China now sees Morocco as a base for manufacturing
It is time for a shift change at Tangier Free Zone.
Rows and rows of small buses queue to enter the industrial park, bringing a new batch of workers to make components for cars and circuit boards for electronics.
Since last year, Spain is our largest economic partner, and we are investing more and more in Africa
Morocco is betting on manufacturing as a means to strengthen the economy and to provide jobs and technology transfers.
That will mean raising industry’s contribution to Morocco’s economy.
Moulay Hafid Elalamy, Morocco’s trade and industry minister, plans to increase it from 14% today to 23% by 2020.
He took office in October 2013, and last year he delivered his industrial strategy to King Mohammed VI’s government.
It builds on previous iterations of the nationalPlan Emergence, which focused on creating industrial ecosystems around big foreign companies such as Canadian aerospace company Bombardier and French car manufacturer Renault.
Bringing with him a wealth of experience in the private sector – Elalamy is listed 40th on Forbes’ Africa’s 50 Richest list for 2014 – he says that much needs to be done to bolster the manufacturing sector.
“In Morocco, the industrial fabric is atomised, its integration rate is weak, its competitiveness has trouble rising, the level of worker qualification is yet to be improved and industrial infrastructure is not exploited to its maximum capacities,” he tells The Africa Report.
To boost Morocco’s performance, Elalamy is betting on federating groups of companies around an industrial locomotive.
The idea is that alliances between large companies and small and medium-sized enterprises (SMEs) could form a whole set of new economic interactions.
“These ecosystems offer to big companies the advantage of having a complete package of supply chain and logistics around them so they can gain in competitiveness.
“For the SMEs, the plus side is that they’ll have a longer pipeline for their orders and greater growth perspectives,” he adds.
So far, four ecosystems have been launched in the automotive sector, and one of them is the Renault factory in the Tangier zone in the north of the country.
There are three other ecosystems in the textile sector.
The government is working with the Association Marocaine des Industries du Textile et de l’Habillement on the networks for denim and fast fashion.
Spanish-Moroccan company Textil Digital Print signed a deal with the government in October 2014 to set up a plant that would employ 200 workers in the Tangier Free Zone.
The government is now focused on responding to the professional training needs of the ecosystems.
In order to do that, the ministry is mapping the demand for skills and the available human resources.
It has not been an easy task to get all the parties – entrepreneurs and government agencies in charge of training – to work together.
“There was a trust issue: the private sector did not believe that the government was capable of listening and understanding them, and the professional training agencies were used to doing it their way.
“So we had to start over from the beginning. It is a slow process, but it is working,” explains Elalamy.
Morocco is also looking to expand its economic ties across the globe.
“Since last year, Spain is our largest economic partner, and we are investing more and more in Africa, exploring our options in English-speaking and Portuguese-speaking Africa.
The natural development of every economy is first to reach its comfort zone – its neighbouring countries.
Once this is done, you naturally have to grow outside of this zone. This is why Morocco is now looking at the rest of the African continent.”
West and East
Foreign investors are also paying closer attention to the kingdom.
“There is this new phenomenon that has been going on for a couple of years where you can see more and more American companies investing in Morocco in the automotive or aeronautical sector, among others,” says Elalamy.
Those US-based companies include Boeing, Eaton and Ford, which alone is spending more than €600m on sourcing from Morocco.
Policy changes in China could give Moroccan manufacturing an edge.
“The Asian giant has decided to stimulate its internal demand to strengthen its domestic market by raising its minimum wage,” says Elalamy.
With the cost of energy also rising in China, investors are looking for new countries to host their manufacturing projects.
Morocco’s trade ministry says talks with Chinese companies are underway.
“Chinese operators are even now seeing Morocco as a sub-contractor and establishing their companies here because Morocco’s labour cost is cheaper than theirs,” enthuses Elalamy, keen to see Morocco become China’s China.
As a sign of things to come, China’s Shandong Shangang Group revealed its plans for a Moroccan steel pipeline plant in July 2014 and the Ming Yang renewable energy company announced in December that it will set up a solar panel factory. ●