Africa Asia Europe North America South America Oceania
You are here: Home > Africa > Morocco

Economy and business in Morocco

Morocco has a substantial, versatile industrial base, more is still far ahead of an agricultural country, and its economy is vulnerable to, among other things, climatic and other factors affecting agricultural production. Low production results in loss of export revenue, and at the same time means that food must be imported.

Business and Economy of Morocco

Despite increasing urbanization, in 2019, 37 percent of Morocco's population lived in the countryside. In 2014, 39 per cent were employed in agriculture, a sector which in 2017 accounted for 14 per cent of GDP. Particularly in cities, unemployment is a significant economic and social problem. In the early 2000s, about 20 percent of the urban population was unemployed, about 10 percent of the population nationwide, and around 350,000 young people enter the labor market each year without creating new jobs at the same pace. Combined with widespread poverty and lack of housing and other infrastructure, this has led to social tension, as well as significant legal and illegal emigration, especially to the EU. The transfer of money from emigrants to Morocco represents a significant supply of foreign currency.

According to countryaah, Morocco is still economically very dependent on the revenue from phosphate extraction, the country became the world's largest exporter of phosphate at the end of the 1990s. Morocco also has other mineral deposits, but only minor discoveries of oil and gas have been made, and the country relies on importing energy. Since 1975, Morocco has claimed the former Spanish colony of Western Sahara, and has in fact incorporated it into the kingdom. The increasing utilization of natural resources in Western Sahara, especially iron ore and fish, is highly controversial in legal and political terms, and a number of companies have withdrawn from oil exploration there.

In addition to the export of phosphate and agricultural products, as well as emigration, the revenue from the tourism industry is an important source of income. After a period of growth in the 1980s, there was a decline in the 1990s, after which the sector is again focused on development. The number of visitors reached a peak of 3.3 million in 1992, after which it dropped drastically, again reaching 2 million in 1998.

Economic liberalization

Since the mid-1980s, Morocco, in consultation with the World Bank and the IMF, has implemented economic liberalization, including extensive privatization of state-owned enterprises. This policy has also aimed to attract foreign investors, including to gain access to the EU market, which has to some extent succeeded. From the 1990s, Morocco has entered into several major trade agreements, both regionally and with the EU, as well as with several individual countries, especially the United States.

Morocco, together with Algeria, Libya, Mauritania and Tunisia in 1989 formed the Union du Maghreb Arab Region (UMA) to promote trade and cooperation, but political contradictions, especially between Morocco and Algeria, as well as the civil war in Algeria, contributed to difficulties in collaboration.

A 1996 economic agreement with the EU, which came into force in 2000, replaces a 1976 cooperation agreement and allows for progressively better access for Moroccan goods to the EU market. This is Morocco's by far the most important single market, but several EU countries, not least Spain, have opposed too extensive access for Moroccan goods, which will compete with their own. The 1996 Accession Agreement also sets political requirements, including respect for human rights, which Morocco has not always complied with, as well as joint efforts to reduce illegal migration.

In 2004, Morocco and the United States signed a free trade agreement, which is the first in the United States with an African country and the first in the Middle East Free Trade Area initiative.

Mining and energy

Morocco has significant mineral deposits, several of which are extracted commercially, but the sector has experienced a decline since the 1980s. Of the greatest economic importance are the phosphate reserves, which are estimated to constitute about two-thirds of the world's total deposits. Proven reserves at the beginning of the 2000s were 10.6 billion tonnes; probable reserves were 57.2 billion tonnes. The largest deposits are found at Khouribga, Youssoufia and Ben Guerir (near Khouribga), and the phosphate is shipped via Casablanca, Safi and the new port of Jorf-Lasfar. Production also takes place in occupied Western Sahara. In 1997, it was reported that Morocco took the position of the world's largest exporter of phosphate, with about one-third of the total export volume.

Coal, barite, lead, zinc, copper, iron ore, salt, cobalt and silver are also mined. Coal production dropped sharply in the 1990s, and Morocco has had to import, especially from South Africa, to supply its coal-fired thermal power plants. Some oil and gas is produced from the Essaouira basin and some gas from the Gharb basin, but far from sufficient to meet domestic demand, and Morocco is the largest energy importer in North Africa.

In 2018, proven reserves were 684,000 barrels of crude oil and 1,444 billion cubic meters of natural gas, but exploration is ongoing. Among other things, in 2004, Norsk Hydro signed an exploration agreement for the offshore field Safi. It is believed that there are significant occurrences in occupied Western Sahara, but a number of companies have withdrawn from exploration there, as a result of international protests. Morocco is a transit center for gas exports from Algeria to Spain and Portugal. The Maghreb-Europe pipeline, across the Strait of Gibraltar, was opened in 1996. Morocco will also recover gas from Algeria, to a gas plant in Tangier.

In recent years, Morocco has seen a strong growth in the consumption of electrical energy, and has undertaken a significant rural electrification. In 2013, expanded production capacity reached 7.9 GW, against 4.5 GW in 2002. Production in 2016 was 32 TWh, of which 26 TWh was based on fossil energy use. The share of renewable energy was 22 per cent, where hydropower contributed 2 TWh and solar and wind energy contributed a total of 5 TWh.

In 1996, a rural electrification program was launched. At that time, only 18 percent of rural areas were electrified. In 2011 it was reported that the percentage had increased to 97.4 per cent, but it is unclear whether the percentage applies to households or villages. Many households in remote areas are connected to local electricity supply plants where the production of electrical energy is done using solar cells.

The country's electricity grid is gradually integrated, both with other countries in North Africa and with Spain. The first transmission network between Africa and Europe was opened in 1998. An agreement with the United States from 2001 opened to establish a 2 MW nuclear reactor at Rabat, which will be used for research purposes. In order to ensure access to fresh water, a preliminary study has been carried out in collaboration with China with a view to using a 10 MWt nuclear reactor for desalination of seawater. Such a plant should be able to produce 8,000 cubic meters of fresh water per day.

Agriculture

Morocco is still a long way from being an agricultural country, with 39 percent of the population employed in agriculture, which in 2017 accounted for 14 percent of GDP. Just over 20 per cent of the land area is cultivated and 30-40 per cent is meadow and pasture. Agriculture is strongly focused on grain cultivation, but the grain crops only in good years cover the country's own needs, and the crops vary greatly; for example, grain production in 1995 was only 1.6 million tonnes, and then reached 10 million tonnes the following year. Cereal production consists mainly of wheat, barley and maize.

Morocco is also a major exporter of food products, especially of citrus fruits and vegetables, essential to the EU. Otherwise, sugar beets are grown to reduce imports, and a number of other products, including spice plants. There are large variations in the mode of operation; a minority operates by very modern methods on large farms. These are mainly located on the coastal plains (al-Rharb, Sous) and at Fès and Marrakech. Here, export production of citrus fruits, early vegetables and cotton is conducted of high quality. This is also where artificial irrigation is most prevalent. The majority operate according to traditional methods and have relatively low returns. Only 1 per cent of the farms have more than 50 hectares available, the most common size is less than 3 hectares. Various programs have been launched to entice farmers in the Riffjellene to switch to cultivating products other than marijuana.

Animal husbandry is substantial, and despite the low yields in many places, Morocco is almost self-sufficient with meat. Some Berber tribes in the Middle Atlas are still semi-nomads, and follow their sheep and goat flocks from summer mountain pastures down to the lowlands in winter.

Forestry and fishing

The forestry sector has little economic importance, apart from the production of cork from the cork oak tree, where Morocco is the world's fourth largest producer. Alpha grass is used for paper production.

Morocco has developed a significant fishing industry, partly supplied by its own fleet and partly by foreign trawlers, who have been required to supply catches in Morocco through various fishing agreements; the majority are sardines. The main fishing ports are Safi, Casablanca and Agadir. The fishing is operated partly with modern boats and partly with traditional small boats. Sales of licenses to foreign fishing fleets, especially the EU, are an important source of revenue, with fear of overfishing. Morocco has also been licensed to fish in the waters off occupied Western Sahara.

Industry

Morocco has a significant industrial sector, with the production of a wide range of goods, essential for the domestic market. In the 1980s, the authorities focused on industrial development to reduce dependence on commodity exports, create employment and reduce imports. The industry consists partly of the processing of agricultural and mining products, partly of the production of consumer goods, and is particularly concentrated in the Casablanca area and the other coastal towns. In 1996, industrial zones were established in Tangier, Jorf Lasfar and Nouasser, to attract national and foreign private capital.

The most important industrial branches are the production of phosphate products (especially fertilizers), steelworks, petroleum refining, cement production, chemical industry, as well as textiles and foodstuffs, including fish and vegetable canning, as well as mills and sugar refining. Textiles were the most important focus area in industrial investment in the 1980s, but the textile industry was severely hit by new trade regimes and increased competition from China around 2005, when a number of enterprises were closed and jobs were lost. Crafts are a major trade route in some cities.

Foreign Trade

Morocco had rising deficits in foreign trade in the 1980s; a deficit that has persisted, although in some years it is far offset by transfers from Moroccans abroad and income from tourism, among other things. The war in Western Sahara in the 1970s, and the later costs of keeping the territory occupied, have contributed to the financial difficulties that were sought to be met with structural adjustment in the 1980s, including privatization in the 1990s. Morocco receives significant financial support from, among others, Saudi Arabia, the United States and France, and multinational organizations.

Most important export products by value are phosphate ore and phosphate products, citrus fruits, seafood and textiles. Imports include crude oil, machinery, grain, chemicals and metals. The EU - especially Spain and France - is Morocco's foremost trading partner. In the early 2000s, approximately 70 per cent of the country's exports went to the EU, while close to 60 per cent of the imports came from there. In 2017, approximately 56 percent of Morocco's exports went to EU countries, while just over 40 percent of imports came from there.

Rapidly rising oil prices around 2005 brought additional burdens on the trade balance for Morocco, which relies heavily on oil imports to meet its energy needs. At the same time, textile production and exports fell as a result of new trade regimes.

Transport and Communications

Morocco has a relatively well-developed transport network. The railways connect Casablanca with Rabat, Fès, Oudja and neighboring Algeria and Tunisia, and with Marrakech and the large phosphate mines at Khouribga and Youssoufia. Plans were made in the 1990s to link occupied Western Sahara to Morocco by rail. A metro in Casablanca was also investigated. In 2003, Morocco and Spain announced plans to realize an old intention to build an underwater rail tunnel between the two countries. The road network comprises 57 300 kilometers (2018).

The main international airports are at Casablanca (Mohammed V), Rabat, Tangier, Marrakech and Agadir; in addition there are about 50 airstrips. Morocco has ten major ports, with Casablanca as the country's largest port city. Other important port cities are Mohammadia, Jorf-Lasfar and Safi. Tangier is the main port for passenger traffic and has a ferry connection with Gibraltar and Algeciras in Spain.

Other Countries in Africa

Cheer Countries Copyright 2001 - 2020 All Rights Reserved