Virtual Magazine of Morocco on the Web
Morocco Week in Review 
October 23 2004

USAID Earmarked $100 million to help Morocco, mission director
Heat wave threatens Morocco agricultural product exports
2005 Finance law plans creation of 7,000 jobs
2005 draft finance law foresees 3 percent GDP growth rate.
Morocco sets $21 bln social-oriented 2005 budget
Medium Stone Age human remains unearthed in Central Atlas Mountains
Marrakech Film Festival (FIFM) to be held on December 6 through 12.
Prince Sultan pays second installment of donation to Moroccan authorities
Morocco submits to UN committee periodical human rights report.
Morocco prepared to fight desert locust infestation.
Host of measures taken to fight locusts in 2004-2005,minister
Moroccan economy
No Regulation on the Import of GM Food in Morocco
Moroccan Banks Allowed to Offer Commodity Trading Services to Importers
Moroccan Industries Facing Globalization
Reforming State-Owned Banks in Morocco
17% more tourists visited Morocco in 2004
ADB should fund surveys to assess wind energy potentials in Morocco, CDER
Moroccan economic growth rate of 3.5 pc in 2004, higher than expected

USAID Earmarked $100 million to help Morocco, mission director
RABAT, Oct 25

The USAID has earmarked $100 million that can be drawn from to help the Moroccan government achieve one of its priorities, namely the creation of jobs, said Monica Stein-Olson, newly appointed USAID mission director in Morocco. Stein-Olson told "Le Matin" daily of Monday the American agency objectives for the 2004-2008 period aim to help Morocco benefit from several opportunities provided for by the Moroccan-US FTA, signed last June By Rabat and Washington.

In the FTA accompanying program, the USAID mission director said there are opportunities to improve business, agriculture and agri-business, adding the USAID lately got proposals as part of a five year programme meant to accompany the transformation of agriculture into a high value added producing sector. Stein-Olson said cooperation between the two countries also focuses on education and training for employment to ease the problem of employment and
fight illiteracy. http://www.map.co.ma/mapeng/home_dep/h_depmay26.htm 
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Heat wave threatens Morocco agricultural product exports

Moroccan exporters are having a difficult time with vegetable prices low in France at the moment and a heat wave affecting the quality of their exports. This second heat wave in a row is threatening projects of an increase in 13-19% over last year of exports. Abderrazak Mouisset, President of the Fruit and Vegetable Producers Association (Apefel), said however that the current climate condition will have an adverse affect, particularly on the coloring of clementines.

The harvest also started one week later compared to the previous year because the temperatures had affected the ground water supply. Exports to Canada had been particularly affected by this delay. Mouisset conveyed however that a similar situation happened in 2001 and the rains solved the situation. Samir Tazi, Vice President of APEFEL, said he was spesifically pessimistic about the tomato export. (menareport.com)
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2005 Finance law plans creation of 7,000 jobs
RABAT, Oct.26

The appropriation bill for the year 2005, submitted to the House of Representatives (parliament lower chamber), plans the creation of 7,000 jobs. The biggest share will go to the education department with 3,700, including 200 for higher education, executives training and scientific research. The health department will be allocated 1,300 jobs and the interior ministry 1,200.

The bill foresees a 3% growth in the GDP, a 2% inflation and a budget deficit of 3.2%, based mainly on the oil barrel price of 35 dollars and a cereal produce equal to the average of the last three years. It expects total expenses to reach 186.63 billion dirhams (around US$ 20.7 billion), i.e. a 11.07% rise compared to 2004. The operating expenses will also rise by 25.41% as compared to 2004 including wages, which will rise by 10.86%.

Oil subsidies will take an overall 4.29 billion Dh, and the government's contribution in the pension fund 'Caisse Marocaine des Retraites' will reach 17.18 billion DH. Public debt-related expenses are set to by 5.37% compared to 2004. As for receipts, they divide into the general budget (159.44 billion DH), the annex budget of the Moroccan first TV channel TVM (721.45 billion DH), State services managed autonomously (1.45 billions) and the treasury's special accounts (24.31 billion DH).MAP 2004
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2005 draft finance law foresees 3 percent GDP growth rate.
Economics, 10/26/2004

The appropriation bill for the year 2005, submitted by finance and privatisation minister, Fathallah Oulaalou, foresees a 3% growth in the GDP, a 2% inflation and a budget deficit of 3.2%. The draft, based mainly on the oil barrel price of 35 dollars and a cereal produce equal to the average of the last three years, expects total expenses to reach 186.63 billion dirhams (around US$ 20.7 billion), i.e. a 11.07% rise compared to 2004.

The operating expenses will also rise by 25.41% as compared to 2004, including wages, which will rise by 10.86%. Oil subsidies will take an overall 4.29 billion Dh, and the government's contribution in the pension fund 'Caisse Marocaine des Retraites' will reach
17.18 billion DH. Public debt-related expenses are set to by 5.37% compared to 2004.

As for receipts, they divide into the general budget (159.44 billion DH), the annex budget of the Moroccan first TV channel TVM (721.45 billion DH), State services managed autonomously (1.45 billions) and the treasury's special accounts (24.31 billion DH).
http://www.arabicnews.com/ansub/Daily/Day/041026/2004102619.html
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Morocco sets $21 bln social-oriented 2005 budget
RABAT, Oct 25 (Reuters)

Morocco's budget bill for 2005 projects a 3.2 percent public deficit and will devote 55 percent of resources to social issues, Finance and Privatisation Minister Fathallah Oualalou said on Monday. The North African country's budget totals 186 billion dirhams ($21.24 billion), up from 167.6 billion dirhams in 2004, and is one of the toughest in years due to dwindling receipts and soaring public wages and world oil prices. Analysts are worried these constraints will make the state unable to keep its finances afloat now that is has sold much of its most valuable assets. "This bill has raised a lot of scepticism but we are armed to face these difficulties," Oualalou told Reuters. With 12 billion dirhams of privatisation receipts forecast for 2005, the budget deficit is expected to stand at 3.2 percent, he said after presenting the bill to parliament. "We have good visibility for the next few years... We have already finished 75 percent of the 2006 budget bill," he said.

The ministry based its budget on a barrel of oil at $35, far below current record prices in London, Oualalou said. The bill forecasts 3.0 percent economic growth driven by a rise in domestic consumption that would result from hikes in public sector wages. The public wage bill, however, will jump to 60 billion dirhams and account for 14 percent of Gross Domestic Product, far above the 10 percent recommended by international lenders.

In the meantime, public investment would rise 11 percent in 2005 to 71 billion dirhams, Oualalou told parliament. Most of the government's spending will go to development plans for the vast disputed Western Sahara and for an area in the north of Morocco ravaged by an earthquake in February. The state will borrow from local banks 11 billion dirhams in 2005 for belated payment up to 1996 of pension contributions, mainly for the military, Oualalou said. He hinted similar operations may follow for phosphate monopoly OCP and power utility ONE, two of the country's largest employers. As a result, domestic debt will rise 32 percent to 42 billion dirhams while 39.4 billion dirhams will be paid to service public debt. Oualalou noted that foreign debt fell by nearly half from 1997 to 2004 while the country's overall debts would represent 67.6 percent of 2004 GDP against 83.2 percent in 1995. The Moroccan economy is on a good course and posted an average 5.0 percent growth per year over the 2002-2004 period, he said. "Economic growth is decreasingly reliant on rainfalls," he added in a reference to the Moroccan economy's traditional dependence on agriculture.
((Reporting by Souhail Karam,Editing by Malcolm Whittaker; Reuters Messaging: souhail.karam.reuters.com@reuters.net; +213-21 727020)) ($1=8.758 Moroccan dirhams) Copyright 2000 Reuters Limited.
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Medium Stone Age human remains unearthed in Central Atlas Mountains
Rabat, Oct 25

A graveyard that comprises several different kinds of tombs and that could go back to prehistory times was discovered in the Azrou region, in the Atlas Mountains, North-Central Morocco, said a communiqué of the Moroccan Institute for Archaeology and Heritage (INSAP). An INSAP team also unearthed several other archaeological sites close to the towns of El Hajeb, Timehdit and Ain Louh, all located in the same region of the Mountains, since it started works last September.

Excavations in these regions helped the team determine the sites could have been inhabited by humans in the medium stone age (120.000 to 40.000 years before History). At the Ain Maarouf site close to El Hajeb, the team discovered a number of caves used by humans between the medium stone to the modern stone ages, as well as remains that could belong to Homo-erectus man and to several animals like hippopotamuses, elephants...
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Marrakech Film Festival (FIFM) to be held on December 6 through 12.
Local, 10/26/2004

The fourth edition of the Marrakech Film Festival (FIFM) will be held on December 6 through 12 in this Moroccan Southern Town, a FIFM communiquZ sent to The Moroccan news agency MAP said. The festival features 14 international movies from Europe, the Two Americas, the Maghreb, Africa, Asia and the Arab states.

The jury will be presided by director Sir Alan Parker, while the FIFM has up to date nominated for honours cineastes Claudia Cardinale (Italy), Sean Connery (Scotland) and Youssef Chahine (Egypt). The festival will also show several other films, including a score of Moroccan movies made the four past years. Indian cinema will be given special honour and some 10 movies made during the past 40 years are featured.

The Marrakech Film Festival goal is to reveal new talents by presenting feature films of quality which contribute to the evolution of the motion picture arts and to increase the Moroccan audience for international cinema through an extensive presentation of new innovative films, FIFM web site said.

The festival also celebrates the cinema of the past, present and future through retrospectives, tributes and "carte blanche" to leading figures of cinema and provides a relaxed and comfortable setting for useful contacts between Moroccan and foreign industry people, in the renowned resort of Marrakech.
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Prince Sultan pays second installment of donation to Moroccan authorities
Rabat, Oct. 29

The Moroccan government has received 13,200,000 Moroccan Dirham worth of the second installment of a 50,000,000 Moroccan Dirham donation by Prince Sultan bin Abdulaziz, the Second Deputy Premier, Minister of Defense and Aviation and Inspector General of the Kingdom of Saudi Arabia, to build and equip the Cancer Treatment Center in the Moroccan southern city ofAgadir. The payment was delivered to the Moroccan government by the Saudi Ambassador to Morocco Dr. Mohammed bin Abdulrahman Albishr. In a statement to the Saudi Press Agency, Albishr said the donation is part of Prince Sultan's numerous noble deeds and humanitarian services.
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Morocco submits to UN committee periodical human rights report.
Politics, 10/26/2004

Morocco presented this Monday to the United Nations human rights committee its 5th periodical reports dealing with its enforcement of the international pact of civil and human rights.

Presenting the report, Morocco's ambassador to the UN in Geneva, Omar Hilale, stressed how King Mohammed VI has been endeavoring, since he acceded to the throne in July 1999, to build a democratic and modern society, while deepening human rights culture, fostering the proximity and participation policy, reinforcing the role of women and consolidating social solidarity.

He went on that the sovereign has started a program to reform administration and justice, as two pillar sectors of the rule of law consolidation process. In parallel, the government is intensifying efforts at the normative and institutional levels for the promotion, protection and defense of human rights, the diplomat said, citing particularly efforts to close once and for all the issue of past human rights abuses.

In this context, he went on citing a series of reforms of the legislation related to the civil, political, economic, social and cultural rights were enacted, in addition to a major reform of the family code that was unanimously adopted by the parliament.

The new family code comes to consolidate family coherence, end the injustice against women while preserving the interests of children and safeguarding the dignity of men, he explained.

Meanwhile, stressed the Moroccan diplomat, the law of civil liberties was considerably amended with some provisions stipulating imprisonment being abrogated, transparency guaranteed and the judiciary system control over the legality of administrative decisions secured.

Hilale cited other improvements such as the creation of an ombudsman, the re-organization of the human rights consultative council (CCDH) which had its prerogatives expanded and independence reinforced. The CCDH, he stressed, presented for the first time a report which documents progress in human rights as well as cases of abuses reported in the anti-terrorism struggle and other violations reported by human rights activists.

The ombudsman, called in Morocco "Diwan Al Madhalim," is not only serving as an office for complaints, but is also designed to be a source of proposals on reforms of legislation, justice and administration.

Another task assigned to the "Diwan Al Madhalim" is to work with the CCDH to press for the release of Moroccans detained by the Polisario separatists in the Tindouf camps (southwestern Algeria), in total violation of the germane provisions of the international pact of civil and political rights, and endeavor to uphold the rights of Moroccan nationals living abroad.

In addition to these institutions, two other major organizations were set up to compensate victims of past human rights violations like forced disappearance and arbitrary detention.

The Moroccan diplomat further recalled that, following the dastardly terrorist attacks that shook Casablanca on May 16 2003, the government proposed an anti-terrorism law which reflects Morocco's adherence to human rights and basic freedoms, insisting that Moroccan authorities remains resolved to carry on and intensify efforts in order to perfect the building a democratic and modern society.
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Morocco prepared to fight desert locust infestation.
RABAT, Oct. 26 (Xinhuanet)

The Moroccan government will strengthen coordination and cooperation with local authorities in fighting against a possible desert locust infestation later this year, Interior Minister al-Mostapha Sahel said Tuesday. At a joint news conference with Agriculture Minister Mohand Laenser, Sahel said the government has bought 4.2 million liters of pesticides and will mobilize hundreds of aircraft and vehicles to fight the crop destroying insects, which are feared to surface in northeastern and northwestern Morocco. Swarms have been stretching from the Sahara desert since late September.

He called on the people in all walks of life to participate in the campaign as the measures taken by the government alone are inadequate. Also at the meeting, Laenser expressed his appreciation to the UN Food and Agriculture Organization and some countries for their financial and material support in the fight against locusts. But he urged the international community to increase aid to help Morocco fight the rampant insects, saying his country needs about 45 million US
dollars for the campaign.

Locusts are present every year in Africa, but this year's swarms are especially large because of prolonged periods of heavy rainfall. In recent weeks, the insects have begun moving northward, out of West Africa's semi-desert Sahel region and into the Maghreb region of North Africa, which includes Morocco, Tunisia, Algeria and Libya, in search of fresh crop to eat. The insects eat their weight in crops daily, and group together in swarms dozens of kilometers long. A swarm of 50 million locustsis capable of destroying 100 tons of crops a day. 
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Host of measures taken to fight locusts in 2004-2005,minister
RABAT, Oct 27

Morocco mobilized 28 aircraft and helicopters to fight migrating locusts for the 2004-2005 period, while a score of other aeroplanes could be added for the same purpose, said Al Mostafa Sahel, the Moroccan interior minister at a press briefing held here Tuesday. Sahel said a number of measures have been taken to fight the insects that have plagued the Sahel and Maghreb region for the past months in their migratory movements from breeding to feeding areas.

Hundred of vehicles have been used in the anti-locust campaign, including 150 all terrain and 60 sprayer cars, as well as 380 cars belonging to various departments involved in the locust fight. More than 4.2 million litres of pesticides were bought for the campaign that is estimated to cost 430 million Dhs, 43 million euros, said the Minister. Sahel recalled the 2003-2004 anti-locust campaign, where 4.1 million liters were used to eradicate the plague, costing 122 million Dhs and 18 planes rented to shore up the action of the army and Gendarmerie.

The renting of the planes cost 142 million Dhs in addition to the purchase of pesticides spraying and insect surveillance and monitoring equipments, Sahel said adding more than 2.8 million hectares were treated during the previous campaign. The Moroccan official said several countries helped Morocco fight migrating locusts, including Spain, South Korea, Saudi Arabia, Holland, as well as the FAO and the USAID. © MAP 2004
http://www.map.co.ma/mapeng/home_dep/mad_1.htm 
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Moroccan economy
RABAT, Oct 27 (Reuters)

The Moroccan economy could grow by up to 3.5 percent in 2004 or slightly above the 3.0 percent that was forecast initially, the state High Planning Commission said on Wednesday. The revision stems from rises of 4.0 percent in agricultural activity and of 3.5 percent for non-agricultural output, it said in a statement. Finance and Privatisation Minister Fathallah Oualalou had already revised up the growth forecast for this year's gross domestic product in July, when he raised it to 3.3 percent from 3.0 percent. Morocco's GDP grew by 5.2 percent in 2003. Oualalou this week presented a 2005 budget bill based on an expected growth of 3.0 percent next year. ((Writing by Souhail Karam, editing by David Christian-Edwards; Reuters Messaging: souhail.karam.reuters.com@reuters.net; +212-37 726518)) Copyright 2000 Reuters Limited.
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No Regulation on the Import of GM Food in Morocco
10-28-2004 -- From 150th issue

Moroccans are unaware whether they currently consume genetically modified (GM) food. There is no legislation banning it, approving it or simply regulating the use of it. But there is a consensus among food experts that GM foods are there and part of the Moroccan households' consumption habits.

Although growing GM agricultural products is said to be illegal in Morocco, even at the experimental level, there are imported additives included in the food that have likely been genetically tempered. These additives, which boost the taste and color of the food, are not produced in Morocco. But there is also a large list of key products imported from foreign markets that could indeed be GM based. That includes a list of products that could entirely be based on GM such as flour, semolina, corn, oils, and other cereal and non-cereal based products.

There is also a list of products that can partially contain a GM component, including cakes, biscuits, cooked meals, beers, chewing gum, ice cream, and a large list of other products.

For nutritionists practicing in Morocco, there is no doubt that GM food is consumed there. Whether it is popcorn or sweets, there is a consensus among professionals about this issue. But while trade and customs officials say the import of GM food is illegal, they do not have, however, the capacity to enforce the law. But even if they had the technology of identifying GM food, there is a legal problem in that Morocco's laws do not have any way of handling importers of GM food.

The fraud enforcement units at the Moroccan customs concentrate their efforts on a variety of missions. The control seeds and plants, the verification the contents of pesticides, and analysis of samples of finished products are among the various control actions they take in the nation's ports and airports. In theory, these units can ban the entry of any products they deem hazardous to consumers. In the case of GM products, they have no tools or legal instruments to allow them to use their best judgments. Not only there are no laws but no single laboratory in Morocco is equipped to identify GM food.

Products entering Morocco undergo three control steps before they move out of the port of entry. The first step is a visual control during which customs agents check the merchandise before clearing it. The second check is to verify the products labels to identify anything suspicious or illegal under Moroccan law. The third step is a chemical analysis, which is random. In June 2002, the newly enacted a law on imported products and the obligatory use of labels failed to introduce anything about genetically modified products.

In Europe, the regulation requires that products carrying GM modified components must be identified in the labels. Whether the product was itself subject of genetic modification or contains a GM ingredient, the label must report it. In July 2003, the Europeans have further strengthen their regulation to include food consumed by both humans and animals.
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Moroccan Banks Allowed to Offer Commodity Trading Services to Importers
From 151st. issue

Moroccan banks are introducing new services to commodity buyers and importers. They are approaching potential clients in an effort to convince them that only banks can help them navigate the rough waters of fluctuating commodity prices and currency movements. By hiring banks such as Attijariwafa, commodity buyers are told they will be better protected against the risks of fluctuation in the market. For most, this is a welcomed service, in particular for traders involved in the cereal market, which has not been stable in the past months.

According to economic analysis think tank the Institut National d'Analyse de la Conjoncture (INAC), the forecasted cereal output from the current campaign will likely be sufficient to cover a bigger portion of domestic demand, hence reducing Morocco's imports in the next cycles. This is good news for Morocco, in particular as prices have been facing pressure on the international market.

However, cereal production in Morocco will still not sufficient to cover the entire demand and imports are necessary. For the importers the situation is not encouraging. Prices on the international market have been moving upward over the past months due to a combination of rising demand and falling stocks.

In such a tough environment and uncertain prospect, importers of commodity products, including cereals are advised to familiarize themselves with techniques that would enable them to preserve their margins. And that's where banks come in. One such bank is Attijariwafa, which has recently partnered with France's Calyon Financial to offer services only recently allowed by the Moroccan financial authorities. The bank's clients who import commodity products have had thus far the only options of either hire international brokers or work with a foreign bank. But since the beginning of this year, Moroccan banks have been authorized to operate on their behalf for the purchase of raw materials and commodities.

Because this business can be highly speculative, it is regulated by the Moroccan customs to avoid or limit speculation. The Moroccan customs say the amount to be spent on import operations must no exceed the average volume of imports recorded by the importer in the past three years. The importer is also required to open a multi currency account at the bank even before the actual import transaction is completed. This account must be fully and exclusively dedicated to the coverage of the risks inherent to the commodity market and fluctuating prices. For its part, the bank is responsible for determining the authorized credit risk for each of its clients and for the issuance of guarantees in favor of a single broker.

With these new rules and the opening of the sector to the banks, financial authorities are seeking to fully involve the banking sector in the process of risk coverage related to commodity import. The goal is to develop within the domestic financial sector new skills and expertise on import operations and risk management and have a much better control over the transactions performed in international trade. The Moroccan banks that will offer such services will have to open an account at an international commodity brokerage firm and with multiple clients, the bank should leverage its strength in terms of volume by purchasing bulk, thus reducing costs.

What the Moroccan authorities are encouraging and seeking to develop within Morocco as a new practice is what is called commodity futures. A future is a contract that allows traders to "lock in" today the price at which they will buy or sell a commodity in the future. The contract can also be traded and does provide a level of security and protection against price fluctuations and risks. Although it is in itself object of speculations, a future is a good response to the need of predictable outcomes and trends, and helps maintain a certain stability in commodity prices. Worldwide, the Chicago Board of Trade (CBOT) is the globe's biggest futures and options on futures exchange. It has more than 3,600 members who trade 50 different futures and options products through open auction and/or electronically. Volume at the exchange in 2003 was a record breaking 454 million contracts. In Europe, Matif was established in 1986 and in 2000 Euronext was established with the merger of the bourses of Paris, Brussels, Amsterdam, Lisbon and London.
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Moroccan Industries Facing Globalization
08-04-2004 -- Trade and Globalization

The establishment of a free-trade zone between Morocco and the European Union is what is in the mind of many Moroccan industrialists. For some, the agreement will open new opportunities for them in Europe. For others, it is a source of worries and major potential problems as trade barriers are removed and goods and products from Europe will ultimately enter Morocco without any obstacle.

The fear among many comes from the fact that the EU has recently expanded to add 10 new members, widely considered here in Morocco to be low-cost manufacturing nations therefore direct competitors. Countries like Slovakia, the Czech Republic and Hungary not only boast highly qualified workforces, but they also have access to lower-cost energy in comparison to what Moroccan companies pay.

With larger industries, Eastern European countries are also advantaged by their economies of scale, and that is not the case for Morocco. Among the advantages of having economies of scale is that the fixed cost can be spread over larger quantities of output, hence lowering the unit price of products and services offered to the market.

In addition, industries such as the household appliances assembly in Morocco have not grown in an organic fashion and there are no peripheral industries to support them. Peripheral industries include contract manufacturers that supply parts and components they manufacture to the product assembler.

So are Morocco's industries doomed to fail? Household Appliances market analysts worry that this could indeed be the case for the companies they monitor. Their demise, they say, could occur as early as in the medium term, even long before the country completely removes its protective barriers by 2012. They argue that what keeps local production alive is precisely the protection it gets from customs, keeping foreign competition at bay.

But although Europe is likely to be a source of problem to local production companies, the steps made so far by Morocco to get closer to Europe have been a boon to everyone in the Kingdom. The reductions of the import taxes for products coming from Europe, and which began in March 2003 created an unprecedented demand for electric household appliances and other products in Morocco. Both importers and domestic assemblers witnessed sustained strong sales and revenue growth. In the past two years, the market grew at a rate of between 10% and 15%. 2004 is also predicted to perform well, most likely to grow at the same rate. This performance is indeed remarkable considering that growth in that industry is at least three times the expected GDP growth. The television set market was the strongest, with an estimated 300,000 units sold in a year, although that number is difficult to confirm. A 2.5% reduction in import taxes on TV sets and strong growth in the household penetration of satellite television broadcasting have led to a major boost in TV set sales. Because there is now a variety of broadcast programs to choose from, a growing number of households are acquiring their second or even third TV unit. A new refresh cycle aimed at replacing aging TV sets is also underway.

This is now. In the future however, what will be left for the current assemblers or manufacturers is a strong likelihood of becoming sole importers. But although given the current environment the washer and dryer industry is almost certain to disappear, the fate of other industries related to electrical household appliances sector is still unclear. A very few companies such as Manar, the producer of the Siera brand and Fagor have been working hard to adapt to the changes in the laws, including those regulating commerce and customs. After its successive lowering in 2003 and 2004, the import tax for products originating from Europe is at 40%, a rate that burdens the two assemblers and make them uncompetitive on the longer term. If assembly and production will remain a core business for the two companies in the foreseeable future, there is a strong likelihood that they will increasingly switch to importing finished items and distribute them in Morocco instead of assembling them there. Already, 50% of Sieras are imported today and the company is preparing to raise the share of imports to 75%. Fagor also taps into its parent company, Spain-based Fagor S. Coop., Ltda. to import finished units into the Moroccan market. In the future, chances are the Moroccan unit will transform itself into a marketing and distribution business and will probably scrap its assembly facility.

The message from many industry players is clear. Given their cost structure they cannot compete with global corporations. Analysts say the cost of producing appliances in Morocco is between the costs of Western Europe and those of Central Europe. And as long as Central European producers have the cost advantage, producers in Morocco will not run a competitive business. At Siera, managers are currently working to reduce production cost to compete with the new members of the European Union.

But Central Europe is not the only problem. Turkey is also a source of anguish for Moroccan producers. To make things more complicated, the two countries have recently signed a free-trade agreement, and that constitutes another factor of risk. Some Moroccans complain that Turkish exports are subsidized by their government. But they also say Turkey has lower cost of energy and a lower cost of labor.

Although the Morocco-Turkish free-trade zone will undergo a transition period before full implementation, Turkish producers are widely considered as formidable competitors. Even among the multinational corporations that only have an import and distribution presence in Morocco and no assembly activity, many concede that Turkish companies are likely to challenge their presence there. Their strength is related to the business environment in which they operate. Three industrial groups are active in the Electric household appliances production in Turkey. These groups are surrounded by a dense contract manufacturing and supplier network and benefit from a relatively large market. The result of these factors and others is that Turkish companies are more competitive than even their Central European peers. In addition, a weak Turkish currency drove production costs by 10% to 15% lower than the cost of production in Central Europe.

But reporting on household appliances without mentioning Asia would be a mistake. This is because China reportedly produces 40% of the world's electric household appliances. Exports of that category of products exceeded $8 billion in 2002. half of the washing machines sold in the world is produced in China and 75% of all microware ovens carry the manufactured-in-China label. It is not surprising that China is where multinational corporations get their supplies. That includes the Moroccan Manar, which imports virtually all of its television sets and a proportion of its other product lines distributed in Morocco. These imports from China helped Manar remain afloat and compete with the big brands.

The Chinese are not the only giants consider a threat factor to Moroccan producers. The South Koreans have made significant strides in penetrating emerging markets and brands like LG now have instant recognition among consumers. It took LG just about six years to establish a reputation of a good company among Moroccan consumers. The Korean vendor has been able to consolidate its position for many product lines. LG pioneered aggressive marketing campaigns to strengthen its position in Morocco, forcing its competitors to follow its steps, but only a few were able to invest in such campaigns
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Reforming State-Owned Banks in Morocco
07-14-2004 -- 147th issue (June 2004)

State banks in Morocco have operated in a slow evolving environment, but the situation is accelerating as the country prepares to anchor its economy with that of the European Union. Painful reforms and restructuring, mergers and consolidations, and other programs have all led to a changing landscape in the financial sector as Morocco prepares to enter a new era of a borderless and global trade.

In the late 1950s and early 1960s, Morocco identified that any economic growth will require a performing banking sector, and at that point, decision makers where willing to experiment and test strategies that will be revised many times in subsequent periods. And the process of transformation is still undeway. Among the first steps Morocco made was the establishment of new banks that would operate in specific market. This led to the establishment six major financial institutions. They were Banque du Maroc (BDM) and Banque Marocaine du Commerce Exterieure (BMCE) to support export and foreign trade activities, Banque Nationale Pour Le Developpement Economique (BNDE) to channel investment into the industrial sector, CIH Bank for property development, real estate and tourism, Banque Populaire to finance small and mid-sized industries and finally the Caisse Nationale de Credit Agricole CNCA to support the growth of agriculture.

With the exception of BMCE and Banque Populaire, all the new entities were considered as financing institutions, as opposed to commercial banks. As such, they were not allowed to raise money from savings and deposits as is the case of universal banks. Without this ability to tap into the savings system, these financing units raised money through long-term borrowing by issuing bonds in the capital market, or through a costly foreign financing guaranteed by the state of Morocco. This situation was a major competitive disadvantage for these units compared to traditional commercial banks. The financing units were disadvantaged by the fact they borrowed money at high interest rates, which combined with the foreign exchange risks made their business very difficult to operate. But because of their role of supporting economic and industrial growth, these institutions were forced to offer financing packages that competed with banks and offered lower interest rate loans. Hence, since their establishment, they recorded growing loses given the imbalance between their high cost of raising money, and the low return on their loan to clients.

It took decades for lawmakers and finance authorities to acknowledge that the system was broken. In 1983 the state decided to change the status of the institutions transforming them into commercial banks. As such, they were apparently able to raise money from public deposits. While CNCA, CIH, BMCE quickly switched to commercial banking, BNDE failed to do so. Even the ones that made the switch, they faced a difficult transition with a series of factors that prevented them from growing their deposits in a significant way. In fact, the new banks suffered from a heavy debt burden from their legacy practices, heightened by high a cost of financing, despite the state guarantee of support.

It was in 1993 that the new Moroccan banking laws introduced the concept of universal bank, allowing virtually any specialized banks to fully adopt commercial bank practices. Commercial banks were also permitted to provide specialty services. The goal set by authorities was to establish uniform practices across the financial sector. But this goal turned out to be difficult to achieve. Indeed the financing units quickly faced difficult tasks. They were ill prepared to transform themselves into real banking institutions. They faced challenges in transforming all of their existing functions to functions that are norms in the banking sector. Their challenges included preparing their staff and managers to new tasks, redefining the missions of the branches, reevaluating the presence of their branches across geographies and markets, and other such factors. The units could not compete with already well entrenched commercial banks. Their dilemma was then whether to expand into a segment where they cannot offer credit at competitive rates or to remain focused on specialty and niche markets that have represented their core activity since their creation. Although most analysts say the state ended up intervening to bail out these financing institutions, some disagree and say the state has done little to help, perhaps with the exception of CNCA given its focus is the very strategic agriculture sector.

But help came from an unlikely source. Indeed a group of commercial banks came forward to provide loans to the troubled institutions, in particular to CIH. The loan to CIH totaled Dh 1.5 billion and was guaranteed by the state. After a long crisis, CNCA underwent reorganization and a reassessment of its activities. CNCA was a public entity that did not have its own capital. It received all of its money from the state. But CNCA began reforming in 1996 with a plan to separate its banking activities based on developing its own network following the recent acquisition of the assets of a defunct bank formerly known as Banque Marocaine Pour L'afrique Et L'orient (BMAO), as well as its acquisition of the branch network of BNDE. The state has also consolidated CNCA's leading role in financing the agriculture sector while giving the bank the green light to serve the enterprise and industrial sectors.

In the case of housing and real estate bank CIH, the ongoing restructuring efforts are mostly focusing on dealing with the banking's own financial shortcomings, such as helping it face its debts and recover delinquent credit owed by real estate developers, hotels and other customers. But an increase of capitalization could soon be announced if the steps underway are not enough to redress the situation. BNDE no longer exists as a sector financing unit and was legally transformed into an investment bank owned by the Caisse de Dépôt et de Gestion (CDG),

while another less known financing institution Fonds d'Équipement Communal (FEC) is currently going through its own reform process. FEC however is largely considered as the star performer. It has managed its business well and controlled risk until 2001. It is currently refinancing via CDG, Banque Populaire, and through medium-term loans raised in the capital market, making the cost of its resources fairly high. FEC is in a situation where its financing of local communities carries a great deal of risk. Local governments and their businesses do not have sufficient guarantees or transparency in their operations to get traditional bank loans. But while the government is working to solidify FEC, it is still unclear what steps it will take to insure sustainability of the new FEC model. Meanwhile all of this remains in the realm of experimentation and there is no guarantee that all these financial institutions will exist in the long term.
http://www.north-africa.com/free.htm 
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17% more tourists visited Morocco in 2004
MADRID, Oct.29

The number of tourists who visited Morocco during the first eight months of 2004 increased by 17%, as compared to the same period last year, said the International Tourism Organization in Madrid. Results for the period from January to August 2004 collected by the WTO show a spectacular rebound of tourism as all regions saw a surge in international arrivals.

"Major traditional destinations, such as Italy (-0.1% until July), France (+0.1% in terms of overnight stays up to September), Spain (+2% until September) or Portugal (-3% in overnight stays until August), have seen their expansion restrained by the strong euro, in particular regarding the "sun and sea" segment, the organization said, adding that other destinations of Europe, such as Turkey (+29% up to September), Croatia (+6%) or Slovenia (+6%) and Mediterranean destinations of North Africa and Middle East, such as Egypt (+49%), Morocco (+17%) or Tunisia (+19%), benefited from this factor.

"It is also interesting to note the growing popularity of travel from Europe to destinations in the Caribbean or in the Americas (Mexico and Brazil) as the strong euro and decreasing airfares make these destinations more and more accessible and a competitive alternative to the Mediterranean."
http://www.map.co.ma/mapeng/home_dep/h_depma17.htm 
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ADB should fund surveys to assess wind energy potentials in Morocco, CDER
TUNIS, Oct 29

The African Development Bank should fund surveys to assess wind energy potentials in Morocco, said a recommendation of the Moroccan Center for Renewable Energy Development (CDER). In a preliminary report on wind energy in the North African country, presented to the seminar held in Tunis on October 28 and 29, the CDER said funds could also be earmarked for technical and economic feasibility studies in Morocco on this kind of energy.

The center has identified some 40 sites likely to host wind power installations and facilities that can generate substantial power and could be connected to the electricity network. The center also recommended, at the seminar held under the theme "wind energy in Africa: untapped resources", to the Tunis-based bank, to finance wind energy projects in the Moroccan rural zone to help supply power to villages and public facilities, like schools, health centers... and other projects.

The CDER report notes that Morocco depends heavily on energy imports, hence the interest in wind energy, for power consumption has been growing in the country with 10.96 million TOE (ton of oil equivalent) in 2003 up from 8.55 million TOE in 1998.

The report also said the energy bill of Morocco went up from 11 billion Dhs (1.1 billion euro) in 2000 to 19.6 billion Dhs in 2003, which is eight per cent of the GDP.

The document, which recalled a number of wind energy projects are under study in Morocco, said wind energy output in the country reached 203 GWH in 2003 compared to 194 GWH the previous year, thanks particularly to wind energy fields in the region of Tetuan, Northern Morocco.

Wind energy accounted for 1.4 pc in 2001 in total energy output, 1.2 pc the following year and 1.0 in 2003, said the report adding that, with the upcoming building of new sites in Essaouira (2006) and in Tangier (2007), the output rate could reach four pc.
http://www.map.co.ma/mapeng/news/economy/eco_003.htm 
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Moroccan economic growth rate of 3.5 pc in 2004, higher than expected
RABAT, Oct 28

Moroccan economic growth rate could stand at 3.5% for 2004, which is a slight rise compared to previous estimates, the High Planning Commissioner said on Wednesday. The higher performance of the economic growth rate is ascribed by the Commissioner to a 4 pc growth of farming activity and to a 3.5 pc rise of non-agricultural commodities.

Mining production could straighten up thanks to phosphates and by-products output while energy sector could recover in spite of the hike of oil prices. Industry is also expected to slow down owing to a decrease of chemical and parachemical and metallic production.

Civil service expenses are expected to go up due to a 7.4 pc rise in personnel expenditure, while domestic commodity demand is expected to rise thanks to a rise of civil service expenses of 7.8 pc to be boosted by expenses of administration budgets.

Household consumption is to grow up 5 pc as a result of the improvement of agriculture revenues and a rise of civil servants salaries as well as a moderate 1.8 rise of commodity prices.

Moroccan trade exchanges entailed a 31.8 pc deficit, compared to 2003, induced by consumption goods and crude oil imports, while expatriates remittances and tourism revenues mitigated the trade deficit incidence on current transactions balance. Exports rose a modest 3.8 pc.

First quarter external hard currency assets are expected to cover for a one year commodity imports. Money mass rose 9.5 pc up to end June at the central bank.
http://www.map.co.ma/mapeng/news/economy/h_dep006cereals.htm 
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