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Morocco: Industry, Walking with both legs

By Nicholas Norbrook
Posted on Friday, 22 December 2017 09:44

Over the past decade, a network of free-trade zones, factories and suppliers has rippled out from the Tanger Med port. From the Tanger Free Zone to the Tanger Automotive City, Tetouan Shore and Park, and Findeq commercial area – all are filling up with auto, electronics and aeronautics factories, and making parts, assembling cars, employing tens of thousands of people.

And while robotic arms whirl around assembly lines with an eerie balletic grace, the policy framework is also a dance of sorts – a negotiated tango of state support and private-sector investment. It is being piloted by the royal palace in collaboration with a number of leading thinkers around industrial policy who have given substance to manufacturing ambitions in ­Morocco. Ultimately, the country seeks to lead in certain sectors, such as renew­able energy.

So how are they doing it, and is it replicable? Because there is an oft-­repeated mantra: Africa needs jobs or else its hundreds of millions of teenagers will turn from dividends into time bombs.

Those words may easily fall from the mouths of African politicians, but putting the solutions in place remains exceptionally difficult. And the problem is not unique to ­Africa: In the United States, despite his campaign bombast about repatriating jobs, President Donald Trump is discovering this too.

That is partly because of the ‘China price’, the exceptionally low manufacturing cost achieved by China for the past two decades, which makes it hard for domestic manufacturing sectors to take off. But creating large numbers of jobs also requires a fresh take on the received wisdom around the openness of economies. “You know, we threw open our markets in the 1980s at the request of the International Monetary Fund and World Bank,” says Benedict Oramah, the chief executive of Afreximbank. “The result was a serious de-industrialisation of our continent. We didn’t have the capacity to compete.”

Job creation requires understanding the importance of the state in helping fix some of the hard problems of developing industries. As Amine Tazi-Riffi, formerly of consulting firm McKinsey & Company and a key architect of Morocco’s industrial strategy, says, state and market are both part of the story: “You need to walk on both legs.”

In Morocco’s case, private-sector banks like Attijariwafa have taken a leading role in financing the free-trade zones, for example. Meanwhile, the state paid $1bn for a training centre to sweeten the offer for Renault’s 340,000-cars-a-year factory, bringing a constellation of auto-part manufacturers in its wake.

Countries that simply offer cheap labour do not end up being the next Japan. “They have to promote learning in their economies – technological learning and process learning,” according to South Korean economist Ha-Joon Chang.

Automotive industry employees at the Renault Tangier site are recruited and trained locally


With this in mind, Morocco’s push to get the car maker Groupe PSA – uniting French manufacturers Peugeot and Citroën – to create more parts for their cars in the country has been a success. The engine block for new low-cost models will be made in Morocco, a significant development for local engineering skills. And ­getting that skill base up helps in the next stage of ‘learning by doing’: pushing Moroccan companies into the supply chains of the multinational companies that dominate the various high-end manufacturing sectors the country is courting.

That is slowly starting to happen. In a joint venture with Japan’s Asahi Glass Company, Moroccan firm Induver is building a factory in Kenitra’s automotive zone with the capacity to produce 1.1m units of side windows and windscreens per year. The plant should be operational by 2019, and it is “aimed at serving the European and African market,” according to the company.

At the other end of the country from the Tangiers automotive cluster, over the Atlas Mountains and some 15km from the sleepy southern oasis town of ­Ouarzazate, lies the new industrial hope for Morocco – green energy.

The Noor solar power station is a hive of activity. Companies from ­China, Spain and the Middle East, among others, are scrambling to finish the latest phase of the project – the world’s largest concentrated solar power plant.

Already running is the 160MW first phase. More than 1.5m square feet of curved mirrors concentrate the sun’s rays on pipes containing a superheated liquid, which then is used to power turbines. Engineering has been completed for the next phase. It includes Noor III: a block of steel mounted on a 250m-tall tower. It is surrounded by a forest of concrete mushrooms.

On top of each structure sits a ­mobile mirror known as a heliostat that slowly tracks the sun’s movement as it passes through the sky, bouncing rays up at the top of the tower. The block then heats up to 600ºC. Thousands of veins run through it carrying a molten salt solution that absorbs heat. This is then taken down the tower to drive a turbine, or stored underground to act as a giant battery.


Again, the principal players are foreign companies – and again, the government has used them to sharpen Moroccan expertise, working with Moroccan engineers in Masen, the government solar power agency. Steel companies such as Prominox are involved with building the steel block for Noor III, and an array of support companies are contracted.

Right now, the energy produced by Noor is not as cheap as burning coal – but with the price of solar energy dropping all the time, Masen hopes to use it as a learning experience to get ahead of the industrial curve. At the heart of the project is a research facility, with a cluster of inter­national researchers working side by side with – you guessed it – Moroccan academics.

Taking bets on technologies can be risky, but, as Herman Schwartz of the University of Virginia explains, the state is often the only institution able to concentrate enough capital to push forward in these domains. It is hard to see Samsung’s spectacular advance in mobile phone technology happening without South Korea’s big bets on internet connectivity and broadband in the 1990s.

That does not mean there is carte blanche to spend without discipline. “Foreign exchange is the most precious thing for developing countries,” Tazi-Riffi, the industrial strategist adds. Again, Morocco’s success is in state/private sector hybrid structures. And Masen is a typical example – an agile agency, not a cumbersome bureaucracy.

“The agency model is an interesting model for development,” says Mustapha Sellam, the director of the Noor site outside of Ouarzazate. “You have the guarantee of the state. But you have a private sector structure, not the civil service – who are not too quick in the morning and not too fast in the afternoon.”

From the April 2017 print edition

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