’Oriental and 17% from the Has- preparing it for future opportunities of the Oriental. san II Fund. On the private side, equal 7.17% stakes were FOUNDING PRINCIPLES: The fund was set up with the contributed by Attijariwafa Bank, Banque Populaire, initial target capital of Dh300m (€26.7m) to invest in Banque Marocaine du Commerce Extérieur, CDG local companies with growth potential but insuffi- Développement, Crédit Agricole and the Holmarcom cient financial muscle. Its innovative public-private Group. Governance is divided between an investment structure works with its fundamental objective of pro- committee and a management committee, in order to moting economic growth in the region through the avoid any political intervention in the form of invest- financing of local business capacity. “We must give ment decisions, and to assure the fund is focused the private sector the necessary tools to take advan- towards regional development. tage of the government’s investment efforts,” said “More than half of the fund is government money, Abdelkrim Mehdi, the director-general of the FIRO. but we want to have a management style like any pri- Accessing finance in any emerging market is a com- vate fund,” Mehdi told OBG. Since its inception in 2005, plicated task, but setting up an equity fund can be dou- the fund has been a key instrument stimulating private bly challenging in a region of family-owned firms that sector development. This is especially important con- lacks the higher level of financial intermediation preva- sidering that the unemployment rate in the region was lent in the kingdom’s central coast cities such as Rabat 17.7% in 2011, according to the High Planning Com- or Casablanca. However, the FIRO has been able to mission, above the national average, and the majority present an alternative financing vehicle for business- of firms are small operations without the capacity to es that also need better operational and managerial absorb large numbers of employees. structures. “Before the royal initiative and the heavy From the onset, investment into large-scale region- focus on the region, companies did not know what al projects was not part of the agenda. “Big projects, capital investment was. They were not even used to such as the new roads or the new port, are the respon- accessing bank credit,” said Mehdi. Banks in the region sibility of the Hassan II fund and other dedicated pub- have traditionally accumulated capital in deposits, but lic funding, so there is no reason to duplicate efforts. not transferred it towards relevant amounts of credit We are exclusively focused on SMEs,” said Mehdi. The new regional issuances to finance the local economy. STAKING IT IN: The FIRO capital invested in local busi- investment fund is focused A MIXED STRUCTURE: The multiplier effects of improv- nesses is between Dh1m (€88,900) and Dh30m on smaller enterprises, leaving larger projects to ing financing for SMEs, particularly in North Africa (€2.67m) with total shareholder ownership from 10% find funding through where they comprise the majority of businesses and up to 35% of capital. Since 2008 the fund has already private sources or other account for much economic activity, are huge. Increased participated in three SMEs with a total investment of government financing.

THE REPORT Morocco 2013 30 ORIENTAL ANALYSIS

Since 2009 the FIRO has Dh60m (€5.33m) of investment, a positive record com- companies is quite a feat, given that there is resistance bought equity stakes in pared with the achievements of the profession: 35 exis- to the opening of the capital of SMEs. In the Oriental three SMEs in the IT, tent capital investment funds have signed 120 opera- region the business culture is used to managing com- agro-industrial and manufacturing sectors. Its tions since the emergence of the capital investment panies on a daily basis,” said Mehdi. investment guidelines sector in 1999 in the country. WIDER WINDOWS: This is changing with time and cover areas such as SEEING THE CHANGE: So far, FIRO has acquired equi- increased investment in the region. Governmental proj- governance, financial ty participations in three SMEs. First, in 2009, FIRO ects now under development, such as the Oujda Techno- reporting and exit bought 30% of Oujda-based FIRO Microwarehouse, an pole, the Med-Est industrial park in Selouane, the Agro- strategies. e-commerce firm focusing on the sale of hardware and pole in Berkane and the Saïdia Resort, are opening the IT that has been operating since 2004. This investment door for more companies to establish themselves in the allowed Microwarehouse to expand its store network. region. Newly available plots of land are adding oppor- Then, in 2010 FIRO concluded a shareholders’ agree- tunities for industries. This means additional SMEs with ment for its stake in Monlait, a dairy products indus- potential will be looking for investors. trial outfit based in Berkane that has been operating Every company in which FIRO buys a stake must be since 1999. The fund acquired 28.33% of the compa- a limited liability company, of foreign or domestic cap- ny and has been supporting its strategy of product val- ital. FIRO investing guidelines also require a transpar- orisation and expansion of milk production. It was also ent managing structure and for financial information the partnership with FIRO that allowed Monlait to gain to be published. Shareholding agreements signed with support from a USAID programme to increase the com- the fund determine FIRO’s exit strategy. petitiveness of the national economy. In 2012 the milk According to Mehdi, a specific deadline for the dura- producer was awarded a Dh1.6m (€142,240) grant for tion of the equity participation is always established. the acquisition of new industrial equipment, helping “Of course the most desired output of an institution- to increase the yield and quality of its products. al investor like FIRO is the listing of the company in the The third equity deal, also taking place in 2010, stock exchange, proof that the investor succeeded in allowed the Oriental’s development fund to invest in a transforming the company into a structured entity 26.66% participation in Midi Peinture, a paint produc- that meets international standards,” said Mehdi. er based in Oujda. The company has been operating FIRO has targets for additional capital investment since 1984 and has FIRO shareholder ownership of transactions that would fund the shareholding struc- 34%. “Entering the capital structure of these three ture of four other companies by the summer of 2013. ORIENTAL LISTINGS 31

Hotels typically add a 10% service charge on top of Mobile phone use is widespread and it is advisable the 10% tax. Some restaurants add a service charge to buy a local SIM card upon arrival, which typically of 5-15%. If a service charge is not applied, it is advis- costs approximately €2. Wireless internet is widely able to add 10-15% to the bill. For taxis and other available as well, although the connection may not services, it is common to round up to the nearest Dh5. always be optimal, even within major urban centres.

GOVERNMENT STATE Houses of Parliament Greece Saudi Arabia MINISTRIES ORGANISATIONS (0537) 679 603 (0537) 638 964/975 (0537) 633 000 Agriculture Casablanca Stock Exchange India Senegal (0537) 760 102 (0522) 452 626 DIPLOMATIC (0537) 671 339 (0537) 754 171 Economy & Finance Central Bank REPRESENTATION Italy South Africa (0537) 677 200 (Bank Al Magrib) Algeria (0537) 219 730/8 (0537) 706 760 Employment (0537) 818 181 (0537) 765 474 Japan Spain (0537) 760 521 National Ports Authority Austria (0537) 631 782 (0537) 633 900 Energy (0520) 200 700 (0537) 761 698 Jordan Switzerland (0537) 688 857 Casablanca Regional Bahrain (0537) 751 125 (0537) 268 030 Foreign Affairs Investment Centre (0537) 633 500 Kuwait Syria (0537) 761 123 (0522) 481 888 Belgium (0537) 751 775 (0537) 757 521 Foreign Trade Competition Authority (0537) 268 060 Lebanon Tunisia (0537) 735 637 (0537) 752 810 Brazil (0537) 656 949 (0537) 730 576 General Affairs Economic, Social & (0537) 714 663 Libya Turkey (0537) 687 300 Environmental Council Bulgaria (0537) 631 871 (0537) 661 544 Health (0538) 010 300 (0537) 765 477 Mali United Arab Emirates (0537) 761 121 General Confederation of Cameroon (0537) 759 125 (0537) 707 070 Higher Education, Scientific Moroccan Businesses (0537) 751 836 Mauritania United Kingdom Research & Training (0522) 997 000 Canada (0537) 658 736 (0537) 633 333 (0537) 771 822 High Planning Commission (0537) 687 400 Mexico United States Industry, Trade & New (0537) 576 904 China (0537) 631 970 (0537) 762 265 Technologies Maroc Export (0537) 754 056 The Netherlands (0537) 762 935 (0537) 307 447 Côte d’Ivoire (0537) 219 600 CHAMBERS OF Information Moroccan Investment (0537) 655 770 Norway COMMERCE (0537) 678 194 Development Agency Democratic Republic (0537) 764 084 Moroccan-Belgo- Interior Affairs (0537) 226 400 of Congo Niger Luxembourgian (0537) 214 000 National Airports Authority (0537) 262 280 (0537) 563 873 Chamber of Justice (0537) 539 140 Egypt Nigeria Commerce (0537) 721 350 National Office of Electricity (0537) 731 833 (0537) 674 615 (0522) 200 061 National Education and Drinking Water European Union Oman Moroccan-Canadian (0537) 771 822 (0522) 668 080 (0537) 579 800 (0537) 672 064 Chamber of Commerce Office of the Head of National Office for France Palestine (0522) 476 483 Government Hydrocarbons and Mines (0537) 689 700 (0537) 769 807 Moroccan-French (0537) 219 400 (0537) 239 898 Gabon Portugal Chamber of Commerce Tourism Rabat Regional (0537) 751 950 (0537) 756 446 (0522) 209 090 (0537) 577 800 Investment Centre Germany Russian Federation Oujda Chamber of Transport & (0537) 776 400 (0537) 218 600 (0537) 753 609 Commerce, Equipment Royal Cabinet Ghana Romania Industry & Services (0537) 684 153 (0537) 760 122 (0537) 757 620 (0537) 738 611 (0536) 500 697

THE REPORT Morocco 2013 131 Great Titchfield St London W1W 5BB United Kingdom THE INSIDE EDGE T +44 20 7403 7213 F +44 173 026 0274 Published by Oxford Business Group