2023-09-10 17:18:20
The devastating earthquake that has occurred Morocco It is a blow to an economy that has not yet fully recovered from the collapse caused by the covid pandemic and that is seeing its full recovery slowed down by the impact the drought is having on its powerful agricultural sector. The Government had just reduced this summer your growth forecast for this year (up to 3.4% of GDP, more than half a point below the previous estimate) and the tragedy threatens to add another burden to the already slow recovery.
The hard blow of the earthquake, which has so far left more than 2,000 victims and has caused enormous damage in large areas of the country, coincides with Morocco’s efforts to undertake a process of transformation of its economy to modernize its industrial sector and its primary sector, gain more weight in international tourism flows and fully enter the decarbonization race and gain energy autonomy through the deployment of renewable plants and taking positions in the future green hydrogen revolution.
To prop up these modernization plans, the Rabat government has actively launched itself to seek foreign investment. The European Union continues to be a priority partner, but the North African country seeks to encourage the arrival of other partners, with the United States and China as possible competitors.
However, at least for now, Spain and its companies – due to geographical proximity and historical economic and commercial relationship – are among the main potential investors. An investment interest that has been leveled by the reactivation of relations between both countries that has put an end to a few years of tension and disagreements after Madrid’s turn to the position on Western Sahara, now supporting the Moroccan theses of autonomy and not self-determination for the former Spanish colony.
At the high-level bilateral summit held between Morocco and Spain last February, an agreement was reached for the Spanish Government to support national companies that want to invest in the Maghreb neighbor with 800 million, seeking for operations to focus on the areas of the renewable energies, the water and desalination sector, infrastructures and logistics, industry and also in innovation tasks. Shortly after, last May, a high-level Moroccan delegation traveled to Madrid to share a business forum with the Spanish Government and with local companies seeking investments.
Spain, the largest buyer and seller
The countries of the European Union are the main commercial market for Morocco. In both directions of merchandise exchanges According to data from the European Commission, more than half of Moroccan imports come from Europe and nearly two-thirds of its exports are destined for EU countries. And in this aspect, Spain is in the lead as a priority trade partner, being both the country’s largest supplier and largest customer. A position that has been reinforced with rising data after the new diplomatic rapprochement between both countries.
According to the Moroccan Office des Changes, Spain is the main supplier country of Morocco, concentrating 15.7% of total imports in 2021, ahead of powers such as China (11.7%), France (10.5%), the United States (6.4%) or Turkey (5.8% ). And Spanish companies are also Morocco’s largest clients with a 21.5% share, surpassing France (20.4%), Brazil (5.5%), India (4.9%), Italy (4. 3%), the United Kingdom (3.3%) and the United States (3.0%).
Last year, the Spanish exports to Morocco reached an amount of almost 11,750 million euros, with a strong increase of 23%; while imports from the neighboring Alawite bordered 8.7 billion, 19% more, according to the records of the Spanish Secretary of State for Commerce.
Las Spanish companies with relations with the Moroccan economy are legion. More than 17,600 companies carry out exports on a regular basis, and Spanish groups have more than 500 subsidiaries based in Morocco and another 670 Spanish companies control shareholdings of at least 10% of the capital of Moroccan companies.
Spanish capote to Morocco with gas
Spain reopened the Maghreb-Europe gas pipeline last June, closed unilaterally by Algeria a few months before. The reactivation of the tube through the Strait of Gibraltar, on June 28, 2022, was historic because since then it has no longer been used to reach gas natural to Spain as it had always happened, but rather the direction of the supply flow has been reversed to send gas from Spain to Morocco.
Los gas shipments to Morocco have intensified progressively during this year, and in recent months more than 85% of the maximum injection capacity towards North Africa has been used. All of this in the midst of a diplomatic clash between Spain and Algeria – the traditional main supplier of gas to the Spanish market – due to the change of the Pedro Sánchez Government in the traditional Spanish position on Western Sahara.
In a strict sense, Spain is not selling gas to Morocco. Spain’s role is limited to receiving in its regasification plants the ships with the gas that Rabat purchases from any supplier country and sending it through the Tarifa (Cádiz) gas pipeline to the Alawite country. Madrid has been like this throwing a cloak to Morocco in the middle of the energy crisis mwhile both countries intensify and try to redirect their bilateral relations. The nod to Morocco, however, has served to further strain the diplomatic clash between Spain and Algeria.
Almost 2,000 million in investments
Spanish commercial leadership is not repeated in the field of direct investments. Waiting to see if the Moroccan plan to attract foreign capital, and in particular Spanish, is successful, the investment stock of 1,945 million euros executed through 56 operations until the end of 2020 (latest data available), far behind France, with just over 11,000 million, five times more.
“It is often said that Spain’s relationship model with Morocco is fundamentally based on trade, unlike the French model, which prioritizes investment,” explains the Spanish Institute of Foreign Trade (ICEX) “This difference is based on historical, geographical reasons (the greater the proximity, the less need for implementation) and structural reasons (due to the greater abundance and longer history of multinational companies in the French economy). Thus, Spanish investment in Morocco is the result of the accumulation of a high number of small investments, which provides a certain stability to the total figures, in addition to relative sectoral diversification,” states the state agency.
40% of employment in the countryside
The Moroccan economy remains heavily dependent on its agricultural sector. The activities of the primary sector (agriculture, livestock and fishing) are responsible for an average of 14% of the gross domestic product of the Alawite kingdom, but it is crucial for being its third main source of income from its foreign trade and above all for concentrate 40% of all employment in the country, according to data collected by the Spanish Icex.
Agricultural and livestock exports reached 6,300 million euros in 2021, only for behind the booming automotive sector and international sales of phosphates (a key mineral for agricultural fertilizers and of which Morocco is a global leader in commercialization and proven reserves). Agricultural exports have the European Union as the main recipient, and sales have doubled in the last decade in which the EU-Morocco association agreement has been in force (they have multiplied by four in the Spanish case).
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Morocco seeks to promote a boom in its industrial and tourism sectors. The industry, especially due to the attraction of investors linked to the automobile (such as Stellantis or Renault) and the textile sector (with relevant suppliers from the Inditex group, for example, and seeking to be partners with other international brands), already concentrates almost 30% of the Moroccan GDP but the country needs to guarantee the modernization of a strategic sector, strengthening the existing fabric and gaining weight in other industrial areas such as communications and technology.
For years, Morocco has been building a growing tourism sector, relying on international operators, including Spanish ones (such as hotel companies Barceló, Meliá or Riu). Tourism currently accounts for 11% of the national GDP and close to 5% of employment. The country’s strategy involves modernizing the industry and standing up to nearby destinations in North Africa as a pole of attraction for international flows of travelers.
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