AFRICAN DEVELOPMENT BANK ADB/BD/WP/2014/136 28 August 2014 Prepared by: ORNA/MAFO Original: French
Probable Date of Presentation to the Committee Operations/ Development Effectiveness (CODE) FOR CONSIDERATION
TO BE DETERMINED
MEMORANDUM
TO : THE BOARD OF DIRECTORS
FROM : Cecilia AKINTOMIDE Secretary General
SUBJECT : MOROCCO - COMBINED 2012-2016 COUNTRY STRATEGY PAPER MID-TERM REVIEW AND 2014 COUNTRY PORTFOLIO PERFORMANCE REVIEW*
Please find attached the above-mentioned document.
Attch. cc. : The President
* Questions on this document should be referred to: Mr. J. KOLSTER Regional Director ORNA Extension 2065 Ms. Y. FAL Resident Representative MAFO Extension 7301 Mr. V. CASTEL Chief Country Economist ORNA/MAFO Extension 6572 Mr. O. BRETECHE Principal Portfolio Officer ORNA/MAFO Extension 6533
SCCD:C.H
AFRICAN DEVELOPMENT BANK
COMBINED REPORT
COUNTRY STRATEGY PAPER (2012 -2016 CSP) MID-TERM REVIEW &
2014 COUNTRY PORTFOLIO PERFORMANCE REVIEW
MOROCCO Editorial Regional Director: J. KOLSTER, Regional Director, ORNA Team Resident Representative: Y. FAL, Resident Representative, MAFO/ORNA
Design Team: V. CASTEL, Chief Country Economist, MAFO/ORNA O. BRETECHE, Principal Portfolio Officer, MAFO/ORNA D. CHARRIER -RACHIDI, Economist, ORNA S. MANSOUR, Economist, ORNA A. MOUAFFAK, Economist, ORNA
Team Members: A. MOUSSA, Electrical Engineer, MAFO/ONEC A. TARSIM, Senior Macro-economist, OSGE.1 B. BEN SASSI, Chief Water and Sanitation Expert, OWAS C. AMBERT, Principal Strategist, OPSM C. MOLLINEDO, Chief Strategist, COPS D. KHIATI, Agricultural Expert, MAFO/OSAN E. DIARRA, Principal Financial Economist, MAFO F. RODRIGUES, Senior Investment Officer, OPSM2 L. JAAFOR-KILANI, Social Development Expert, MAFO/OSHD L. LANNES, Principal Health Economist, OSHD.3 M. BOUZGARROU, Principal Portfolio Officer, ORNA M. EL ARKOUBI, Procurements Officer, MAFO/ORPF.1 M. EL OUAHABI, Water and Sanitation Expert, MAFO/OWAS M. GUEYE, Principal Education Economist, OSHD.2 M. YARO, Financial Management Regional Coordinator, ORPF.2 O. BEN ABDELKARIM, Chief Education Expert, OSHD.2 P. MORE NDONG, Senior Transport Engineer, MAFO/OITC R. MAROUKI, Chief Agricultural Economist, OSAN T. RAJHI, Chief Training Expert, EDRE.0 W. DAKPO, Principal Procurements Expert, ORPF.1 W. RAIS, Principal Financial Analyst, MAFO
Reviewers A. A. BA, Resident Representative, BIFO R. KANE, Resident Representative, CMFO M. NDONG NTAH, Resident Chief Country Economist, ORNA S. KAMARA, Principal Portfolio Officer, DIRA/ORWA K. EGUIDA, Principal Portfolio Officer, SNFO C. CALVOSA, Country Risk Officer, FEMA K. ABDERAHIM, Country Risk Officer, FEMA K.HASSAMAL, Energy Expert, ONEC.2
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uuu AFRICAN DEVELOPMENT BANK
COMBINED REPORT
COUNTRY STRATEGY PAPER (2012-2016 CSP) MID-TERM REVIEW AND 2014 COUNTRY PORTFOLIO PERFORMANCE REVIEW
MOROCCO
ORNA/MAFO
August 2014
Translated Document
TABLE CONTENTS TABLE CONTENTS ...... i LIST OF ACRONYMS ...... iv CONVERSION RATES ...... v FISCAL YEAR ...... v Executive Summary ...... vi I. Introduction ...... 1 II Country Context and Developments ...... 1 2.1 Political Developments ...... 1 2.2 Economic and Social Developments ...... 1 III. CSP 2012-2016 Implementation and outcomes ...... 4 3.1. Country Development Context ...... 4 3.2 Bank’s Positionning ...... 5 3.3 Resource Allocation ...... 5 3.4. CSP Implementation Status ...... 6 3.5. CSP Implementation Results ...... 6 3.6 Other Effects of the Strategy ...... 8 3.7. Implementation of Paris Declaration, Accra Agenda for Action and Busan Partnership commitments ...... 10 IV. Country Portfolio Performance Review ...... 10 4.1 Current Portfolio ...... 10 4.2 Portfolio Monitoring and Evaluation ...... 11 4.3 PPIP Implementation Status ...... 13 4.4 Bank Group Performance ...... 13 4.5 Country Performance Outcomes Based on the Questionnaire on Portfolio Quality ...... 13 4.6 Conclusions of Meetings with Stakeholders ...... 14 4.7 Revised PPIP ...... 14 V. Experience and Lessons ...... 14 5.1 Bank Group ...... 14 5.2 Government ...... 20 5.3 Partners...... 20 VI. Conclusion and Recommendations ...... 20 6.1 Summary of Conclusions ...... 20 6.2 Key Recommendations ...... 20 Annex 1: Results Monitoring ...... 21 Annex 2: Implementation of the 2012-2013 Lending Programme ...... 23 Annex 3: Potential Lending Programme (2014-2016) and Scenarios ...... 25 Annex 4: CSP Results Framework Monitoring Matrix for 2014-2016 ...... 26 Annex 5: Key Social Indicators ...... 34 Annex 6 : Key data on Ongoing Bank Group Portfolioo Operations as at 30 June 2014 ...... 35 Annex 7: Scoring of the Indicators of Public Window Active Projects in 2014 ...... 36
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Annex 8: Monitoring of Development Progress and Results ...... 37 Annex 9: Implementation Status of the Country Portfolio Performance Improvement Plan 2013 ...... 38 Annex 10: 2014 Project Portfolio Performance Improvement Plan...... 41 Annex 11: Main Donors in Morocco ...... 43 Annex 12: Team ...... 44 Annex 13: Subsidiary Funds Financed by the Bank and Located in Morocco ...... 45 Annex 14: Conclusions of the Detailed Analysis of Fiduciary Risks ...... 46 Annex 15: Importance of the Role of the Country Office (MAFO) at Each Stage of the Operations Cycle of its Portfolio in Morocco ...... 48 Annex 16: Endnotes ...... 49
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LIST OF ACRONYMS
AFD French Development Agency AfDB African Development Bank AGTF Africa Growing Together Fund AMDL Moroccan Agency for Logistics Development ANPME National Agency for the Promotion of Small- and Medium-Sized Enterprises ATM Automated teller machines CODE Committee on Development Effectiveness CPO Country Programme Officer CPPR Country Portfolio Performance Review CS Construction sector CSP Country Strategy Paper CTF Clean Technologies Fund DEPF Directorate of Studies and Financial Forecasts DEPP Directorate for Public Enterprises and Privatisation DWSS Drinking Water Supply and Sanitation EIB European Investment Bank EU European Union FA Formal approval FFCO Financial Control GDP Gross domestic product IGF General Inspectorate of Finance ISR Report on Implementation Status and Results LOLF Organic Law on Finance MAD Moroccan Dirham MAFO Morocco Field Office (of the AfDB) MCC Millenium Challenge Corporation MDGs Millennium Development Goals MEF Ministry of Economy and Finance MIC Middle-income country MIC TAF Middle-Income Country Technical Assistance Fund MSP Moroccan Solar Programme OCP Moroccan Phosphates Authority OFSD Financial Sector Development Department (of the AfDB) OITC Transport and Infrastructure Department (of the AfDB) ONCF National Railways Authority ONEC Energy, Environment and Climate Change Department (of the AfDB) ONEE National Electricity and Water Authority ORPF Procurements and Fiduciary Services Department (of the AfDB) OSAN Agriculture and Agro-Industry Department (of the AfDB) OSGE Governance and Financial Management Department (of the AfDB) OSHD Human Development Department (of the AfDB) OWAS Water and Sanitation Department (of the AfDB) PAAFE Training-Employment Matching Support Programme PACE Competitiveness Support Programme PADESFI Financial Sector Development Support Programme PAPMV Green Morocco Plan Support Programme PAPNEEI National Programme for Irrigation Water Conservation Support Project PARCOUM Medical Coverage Reform Support Programme PARGEF Economic and Financial Governance Revitalization Support Programme
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PDRTE Transport Networks and Electricity Distribution Development Programme PEFA Public Expenditure and Financial Accountability PFM Public finance management PIEHER Integrated Wind Energy, Hydro Power and Rural Electrification Programme PJD Justice and Development Party PMV Green Morocco Plan PNEEI National Programme for Irrigation Water Conservation II PNRR National Rural Roads Programme PPIP Portfolio Improvement Plan PPP Category Category – Potentially problematic project PRP Procurement Plan RAMED Medical Assistance Regime RSP Regional Strategy paper SLL Sustainable lending limit SME Small- and medium-sized enterprises TFT Multi-Donor Trust Fund for Countries in Transition TGR General Treasury of the Kingdom UA billion UA billion
UA million UA million UN United Nations USD million USD million VSE Very small enterprises
CONVERSION RATES April 2014 UA 1 = MAD 12.6 UA 1 = USD 1.55 UA 1 = EUR 1.12
FISCAL YEAR
1 January – 31 December
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EXECUTIVE SUMMARY
1. The 2012-2016 Country Srategy Paper (CSP) with lending operations as well as systematic for the Kingdom of Morocco was approved by assessment of the management capacity of new the AfDB Board of Directors on 11 April 2012. partners. The strategy focuses on two pillars, namely: (i) 6. Lessons from a growth diagnosic, related to enhanced governance and social inclusion; and the constraints that undermine the country’s (ii) support for the development of “green” capacity to tackle its challenges, enabled the infrastructure. Bank to confirm the two pillars and fine-tune 2. The country enjoys good political stability as its support under these pillars for the remaining it implements far-reaching reforms. From the period. Under the governance pillar, the Bank’s economic standpoint, Morocco has solid support for 2014-2016 will focus on boosting performance with an average annual growth rate competitiveness, coordinating stakeholders and of 4.2% over the 2009-2013 period despite a streamlining social spending. Under the difficult international and regional context. Since infrastructure pillar, it will focus on boosting 2011, successive authorities have striven to economic competitiveness and reducing regional improve government efficiency and public disparities. finance management, while seeking to preserve 7. Furthermore, alignment on the 2013-2022 macro-economic stability. strategy was enhanced and operational 3. The indicative budget for the 2012-2014 work arrangements adjusted to take account of programme projected a total of UA 1.191 billion financing constraints. In particular, the for 2012-2013 and UA 391 million in 2014. The mobilization of additional resources will be amount for the Bank’s approved projects from reinforced and private sector support improved. January 2012 to April 2014 (UA 1.108 million) Special emphasis will also be laid on: (i) is consistent with this target. increased communication on Bank operations; (ii) selection/formulation of projects through a set 4. The Bank’s overall portfolio performance of indicators that reflect the objectives of the remains satisfactory overall, with an average strategy; (iii) civil society involvement; and (iv) score of 2.53 on 3 in 2014. This score has implementation of analytical work to enhance the remained stable since 2012. Bank’s consultancy role. 5. The mid-term review made it possible to 8. The following proposals were also retained update the Portfolio Performance Improvement by the authorities to improve the performance Plan (PPIP). The main recommendations of Bank operations: (i) respect the deadlines for include continuing the organisation of quarterly submission of project audit reports; (ii) continue workshops and reviewing the possibility of holding quarterly meetings between the Bank, establishing technical assistance at MEF for close MEF and executing agencies on the monitoring monitoring of grants. As regards of grants and expand such monitoring into a recommendations of previous reviews, this new comprehensive review; (iii) examine the PPIP repeats those aimed at guaranteeing good possibility of supporting MEF in monitoring quality-at-entry of loan and grant operations and, grant implementation; and (iv) request for regular specifically, stricter targeting of grants aligned and quality project reports.
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I. INTRODUCTION organized in June 2015 and elections for the chamber of advisers in September 2015. 1.1 The 2012-2016 Country Strategy Paper (CSP) for the Kingdom of Morocco was 2.1.2 At the international level, commitment to approved by the AfDB Board of Directors on the reform process was rewarded in 2011 with 11 April 2012. Through this strategy, the Bank obtainment of the status of Partner for supports Morocco’s efforts to lay the foundation Democracy from the Council of Europe. for an attractive economy by helping the Furthermore, Morocco was a non-permanent country to develop its assets. This strategy member of the Security Council from 2012 to focuses on two pillars: (i) enhanced governance 2013. During this period, it also joined the and social inclusion; and (ii) supporting the United Nations Human Rights Council for three development of “green” infrastructure. years, as well as the United Nations Committee against Torture and the UNESCO Council. 1.2 The CSP ends in December 2016, and pursuant to the guidelines issued in April 2.1.3 Morocco’s security situation remains 20131, this combined CSP 2012-2016 Mid- under control, despite a disturbing regional Term Review and the 2014 Country Portfolio context. Performance Review (CPPR) was prepared. 2.2 Economic and Social Developments2 Continuous dialogue with the Government and other partners, as well as a broadbased 2.2.1 From the macroeconomic standpoint, consultative mission organized in June 2014 Morocco has posted solid performance with an (including workshops with civil society and average annual growth rate of 4.1% over the development partners) brought confirmation that 2009-2013 period, despite a difficult the Bank's intervention strategy remains international and regional context. After a relevant. slowdown in 2012 (+2.7%), the economy rallied again in 2013 (4.4%). This bounce stems in 1.3 The two pillars of the strategy have been particular from the excellent performance of the maintained. Under the governance pillar, the agricultural sector (+19%). Meanwhile, non- Bank’s support for 2014-2016 will focus on agricultural activities, which had grown by 4.5% boosting competitiveness and streamlining on average over the decade, remained less social spending. Under the infrastructure pillar, bouyant (+2.3%)3 Nonetheless, the new it will focus on enhancing economic automobile and aeronautic industries competitiveness and reducing regional experienced strong export growth (+20% and disparities. The objectives of green and +14% in 2013). Inflation remained low from inclusive growth have been addressed under the 2009 to 2012 (1%), and stood at only 1.9% in two pillars. 2013, despite the spike in the prices of some II COUNTRY CONTEXT AND DEVELOPMENTS energy products on which subsidies were 2.1 Political Developments reduced. Growth prospects are good: 4% and 5% in 2014 and 2015 (AEO, 2014). 2.1.1 The country enjoys good political stability as it implements far-reaching reforms. The 2.2.2 With regard to public finance, Morocco constitution was revised by referendum in July tightened budget discipline to curb the deficit 2011 to consolidate multiparty democracy, that has been growing since 2009. The human rights and individual freedoms. The authorities took several key measures to contain elections of November 2011 were won by the this deficit in 2013, such as: (i) the reduction of Justice and Development Party (PJD) whose subsidies by almost 2% of GDP after the Secretary-General was appointed to head the introduction in September of a partial price Government. A first coalition government was indexation mechanism for some petroleum formed on 3 January 2012 and a second in products; (ii) the reduction of wage costs by October 2013 following the withdrawal of the about 0.4% of GDP; and (iii) the non-deferment Istiqlal Party from the governing coalition. The of investments in October 2013. Hence, the next regional and municipal elections will be budget deficit reduced to -5.5% of GDP in 2013
-1- compared to -7.4% in 2012. However, total which led to bilateral agreements in Africa, revenue declined by 0.5% in 20134. In 2014, Morocco is currently negotiating strategic these measures continued with the suspension of partnership agreements with WAEMU, fuel-oil and petrol subsidies in January5, in an ECOWAS and CEMAC. Furthermore, the effort to curtail the deficit to 3% of GDP by country is building a range of infrastructure 2016. Furthermore, although the external debt for services (such as Casa Finance City) or increased recently (from 24.4% of GDP in 2009 for transport to underpin these plans. to 30.9% in 2013), it remains sustainable and should decline from 2016. At the end of April Figure 2: Trade Deficit and Cover Rate Trends 2014, Fitch Ratings affirmed Morocco’s credit 250 52 50,2 202,1 196,4 50 risk rating for its long-term debt in foreign 200 182,8 47,8 151 148,4 48,9 48 exchange and local currency at BBB- and BBB, 150 48,2 6 47,8 with a stable outlook . Deficit reduction and 107,3 46 100 44 structural reforms account for this improvement. Milliards de Dirham 50 42,8 42 Figure 1: Revenue, Expenditure and Overall Balance (in 0 40 MAD billion) 2008 2009 2010 2011 2012 2013 300 000 Trade deficit Cover rate (%) 200 000 Source : Office des Changes, Maroc 100 000 0 2.2.5 Morocco's banking sector is one of the 2005 2006 2007 2008 2009 2010 2011 2012 2013 -100 000 most efficient on the continent. Outstanding -200 000 credits to the economy grew in 2013 by 3.2% -300 000 compared to 5.4% in 20129. This better access Recurrent revenue (net of VAT) Recurrent expenditure Investment expenditure Overall balance to financial services stems from a substantial Source: Ministry of the Economy and Finance, DEPF, Morocco increase in the bank penetration rate and wider geographic coverage (5,711 branches and 5,893 2.2.3 The external current account balance ATMs). However, challenges remain in terms of improved to -7.6% from -9.7% in 2012, despite financing of VSEs and SMEs as well as access the decline in exports in 2013, due to a 23% 7 to basic banking services for communities with contraction in phosphate exports . This trend modest income, the youth, women in business can be explained by a greater reduction in the and rural households. value of imports (-2%) than in the value of exports (-0.8%). Foreign exchange reserves 2.2.6 Boosting global competitiveness is a core reached 4 months and 9 days of imports in concern. The business environment has 20138, thanks to a contraction of the trade deficit improved and Morocco is ranked 87th in Doing and a strong growth in FDI (+23.2% in 2013) as Business 2014. Specifically, the country is well as access to international bond markets at ranked 39th as regards starting a business (+14 favourable conditions (USD 750 million raised spots)10. On governance, however, Morocco in May 2013). regressed by three spots in the 2013 “Transparency International” classification to 2.2.4 Nonetheless, the geographic the 91st position. The country is ranked 77th (70th concentration of exports to Europe (66%) does in 2012) in the 2013 Global Competitiveness not encourage the expansion of Morocco’s Report which identifies bureaucracy as the main market share in a context of low growth. private sector constraint. The report underscores Furthermore, sub-regional integration remains the need to pursue reforms, especially in the less dynamic. Hence, Morocco considers the following areas: (i) protection of intellectual consolidation of economic cooperation ties with property (90th out of 148); (ii) innovation Sub-Saharan Africa to be a priority. Morocco is (106th); (iii) labour market regulation (122nd); the second African investor on the continent and and (iv) higher education quality (102nd). has a growing presence in the services sector Morocco experienced an improvement in its (banking, telecommunications). In addition to logistical performance under the logistics the recent visit of the King in 2013 and 2014,
-2- performance index, improving its ranking from electrification plan seems to have succeeded 113th in 2007 to 50th in 2012 (out of 150). with a rural coverage rate of 98.1% in 2012 However, efforts still have to be made in the compared to 22% in 1996. Indeed, some MDGs development of logistical poles to ensure higher were achieved before 2015 and the others will volume flows, reduce goods transport costs and be attained by then (Annex 8). create jobs in the hinterland. 2.2.11 Gender disparities in access to human Table 1: Business Environment (DB-2014) and economic development opportunities Domain 2014 2013 ∆ remain strong but have markedly reduced. At Starting a business 39 53 14 the institutional level, this trend was supported Dealing with construction by the gender-sensitive budgeting process in permits 83 81 -2 Getting electricity 97 95 -2 2003 and the new Constitution of July 2011. Registering property 156 166 10 The Government has undertaken to increase Getting credit 109 105 -4 Protecting investors 115 113 -2 women’s representation in all areas, using the Paying taxes 78 115 37 Government Equality Plan as reference Trading across borders 37 34 -3 Enforcing contracts 83 83 0 framework. Efforts made to encourage primary 2.2.7 Hence, the low competitiveness of education for girls raised the enrolment rate to 97% in 2012. Nevertheless, in 2012, 38% of Moroccan exports is the primary challenge 14 of the economy. This probably stems more women remained illiterate compared to 23.5% from their inadequate technological content than of men. Moreover, the employment rate for their cost11. women stood at 26.1% in 2012. From the gender standpoint, the reduction of 2.2.8 Limited private sector dynamism and lack unemployment favoured men (from 13.6% to of SMEs is the second challenge. Small 8.4%) more than women (from 12.8% to businesses tend to remain small and big 10.2%). This situation is reflected in the 2013 businesses remain big due to “the missing gender equality report of the World Economic middle". Because of distorsions in the market, Forum which ranks Morocco 129th out of 136 small businesses tend to rely on traditional countries. According to the 2013 Global Gender revenue sources while avoiding new 12 Gap Report, major gender inequalities persist in investments in innovative industries . parliament, appointments to ministerial posts, 2.2.9 Youth unemployment remains a number of magistrates, directors and senior constraint on social and economic stability. executives in public or private companies as The unemployment rate was 9.2% in 2013 well as in income. In 2013, the proportion of (19.3% among those aged 15-24 years, 16.3% women in public administration was 38% among graduates and 4.5% among non- (compared to 26% in 2009). Hence, there are graduates). Job growth is weak partly due to still numerous challenges that must be addressed distorsions that stem from the distribution of to reduce inequalities, especially those related to value-added between capital and labour. gender. 2.2.10 Poverty and regional disparities 2.2.12 The fragility of the environment and the constitute another constraint. The poverty rate risks caused by climate change account for the was 6.2% in 2011 and the vulnerability rate weak development of the Moroccan economy. 13.3%. Furthermore, poverty remains a rural Water resources in particular are the focus of phenomenon. Morocco’s scores in terms of all attention. Groundwater is reaching human development and GDP per capita are saturation point and the significance threshold lower than those of comparable countries13. has already been attained due to However, the State has undertaken many actions overexploitation, driven sometimes by the to address this problem. The water and shortage or even absence of surface water, while sanitation access rates increased in urban areas water demand is increasing. The 2011 (100% in 2011). In rural areas, these rates grew Constitution recognised access to a healthy from 70% in 2005 to 92% in 2011. The environment as a fundamental right of citizens.
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Several strategies were formulated15 and of PEFA; (ii) more coherent implementation implemented through actions that improve areas of public procurement rules; (iii) directly related to the health and living development of electronic tools for integrated conditions of citizens, especially: (i) protection expenditure management and administrative of water quality; (ii) regulation of air-polluting simplification, which facilitate access to emissions; (iii) waste management; and (iv) common administrative services; and (iv) impact assessments of public and private improvement of the financial governance and environmental projects. The Green Morocco control of public enterprises and Plan (PMV) is one of the pillars. It seeks to establishments. Furthermore, to improve provide sustainable support to agriculture macroeconomic balances, the Government’s because this sector contributes 15% to 20% of commitment to reform and budget discipline GDP and employs 4 million people. was underscored by observers (for example, during the energy subsidy reforms in late 2013 III. CSP 2012-2016 IMPLEMENTATION AND and 2014). OUTCOMES 3.1. Country Development Context 3.1.4 With regard to competitiveness, Morocco launched the 2014-2020 Logistics Acceleration 3.1.1 Morocco is a middle-income country with Plan and the National Industrial Acceleration a GDP per capita of USD 2 924.94. Since Plan in 2014 to replace the National Pact for 2011, it has also become a transition economy Industrial Emergence launched in 2008 (which that enjoys support from the Deauville enabled the country to develop new industries Partnership and which, since adopting the new such as aeronautics or car manufacturing). The 2011 Constitution, has been implementing objectives of this plan are to: (i) increase the numerous reforms and speeding up the share of industrial GDP in overall GDP from implementation of its new development 14% to 23%; (ii) build new synergies between strategies and policies. large enterprises and SMEs (corporate 3.1.2 In January 2012, the Government ecosystem); (iii) enhance the role of industry as presented the priorities of its programme the purveyor of jobs, especially for the youth through its General Policy Statement. These (creation of 500,000 jobs); and (iv) optimize the priorities mainly focus on: (i) the State’s social social and economic fallout from public action performance; (ii) improvement of procurement through industrial compensation. education and research; (iii) modernization of The new plan will also be used to guide the the agricultural sector; and (iv) economic and transition from the informal to formal economy financial governance. During formation of the through the establishment of a complete second government of October 2013, emphasis mechanism for the integration of a very small was also laid on improving the business enterprises (VSEs) and the creation of a public environment and boosting the competitiveness industrial investment fund that will have a of the national industrial fabric. budget of MAD 20 million by 2020. With regard to the agricultural sector, boosting 3.1.3 Since 2011, the authorities have competitiveness is the core concern under the especially striven to improve government Green Morocco Plan. efficiency and public finance management while seeking to preserve macro-economic 3.1.5 In a bid to combat poverty and insecurity, stability. This led to the adoption of a new the Government plans to expand social Organic Law in relation to the Budget Act. The protection while improving the targeting and Government has striven to enhance transparency efficiency of services rendered to citizens. This and accountability in public resource led to the generalization of the medical management mainly through: (i) enhancement assistance scheme in 2012, for instance. The of performance-based budgeting with Government is working to streamline its social stakeholder involvement16, thanks to better action by enhancing the efficiency of transfers access to financial information and the conduct and establishing a single identifier. Reform of
-4- the pension system is one of the next challenges. 3.2.3 The Bank has initiated an in-depth dialogue with the authorities on operations 3.1.6 As regards education and vocational identification and public reforms and policies, training, the emergency programme that shored up by budget support. Furthermore, the sought to: (1) extend the duration of presence of a field office (MAFO) facilitates mandatory schooling in Morocco to 15 years; almost daily interactions with sector ministries (ii) put more resources at the disposal of and bodies involved in project implementation. pupils; and (iii) guarantee better vocational In this regard, two portfolio performance training for them, ended in 2012. The reviews were conducted in December 2012 and Government is currently preparing strategies on 2013, and a fiduciary clinic held in 201417. vocational training (2014) and education (2015). Besides, the active participation of MAFO in These strategies have to address issues such as events organized by the Government, civil job-relevant training, competitiveness, society, the private sector and partners helps to entrepreneurship and elimination of skills provide a fuller understanding of stakeholder development constraints. needs. 3.1.7 From 2011, Morocco initiated the second 3.3 Resource Allocation phase of the process to institute the advanced regionalisation system. In this regard, 3.3.1 The indicative budget of the 2012-2014 decentralisation and devolution should help to work programme projected a total of UA 1.191 modernise State structures in the regions and billion for the 2012-2013 period18 and UA 391 promote sustainable and integrated million in 2014. development. The organic law is expected in 3.3.2 The amount for projects approved by the 2014/2015. The reduction of regional disparities Bank from January 2012 to April 2014 is also begins with investments in various regions consistent with this objective and stands at UA of the Kingdom to increase access to social 1.108 billion (Annex 2). This budget was infrastructure and services. allocated to 22 projects, including four budget 3.2 Bank’s Positionning support programmes, three investment operations, two operations financed by the 3.2.1 The Bank is one of Morocco’s leading Clean Technologies Fund (CTF), seven grants development partners. Its active portfolio in from the Middle-Income Country Technical Morocco currently has 33 operations (loans and Assistance Fund (MIC TAF) and six operations grants) for net commitments of approximately of the Trust Fund for Countries in Transition UA 1.8 billion. Apart from the Bank, the main (TFT). financial partners are: France, World Bank, EU and EIB, which all have an equivalent level of 3.3.3 In particular, budget support stood at UA commitment (approximately UA 1.5 to 1.8 391.4 million in 2012 and 2013. It included: (i) billion - Annex 11). the Green Morocco Plan Support Programme (PAPMV-July 2012); (ii) the Economic and 3.2.2 The Bank’s strategy for the 2012-2016 Financial Governance Revitalization Support period focuses on two pillars, namely: (i) Programme (PARGEF-July 2012); (iii) the enhanced governance and social inclusion; Training-Employment Matching Support and (ii) support for the development of “green” Programme (PAAFE-July 2013); and (iv) the infrastructure. These operational pillars are a Medical Coverage Reform Support Programme continuation of government action aimed at (PARCOUM-December 2013). consolidating the foundation of “green” and inclusive growth by: supporting economic 3.3.4Meanwhile, investment operations competitiveness; developing the private sector; amounted to UA 712 million and included: (i) diversifying the sources of economic growth; the Ouarzazate Solar Power Station Project increasing the State’s social support and (May 2012); (ii) the Integrated Wind Energy, reducing disparities. Hydro Power and Rural Electrification Project (PIEHER-June 2012) and; (iii) the 12th
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Drinking Water Supply Project in the counterbalanced by postponement of the Marrakesh Region (12th DWS-November 2012). formulation of PNEEI-II (since PNEEI-I was This budget also covers 2 operations financed not yet completed due to financing constraints at by the CTF (USD 100 million – Ouarzazate the level of the Bank) and of the Logistic Project; USD 125 million – Wind Energy Support Project (since the Moroccan Logistics Programme). Development Agency (AMDL) was only created in 2013). As far as grants are concerned: 3.4. CSP Implementation Status the Rural Roads Programme Impact Study was 3.4.1 Pillar I of CSP 2012-2016 namely, taken over by the EU, support to the National “Enhanced governance and social inclusion” Logistics Observatory was delayed pending the provides for the funding of 14 operations, creation of AMDL, while the Green Growth including 12 in 2012-2013. Its objective is to Study is being prepared. build on achievements in the areas of 3.5. CSP Implementation Results governance and inclusive growth. In keeping with the new constitution of 2011 which places 3.5.1 An assessment of the attainment of governance at the core of public action, the results set at mid-term is presented in Annex 1. authorities wish to channel reforms increasingly For the first pillar, the macroeconomic targets towards grassroots management, participation were ambitious and the Government initiated and accountability. reforms to meet them. Reforms on access to information, the creation of an authority in 3.4.2 For Pillar I, the volume of operations in charge of capital and insurance markets as well 2012 and 2013 exceeded the expectations of as regionalisation are being pursued. For the the indicative lending programme (UA 396.1 second pillar, objectives related to the million compared to UA 393.9 million). The performance improvement and coverage of entire lending programme was implemented. transport, water and sanitation infrastructure are Two grants (MIC TAF) for infrastructure were being pursued, while those related to energy cancelled (and taken over by the EU and CTF), have been met. but seven additional grants were formulated (one MIC TAF and 6 TFTs to strengthen Execution of Pillar 1 - Governance support in the social sector (Annex 2)). Two 3.5.2 As regards governance, PARGEF (UA studies on the public sector and competitiveness 100 million – September 2012) made it possible were replaced with a growth diagnostic study. to support the "Hakama" multi-year reform 3.4.3 Pillar II, namely “Support to green programme. This programme seeks to improve infrastructure development” provides for the State efficiency in budget management and funding of 14 operations, including 10 in provision of public services to promote robust 2012-2013. It seeks to rely on infrastructure and inclusive economic growth19. It has helped development to promote green growth, which is to improve budget forecast and management the priority objective of Moroccan authorities. efficiency, the establishment of an institutional Although these actions preserve natural framework for e-government, the reduction of resources, they are aimed at boosting time-limits for customs clearance of goods from competitiveness and the diversification of 40 days to 3 days and the adoption of the new growth sources. public procurements code. Furthermore, these activities were supported with technical 3.4.4 For this pillar, the volume of operations assistance for "the modernisation of the debt in 2012 and 2013 fell below the expectations of management organisational framework." The the provisional loan programme (UA 712.2 financial sector was supported by the "support million compared to UA 797.5 million). project for the preparation of the Moroccan Lending operations in the energy sector Monetary and Financial Code”, which is a exceeded projections, partly due to the early technical assistance approved in 2012 to formulation of activities for the Tangier Wind strengthen capital market governance. However, Farm (initially scheduled for 2014). This was
-6- the two technical assistance operations are still creation of an e-university within the at the start-up phase. Lastly, the conduct of a International University of Rabat. Lastly, to gain growth diagnosic with the authorities and the a better understanding of job promotion policies, Millennium Challenge Corporation (MCC) the Bank financed technical assistance (MIC helped to identify the main constraints to private TAF, 2003) to the Ministry of the Economy and sector development and the structural reform Finance to conduct a study on inclusive growth options. and employment. 3.5.3 Furthermore, as regards civil society, the 3.5.5 Social inclusion was also supported two technical assistance operations (TFT- through operations in the social protection 2013) have contributed to enhance women’s sector. In this regard, PARCOUM III seeks to representation in elected councils and boost the extend basic medical coverage and broaden national public consultation policy. They indeed access to healthcare. An initial disbursement of facilitated the organisation of the national EUR 70 million was made after: (i) the conferences of 2014. establishment of an inter-ministerial committee for medical coverage; (ii) the proposal of 3.5.4 In an effort to strengthen social scenarios for the coverage of self-employed inclusion, the Bank continued its support for workers; and (iii) the mobilisation of resources better training-employment matching, allocated to RAMED. Two technical assistance particularly in connection with the operations approved in 2013 and in the start-up employability of the youth and young women. phase have consolidated these reforms through In this regard, the Bank supported the the preparation of: (i) a health mapping implementation of the Training-Employment decision-making information system for Matching Support Programme (PAAFE) with Morocco (PRI); and (ii) the health sector budget support (UA 101.9 million – July 2013). financing strategy (TFT). The objective of this programme is to improve the employability of graduates from Execution of Pillar II - Infrastructure the educational system through: technical 3.5.6 In the energy sector, two Bank operations education and vocational training that is more help to combat climate change and ensure rooted in the productive environment, improve diversification of the energy mix. The the relevance and management of higher Ouarzazate Solar Power Station (23% physical education, and provide better sector implementation rate) is being financed under the coordination and governance. PAAFE has Moroccan Solar Programme, which seeks to specifically led to: (i) review of the training install 2,000 MW of solar energy capacity by referentials in technical education; (ii) 2020. The Integrated Wind Energy, Hydro preparation of a bill to establish a national Power and Rural Electrification Programme agency for the assessment of higher (PIEHER) has already electrified 2,223 villages education; (iii) establishment of a mechanism (out of 7,000), representing 61,824 households. for the recruiment of graduates; (iv) The financing of these two operations has also establishment of regimes for the delegated made it possible to mobilise CTF resources. management of vocational training; and (v) improvement of governance. Concerning 3.5.7 In the water sector, the 12th Marrakech training, the Bank also financed four technical Drinking Water Supply (DWS) Project (UA assistance operations (3 TFTs and 1 MIC TAF), 125 million – November 2012), at the start-up all in the start-up phase, for: (i) the creation of a phase, seeks to satisfy drinking and industrial national mechanism to promote the water needs in the Marrakech region up to 2030. employability of graduates; (ii) the The Bank also financed the study on the establishment of an integrated system to drinking water supply master plan for evaluate the quality of vocational training; (iii) communities of the Moulouya river basin. The the identification of skills needs in the purpose of the plan is to ensure steady drinking construction sector by 2015; and (iv) the water supply and sanitation in this region and
-7- thus preserve the quality of water resources. increase the supply of private education. 3.5.8 In agriculture, the Green Morocco Plan Pillar II - Infrastructure Budget Support Programme (PAPMV) (UA 3.6.3 As regards energy, improvement of the 87.5 million-July 2012), which adopted an energy reliability and efficiency of the inter-sector approach involving 5 electricity network is supported by the departments20, made it possible to implement programme to develop electricity transmission key measures such as irrigation water and distribution networks (2009). The planning21, promotion of value chains22, programme has led to the procurement of three establishment of regional environmental shielded substations and 76 km of evacuation observatories and the national irrigation map. In lines, which have protected the interconnection this regard, six laws were adopted. At the same with Spain. This operation is reinforced by the time, the Bank instituted technical assistance for implementation of technical assistance (Finish the promotion of young farmers (MIC TAF) Trust Fund) which made it possible to conduct with a view to addressing the problem of youth an energy audit of 50 companies to institute employment in rural areas (with emphasis on energy efficiency plans. young women). Lastly, a South-South grant is aimed at developing agricultural production by 3.6.4 Concerning transport, three sub-sectors supporting the use of biotechnologies. are concerned. The National Rural Roads Programme (PNRR 2, 2007 - UA 37.5 million) 3.6 Other Effects of the Strategy focuses on upgrading a number of roads on the Pillar I - Governance national network with a view to improving rural 3.6.1 Several operations initiated under the road access for the population from 54% in previous CSP in the financial sector also 2005 to 80% on completion (in 2015). The contribute to the attainment of Pillar I average national access rate recorded at the end objectives. PADESFI II made it possible to of 2013 was approximately 74%, with 13,277 support: (i) the financial inclusion of households km launched out of 15,500 km. In the airport by raising the bank penetration rate from 35% in sub-sector, a UA 200 million loan approved in 2008 to 60% in 2013; and (ii) efforts to diversify April 2009, should help to increase airport the economy and enhance its resilience by operational capacity through infrastructure increasing the number of SVEs benefitting from upgrade, extend the air navigation system and a guarantee of 25% and paring down the risky reinforce ground safety facilities in the Fès, portfolio from 40% in 2008 to 6% in 2013. Marrakesh, Agadir and Oujda airports. The Furthermore, two MIC TAF grants contribute to physical implementation status of the project the attainment of the objectives of improving stands at 38%. Lastly, under the 2010-2015 financial sector governance, namely: (i) the contract-programme between the ONCF and the project to strengthen the control of financial State for the upgrade and modernization of markets with the Securities Ethics Board (which transport infrastructure and services, the Bank is being implemented) and; (ii) the Project to granted a loan to expand the capacity of the Improve the Guarantee System with the Central Tangier-Marrakech railway line (UA 250 Guarantee Fund (the survey conducted among million -2010). The physical implementation users reveals that the services rendered are status of the project stands at 63%. highly satisfactory). 3.6.5 In the water sector, the Bank is the 3.6.2Lastly, the Private Education leading partner in Morocco with ongoing Establishments Development Strategy Support commitments of over UA 429 million. In 2006, was approved in 2011 in the form of a grant the Bank initiated a new management method in (MIC TAF) and its implementation has only just the water sector under the 9th DWS Project (UA started. It seeks to prepare an integrated strategic 67.5 million - closed in 2013). This project plan for the development of private higher, which was implemented in rural areas initiated secondary and technical education and to the decentralized management of resources. It
-8- helped to: (i) ensure regular water supply for the creation of 9,000 direct jobs in industrial 380,000 rural dwellers, thus raising the national SMEs. Furthermore, the Bank intervenes access rate by 2.8%; and (ii) develop sanitation indirectly through investment funds. Its in 3 towns, thus improving the national interventions are fully focused and diversified sanitation rate by 1.5%. Subsequently, the 10th from the sector standpoint (pharmacy, agro- DWS Project (2008) improved regular drinking industry, infrastructure, banking) (Annex 13). water supply in the major cities, while the Through these funds, the Bank has disbursed Rabat-Casablanca 11th DWSS Project (2011) led close to UA 16 million as indirect participation to the construction of one of the biggest in the capital of Moroccan business. The Bank treatment plants in Africa, with a capacity to also intervenes indirectly by providing financing serve 9 million inhabitants. These projects have through regional lines of credit and participation contributed to improve water access, quality and in pan-African initiatives24. sustainability. 3.6.9. Furthermore, the Bank´s operations 3.6.6 In the agricultural sector, the National have supported a PPP approach. This is the Irrigation Water Conservation Programme case in the energy sector with the Ouarzazate Support Project (PAPNEEI 2009) helped to Solar Power Station Project and within improve water use efficiency mainly through PIEHER with the Tangier Wind Farm. The conversion of the irrigation mode on same also applies in the agricultural sector under approximately 5,000 hectares (out of the 20,000 the Green Morocco Plan (PMV): the study for scheduled) from sprinkling to drip irrigation. delegated management in irrigation areas and Two technical support operations were the enabling instruments of the law on the provided, namely: (i) a programme for the private agricultural board (PPP). protection, conservation and development of the Other Economic and Sector Work oases in the South (POS) (MIC TAF, from 2009 to 2013) that led to the implementation of four 3.6.10 In addition, studies were conducted to rural community development plans (project focus the Bank´s dialogue on AfDB’s closed); and (ii) support for the development of operational objectives and pillars, while irrigation infrastructure (MIC TAF in 2011) for nurturing thinking on the reforms supported the establishment of strategic, operational and in Morocco. These studies yielded the following innovative tools (ongoing)23. publications: (i) Labour Market Reforms in North Africa; (ii) Promoting Crisis-Resilient Private Sector Support Growth in North Africa; (iii) The Quest for 3.6.7 AfDB support to the private sector led to Inclusive Growth in North Africa; (iv) an improvement of the business environment, Development of Financial Markets in North thanks to reforms and the infrastructure set Africa; (v) Tackling Youth Unemployment in up. In terms of reforms, this improvement is the Maghreb; (vi) Poverty and Inequality in characterized by the establishment of a more Tunisia, Morocco and Mauritania; (vii) transparent framework (especially in public Comparative Study on Export Policies in Egypt, procurement), improved access to financing (for Tunisia and South Korea; and (viii) The small business owners) and greater access to Political Economy of Food Security in North human capital. With regard to infrastructure, the Africa. Presentations were organized in the private sector benefits from an environment that region to facilitate dissemination. facilitates trade (roads and airports) and more Pan-African Dialogue stable access to inputs (water and electricity). 3.6.11 The holding of the 48th Annual 3.6.8 The AfDB supports the private sector Meetings of the AfDB at Marrakech in 2013 through direct and indirect financing. enabled the Bank to initiate dialogue with the Financing support to the ten-year investment authorities in a pan-African context. This led programme of the Moroccan Phosphates Morocco to reaffirm its willingness in 2013- Authority (OCP) should in the long run lead to 2014 to position itself as a leading player in
-9- promoting trade with Africa. pool multilateral actions (previous piloted by the director) and bilateral actions (previously piloted 3.7. Implementation of Paris Declaration, by a unit) within a central unit. The Bank will Accra Agenda for Action and Busan strive to provide its assistance for the creation of Partnership commitments this thematic group. 3.7.1 The AfDB field office in Morocco 3.7.4 In accordance with the Paris (MAFO) plays a key role in consolidating Declaration, Morocco became the first country dialogue with the Government and other in 2014 for which the Bank will use the development partners. Since starting its national procurement system25. activities in 2006, the Bank´s partnership with the country and coordination with other IV. COUNTRY PORTFOLIO PERFORMANCE development partners have significantly REVIEW improved. Regular dialogue between MAFO 4.1 Current Portfolio and the authorities helps to identify problems and the priority actions that need to be 4.1.1 The Bank´s active portfolio in Morocco implemented to improve on project execution. comprises 3326 ongoing operations for net MAFO’s role in providing close oversight commitments of approximately UA 1.78 billion highlights all the advantages of decentralization (see Annex 6). Loans amount to UA 1.77 billion and of the Bank´s physical presence on the (99.7%), or 15 projects and programmes worth ground. However, the fact that the new MAFO an average of approximately UA 111 million premises are located outside Rabat since 2013 per operation. has had a profound impact on the Bank´s 4.1.2 The portfolio covers six intervention capacity to implement sustained dialogue over sectors: energy (34%), transport (22%), water this period. and sanitation (17%), social sector (11%), 3.7.2 Coordination among partners is private sector (9%), agriculture (7%) as well as conducted by the Moroccan Government. multisector operations (0.1%). There is a high However, there are thematic groups that allow concentration of operations in the infrastructure fluid exchange of information. These groups sector (90% of commitments), particularly are either chaired by the partners or the energy and transport (56%). Government. The Bank is the lead agency for 4.1.3 Public sector loans (sovereign civil society and should be the lead agency for operations) amount to UA 1.7 billion for 13 education in 2015. It participates in all social projects. Furthermore, the portfolio includes 18 sector thematic groups (health, youth, migration, technical assistance operations: 11 with MIC social protection). Furthermore, the water sector TAF financing (UA 5.4 million) and 7 with the group, created in 2002 by EU member states, resources of the Trust Fund for Countries in has been open to other donors since 2005. Co- Transition (TFT—UA 1.4 million in 2013). chaired by the EU, AFD and the ministry delegate for water, it provides a forum for sector 4.1.4 The portfolio includes two non- dialogue twice a year (the last was held in sovereign operations (a loan to the March 2014). Moroccan Phosphates Authority and an equity participation in the Argan Fund for 3.7.3 Nevertheless, some weaknesses persist. Infrastructure Development) for a total of The Government wishes to see enhanced UA 177 million. coordination in the agricultural sector through the organization of joint missions. In the social 4.1.5 Over 25% of the Bank´s portfolio domain, the Bank´s dialogue should be commitments in Morocco are implemented expanded to include themes such as social through co-financing arrangements. Most of protection, social transfers and governance. The the budget support operations, such as Ministry of Transport is currently restructuring PARCOUM III and PAAFE, are co-financed its mode of coordination with donors in order to with other donors. For investments, specific
-10- examples are the Ouarzazate Solar Power 4.2.3 Compliance with Conditions. Station Project, PDRTE and PNRII for which Performance in compliance with loan co-financing was satisfactorily implemented. conditions remains globally satisfactory in Working documents and meeting minutes are 2014. The average deadline for effectiveness transmitted to the Bank for approval and declined from 6 to 5.1 months for loans and comment, while Bank missions systematically from 2.6 to 2.1 months for grants since the 2013 meet with development partners. A number of review. In 2013, the effectiveness timeframe missions are conducted jointly, especially in the was below 3 months for PAAFE (July), financial sector where the Bank carries out immediate for PARCOUM III (December), and frequent short-term consultations with the EU 4 months for the grant on the Moulouya Master and WB. Lastly, in the case of the Ouarzazate Plan Study. The reduction in the timeframe Solar Power Station Project, AfDB rules apply since 2011 stems from the rapidity with which to the audits while WB rules apply to compliance is ensured for budget support procurements. This attests to the excellent programmes. The timeframes observed for collaboration between both institutions. energy projects approved in 2012 stem from their higher complexity, the multiplicity of 4.2 Portfolio Monitoring and Evaluation donors involved (with their respective 4.2.1 The overall performance of the Bank´s conditionalities) and certain prerequisites portfolio remains satisfactory overall, with a contingent on the nature of these operations total average score of 2.53 on 3 in 2014. This (economic and social impact assessments; score has been stable since 2012. Its rating selection of a developer under a PPP29). For under the new EER methodology ranges from PIEHER in particular, this will affect the satisfactory to highly satisfactory (3.36/4)27. The implementation of the operation and overall rating of the portfolio, including the two consequently the portfolio performance30. scoring methods, has evolved favourably. The Nevertheless, the “rural electrification” average age of operations has increased since component of this project is highly effective. 2012 from 2.3 to 3.1 years (2.2 to 3 years for 4.2.4 Furthermore, the transmission of loans and 2.3 to 1.9 years for grants). The quarterly reports, including interim financial portfolio has no aged projects according to the reports, remains irregular. The quality and Bank´s definition. regularity of report transmission has certainly Table 2: Portfolio Rating improved following: (i) the recommendations of the last CPPR in 2013; and (ii) the transmission 2002 2007 2009 2011 2012 2013 2014 of a template to executing agencies. However, 2.4 2.4 2.6 2.7 2.5 2.56 2.53 operations such as PMV or PAPNEI must 4.2.2 The overall disbursement rate reached conform to the requirements. 41% in mid-2014 (36.3% in 2013, 32% in 4.2.5 In general, project financial audits have 2012) following measures implemented by been conducted according to the Bank´s Terms 28 the Bank and the executing agencies for the of Reference. Besides, there is better planning th th following projects: (i) 10 and 11 DWS; (ii) of the process to select audit firms at the level of PAPNEI; and (iii) the Ouarzazate Solar PPMs. Although the deadlines have not been Power Station. Similarly, the disbursement rate respected, all FY2012 audit reports for for grants remains appropriate (51.1%) despite investment projects have been transmitted to the the exit of 3 grants from the portfolio in March Bank, which endorsed them. For FY2013, 15 2014. The target of 54% by the end of 2014 is audit reports were still expected by the Bank as attainable because a number of disbursements of mid-June 2014. This situation stems from: (i) are expected on these operations. the slow execution of the adversarial and final Analysis of the Key Performance Indicators approval procedure of reports drafted and filed of Public Sector Projects on time by the IGF to the project execution agencies concerned; and (ii) the schedule
-11- programming the transmission of financial information presented in the audited annual statements to audit firms. To resolve this financial statements for FY2012. In general, problem, the executing agencies must transmit auditors´ opinions on these financial statements their annual financial statements to the IGF or were acceptable to the Bank and the number of their audit firm 3 months before the requested Bank reservations were fewer compared to deadline, and request the IGF or audit firm to FY2011. Nonetheless, the Bank remains intervene within one month31. concerned by the poor scores for the annual financial statements transmitted by executing 4.2.6 Procurement Arrangements. The agencies and external auditors. Furthermore, the overall procurement performance remains transmission of interim financial reports remains satisfactory with an average score of 2.5 on 3 irregular. The procedure for monitoring audit (2.6 in 2013). This performance is the result of recommendations and Bank supervision the close support provided in the form of missions is neither systematic nor formalized training on rules and procedures, through through a regularly updated master plan. This workshops and targeted coaching. An example situation stems from the fact that 83% of the of the highly satisfactory procurement administrative, financial and accounting performance is the Tangier-Marrakech Railway management services of projects are not Capacity Expansion Project in which all informed by audit review recommendations at procurements planned for 2013 were executed the level of their executing agencies. according to schedule. Nevertheless, a number of operations and especially the 11th and 12th 4.2.9 Activities and Achievements: DWS Projects, the 3rd Airport Project, and the activities and achievements are generally better Electricity Transmission and Distribution than in 2013, mainly due to progress in DWS Networks Development Programme (PDRTE) projects. Nonetheless, the number of project experienced procurement slippages. These extensions, especially those financed with delays stem from several factors including the grants, has increased. These extensions result difficulty of expropriating land for certain from delays in the recruitment of consultancy projects (PDRTE)32 or long timeframes for firms or approval of terms of reference adopting standard Bank documents by the (Technical Support Project for the Promotion of executing agencies. For most of the grants, the Young Entrepreneurs and Technical Support procurement difficulties identified during the Project for the Development of Irrigation last CPPR in 2013 were addressed mainly Infrastructure). The extension of through training, targeted support and support to implementation deadlines also results from the MEF. complexity of certain projects such as the 11th DWS. For certain loans, the non-completion of 4.2.7 Operations performance will also works and/or payments (PNR II, 3rd Airport improve with: (i) the operationalisation of the 34 Project) have caused additional delays . letter of agreement on the use of national procurement procedures for national 4.2.10 During the workshop on grants held as competitive bidding for the procurement of part of the review, it was proposed that a more goods and services in AfDB-funded projects; rigorous monitoring indicator on physical and (ii) the outcomes of the fiduciary clinics progress status be included. It is true that organized from March 201433. operations could have an adequate disbursement rate and yet be inefficient in terms of physical 4.2.8 The overall portfolio performance is execution. significantly better. There is, indeed, a notable increase in the speed of financial execution and 4.2.11 As regards exposure to risks, in 2013 the disbursement rates, especially in the water and Bank streamlined its portfolio through partial sanitation sector (10th and 11th DWS) since cancellation of funds allocated to two projects early 2014, except for the 12th Marrakech and amounting to UA 141.3 million. In 2013, DWS. The quality of audit reports has improved, the portfolio no longer had any risky projects. thanks in part to the accuracy of the financial Nonetheless, in March 2014, the 12th DWS was
-12- classified as a PPP, since its commencement 4.4.1 The Bank’s performance remains was delayed by the cancellation of AFD satisfactory. MAFO’s proactiveness helped to financing, among other reasons. The Bank is improve certain project performance indicators, working with ONEE to speed up procurements including those relating to compliance with and ensure a first disbursement in July 2014 (17 conditionalities and financial performance. months after its approval) so that the project can Project supervision (over 74% undertaken by be removed from the PPP category35. MAFO) as well as proximity to partners and the many training sessions attest to MAFO’s 4.2.12 A number of operations finalized end- dynamism through the entire project cycle. December 2013 were financially closed as of Upstream, the programming of fully mature 31 March 2014, namely two grants: POS, projects has been well mastered thanks to a Haouz Groundwater Replenishment, and the 9th constant dialogue with the authorities and DWS loan. These projects show satisfactory partners whose involvement should be increased results and their balances were either cancelled at various stages of the project cycle. Active or are in the process of cancellation (9th DWS). attention to quality-at-entry will help to achieve 4.3 PPIP Implementation Status significant progress for future operations identified. More realistic conditionalities for 4.3.1 The implementation of the 2013 PPIP is operations, submission of documents that fulfill satisfactory: project quality-at-entry and the requisite Bank conditions, reduction of monitoring have improved. The project timeframes for forwarding such documents and portfolio has also been enhanced. Portfolio dialogue with the authorities remain crucial operations have experienced no supervision determinants. delays. The maturity of projects in conducting programming is analysed in terms of the Table 3: Portfolio Performance 36 finalisation of technical studies . Teams Indicators 2011 2012 2013 Mid- responsible for project design currently coopt 2014 procurement and financial management experts. Portfolio of Operations Number of projects 27 27 28 33( 4.3.2 Since March 2014, there has been an Projects managed by MAFO (%) 50% 58% 74% 74% Total commitments (UA billion) 1.8 2 2.3 1.8(2) upsurge in training thanks to the fiduciary Risky projects (%) 0 1 0 1(3) clinics organised to acquaint the executing Risky commitments (%) 0 15.5 0 7% 38 agencies with Bank rules and procedures. Rate of audit submission (%) 100 100 0 NA Portfolio Management Average effectiveness timeframe 6.9 6.4 6 4.9 4.3.3 Since the last portfolio review in 2013, (month) the Bank has significantly restructured its Proactivity index (%) - - 100 NA operations with a view to streamlining its Projects supervised at least twice/year - 50 70 100 (%) portfolio and generating financing margins for Number of grant proposals initiated by - - 6 2 new operations. This pro-activeness led to the MAFO and approved Number of files processed on time / - - 62/11 23/47 cancellation of UA 141 million through total number of files received 4 rd restructuring of the 3 Airport Project, as well Sector experts posted to MAFO 4 6 7 7 as the partial cancellation of the loan for the 11th Fiduciary experts posted to MAFO 1 2 2 2 37 Projects approved in the course of the year DWS Project . These cancellations of non- Project 3 8 5 4 performing components were motivated by Commitment (UA million) 421 947 204 245 enhanced dialogue with partners, savings 4.5 Country Performance Outcomes Based generated during the procurement process, or on the Questionnaire on Portfolio Quality the use of new and cheaper technologies while maintaining the initial project targets (11th 4.5.1 The answers to the questionnaire on DWS). These cancellations freed up resources portfolio quality were discussed with the for the financing of PARCOUM III (approved executing agencies present at the feedback by the Board approved in late 2013). workshop. Quality-at-entry as well as the conditions precedent to effectiveness and first 4.4 Bank Group Performance disbursement were deemed appropriate.
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Although the executing agencies deemed stricter targeting grant operations aligned with MAFO´s procurement service to be competent, lending operations and systematic assessment of they still expressed the wish to shorten the time the managerial capacity of new partners. limit for processing Notices of No Objection V. EXPERIENCE AND LESSONS (NNO). The agencies expressed their satisfaction with the disbursement and audit 5.1 Bank Group processes. Lesson 1: Confirmation of Pillars and Fine- 4.5.2 The proposals identified by the executing tuning of the Areas of Focus for 2014-2016 agencies to improve portfolio quality include: Constraint Assessment Results (i) anticipation of land-related problems during operations design; (ii) simplification of 5.1.1 In 2013-2014, AfDB conducted a growth procurement procedures by focusing on ex post diagnosic at Government’s request, as part of controls; (iii) increase of NNO thresholds to preparations for the 2nd MCC Compact. This strengthen the validation of procurements at study helped to analyze the constraints on MAFO level; and (iv) the possibility of growth and private investment. Several dialogue introducing an information system and workshops39 bringing together all stakeholders ultimately an electronic signature for were organised within this framework. disbursement requests. 5.1.2 The main constraints to private-sector- 4.6 Conclusions of Meetings with driven economic growth that affect Stakeholders competitiveness, job creation, entrepreneurship and innovation are of three types. Firstly, it was 4.6.1 Two workshops and one fiduciary clinic noted that microeconomic distortions (fiscal and session (specifically on the consultant legal distortions, land, labour market, recruitment process) were organized during the governance) affected the business environment. review. These workshops were: a specific Secondly, the educational system and vocational workshop on grants as well as the dialogue and training are unable to meet private sector needs feedback workshop on the 2014 portfolio in terms of quantity and quality. In particular, review. Apart from its recommendations, this public spending statistics on education show workshop helped to address the obstacles facing that Morocco exceeds all comparable countries, some projects (grant on private education). with a share of 24.8%, whereas such Henceforth, quarterly tripartite meetings will be investments remain low in the secondary and organized between MEF, MAFO and grant higher education subsectors40. Good beneficiaries. Following a discussion on governance and coordination among portfolio performance and the identification of stakeholders appears to be essential within measures to be implemented for certain this framework. Furthermore, innovative operations, the final workshop defined the capacity must be accompanied by the pursuit of recommendations presented as Annex 10. efforts in infrastructure and better coordination 4.7 Revised PPIP of public and private stakeholders. Lastly, certain industrial subsectors, including 4.7.1The new Portfolio Performance agroindustry, were identified as strategic to: (i) Improvement Plan (PPIP) focuses on more stabilising growth (a sector that is highly intensive monitoring of grant operations. The dependent on rainfall and represents 14% of key recommendations include the need to GDP); (ii) creating wealth and jobs with high continue organising quarterly workshops and capital returns (130% despite the limited reviewing the possibility of establishing investments) and the possibility of upscaling. technical assistance at MEF for close Good governance and coordination (at sub- monitoring of grants. As regards the sector level and for water resource management) recommendations of previous reviews, this new appeared to be fundamental within this PPIP repeats those aimed at guaranteeing good framework. quality-at-entry of loan and grant operations,
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5.1.3 Social and environmental inequalities the country’s capacity to overcome the and challenges were also identified. Firstly, the challenges presented in Section 2.2. issue regarding the performance of the State´s Government’s priorities presented in Section 3.1 social action was raised. Simultaneously, translate into strategies that yield reforms and reforms that help to boost competitiveness, investments. In turn, these help to improve implement efficient social safety nets and governance and competitiveness, the efficiency maintain macroeconomic balances (transfers, of the State´s social action and the economic pensions, unemployment insurance) must be and social development of the various regions. implemented. Secondly, efforts initiated to 5.1.5 The lessons from this diagnosis on the reduce regional disparities (especially in constraints that undermine the country’s infrastructure) must continue. Lastly, capacity to tackle the challenges presented in coordinated water management seems crucial Section 1, enabled the Bank to confirm the two for ensuring the sustainability of this resource. pillars and fine-tune its support under these 5.1.4 The authorities are actively engaged in pillars for the remaining period (Table 2). addressing these constraints which undermine Table 2: Alignment between the I-CSP, Intervention Pillars and the Strategic Framework Growth Diagnosis (2014) (AfDB-Government-MCC) Country Strategic Framework CSP Pillar Chapters II & V 2012 & 2013 Policy Letters 2012-2016 Challenges Constraints Chapter III Chapter V Low export Microeconomic distortions (fiscal, land, legal, labour Improvement of economic and Governance (5.1.5) competitivenes (2.2.7) market, governance) (5.1.2) financial governance (3.1.3) Improvement of the business Governance (5.1.5) Innovation capacity must be accompanied by environment and competitiveness Low private sector Infrastructure (5.1.9) infrastructure and stakeholder coordination (5.1.2) (3.1.4) dynamism (2.2.8) Infrastructure, Agriculture et Governance (5.1.5) Regionalization (3.1.7) Infrastructure (5.1.10) Infrastructure in the regions to be consolidated (5.1.3) Improvement of the performance Governance (5.1.6) Poverty and regional of the State´s social policy (3.1.5) disparities (2.2.10) Poor performance of social policy (5.1.3) Infrastructure (5.1.10) and regionalisation (3.1.7) Youth unemployment Inefficient educational and vocational training systems Improvement of education and Governance (5.1.5) (2.2.9) (5.1.2) training (3.1.6)
Strategy Pillars and Interventions (a) economic and financial governance; (b) the business environment and competitiveness; and 5.1.6 It is proposed that for the 2014-2016 (c) performance of the State´s social policy. It period, Pillars I (Goverrnance) and II also allows for supporting new strategies (Infrastructure) be kept consistent with the (industrial, Green Morocco) and major reform Bank´s Ten-Year Strategy. Under Pillar I, the areas (competitiveness, social safety net, Bank´s action will support government actions education). This rich yet targeted approach is aimed at improving governance, the efficiency of also a reflection of the fact that: (1) Morocco is State action and public finance management the Bank´s first partner, with a sophisticated through: (i) improvement of competiveness and development programme; (2) the themes the business environment within the economy; addressed were anticipated in 2011 and were and (ii) streamlining of social spending. These broached long before the Ten-Year Strategy; and two dimensions are closely related (3) there was continuous commitment to these (competitiveness can be boosted only if reforms sectors during formulation of the provisional are accompanied with more efficient social loan programme over the last five years. This action). Under Pillar II, emphasis will be laid on approach is consistent with the Bank´s strategies competitiveness and reduction of regional for developing governance, the private sector, disparities, with focus on the three sectors: water, human capital and energy. energy and transport. This approach is based on the government programme aimed at improving:
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Pillar I: Governance targeted technical assistance especially at the level of: (i) control organs (IGF, Audit Bench); 5.1.7 Under this pillar, lending operations (ii) the General Treasury of the Kingdom to during the remaining period will seek to support the implementation of public improve public, economic and financial procurement reform; (iii) the Directorate for governance as well as create jobs while Public Enterprises and Privatisation; and (iv) the enhancing the efficient use of public Ministry charged with modernising the resources. In this regard, the Bank will continue administration with a view to improving the its support to the Government’s multi-year quality of public services rendered to citizens. To reform programme through the Financial and that end, the Bank will provide its contribution to Insurance Sector Development Support the conduct of the PFM performance Programme (PADESFI III and PADESFI IV) measurement diagnosis based on the PEFA and the Competitiveness Support Programmes methodology. Training/employment matching (PACEI), both of which will seek to mitigate the will be supported through labeling of training microeconomic distortions identified through the programmes and adaptation of the core growth diagnosic and improve access to competency and trades reference guide to the financing. Emphasis will be laid on two priority logistics sector. Furthermore, technical sectors. Improvement of the modernization and assistance to the National Agency for the competitiveness of the agroindustrial sector Promotion of Small- and Medium-sized through reforms that allow better coordination of Enterprises (ANPME) as well as the study on the stakeholders in order to eliminate constraints the establishment of a women´s investment to the development of value chains while fund should supplement this mechanism. preserving resources (including water) will be at Lastly, under the Social Sector Governance the core of the Sector Competitiveness Support Support Programme, the technical assistance Programme - GMP. The governance and actions being identified will make it possible to coordination of stakeholders in the Ministry of streamline spending through the preparation of a Education and Training form the core of the national population register, an Integrated Sector Competitiveness/Training-Employment National Management and Information System Matching Support Programme. This programme for Grassroots Medical Coverage, and will emphasize the efficient use of public reinforcement of the Regulatory and Control resources within this ministry and lead to the Mechanism in the Insurance and Pension Sector. improvement of governance, management, performance and coordination of the higher Pillar II: Infrastructure education system to enable it to better respond to 5.1.10 Support to infrastructure development private sector needs. Furthermore, support will will focus on essential factors of production: be provided to integrate the green dimension and water, energy and transport. It will help to encourage PPPs. Non-sovereign operations that improve the business environment and boost help to improve the business environment, competitiveness while serving as a vector of competitiveness or the structure of value chains innovation. The supported infrastructure will also will also be considered. contribute to reduce regional disparities (and 5.1.8 Furthermore, lending operations will seek better integrate the regions into the national to boost the efficiency of the State´s social economic fabric) and boost the sophistication of action. This will start with supporting reforms the economy. Support to these investments will that lead to streamlining of expenditure, be provided in a manner that promotes the green stakeholder coordination and better targeting of dimension and PPPs. beneficiaries to accompany reforms that should 5.1.11 As regards boosting competitiveness, improve the business environment in a socially infrastructure support will entail developing acceptable manner (Social Sector Governance areas that facilitate Morocco´s integration into Support). the regional and global value chains (port), 5.1.9 In consultation with MEF, reforms will be while connecting such infrastructure to supported through the implementation of hinterland Morocco. This will include: (i) the -17-
Railway Infrastructure Consolidation Project learnt from the first implementation period. In between Settat and Marrakech; (ii) the Nador particular, more quantitative indicators were Port Project which will position Morocco as a included. Nevertheless, the results are heavily strategic stakeholder in hydrocarbons refining, dependent on the lending scenario that will be storage and transporting; and (iii) the national retained (see paragraph 5.1.17). logistics development strategy. Furthermore, 5.1.15 With respect to the “governance” pillar, financing of the Ouarzazate Solar Power Project structural and sectoral reforms will be Phase II (500 MW) will help to bring innovation supported to accompany the qualitative into the economy. Lastly, the line of credit transformation of the country´s institutional extended to one bank will be beneficial to framework. The Bank´s action, executed mainly infrastructure and SME projects in Morocco and through budget support, will help to: (i) boost in Sub-Saharan Africa (3 infrastructure projects competitiveness and streamline the State’s social and 50 SMEs financed by 2022). action with reinforcement of Morocco´s 5.1.12 As regards the mitigation of regional economic and financial governance disparities, the Bank will adopt an integrated (administrative reforms, insurance and pension water management approach with: (i) Phase II of systems, decentralization, development of online the National Irrigation Water Conservation services, operationalization of the PPP law, Programme Support Project to ensure the transparency in public procurement and sustainable water resource management and reinforcement of control organs, etc.); and (ii) improved productivity of irrigation areas; and (ii) develop skills and transform sub-sectors the 13th Drinking Water Supply Programme. To (modernization of agriculture, tailoring the ensure that the regions are more economically educational system to the needs of businesses). integrated, the Bank will consider financing Such budget support will be supplemented with Phase III of the National Rural Roads targeted technical assistance to facilitate reform Programme. implementation. 5.1.13 With regard to technical assistance 5.1.16 Under the “infrastructure" pillar, and in consultation with MEF, it is proposed investment projects that facilitate the that capacity-building be conducted in the development of basic, core or innovative area of PPP (DEPP, ONCF, ONEE) with, for infrastructure will be supported. This approach instance, the Project to sub-contract will enhance the appeal of the regions and their management of ONEE´s commercial risk. access to basic public services (access routes, There are also proposals to support the holistic water resource management), support development of strategic visions: (i) for transport innovation and boost national through the national logistics development competitiveness(port, train, clean energy). strategy based on the multimodality development Lesson 2: Enhance alignment with the and transport coordination study; (ii) for water 2013-2022 strategy and based on an integrated approach through: (a) strategic review of the National Sewage and 5.1.17 Both the Government’s action and the Water Treatment Programme; (b) support to the Bank’s commitment during the 2014-2016 National Irrigation Water Conservation period are seamlessly consistent with the green Programme; (c) support to the association of and inclusive growth objectives of the Bank’s agricultural water users; and (iii) for energy Ten-Year Strategy. It was agreed at mid-term through the strategic reflection on the energy that the “inclusive” and “green” growth targets sector. had to be promoted with the two pillars. This is not a strategic reorientation but rather allows for
Expected Outputs and Targets a reflection of the Bank’s ongoing action. The 5.1.14 The CSP results monitoring “inclusive” aspect will be promoted under the framework matrix is presented in Annex4. It Governance Pillar through support for the was revised in accordance with new establishment of a framework that facilitates: (i) commitments and to take account of the lessons better citizen participation; (ii) grassroots
-18- entrepreneurship; (iii) better citizen involvement improved by supporting agricultural sector in economic activities; and (iv) more efficient sophistication (Green Morocco and technical State social action. The Infrastructure Pillar will assistance on value chains), development of facilitate: (i) integration of the regions in the agricultural productivity (PAPNEI II) and better national economic fabric; and (ii) citizen access connection through transport infrastructure from to basic infrastructure. “Green” growth will be farming areas to processing and consumption supported through the implementation of reforms centres (farm-to-market roads, roads, railway that promote green growth with the infrastructure). "competitiveness” programmes of the Lesson 3: Adjustment of operational Governance Pillar. Under the Infrastructure methods during implementation Pillar, “green” growth will be supported through 5.1.19 Risk appreciation trends at the regional financing of infrastructure and strategies that and national levels will influence the Bank´s will: (i) promote integrated water management to intervention level. In this regard, three scenarios help Morocco tackle its greatest environmental have been designed at mid-term to introduce the challenge; (ii) reduce the carbon footprint (solar different levels of commitment possible, energy, railway transport); and (iii) be adapted to depending on changes in the Bank´s lending climate change or ensure better adaptation (drip capacity, with maximum thresholds as follows: irrigation). Water resource conservation will be (i) low scenario: UA 320 million; (ii) median supported by an array of mechanisms: budget scenario: UA 450 million; (iii) high scenario: UA support (Competitiveness-GMP), investments 600 million (Annex 3). Depending on changes in (DWS and PAPNEII II), TA and PPP. the country`s priorities and the maturities of the various projects, there will be a certain amount of 5.1.18 The crosscutting themes of the Ten-Year flexibility in the selection of projects that fall Strategy will also be better covered after this under these various scenarios. review. With regard to “gender”, reform 5.1.20 Following this review, and in a bid to programmes (especially PADESFI III and IV and facilitate the mobilisation of additional the Training-Employment Matching resources, the Bank will embark on a series of Programme) will ensure that special measures co-financing arrangements and optimize the are taken to enhance women´s integration into contribution of funds such as the CTF, the the economic fabric and that they particularly Africa Growing Together Fund (with the benefit from the State’s social action (Social People´s Bank of China) or Africa 50. The Sector Governance Support Programme). Their objective is to raise a minimum of UA 1.4 participation in decision-making will also be billion. supported through the Training Kit for Women in Elective Bodies, which is being prepared. 5.2.21 Apart from the support provided Grassroots infrastructure programmes (DWS, through reforms, after this review, the AfDB PAPNEI II) will ensure that women are closely will seek to actively support the private sector. involved in their implementation. As regards the Potential funds were earmarked to that end under “fragility” aspect, the programme will be the 2014 provisional programme and for the designed to respond directly to the “fragilities” median and high scenarios for 2015. Such identified in Sections 1 and 2: (i) improvement of support could also be provided by using venture the stability of the macroeconomic framework capital for investments through capital (through reform support); (ii) competitiveness investment funds that are not calculated as part of and lack of private sector dynamism (through the Bank´s commitment limits for the country. reform and infrastructure support); (iii) This approach which supplements the “green unemployment and especially youth field” project will help to address the absence of unemployment (through direct employment SMEs. Multi-country funds also provide an created by infrastructure, entrepreneurship opportunity for geographic diversification. The support, and education-employment matching PPP approach will be actively supported by the support); and (iv) environmental fragilities, projects, reform support and technical assistance especially water (green dimension of the (Annex 4). programme). Lastly, “food security” will be -19-
5.1.22 In a bid to improve transparency, society in the project cycle and in particular relevance and the Bank’s visibility, it was during budget support; and (ii) actively publicize agreed at mid-term to lay emphasis on: (i) the Bank´s activities within civil society. enhanced communication on operations; (ii) 5.3.2 During the workshop with technical and selection of projects through a set of indicators financial partners, it was agreed to: (i) enhance that reflect strategic objectives; (iii) civil society partner coordination in the agricultural and involvement; and (iv) implementation of transport sectors; and (ii) better disseminate the analytical work to strengthen MAFO´s advisory Bank´s studies. role by assigning it greater responsibilities. VI. CONCLUSION AND RECOMMENDATIONS 5.1.23 Furthermore, it was noted at mid-term that the Bank needs to guide Morocco in its 6.1 Summary of Conclusions determination to position itself as a leading 6.1.1.The two pillars of the strategy, namely: (i) stakeholder in economic relations with the rest governance; and (ii) infrastructures, continue of Africa, including North Africa. Specifically, to be relevant for the 2014-2016 period and a taskforce involving other representations and consequently remain unchanged. The Bank´s sector departments could be set up to institute action will focus on competitiveness and strategic surveillance and operationalize this effective social action under the “governance” support by guiding both public and private pillar as well as the reduction of regional stakeholders. This reflection on large-scale disparities and competitiveness under the regional activities will be done in synergy with “infrastructure” pillar. preparation of the RISP, which considers specific support to AMU. Furthermore, the Bank will 6.1.2 The portfolio was streamlined and its accompany these plans with policy advice performance remains satisfactory with an (opportunities and weaknesses during hub improvement noted at the level of grant development; analysis of tariff barriers with implementation. It is necessary to carry on with Africa by MAFO) and targeted technical the efforts initiated in 2013 so as to continue assistance (dual listing on the Casablanca Stock improving the portfolio performance. Exchange and the West African Regional Stock 6.2 Key Recommendations Exchange – Creation of a specific logistics area 6.2.1 CODE is invited to consider and adopt the for Africa). The potential financing of a line of Mid-Term Review of CSP 2012-2016 and the credit to one bank will also help to advance 2014 RPPP41. Morocco’s African plans. 5.2 Government 5.2.1 The following proposals were made to improve performance of the Bank´s action: (i) comply with deadlines for the submission of project audit reports by urging executing agencies to transmit their annual financial statements on time to the IGF or the auditors; (ii) continue holding quarterly meetings between the Bank, MEF and executing agencies on the monitoring of grants, and expand such monitoring into a comprehensive review; (iii) examine the possibility of supporting MEF in the monitoring of grant implementation; and (iv) request for regular and quality project reports. 5.3 Partners 5.3.1 During the workshop with civil society, it was agreed to: (i) systematically involve civil
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ANNEX 1: RESULTS MONITORING
Mid-term Targets Status Comments and Remarks
/Pillar I: Governance Budget balance (net of privatization) -1% of GDP Ongoing Budget deficit, net of privatization, reduced to 5.5% of GDP compared to 7.4% in 2012. Containment of wage bill to 10.5% of GDP The public service wage bill, with MAD 98 billion in 2013, represents 11.2% of GDP. The financial impact to be generated by an increase of the minimum wage (from July 2014) Ongoing should greatly affect the general wage bill (which stands at approximately MAD 110 million per year). Inflation contained at below 3% Thanks to a cautious monetary policy, inflation stood at 1.9% in 2013 and should fall to Attained 0.9% in 2014. Outstanding external debt limit: 25 % of GDP. The outstanding external debt increased to 26.9% of GDP in 2013 compared to 25.7% in Not attained 2012. Total debt: 50% of GDP The outstanding treasury debt increased to 63.5 % of GDP in 2013 compared to 59.7% in Not attained 2012. GDP growth rate of 4% Growth rate of 4.4% in 2013, driven mainly by domestic consumption and public Attained investment. Widespread presentation of administrative procedures for Partially The development of e-government will lead to an increase in the number of websites, the users on the websites of government services attained number of online services and downloadable online forms. Instruments for the implementation of public action As part of the effective implementation of the LOLF, which has experienced a significant Ongoing territorialisation process slippage on the schedule. Institution of a national entity to monitor and assess the As part of the effective implementation of the LOLF, which has experienced a significant Ongoing regionalisation, decentralisation and devolution processes. slippage on the schedule. Development and commercialization of agropoles Partially Action plans for the promotion of agropoles were adopted and commercialization plans attained are being implemented: 30% in Berkane and 50% in Meknès. Financial resources for the development of an irrigation area, Partially Dar Khroufa (22,000 hectares) feasibility and structuring study conducted. under a PPP, are available. attained National Agricultural Advisory Board operational The first Board meeting was chaired by the Head of Government in September 2013 in Attained Rabat. Improved household access to the financing of social housing Approximately 100,000 households receive financing guarantees for the acquisition of Attained social housing. Capital and insurance markets authority created An explanatory statement of Bill No. 53.08 on the Moroccan Capital Markets Authority Partially has been presented. The enabling instruments are being awaited to ensure full attained implementation of this reform. Implementation of the mechanism to combat youth Attained Establishment of a mechanism for the recruitment of graduates. unemployment Implementation of reforms provided for under PUEN PAAFE supports the component relating to improvement of the governance of AREFs (National Education Emergency Programme) mainly through the establishment of internal audit units, the appointment of external Partially auditors and the training of administrators responsible for financial management and attained contracts. Furthermore, audit of PUEN’s higher education component commissioned at the PAAFE’s request. Development of dynamic partnerships between businesses Support for the development of PPPs in the form of delegated management and CFA/IE of Partially and ETFP/higher education vocational training establishments and the diversification and professionalization of higher attained education courses will continue. Labour market flexibility is improved Ongoing This issue will receive potential support during the rest of the CSP PILLAR II - Infrastructure ONCF logistical zones and platforms connected to the Of the two logistics platforms programmed under this contract programme, only one (Sidi- railway (75%) Ghanem) is being completed and is also connected to the railway. As regards the second Partially (Zenata) which is not considered under this project, the works have not yet started. attained Construction works on the third line between Kenitra and Zenata to connect the logistics platform should be completed latest end-December 2016. Establishment of a national logistics observatory (ONL) The Moroccan Logistics Development Agency (AMDL) was only effectively created Ongoing (prior to the project) in 2013. Upgrading of 20,000 sub-contractors and 35,000 VSEs of Information of the training of logistics sector operators can only be obtained from AMDL Ongoing logistics operators (75%) or CGEM. Regulation of the logistics services sector (creation of AMDL Partially Only AMDL was created. and ONL) attained 3rd railway line of 147 km between Tangier and Casablanca Component 1 – Increased capacity for the Casa-Kenitra segment: attained 50%. devoted to freight and container transport, and upgrade of the Ongoing Component 2 – Settat-Marrakech segment upgraded 94%. Kenitra-Casa and Settat-Marrakech (75%). Increase of the operational capacity of the Fès, Casablanca Ongoing An average physical progress status of 38% has been recorded. and Marrakech airports Upgrade of national network roads (75%) The average national access rate recorded at end-2012 was approximately 74% Ongoing (connection rate: with 13,277 km launched out of 15,500 km) – figure updated in November 2013
Rehabilitation/consolidation of protection facilities in 7 ports Not attained Cancellation: non-performing Percentage of electricity generated through renewable energy Attained The percentage of renewable energies in total electricity production is up to 27.2%. is 20% The national electrification rate is 85%, Attained The rural electrification rate was 98.06% at end-December 2013. - Audits conducted in industry; Conduct of 40 audits in 20 agricultural businesses and 20 businesses dealing in chemicals Attained - Moroccan audit firms available and parachemistry, textiles and hides. Improvement of the water production system in settlement Works on the 10th DWS project have progressed at an overall rate of 70%. It will make it areas and increased access to drinking water for rural Ongoing possible to improve the quantity and quality of drinking water supply for approximately 3 communities million persons. PNEEI-1 completed and is followed by PNEEI-2 Overall, the project has attained a physical execution rate of 45%. Ongoing PNEEI-2 is scheduled for 2015. PNEEI monitoring/evaluation system available A consultant was recruited as part of technical support (MIC grant for irrigation Ongoing infrastructure). A first version is in place and will be completed in September 2014.
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ANNEX 2: IMPLEMENTATION OF THE 2012-2013 LENDING PROGRAMME
OPERATIONS 2012 2013 2014 2012 2013 2014 Comments
Pillar I FORECASTS ACTUAL (UA (UA (UA (UA (UA (UA Lending Programme million) million) million) million) million) million) Green Morocco Plan Support Programme 90 87.5 Training-Employment Matching Support 100 101.9 Programme Public Administration Reform Support Re-entitled PARGEF: Economic and Financial 100 100 Programme - PARAP Governance Revitalization Support Programme Financial Sector Development Support rd 100 Being considered for 2014 (forecast) Programme (3 phase) – PADESFI III Medical Coverage Reform Support Programme rd 100 102 (3 phase) – PARCOUM III Non-Lending Programme (i) Technical Assistance to MTEF Development Not executed due to a change of strategic vision 0.50 (MIC grant) by the authorities Delay in the creation of a Moroccan logistics agency. TA confirmed for 2015 - labeling of Study on REC preparation in logistical trades 0.50 training programmes and adaptation of the core (MIC grant) competency and trades reference guide to the logistics sector (OITC) Study on the relationship between inclusive 0.35 0.59 growth and employment in Morocco (EES) Study on the competitiveness of the Moroccan Replaced by the AfDB/MCC Growth Diagnosis 0.50 economy (EES) Study conducted in 2013/2014 Public sector reform: Assessment and outlook 0.50 Not attained (ESS) Technical assistance for the promotion of young 0.50 0.57 agricultural entrepreneurs (MIC grant) Modernisation of the debt management 0.50 0.54 organizational framework (MIC grant) Drafting of the Monetary and Financial Code 0.50 0.49 (MIC grant) Technical assistance for the establishment of a 0.50 0.38 GIS and a health map (MIC grant) Additional Operations (non-lending) e-University UIR (MIC grant) 0.77 National mechanism to promote the employability 0.23 of graduates (TFT grant) Establishment of a professional integrated quality 0.13 assessment system (TFT grant) Identification of construction sector skills needs 0.30 by 2015 (TFT grant) Technical assistance to the health sector financing 0.17 strategy (TFT grant) Training kit for women in elective bodies (TFT 0.16 grant) TA national dialogue on the constitutional roles of 0.34 civil society (TFT grant) Total Pillar I 193.4 200.5 100.5 189.2 206.9 Pillar II FORECASTS ACTUAL Lending Programme Integrated Wind Energy, Hydro Power and Rural 320 299 Electrification Programme (PIEHER) Intergrated Wind Energy and PERG Programme 78 (CTF fund) DWS Project in Marrakech Region (12th DWS) 135 125 Support to the National Irrigation Water Under consideration – and for presentation to the 90 Conservation Programme II (PNEEI 2) Board in 2015. Taza, Tangier or Kalladi Wind Farm Project Refocusing on Tangier which was included in 100 (private sector) PIEHER Ouarzazate Solar Power Station Project (Phase I) 150 140 Ouarzazate Solar Power Station Project (CTF) 70 CTF Fund Ouarzazate Solar Power Station Project (Phase 2) 100 Under consideration for 2014
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Preparatory TA cancelled because not Project to repair protection facilities in 7 ports 90 satisfactory. Refocusing in 2015 on Nador Port. Not implemented: The Moroccan Logistics Development Agency (AMDL) created (prior to Logistics Strategy Support Project 100 the project) in 2013 – Scheduled to be considered in 2016 Non-Lending Programme Impact assessment of the rural roads programme Not implemented: Assessment financed by the 0.50 (MIC grant) EU Not implemented: Replaced by global TA of the Technical assistance to MASEN (MIC grant) 0.50 CTF (under consideration) Technical assistance to the National Logistics Not implemented: Observatory set up in AMDL, 0.50 Observatory (MIC grant) created in 2013 Technical assistance to irrigation infrastructure 0.50 (MIC grant) DWS Master Plan Study for urban and rural communities north of the Moulouya river basin 0.50 0.20 (MIC grant) Technical assistance for mitigation of the effects Study on green growth (not accepted by TFT), 0.50 of climate change (MIC grant) submitted to the MIC fund (under consideration) Total Pillar II 606.5 191.0 290.5 712.0 0.2 Grand total 799.9 391.5 391.0 901.2 207.1
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ANNEX 3: POTENTIAL LENDING PROGRAMME (2014-2016) AND SCENARIOS
2014 Project Amount Financial Sector Development Support Programme (PADESFI III) (Pillar UA 90 million I) Noor II Programme (Ouarzazate Solar Power Station II) (Pillar II) UA 80 million CTF: USD 119 million Line of credit – SME Africa (Pillar I) UA 65 million (USD 100 million). Indicative Total UA 235 million
2015 Baseline Scenario Median Scenario High Scenario PAPNEI (Pillar II) UA 50 PAPNEI (Pillar II) UA 50 PAPNEI (Pillar II) UA 50 million million million Economic UA 80 Economic Competitiveness UA 80 Economic Competitiveness UA 80 Competitiveness Support million Support Project (PACE) million Support Project (PACE) million Project (PACE) (Pillar I) (Pillar I) (Pillar I) Nador West Med Project UA 90 Nador West Med Project UA 90 Nador West Med Project UA 90 (Pillar II) million (Pillar II) million (Pillar II) million Support to the Green UA 100 Support to the Green UA 100 Support to the Green UA 100 Morocco Plan (Pillar I) million Morocco Plan (Pillar I) million Morocco Plan (Pillar I) million 13th DWS (Pillar II) UA 80 13th DWS (Pillar II) UA 80 million million Settat-Marrakech Railway UA 90 Line Doubling Project million (Pillar II) National Rural Roads UA 50 Programme (PNR III) (Pillar million II) Non-sovereign operation UA 50 Non-sovereign operation UA 50 million million TOTAL UA 320 UA 450 UA 600 million million million Budget support/Total 56% 40% 30%
2016 Baseline Scenario Median Scenario High Scenario PADESFI IV (Pillar I) UA 90 PADESFI IV (Pillar I) UA 90 PADESFI IV (Pillar I) UA 100 million million million Settat-Marrakech Railway UA 70 Settat-Marrakech Railway UA 80 Settat-Marrakech Railway UA 90 Line Doubling Project million Line Doubling Project million Line Doubling Project (Pillar million (Pillar II) (Pillar II) II) Support to Social Sector UA 80 Support to Social Sector UA 80 Support to Social Sector UA 100 Governance (Pillar I) million Governance (Pillar I) million Governance (Pillar I) million 13th DWS (Pillar II) UA 80 13th DWS (Pillar II) UA 80 13th DWS (Pillar II) UA 80 million million million Support Project for Sector UA 70 Support Project for Sector UA 90 Competitiveness and million Competitiveness and million Training-Employment Training-Employment Matching (Pillar I) Matching (Pillar I) National Rural Roads UA 50 Programme (PNR III) million Non-sovereign operation UA 50 Non-sovereign operation UA 80 million million TOTAL UA 320 UA 450 UA 600 million million million Budget support/Total 53% 55% 48%
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ANNEX 4: CSP RESULTS FRAMEWORK MONITORING MATRIX FOR 2014-2016
Before 2012 2012-2013 2014-2016 Constraints to the Country Technical Attainment of FINAL RESULTS (end 2016) FINAL OUTCOMES (end 2016) Closed Technical Assistance Technical Assistance Objectives Current Loans Assistance Loans Loans Objectives Loans Grants Grants Grants PILLAR I: Governance Coordination to Structural reforms initiated to eliminate Growth diagnosis facilitate the private sector constraints. Improvement Main constraints to private sector (ORNA/OSGE/ECON identification of of the Doing Business ranking (97- development identified (2 to 5 constraints) ) constraints 2014) (i) Variation in interest charges due to Support variation in the Treasury debt stock: < 1 in State efficiency in Institute a new organizational modernization of the 2016 budget management framework for the debt pole and the debt management (ii) Time limits for dissemination of the and control of tools needed to improve efficiency in organizational results of active cash-flow management macroeconomic the management of government debt framework (P- operations: 5 mn - 2016 balances and cash flow PARGEF MOCOGEDE) (iii) Number of operational incidents reduced (OSGE) by 20%/year in 2016 (i) 30% of elected women in Training kit for specialized commissions in 2015 Development of training modules to build the women in elective Civil society (ii) 20% of women chair communes capacity of women bodies (MAFO) involvement in and regions decision-making TA national dialogue Boost processes CSOs enjoy the right to file motions on the constitutional Organization of national forums economic and petition Parliament roles of civil society competitivenes (MAFO) s Budget management (i) Improved budget credibility: PEFA (i) Effective implementation of the LOLF: that is not results- PI-3 (composition of actual Budgeting for at least 12 ministries (multi- based and insufficient expenditure compared to the initial year and programme budgets) mobilization of budget) obtains an A score; (ii) (ii) Preparation and publication of documents resources to create a Improvement of budget planning and containing budget information to accompany public spending policies: PEFA PI 12 the Budget Act (gender report, wage bill budget margin for Support to obtains a score of 1; (iii) Improvement report) sustaining growth competitiveness of available budget information: PEFA (ii) Operationalization of the database that and boosting (PACE) – PI-6 (exhaustiveness of the information centralizes the common business identifier competitiveness Economic and in the budget documentation) obtains (iii) Establishment of the legal, regulatory and financial an A score; institutional framework for PPPs Lack of clarity in governance (iv) % of public contracts awarded relations between the (OSGE) through competitive bidding >90% & public and private average procurement duration <80 sectors days; (v) % of private investments relative to total investments in the Rules governing the economy increases by 5 points functioning of the Strengthening of the performance (i) Development of an IGF and IGM training Support to control organs
-26- private sector are assessment system (IGF) and public plan to build the performance assessment (PAOC) for the IGF and sometimes policies (Audit Bench): Scope, nature capacity of public entities Audit Bench and to the constraining and monitoring of external verification (ii) Review of the Audit Bench information TGR on public contracts improved (PEFA PI 26 moves to a system, interconnection with public finance (OSGE/ORPF) score of B) management systems and adaptation to the Reform implementation for the gradual dematerialization of the national public procurement system administration (i) Administrative services provided to (i) Improvement of the quality of citizens simplified and improved with public services to citizens (e- capacity-building for the public offices of Support to MFPMA government; adoption of the public central government and public entities (OSGE) services charter) (ii) Technical provisions taken for the application of the Public Services Charter (i) Time-limit for the processing the applications for approval from OPCR (i) 100% of business processes have reference and FCPT management companies tables and XML plans Project to enhance declines by 67% (from 180 days in (ii) 80% of target businesses are integrated the control of 2010 to 60 days in 2016); (ii) Average (iii) 100% of active CDVM employees are financial markets deadline for processing of approval trained (CDVM) (OFSD) applications for mutual funds, OPCRs (iv) Tools for raising the awareness of and FPCTs reduces from 30 days in external partners are disseminated 2010 to 15 days in 2016 (i) Facilitate access to bank financing for PADESFI (i) System deployed and 100% of businesses and individuals (from 20,000 in II (OFSD) Guarantee System business processes covered; (ii) Risk 2010 to 30,000 beneficiaries by end-2016); Improvement Insufficient management generalized to all CCG (ii) Average time limit for processing a Project (CCG) mobilization of products and activities; (iii) 100% of guarantee application reduces from 2 weeks (OFSD) resources for active employees trained in 2010 to one week in 2016 boosting Support to the competitiveness Casablanca Finance City (CFC) (i) MAGICODE software adapted to the preparation of the
generates at least 1% of the GDP context is available; (ii) 100% of legislative Monetary and Insufficient financing growth rate in 2016 instruments codified and translated Financial Code of VSEs and (OFSD) entrepreneurs (i) Bank penetration rate doubles from 30% in Financial Sector (i) improved access to credits for 2009 to 63% in 2016; (ii) Number of real Development Insufficient students to finance their studies; (ii) estate credits for the purchase of social Support sophistication of the establishment of the Business Savings housing that benefit from CCG guarantees Programme (3rd stock exchange sector Plan; (iii) improved community access grow by 40% from 2010 to 2016; (iii) Over phase) – to financial services country-wide; half of microcredits awarded to women (55% PADESFI III promotion of women’s of outstanding loans) in 2016 and 50% of (OFSD) entrepreneurship through the outstanding loans in rural areas in 2016; (iv) development of a guarantee product; 600 students receive student loans since (iv) enhancement of banking sector launching of the exercise; (v) Number of solidity and stability; (vi) creation of ABB Mobile Banking adherents reach compartments in the Casablanca Stock 155,000, including at least 50,000 in rural Exchange that focus specifically on areas; (vi) volume of investments in the mutual funds and SMEs investment capital reaches MAD 1550 billion. At least one business is listed on both (i) Assessment of the opportunities for joint Simultaneous listing on
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the Casablanca Stock Exchange and listing; (ii) identification of major constraints the Casablanca Stock the West African stock exchange and design of scenarios Exchange and the West (BRVM) (by 2017). African Regional Stock Exchange (BRVM) (OFSD) Reinforcement of the (i) Improvement of regulatory and (i) Regulatory and control tools put in place regulatory and control control standards in line with (ii) Capacity-building for State employees mechanism of the international standards; (ii) prudential involved in regulation and control of insurance and pensions ratios; and (iii) financial situation insurance and pensions sector (OFSD) Feasibility study, preparation of an action Study on the creation of a Increase the number of women plan and a project schedule for the creation Women´s Investment shareholders in companies and commencement of the Fund Fund (OFSD) (i) Development of logistical and Green agrobusiness platforms, and promotion of Morocco Plan Limited strategic subsector: 4 agropoles developed, of Support territorialization of which 2 are operational (Oriental and Saiss Programme State action in the regions); (ii) operationalization of the PPP; 2008-2020 agricultural sector; (i) Improved business environment in study conducted on delegated management of (PAPMV) the agricultural sector irrigation areas; enabling instruments of the (OSAN) Limited private (ii) Promotion of the value chain law on the private agricultural board (PPP) sector involvement; (iii) Development of agricultural and the law on aggregation published; (iii) insurance promotion of homegrown products (labellling Poor development of of 4 products) and promotion of organic agricultural farming on 8,000 hectares; (iv) 5 agricultural products< sub-sectors developed (1,000,000 hectares developed nationwide) and multi-risk insurance applied Promotion of Young Establishment of a model for Installation of 160 micro-enterprises of Agricultural promoting youth employment based on Young Agricultural Entrepreneurs (JEA)) Entrepreneurs (JEA) entrepreneurship (OSAN) Boost agricultural sector Support sector Signature and launching of the reform competitiveness and sustainability competitiveness programme (Budget support measures through sustainable agricultural water – Green approved) management Morocco Plan
(i) Roadmap prepared for the promotion of (OSAN) Green growth development tools green growth in the Sous-Massa region; (ii) Promotion of green
prepared mapping of "green professions" initiated for growth (OSAN) the promotion of young green entrepreneurs (i) Implementation of the mechanism to Training- Boost (i) Increase of the socio-professional combat youth unemployment: reduction of Low training- Employment competitivenes integration rate for young higher the unemployment rate (8% in 2020, and employment Matching s and the education and vocational training 8.9% for women); (ii) development of matching for the Support performance of graduates; (ii) increased partnerships between businesses and youth and for young Programme State social professionalization of training courses vocational training /higher education women in particular (PAAFE) action establishments (OSHD 2) Employment promotion policies Diagnosis conducted on the impact of growth Study on the relation
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integrated into the Government’s patterns on employment between inclusive economic and social programme growth and employment in Morocco (EES) Development strategy for Institution of the private sector The private sector covers 20% of educational private
development strategy and training establishments by 2020 educational establishments (OSHD 2) Programme identification stage Programme identification stage Sector Competitiveness National mechanism and Training- to promote the Reduction of the unemployment rates Establishment of job observatories within 14 Employment employability of for higher education graduates universities (nationwide) Matching university graduates Support (OSHD 2) Programme Integrated system for The quality of vocational training is 80% of vocational training graduates find a the assessment of improved. job within 6 months after graduation vocational training (OSHD 2) Construction sector Improvement of the relevance of 80% employment rate in 2016 for graduates skills needs – training training courses in construction and of construction courses plan for 2015 (OSHD public works 2) Increased employment for UIR UIR e-University Creation of an e-University graduates (OSHD 2) (i) Mechanism instituted for the labelling of Labelling of training Improved matching between training training programmes; (ii) update method and programmes and profiles and the specialized jobs reference guide for jobs, trades and skills adaptation of the guide for required for the development of the prepared; (iii) tools and user guides prepared; jobs, trades and skills to logistics sector (iv) communication plan on the mechanism the logistics sector (OITC) and reference guide prepared. Social protection (i) Generalization of RAMED Medical (i) Infant mortality rate: 20 per 1000 in 2020 system is inefficient (coverage rate rises from 86% of the Coverage (30 per 1000 in 2014); (ii) maternal mortality target population in 2014 to 100% in Reform rate: 80 per 100,000 in 2020 (112 per 100,000 Health status of the 2015) (ii) Consolidation of Support in 2014); (iii) Proportion of households in population, especially Compulsory Health Insurance - AMO - Programme direct payments for health spending: 48% in the poor (institution of independent health (3rd phase) – Improve the 2015 (53.6% in 2014) insurance) PARCOUM performance of III (OSHD 3) Health sector the State´s Establishment of the health sector Securement of RAMED funds financing strategy social action financing strategy (OSHD 3) Undergoing identification Undergoing identification Support to Nationwide institution of a 50% of social programme beneficiaries are social sector National Population computerized civil status registry; registered in the national population register governance Register (NPR) – Improved access to healthcare or (NPR) Integrated National GIS of RAMED beneficiaries Household spending on health reduces by grassroots medical
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25% in 2020 coverage (OSHD)
Social protection Establishment of a national social 50% of independents join a social protection diagnosis and intervention protection strategy system (MI+pension) framework (OSHD) Establishment of a national pension Reform scenario for the insurance and PADESFI IV system and insurance sector reforms pension system developed PILLAR II: Infrastructure Ouarzazate Poor diversification (i) % of renewable energies in primary Solar Power Installation of 150 MW of solar power of energy sources; energy consumption: 12% in 2020 Station 1 (4.1% in 2011) (ONEC) The country is highly (ii) % of renewable energies in total (i) CSP power stations with parabolic trough Ouarzazate dependent on energy electricity production: 42% in 2020 technology (200 MW) and solar tower Solar Power
imports (27.2% in 2012) technology (100 MW) constructed Station II (ii) Energy storage operational units (ONEC) Support for the Study on the development (i) Optimized management of national of transport multimodality merchandise flows (cereals, petroleum Development of 10 multi-flow logistics zones logistics and coordination and an products); (ii) Emergence of structured development African logistics area and qualified operators strategy (OITC) (OITC) (i) Construction of a deep-water port (i) Consolidation of Morocco´s port composed of a 4 200 ml dyke, one 1,500 m capacity in the western Mediterranean Nador port container terminal; (ii) Development of a (ii) Increased access and project (OITC) 1,500 ha industrial and logistics free trade Need to consolidate competitiveness for the Oriental region transport area Boost infrastructure (i) Development of the terminal facilities of competitivenescapacity to address Increase of the operational capacity of Fès and Marrakech; (ii) Construction and 3rd Airport s the needs of the the Fès, Casablanca and Marrakech equipment of the second air control centre in Project (OITC) business community airports Agadir
(i) Construction of a 3rd 99 km track between Tanger- Kenitra and Casablanca (for freight); (ii) (i) Increased capacity for the Marrakech Renewal of the tracks (115 km), overhead Casablanca-Kenitra segment Railway powerline system (250 km) between (ii) Upgrading of the Settat-Marrakech Capacity Kenitra/Casablanca and Settat/Marrakech; segment Expansion (iii) Construction of a second 38 km track Project (OITC) between Settat and Marrakech (i) Increased fluidity in the circulation of trains between Casablanca and Marrakech; (ii) Reduction (38 mn) of Construction of a 136 km railway track Settat-
the travel time between Casablanca and between Settat and Marrakech Marrakech Marrakech; (iii) improvement of the Railway Track regularity rate of trains (currently 60%) Doubling (i) Detailed training programme developed Project (OITC) Support to ONCF for ONCF capacity-building on PPPs for ONCF staff on the preparation of energy green energy supply (PPP supply PPP contracts; (ii) standard capacity) (OITC) -30-
procurement documents adopted (i) Capacity of the phosphates Loan to the production chain increases from 28 MT USD 6 billion support to the OCP Ten-Year Moroccan to 47 MT per year; (ii) Operational and Investment Programme (creation of 9,000 Phosphates ore transport costs reduced direct jobs and industrial SMEs) Low value-added Authority
(local processing) (i) Increased capacity, especially for Argan Fund for oriented towards Financing and creation of appropriate industries that have suffered from Infrastructure export investment opportunities and management of electricity shortages; (ii) contribution Development investments in the equity capital of to the creation and/or improvement of (regional fund Relative scarcity of enterprises, infrastructure and projects facilities that give access to foreign of EUR 66 medium- and long- relating to infrastructure. markets million) term resources Granting of a multi-currency line of credit available for the (LOC) with a maximum value of EUR 72.5 financing of SMEs Support to the pan-African growth million (7-year maturity period, including a 2- Line of credit to
strategy of the AWB group year grace period): at least 3 infrastructure a bank projects and 50 SMEs financed by 2022 (Morocco & Sub-Saharan Africa) Electricity Transmission Electricity access rate of 100% in urban areas and Distribution and 99% in rural areas; Improve regular electricity supply and Networks
network reliability for clients Development Problem of access to Reduce the network´s technical loss rate by Programme a reliable energy approximately 1.5% (from 5% to 3.5%) PDRTE source for businesses (ONEC) and households in the Integrated regions Installation of 850 MW of wind farms; Wind Energy, 69% thermal electricity, 27% Hydro Power hydroelectricity and 4% wind power Installation of 520 MW hydro-electric hybrid and Rural electricity by 2012 Support the power stations Electrification inclusion of Project regions in (i) Reinforcement and safeguard of (i) Extension of the Marrakech treatment economic and water supply access in urban areas: station: Additional flow of 1 m3/s and an social maintain drinking water access at emergency outlet of 1.4 m3/s on the Lalla 10th DWS Water resource development 100%; (ii) increase the drinking water Takerkoust dam; (ii) construction of water Project availability in quality access rate in rural areas from the intake facility of 750L/s, treatment station of (OWAS) and quantity current 94.5% to 96% in 2016 420l/s, demineralization station of 420 l/s for
(iii) Increase the output of distribution drinking water suppy to Khénifra town.
networks from the current 73% to 76% (i) Additional flow of 5m3/s from pumping of Inefficient in 2016; raw water (approximately 3 million management of (iii) Increase the output of power beneficiary inhabitants), laying of a 2,00 mm irrigation networks in 11th Rabat- generation networks from the current diameter pipe over a distance of 5.5 km. (ii) the irrigation areas Casablanca 95.3% to 96% in 2016; Laying of a new 2,000 mm diameter water and poor water DWSS Project (v) Improve the connection rate from supply pipe over a distance of 73 km, development (OWAS) the current 94% to 96%: rehabilitation of existing pipes with a a) Improve connection rate to the diameter of 1400 to 1500 mm over a distance national sanitation network from the of 2 km.
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current (2014) 73% to 75% in 2016; (i) The flow rate of water pumped from the Al 12th b) Increase the wastewater treatment Massira dam is 7 m3/s in 2017 (for the 1st and Marrakech rate from 44% in 2016 to 60% in 2nd phases); (ii) 3 pumping stations built by DWS Project 2020, compared to the current 36% 2017 (Phase I); (iii) 2 reservoirs built by 2017 (OWAS) (Phase I). Reinforcement of DWS in rural or urban 13th Drinking
areas (selected from the programme contract) Water Supply Delegated management of a community Programme AWF/ONEE grant: network through a PPP arrangement (OWAS) Commercial Risk Management Sub- contracting Project
(OWAS) National sanitation plan available Strategic review of the National Sewage and Wastewater Treatment Programme (PNA) (OWAS) (i) Promotion of irrigation water (i) 20,000 ha converted to localized irrigation; conservation and development; (ii) (ii) National irrigation map prepared; National
Improved institutional capacity and (iii) Early warning system for functional Programme for better adaptation to climate change irrigation. Irrigation Water (i) Development of strategic tools for Conservation Development of the irrigation sector; (ii) (i) Better planning of water resources over Support Project irrigation implementation of operational water 400,000 ha; (ii) Promotion of agricultural (PAPNEEI) infrastructure management tools and capacity- water conservation on 30,000 ha. (OSAN) (OSAN) building. (i) Conversion of irrigation from traditional PAPNEI II methods (gravity and sprinkling) to localized (OSAN) irrigation on 25,000 hectares; (ii) Reduction Modernisation of irrigation water of water supply complaints by 30% in 2020; infrastructure; (iii) Localized irrigation surface area: from Irrigation water development; 192,000 ha in 2014 to 218,000 ha in 2020; Institutional capacity-building. (iv) Remote management, irrigation early warning, water resource information and management systems are operational in 2020
Improve programming, support the procurement process, ensure capacity- Support the National Support the execution of PAPNEI II building for the ministry of agriculture and Irrigation Water Strengthen the performance of ORMVAs. Conservation Programme Agricultural Water Users´ Associations 2 and promotion of (AUEA) and promote participatory (i) Organisation of capacity-building for the AUEAs in the irrigation irrigation management AUEAs in the Loukos, Tadla and Doukala sector (OSAN) irrigation areas; (ii) Diagnosis and proposal of institutional reforms to promote AUEAs. Inadequate transport 2nd National Increase in the population´s rate of Construction of 15,560 km of rural roads infrastructure Rural Roads access to rural roads: 90% in 2016 comprising 65% paved roads and 35% earth capacity to address Programme (54% in 2005) roads the needs of the (OITC)
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business community 3rd National Construction and rehabilitation of 25,000 km Rural Roads
of rural roads Programme (OITC)
Technical Assistance Discussed with the Authorities and Left in the Pipeline
FINAL RESULTS (end-2016) FINAL OUTCOMES (end-2016) Technical Assistance Pipeline At least 1/4 of VSEs/SMEs that receive credits are located in Control of risks and establishment of a GIS piloted by the Jaida Fund to increase AMC credits Capacity-building support to micro-credit associations (OFSD) rural areas granted to VSE/SMEs. (i) 110,000 person undergo the financial education programme (i) Teaching aids, training and awareness-raising modules made available; (ii) Provision of (50% youth, 40% women and 30% from rural areas; (ii) 300 targeted training, especially for the youth, women and rural dwellers; (iii) Organization of Support the promotion of financial education (OFSD) VSE/SMEs benefit from the financial education programme training for VSE/SMEs. (40% women in business and 30% from rural areas). Support operationalisation of the aggregation process and build the capacity of aggregation Promotion of PPPs and development of agricultural products Promotion of value chains (OSAN) stakeholders Promotion of micro-credit and small farmers´ access to Partnership agreement between CAM (Crédit Agricole du Maroc), AUEA and ORMVA Technical support to Tamwil El Fallah (OSAN) financing signed and implemented Promotion of PPPs in irrigation (Dar Khroufa - Loukos sector) Design and formulation of the operation Promotion of PPPs in irrigation (Dar Khroufa - Loukos sector) (OSAN). over 22,000 ha. Nationwide generalization of RAMED Master plan for monitoring RAMED (OSHD) Establishment of civic mechanisms in primary and secondary Develop citizen access and participation mechanisms for the delivery of social 45% of persons are satisfied health centres nationwide services (OSHD) Improved management of PSHs 7% of public services positions are filled by persons with disabilities Capacity-building in the management of persons with disabilities PPP preparation projects are designed based on the new legal, PPP framework established; managerial capacity of these partners is consolidated: Technical Support to DEPP (OSGE) – PPP support subject to KOAFEC financing (ORNA) regulatory and institutional framework assistance for DEPP capacity-building in PPPs Review to the Macro unit, review of public spending and strategic reflection in Strategic or decision-making tools formulated the area of energy (ORNA) Main constraints to the development of both sub-sectors identified (agriculture and Better coordination instituted in both sub-sectors Promotion of the value chain (ORNA) subject to a grant from KOAFEC automobile)
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ANNEX 5: KEY SOCIAL INDICATORS
Morocco COMPARATIVE SOCIO-ECONOMIC INDICATORS
Develo- Develo- Year Morocco Africa ping ped Countries Countries Basic Indicators GNI Per Capita US $ Area ( '000 Km²) 2011 447 30 323 98 458 35 811 Total Population (millions) 2013 33,0 1 109,0 5 909,3 1 252,8 3500 Urban Population (% of Total) 2013 57,8 40,2 47,7 78,3 3000 Population Density (per Km²) 2013 72,3 46,9 70,7 23,5 2500 2000 GNI per Capita (US $) 2012 2 960 1 719 3 815 38 412 1500 Labor Force Participation - Total (%) 2012-2013 34,9 37,4 67,9 72,1 1000 Labor Force Participation - Female (%) 2012-2013 27,2 42,5 38,6 44,6 500
Gender -Related Dev elopment Index Value 0
2007 2010 2011 2005 2006 2008 2009 2012 2007-2011 0,625 0,502 0,694 0,911 2004 Human Dev elop. Index (Rank among 187 countries) 2012 130 ...... Popul. Liv ing Below $ 1.25 a Day (% of Population)2007-2011 2,5 40,0 20,6 ... Morocco Africa Demographic Indicators Population Grow th Rate - Total (%) 2013 1,5 2,5 1,3 0,3 Population Grow th Rate - Urban (%) 2013 2,1 3,4 2,5 0,6 Population < 15 y ears (%) 2013 27,9 40,9 28,3 16,4 Population >= 65 y ears (%) 2013 5,0 3,5 6,1 16,8 Population Growth Rate (%) Dependency Ratio (%) 2013 48,7 77,9 52,4 49,9 3,0 Sex Ratio (per 100 female) 2013 97,5 100,0 103,3 94,4 2,5 Female Population 15-49 y ears (% of total population) 2013 27,9 24,0 53,1 45,2 2,0 Life Ex pectancy at Birth - Total (y ears) 2013 70,9 59,2 68,4 77,8 1,5 Life Ex pectancy at Birth - Female (y ears) 2013 72,7 60,3 70,3 81,2 1,0 Crude Birth Rate (per 1,000) 2013 22,7 34,8 21,2 11,2 0,5
0,0
2010 2011 2012 2013 2006 2007 2008 2009 Crude Death Rate (per 1,000) 2013 6,3 10,4 7,6 10,4 2005 Infant Mortality Rate (per 1,000) 2013 25,8 61,9 39,8 5,5 Child Mortality Rate (per 1,000) 2013 31,4 97,4 56,3 6,6 Total Fertility Rate (per w oman) 2013 2,7 4,6 2,6 1,7 Morocco Africa Maternal Mortality Rate (per 100,000) 2010 100,0 415,3 240,0 16,0 Women Using Contraception (%) 2013 66,7 34,9 62,6 71,3
Health & Nutrition Indicators Phy sicians (per 100,000 people) 2004-2011 62,0 47,1 117,8 297,8 Life Expectancy at Birth Nurses (per 100,000 people)* 2004-2011 89,0 132,6 202,7 842,7 (years) Births attended by Trained Health Personnel (%) 2006-2011 73,6 52,6 66,3 ... Access to Safe Water (% of Population) 2012 83,6 68,8 87,2 99,2 71 61 Access to Health Serv ices (% of Population) 2000 70,0 65,2 80,0 100,0 51 Access to Sanitation (% of Population) 2012 75,4 39,4 56,9 96,2 41 31 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2012 0,1 3,9 1,2 ... 21 Incidence of Tuberculosis (per 100,000) 2012 103,0 223,6 144,0 23,0 11
1
2005 2008 2009 2013 2007 2010 2011 2012 Child Immunization Against Tuberculosis (%) 2012 99,0 83,0 81,5 96,1 2006 Child Immunization Against Measles (%) 2012 99,0 74,0 83,0 94,3
Underw eight Children (% of children under 5 y ears) 2005-2012 3,1 19,7 17,0 1,4 Morocco Africa Daily Calorie Supply per Capita 2009 3 264 2 481 2 675 3 285 Public Ex penditure on Health (as % of GDP) 2011-2012 2,1 2,9 3,0 7,5
Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2012-2013 116,9 101,9 109,4 100,9 Infant Mortality Rate Primary School - Female 2012-2013 114,1 97,9 107,6 100,6 ( Per 1000 ) Secondary School - Total 2012 68,9 47,4 69,1 100,2 Secondary School - Female 90 2012 63,4 44,0 67,8 99,7 80 Primary School Female Teaching Staff (% of Total) 2012-2013 54,0 46,6 58,0 84,3 70 60 Adult literacy Rate - Total (%) 2011-2012 67,1 62,0 80,3 99,2 50 40 Adult literacy Rate - Male (%) 2011-2012 76,1 70,7 85,9 99,3 30 20 Adult literacy Rate - Female (%) 2011-2012 57,6 53,7 74,9 99,0 10
0
2008 2010 2006 2007 2009 2011 2012 2013 Percentage of GDP Spent on Education 2009-2012 5,4 5,3 4,3 5,5 2005
Environmental Indicators Land Use (Arable Land as % of Total Land Area) 2011 17,8 7,6 10,7 10,8 Morocco Africa Annual Rate of Deforestation (%) 2000-2009 0,0 0,6 0,4 -0,2 Forest (As % of Land Area) 2011 11,5 23,0 28,2 35,0 Per Capita CO2 Emissions (metric tons) 2010 1,4 1,2 3,0 11,6
Sources: AfDB Statistics Department Databases; last update : mai 2014 United Nations Population Division, World Population Prospects: The 2012 Revision; World Bank: World Development Indicators; UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports. For any given interval, the value refers to the most recent year available during-34 the- period Note : n.a. : Not Applicable ; … : Data Not Available. ANNEX 6 : KEY DATA ON ONGOING BANK GROUP PORTFOLIOO OPERATIONS AS AT 30 JUNE 2014
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ANNEX 7: SCORING OF THE INDICATORS OF PUBLIC WINDOW ACTIVE PROJECTS IN 2014
Projects Scored According to the SAP Method
Financial Activities and Impact on Performance Score Loan Conditions Procurements Performance achievements Development IA OD Tot. PAPNEI 2.66 2 2 2 2.75 2.15 2.75 2.29 3rd Airport 2.28 3 2 2.4 2.25 2 2.36 2 Project Tangier- Marrakech Railway 3 3 2.8 2.5 3 2.79 3 2.83 Capacity Expansion Project Electricity Distribution and Transmission 2.33 2.5 2.8 2.5 2.25 2.57 2.25 2.50 Network Development Programme 10th DWS 2.66 2.5 3 2.75 3 2.57 3 2.67 11th Rabat- Casablanca 2.33 3 2.75 2.75 3 2.5 3 2.61 DWSS Project Total Score 2.66 2.5 2.62 2.62 2.66 2.49 2.66 2.53
Colour Code Key Excellent Performance (2.2-3.0) Average Performance (1.6-2.1) Poor Performance (0-1.5)
Projects Scored According to the IPR Method
OD EE Total Score Training- 3 3.5 3.3 Employment Matching Support (PAAFE) 12th Marrakech 2 2 2 DWS PIEHER (rural 4 4 4 electrification component) Ouarzazate Solar 4 4 4 Power Station, Phase I PARCOUM III 3 4 3.5 Total Score 3.2 3.5 3.36: Satisfactory
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ANNEX 8: MONITORING OF DEVELOPMENT PROGRESS AND RESULTS
Morocco PROGRESS TOWARD ACHIEVING THE MILLENNIUM DEVELOPMENT GOALS
Employment to population ratio, 15+, total (%) 60 Goal 1: Eradicate extreme poverty and hunger 19901 20002 20133 40 Employment to population ratio, 15+, total (%) 47,6 47,1 45,8 20
Malnutrition prevalence, weight for age (% of children under 5) 8,1 9,9 3,1 0 1990 2000 2013 Poverty headcount ratio at $1,25 a day (PPP) (% of population) 2,5 6,3 2,5 SL.EMP.TOTL.SP.ZS Primary completion rate, total Prevalence of undernourishment (% of population) 6,5 5,2 5,5 120 100 Goal 2: Achieve universal primary education 80 60 Literacy rate, youth female (% of females ages 15-24) 46,0 60,5 74,0 40 20 0 Literacy rate, adult total (% of people ages 15 and above) 41,6 52,3 67,1 1990 2000 2013 SE .PRM .CMP T.ZS Primary completion rate, total (% of relevant age group) 47,4 73,4 98,9 Ratio of female to male primary enrollment Total enrollment, primary (% net) 62,8 84,7 97,5 150
Goal 3: Promote gender equality and empower women 100 50 Proportion of seats held by women in national parliaments (%) 0,0 10,8 17,0 0 1990 2000 2013 Ratio of female to male primary enrollment 74,0 91,1 95,3 SE .ENR.PRIM .FM .ZS
Ratio of female to male secondary enrollment 74,4 83,8 85,6 Mortality rate, infant (per 1000 live births) 60 Goal 4: Reduce child mortality 40
Immunization, measles (% of children ages 12-23 months) 88,0 95,0 99,0 20
Mortality rate, infant (per 1,000 live births) 47,9 36,2 25,8 0 1990 2000 2013
SP .DYN.IMRT.IN Mortality rate, under-5 (per 1,000) 60,7 44,4 31,4 Maternal mortality ratio (modeled Goal 5: Improve maternal health estimate, per 100,000 live births) 250 Births attended by skilled health staff (% of total) 39,6 62,6 73,6 200 150 Contraceptive prevalence (% of women ages 15-49) 50,8 62,5 66,7 100 50 0 Maternal mortality ratio (modeled estimate, per 100,000 live births) 230,0 170,0 100,0 1990 2000 2013 SH.STA.MM RT.NE Goal 6: Combat HIV/AIDS, malaria, and other diseases Incidence of tuberculosis (per 100,000 people) Incidence of tuberculosis (per 100,000 people) 152,0 97,0 103,0 200
150 Prevalence of HIV, female (% ages 15-24) ...... 0,1 100 Prevalence of HIV, male (% ages 15-24) ...... 0,1 50 0 1990 2000 2013 Prevalence of HIV, total (% of population ages 15-49) ... 0,0 0,2 SH.TBS.INCD
Goal 7: Ensure environmental sustainability Improved water source(%) 84 CO2 emissions (kg per PPP $ of GDP) 0,9 0,7 0,7 82 80 Improved sanitation facilities (% of population with access) 58,9 67,4 69,8 78 76 74 Improved water source (% of population with access) 75,8 79,7 82,1 72 1990 2000 2013 Goal 8: Develop a global partnership for development SH.H2O.SAFE.TO.ZS
Net total ODA/OA per capita (current US$) 18,7 25,8 38,6 Mobile cellular subscriptions (per 1000 people) Internet users (per 1000 people) 0,0 116,1 550,0 1500 1000 Mobile cellular subscriptions (per 1000 people) 1,1 312,7 1199,7 500
Telephone lines (per 1000 people) 42,0 43,8 100,8 0 1990 2000 2013 IT.CEL.SETS.P3
Sources : ADB Statistics Department Databases; World Bank: World Development Indicators; last update : August , 2014 UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports, Note : n,a, : Not Applicable ; … : Data Not Available, 1 Latest year available in the period 1990-1995; 2 Latest year available in the period 2000-2004; 3 Latest year available in the period 2005-2013
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ANNEX 9: IMPLEMENTATION STATUS OF THE COUNTRY PORTFOLIO PERFORMANCE IMPROVEMENT PLAN 2013
Objective Actions to be Taken Monitoring Indicators Authority in Charge Schedule Trends up to June 2014 GENERIC ACTIONS IN THE ENTIRE PORTFOLIO Quality-at-entry Ensure that technical studies are Projects benefitting from Bank, Ministry of Permanent The maturity of projects during of operations ready right from the appraisal Bank financing are approved Economy and Finance programming is systematically phase of operations in order to based on technical studies guarantee better quality-at- evaluated based on the finalisation of entry technical studies for the relevant operations. - Ensure better targeting of the - The capacity of entities Bank, Ministry of Permanent Such attention is given to all new grant beneficiaries of Bank grants and requesting the Bank´s Economy and Finance operations to de designed in future. technical assistance and make technical assistance must be sure, beforehand, that they are evaluated to ensure that they MAFO will evaluate the institutional capable of executing operations have the required capacity to capacity of agencies to execute all new
satisfactorily. implement operations operations.
efficiently -Systematically include a - Project teams comprise a Ministries, executing Permanent - Project teams systematically comprise procurements officer and a procurements expert and a agencies a procurement expert and a financial financial management officer in financial management the teams of executing agencies expert. management expert. This will during the design of operations. - The procurement process is henceforth be extended to TFT grants. better understood and Nonetheless, progress still has to be operations are executed on made to better manage procurement time. timeframes. Commencement Systematically include Project teams are initiated on Bank Permanent Systematic, to be generalized to include of operations representatives of departments AfDB rules and procedures TFT grants. responsible for procurements, relating to procurement, disbursements and financial disbursements and financial management during launching management during of operations. launching missions For grants, trigger the Reduction of delays in Ministry of Economy Permanent Dialogue must be continued with TGR procurement process right from procurement processes and Finance, and DEPP to anticipate the grant approval, even if the grant funded with grants Ministries, executing has not yet been budgeted. agencies procurement process. This issue was raised at the workshop on grants during portfolio review. Familiarize Continue training executing A clinic is organized end- Bank (MAFO, 2014 and annually Implemented: a fiduciary clinic was executing agency and ministry officials on 2013 and a training session ORPF.1, ORPF.2, successfully organized in Rabat in agencies with Bank rules and procedures organized each year. FFCO.3) Bank rules and governing procurements, March 2014 followed by 8 training procedures. disbursements, audit and sessions on fiduciary issues
results-based project IMPROVE QUALITY IN THEIN QUALITY OF OPERATIONS IMPROVE IMPLEMENTATION -38-
management. programmed in 2014. Improve the Strengthen the office with a Office reinforced with a Bank 2014 Not yet implemented due to budget financial financial management expert financial management expert constraints management of projects Accelerate the Continue providing regular The timeframes for Bank (MAFO, Shortest time Improvement is underway. Note processing and support to the office in the area processing procurement files ORPF.1 and FFCO.3) possible should, however, be taken of the approval of of procurements given the huge are significantly reduced. procurement volume of files in the portfolio. The timeframes for volume and complexity of procurement and processing procurement files activities in the portfolio, which disbursement by the Bank does not exceed constitute a major challenge. files 15 days). Promote the use Apply national procedures to Number of projects using the Bank, TGR 2014 Operationalization is underway. No of national national competitive bidding for national procurement system new operations have yet been initiated. procurement Bank-funded projects. for national competitive procedures. bidding (NCB) Where necessary, guide Effective guidance of the Bank, TGR November 2013 Guidance by the Bank is underway. implementation of the government provisions of this Letter of Agreement by providing the country with technical support for the finalization of the special conditions (SC) and general conditions of contract (GCC) applicable to Bank projects th Strengthen Create a taskforce and hold Quarterly meetings Government (MEF) 4 quarter of Programmed in March 2014. Not yet operations meetings regularly with the organized and Bank (MAFO) 2013 and each implemented due to unavailability. A management, Bank and executing agencies subsequent coordination and (quarterly) for specific quarter workshop on grants was organized monitoring. monitoring of grants based on a during the 2014 portfolio review. portfolio improvement matrix, and expand the monitoring into a complete review that includes lending operations. Request regular project reports Project reports are regular Executing agencies Permanent Reports from some executing agencies that are timely and of good and of good quality are still irregular. quality. Send a project status report All executing agencies Bank (Task Manager) December 2013 The template was sent in October 2013 template to executing agencies received a project status report template Accelerate the Be more strict in extensions of Extension justified by an Bank and Permanent There are still many extensions implementation grant operations which must implementation plan Government (MEF resulting from poor design of of technical systematically be justified with corresponding to the and executing
-39- assistance realistic supporting documents capacity of the executing agencies for technical operations at entry. Nevertheles, these operations pertaining to implementation agency assistance operations) extensions must henceforth be clearly financed by capacity and processing of justified. grants procurement files. Reinforce the Participate actively in Monitoring/evaluation of Executing agencies 2014 Yet to be improved. culture of results reinforcing the culture of results projects makes it possible to and ministries in projects. include regular information on operational results into the reports Project audit Improve planning of the process Include the recruitment of Executing agencies 30 June 2014 There is better planning of the process to select an audit firm and audit firms in the PPM and and the Bank to select audit firms in the PPMs. ensure that the auditor initiate the process one year recruitment process is launched before submission of the However, the risk of delayed on time. audit report so that it can be transmission of FY2013 audit reports to transmitted on time (latest 6 the Bank remains very high. To date months following the end of (mid-June 2014) no audit report for the fiscal year concerned). FY2013 has been received by the Bank. Ensure the quality of audit The quality of audit reports Executing agencies/ Permanent The quality of audit reports is better; reports and see that they comply is satisfactory and the reports IGF and private these efforts must be continued. with the relevant Bank submitted are final and auditors guidelines to enable them to be complete versions. reviewed by the department in charge of financial management.
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ANNEX 10: 2014 PROJECT PORTFOLIO PERFORMANCE IMPROVEMENT PLAN
OBJECTIVE ACTIONS TO BE TAKEN MONITORING INDICATORS AUTHORITY IN SCHEDULE CHARGE GENERIC ACTIONS IN THE ENTIRE PORTFOLIO QUALITY AT ENTRY OF Ensure that technical studies are Projects benefitting from The Bank, Ministry PERMANENT OPERATIONS ready right from the appraisal phase Bank financing are approved of Economy and of operations to guarantee better based on technical studies. Finance quality at project entry Ensure better targeting of the Systematic evaluation , by the The Bank, Ministry PERMANENT beneficiaries of technical assistance Bank’s field office, of the of the Economy and and studies financed by grants and institutional capacity of Finance make sure, beforehand, that they are agencies to execute all new capable of executing operations operations financed with satisfactorily. grants. Establish realistic schedules including Systematic evaluation, by the Executing agencies, PERMANENT clear estimates on procurement Bank’s field office, of the the Bank timeframes for new operations. schedules of new operations COMMENCEMENT OF Systematically include representatives All project teams are initiated The Bank PERMANENT OPERATIONS of departments responsible for on AfDB rules and procurements, disbursements and procedures relating to financial management during procurement, disbursements launching of operations, including and financial management those financed by trust funds. during launching missions - Encourage and facilitate the rapid Reduction of delays in the Ministry of PERMANENT commencement of the procurement procurement process. Economy and process by using early actions for Finance, Ministries, loans and triggering the process for executing agencies grants as soon as they are approved without waiting for them to be budgeted. Continue dialogue with TGR and DEPP to anticipate the procurement process. Identify and analyse difficulties Mapping prepared and Ministry of PERMANENT relating to validation and approval of discussed with DB and TGR Economy and files in the public expenditure circuit on difficulties in processing Finance, Ministries, for operations using the PFM system. dossiers in the public executing agencies expenditure circuit. and Bank
Familiarize executing Continue training executing agency New sessions of the fiduciary The Bank (MAFO, 2015 agencies with Bank rules and ministry officials on Bank rules clinic are organized in 2015. ORPF.1, ORPF.2, and procedures and procedures governing FFCO.3) procurements, disbursements, audit and results-based project management. Build Bank office capacity Strengthen the office with a financial Office strengthened with a The Bank 2014-2015 in financial management management expert. financial management expert. Accelerate the processing Plan regular effective support for the The timeframes for The Bank (MAFO, 2014-2015 and approval of office on procurements, given the size processing procurement ORPF.1) procurement dossiers and complexity of the portfolio. dossiers are significantly reduced. The timeframes for processing procurement dossiers by the Bank does not exceed 15 days. Promote the use of Guide operationalization of the Effective guidance of the The Bank, TGR DECEMBER national procurement provisions of the Letter of Agreement governement 2014 procedures by providing the country with technical support for the finalization of the special conditions (SC) and standard consultancy regulations
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(CR) applicable to works and supplies used for Bank projects. Strengthen operations Continue with the meetings initiated Quaterly meetings organized Government (MEF), 2014-2015 management, between the Bank and executing Executing agencies, coordination and agencies (quarterly) for specific the Bank (MAFO), monitoring monitoring of grants based on a DEPP, TGR. portfolio improvement matrix and expand the monitoring into a complete review that includes lending operations. Include State controllers and paymasters from DEPP and TGR Request regular project reports that Project reports are regular and Executing agencies PERMANENT are timely and of good quality. of good quality Reinforce monitoring of Provide support at the level of MEF Consultant recruited in MEF The Bank, MEF 2014 technical assistance and to monitor technical assistance and studies financed by grants studies financed with grants Include an indicator on the use of Regular information given by The Bank (FFCO.3 PERMANENT disbursements to monitor the the Disbursements Officer to and sector implementation of technical each Project Officer on all departments) assistance and studies financed by idle cash-flow of 4 to 6 grants months. Reinforce the culture of Participate actively in reinforcing the Project monitoring/evaluation Executing agencies 2014-2015 results culture of results in projects of projects allows for and ministries inclusion of regular information on operational results into the reports Project audit Submit audit reports within the (i) The firm was recruited one Executing agencies PERMANENT timeframes prescribed by the Bank year before submission of the by: (i) improving the programming of audit report in compliance the audit firm selection process; (ii) with the Bank´s timeframe transmitting annual financial (not later than 6 months after statements to the IGF or the audit the end of the financial year firm on time. under consideration). (ii) The annual financial statements were transmitted to the IGF and the audit firm 3 months prior to the Bank´s deadline; and (iii) notification was given to the IGF and the audit firm to intervene within a timeframe not exceeding one month.
Formalize the practice of Systematically prepare a monitoring The monitoring master plan is Executing agencies PERMANENT monitoring the master plan to be updated periodically systematically prepared and and the Bank implementation of audit in the course of the year, upon receipt periodically updated. and supervision of the letter from the Bank recommendations in transmitting the conclusions and financial management recommendations of its review of the financial management audit or supervision report.
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ANNEX 11: MAIN DONORS IN MOROCCO
Amount Allocated (in Amount Disbursed (in Donors Number of Projects MAD) MAD) France 25 121 728 860.00 3 622 981 056.66 43 IBRD 24 827 985 953.57 8 572 927 951.71 48 AfDB 23 217 639 714.36 10 473 964 309.90 32 EU 22 865 494 749.95 16 915 605 399.66 119 EIB 21 921 935 000.00 8 090 126 760.37 19 JAPAN 6 722 297 370.00 3 196 344 926.68 11 Spain 3 808 545 405.43 110 445 667.08 190 SFD 2 305 056 000.00 1 341 221 029.74 11 AFESD 2 204 700 000.00 886 698 762.44 8 United Nations 1 317 357 774.53 1 089 928 849.12 111 USAID 1 017 370 258.41 734 516 644.12 3 Belgium 825 511 890.69 536 143 091.95 19 IFAD 754 845 094.00 237 427 446.89 6 Italy 699 412 000.20 616 717 431.61 3 KFAED 450 000 000.00 154 842 256.54 1 OPEC Fund 413 301 800.00 67 907 769.76 5 Germany 374 738 365.96 248 427 194.42 4 China 210 594 000.00 6 706 000.00 8 UNDP 149 153 571.79 19 953 166.98 19 Abu Dhabi Fund 137 370 000.00 51 258 695.97 1 IsDB 11 000 000.00 4 291 178.00 2
30 000,00
25 000,00
20 000,00
15 000,00 MAD MAD Millions
10 000,00
5 000,00
0,00
ANNEX 12: TEAM
Editorial Regional Director: J. KOLSTER, Regional Director, ORNA Team Resident Representative: Y. FAL, Resident Representative, MAFO/ORNA
Design Team: V. CASTEL, Chief Country Economist, MAFO/ORNA O. BRETECHE, Principal Portfolio Officer, MAFO/ORNA D. CHARRIER-RACHIDI, Economist, ORNA S. MANSOUR, Economist, ORNA A. MOUAFFAK, Economist, ORNA
Team Members: A. MOUSSA, Electrical Engineer, MAFO/ONEC A. TARSIM, Senior Macro-economist, OSGE.1 B. BEN SASSI, Chief Water and Sanitation Expert, OWAS C. AMBERT, Principal Strategist, OPSM C. MOLLINEDO, Chief Strategist, COPS D. KHIATI, Agricultural Expert, MAFO/OSAN E. DIARRA, Principal Financial Economist, MAFO F. RODRIGUES, Senior Investment Officer, OPSM2 L. JAAFOR-KILANI, Social Development Expert, MAFO/OSHD L. LANNES, Principal Health Economist, OSHD.3 M. BOUZGARROU, Principal Portfolio Officer, ORNA M. EL ARKOUBI, Procurements Officer, MAFO/ORPF.1 M. EL OUAHABI, Water and Sanitation Expert, MAFO/OWAS M. GUEYE, Principal Education Economist, OSHD.2 M. YARO, Financial Management Regional Coordinator, ORPF.2 O. BEN ABDELKARIM, Chief Education Expert, OSHD.2 P. MORE NDONG, Senior Transport Engineer, MAFO/OITC R. MAROUKI, Chief Agricultural Economist, OSAN T. RAJHI, Chief Training Expert, EDRE.0 W. DAKPO, Principal Procurements Expert, ORPF.1 W. RAIS, Principal Financial Analyst, MAFO
Reviewers S. KONE, Adviser to the Vice-President, ORVP C.L.TAWAH, Adviser to the Vice-President, FVP/COO A. A. BA, Resident Representative, BIFO R. KANE, Resident Representative, CMFO M. NDONG NTAH, Resident Chief Country Economist, ORNA S. KAMARA, Principal Portfolio Officer, DIRA/ORWA K. EGUIDA, Principal Portfolio Officer, SNFO C. CALVOSA, Country Risk Officer, FEMA K. ABDERAHIM, Country Risk Officer, FEMA K.HASSAMAL, Energy Expert, ONEC.2
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ANNEX 13: SUBSIDIARY FUNDS FINANCED BY THE BANK AND LOCATED IN MOROCCO
Name Name of Sector Date of Status Amount Share (%) Description of of Subsidiary Equity UA Activities in Fund Participatio million Morocco n
ECP I Charaf Services 12/03 Quit 7.17 12.2% Fertilizer Corporation ECP I Veolia Water Energy 01/05 Quit 26.53 12.2% Water and Maroc sanitation / Electricity distribution AHF Steripharma Health 05/13 Active 1.43 20.10% Pharmaceuticals MPEF Manorbois Services 04/07 Active 3.65 16.1% Import and II distribution of building materials MPEF S2M Telecoms 04/07 Quit 1.19 16.1% Payment solutions II MPEF S2M Telecoms 04/08 Active 0.74 16.1% II MPEF SAISS LAIT Agro- 12/07 Active 5.64 16.1% Dairy products II industry MPEF SICOPA Agro- 09/08 Active 9.23 16.1% Olives, dried II industry tomato, pepper PAIP Mixta Africa SA Industry 11/08 Quit 28.65 10.8% Real estate II ACF Banque Centrale Banks 11/12 Active 14.83 25% Commercial bank Populaire MPEF Polymedic Health 11/12 Active 9.06 17% Pharmaceuticals III MPEF SJL Transport 06/13 Active 8.68 17% Transport and III logistics MPEF Inpackt 01/13 Active 10.52 17% III
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ANNEX 14: CONCLUSIONS OF THE DETAILED ANALYSIS OF FIDUCIARY RISKS
Pillars Indicators Risk Factors Initial Risk Mitigation Measures Residual Risk Measures in the form of reforms initiated and formalized through statutory and No multi-year enabling instruments and which are programmed in the provisional effectiveness global forecasts schedule of Budget Act No. 130-13: (Global MTEF); Budget programming and multi-year programming with their respective presentations to Limited the Finance Commissions and the Parliamentary Sector Commissions from 1 January efficiency of 2018; control Abolition of SEGMAs and CAS, which no longer comply with creation conditions from 1 procedures for January 2018; non-salary Limitation of staff credits on 1 January 2016; expenditure Inclusion of State social insurance and pension contributions in the staff expenditure
Significant chapter from 1 January 2019;
Exhaustiveness budget deviations Presentation to Parliament of projects or actions broken down into budget lines (resulting
during execution from central and regional programmes) within the budget review law related to the Budget
Transparency (mainly due to Act from 1 January 2017; carryover of Ceiling on carryovers of investment appropriations from 1 January 2017;
Budget Moderate Efficiency appropriations) Moderate Programming nomenclature of State budget spending from 1 January 2017.
Measures to be pursued Timely Global MTEF pending the acquisition of technical assistance support; presentation Promulgation of the new Budget Act No. 130-13; Restructuring of Budget Department, including a Budget Reform Support Unit, etc; Finalization of the IGF reform bill: Update of 1960 texts, etc.;
Measures implemented Sector MTEFs prepared for 19 ministries.
Mechanism established and operational Involvement of the Audit Bench in the assessment of public policies and attendant recommendations Measures in the form of reforms initiated and formalized through statutory and Limited scope of enabling instruments and which are programmed in the provisional effectiveness parliamentary schedule of Budget Act No. 130-13 review General accounting from 1 January 2016; No general and Cost accounting from 1 January 2019; cost accounting Certification of the regularity and accuracy of State accounts by the Audit Bench; until Annual performance report, performance audit reports, general State account and promulgation of documents attached to the budget review bill relating to the finance bill, to be submitted the new Budget from 1 January 2019 in an effort to increase the amount of information transmitted to Act No. 130-13; Parliament;
Limited accounts Other measures provided for in the new Budget Act No. 130-13
certification of Readjustment of the conditions and schedules for review and voting of Budget Acts;
Exhaustiveness the Audit Bench Increase of the scope of parliamentary authorization by informing parliament of certain
until measures beforehand in the course of the fiscal year;
Transparency promulgation of Clarification, definition and broadening of parliamentary amendment rights. the new Budget Measures initiated and launched Efficiency Act No. 130-13 Extension of the GID system; will be extended to local councils and EEPs.
Tardy and Moderate Timely unsystematic Moderate Measures to be pursued presentation monitoring of Capacity-building for IGMs to, inter alia, monitor IGF recommendations at the level of Audits and Reports Audits IGF their ministry; recommenda- GID: Configuration of general and cost accounting, programming classification and new tions nomenclature for supporting documents; Risk on project GID: Integration of GIR.
audits by IGF; Measures implemented Weaknesses in Module for online monitoring of IGF recommendations; the configuration Reduction of the time limit for submission of the Audit Bench report to Parliament. of GID pending Mechanism established and operational promulgation of Involvement of the Audit Bench in the assessment of public policies and attendant the new Budget recommendations; Act No. 130-13. Establishment of a new PFM control commission in Parliament; Assessment by the TGR and IGF of the management capacity of authorizing services in modulated control.
PEFA 2009 (PI 19), i. Measures implemented NCBS 2011, Multiplicity of OECD/ CAD the regulatory Promulgation on 1 July 2011 of the new constitution which explicitly mentions the need to 2008, IGF, TGR frameworks of combat corruption, right of access to public information and promotion of good discussions public governance, transparency and integrity in procurements enterprises New Decree No. 2-12-349 of 30 March 2013, relating to public procurement, becomes effective on 1 January 2014. It introduces major innovations such as the partial unification
Legal and Lack of of the regulatory framework, simplification and clarification of procedures, introduction of
regulatory independence and e-procurement and improvement of complaint and redress mechanisms.
frameworks efficiency in the ii. Measures to be pursued Low Moderate
Procurement Exhaustiveness current Adoption and effectiveness of the new decree to set up the National Public Procurement and transpa- complaints Board (CNCP). The CNCP will be responsible for complaints and management of rency management remedies following a mechanism that is consistent with international standards. Efficiency system Promulgation of the new organic Law No. 130-13 relating to the Budget Act (FL); Finalization of public procurement reform through drafting and adoption of the enabling instruments of the new decree (CPS, CCAG); Provisions on fraud and corruption to be inserted into the BDs. Measures to be pursued
Exhaus- Revision of the corruption control legal framework (new law)
tiveness Draft convention between INPLC and IGF pending;
INPLC capacity-building on the investigation of fraud and corruption;
Low corruption
perception index
Measures implemented oderate
M
Moderate IGF capacity-building on the investigation of fraud and corruption within the framework Corruption of twinning with the IGFs of Portugal and France.
Global fiduciary risk Moderate Moderate
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ANNEX 15: IMPORTANCE OF THE ROLE OF THE COUNTRY OFFICE (MAFO) AT EACH STAGE OF THE OPERATIONS CYCLE OF ITS PORTFOLIO IN MOROCCO Identification and Formulation of Operations: Firstly, constant dialogue with Morocco´s partners ensures effective control of programming, which translates into a robust pipeline of operations. Special attention is paid to quality-at-entry and preparation of operations through this dialogue with stakeholders (including MEF) on the relevance of proposed interventions, and the capacity of beneficiary institutions, through guidelines developed on the basis of economic and sector work (including Morocco´s growth diagnosis in 2014), and through the contributions of 18 technical assistance operations, three-quarters of which are identified by the Office. These efforts lead to a global reduction in timeframes for effectiveness of operations as well as better preparation of operations launching, among others. Furthermore, the office continues its involvement in coordination with other donors in Morocco, including becoming the lead agency for the group on civil society. Operations Supervision: Close monitoring operations implementation is mainly conducted by MAFO (74% of supervisions), including grants which have attained significant financial performance (51% of the disbursement rate in July 2014). Furthermore, MAFO is keen to maintain a sound portfolio as demonstrated in the major restructuring of operations made end- 2013 (cancellation of UA 141 million). This freed up financing margins for a new lending operation that is ready for launching. Procurements and Fiduciary Monitoring: Similarly, the Office stepped up its support to executing agencies on fiduciary issues by organizing the first fiduciary clinics in 2014 and continuing its efforts on targeted coaching and specific workshops (grants). Furthermore, the dialogue between MAFO and Moroccan partners has intensified since 2013 with respect to preparation and guidance on implementation of the Letter of Agreement on the use of national procurement procedures. MAFO also responded to the appeal of its Moroccan partners for reflection and support on issues such as consideration to have a higher proportion of local production in operations financed by the country´s donors. Completion of Operations: With respect to quality-at-completion of operations, efforts have to be pursued with the executing agencies to strengthen monitoring/evaluation and MAFO is sensitizing partners in this regard.
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ANNEX 16: ENDNOTES
1 New guidelines (ADB/BD/IF/2013/83 of 22/04/2013) for the review of country portfolio performance provides that the RPPP should be an integral part of the CSP at three levels: during preparation, mid-term review and the CSP completion report. 2 The results, estimates and forecasts presented in this chapter come from the MEF macroeconomic unit and are supplemented with the Bank´s own results, estimates and forecasts. 3 This poor performance is mainly observed in sectors such as phosphates, real estate, public works, textiles and hides and skins, which are seriously affected by the decline in European demand. 4 Tax revenue was approximately 21.3% of GDP in 2012 and attained 19.8% of GDP in 2013. 5 The diesel subsidy retained will gradually decline from MAD 2.15 in the 1st quarter of 2014 to MAD 0.8 in the last quarter of 2014 6 In May 2014, Standard & Poor’s also mentioned the possibility that Morocco´s rating could move from "negative" to "stable" and confirmed the “BBB-/A_3” rating given to the country for its long and short-term debts in local currency and foreign exchange. 7 The decline in imports affected all products except capital goods and semi-finished products. The decline in exports mainly affected phosphates and its by-products (-23.3%) as well as the textiles and leatherwork sector (-3.9%). 8 Following a decline of 16.7% at end-2012 and 10.7% at end-2011. 9 The provisioning rate remains satisfactory (63%) as well as the capitalization of banks, since the average solvency ratio exceeds 12%. 10 This progression essentially stems from improvement of the facility and the rapidity of business creation procedures (5 procedures and 11 days). 11 Nevertheless, the improvements are obvious. The share of products with an average technological content rose from 31% in 2010 to 50% in 2013 due to the development of new trades in Morocco. 12 See the Growth Diagnosis conducted by the AfDB, authorities and MCC. 13 See the Growth Diagnosis conducted by the AfDB, authorities and MCC.
14 This rate rose to 58% among rural women. 15 Framework law on the environment adopted in 2013; a National Sustainable Development Strategy is in the finalisation stage and is scheduled for September 2014. 16 Government, Parliament, Audit Bench, civil society. 17 The fiduciary clinic organized in March 2014 was an efficient communication framework to satisfy training needs and resolve management and control problems. 18 UA 799.85 million in 2012, UA 391.5 million in 2013. 19 This affects all regions, age groups and social classes. 20 Economy and Finance, Agriculture, Water, Environment and Energy. 21 Preparation of a national irrigation map, establishment of a PNEEI monitoring system, preparation of a roadmap for institutional reform of the irrigation sector, integrated and sustainable management (groundwater contract, artificial groundwater replenishment, use of treated wastewater for irrigation). 22 Law on aggregation, law on organic farming, promotion of labels and local products, private agricultural board, action plan for the promotion of agropoles, promotion of agricultural insurance, ...),
23 . Strategic tools (Irrigation Water Conservation Roadmap, National Irrigation Map, …); operational tools (PNEEI monitoring/evaluation system, …); innovative tools (coupling of water conservation with energy conservation, installation of smart terminals, ...) 24 African Capitalization Fund owned 25% by the Bank and established within Banque Populaire Centrale. Objectives of the investment: Help develop financing for SMEs; contribute to the increase in the bank penetration rate; support the Bank in its external growth in Africa 25 To date, 29% of active AfDB operations (projects and sector budget support) use the public expenditure circuit through the stages of commitment, settlement, authorization and payment. The operationalization of modulated control of State expenditure and the scheduled implementation of the new Organic Law on the Budget Act and Accounting reform in 2017, will enable the AfDB to increase this rate. 26 33 operations including 13 sovereign loans, 2 non-sovereign loans, 11 MIC grants and 7 TFT grants, 27 Despite the unsatisfactory score of the 12th DWS of Marrakech that fell into the risky category of potentially problematic project (PPP) 28 ONEE Water Branch, Department of Irrigation in the Ministry of Agriculture and MASEN 29 Tangier Wind Farm 2 under PIEHER 30 Nevertheless, the conditions precedent to first disbursement for the other components should be fulfilled by July and November 2014. 31 IGF indicated during consultations that, for structural reasons, it would like to initiate dialogue with the Bank to submit the provisional reports in June and the final reports in September. 32 In the case of the PDRTE, the schedule of works as planned at project appraisal will not be respected. Consequently, the initial loan closure date of 31/12/2014 will be extended (two to three years). 33 5 out of 8 sessions organized 34 The poor performance of the Airport Project stems from the exceptional situation generated by the institutional crisis of the executing agency which slowed down implementation of the operation. Consequently, MAFO restructured the project in 2013 and cancelled EUR 70 million. 35 It should also be noted that the project, by its very nature, has a limited number of procurements with large-scale lots whose time limits for preparation of BDs and bid analysis are generally fairly long. Consequently, first disbursement can only be done after the first year. 36 For operations needing it. 37 UA 40 million and USD 13.6 million 38 The audit reports for FY2012 were all submitted. For FY2013, since the deadline for submission of audit reports to the Bank was 30 June 2014, no report had been received during the drafting of this Review. However, it should be noted that in previous fiscal years, these audit reports were generally transmitted before October. It is expected that the reports for FY2013 will be received before October 2014 as has been the practice in previous years. 39 (Government, private sector, civil society, development partners) 40 Net school enrolment ratio for children aged 12 to 14 years does not exceed 53.9% at the national level. 41 Since the scope and pillars of Bank operations will not be modified after this CSP Mid-Term Review, the final report could be approved by the Country Team pursuant to the provisions of point 2.4.6(b) of Presidential Directive No. 03/2013.
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