- Over the years, Morocco has been riding on its strategic position on Europe’s edge to build its success on low-cost production of low-cost goods, including textiles and food, through trade pacts with the European Union
- Automotive was among the first industries to establish itself in Morocco and has become one of its success stories.
- Morocco’s aerospace exports, according to official estimates, increased by 21.9 per cent last year to $1.6 billion after plunging by over 30% in 2020 as a result of the global aircraft industry crisis prompted by the Covid-19 epidemic.
Over the years, Morocco has been riding on its strategic position on Europe’s edge to build its success on low-cost production of low-cost goods, including textiles and food, through trade pacts with the European Union.
However, the emphasis has shifted to higher-value, higher-tech industries such as the automotive industry, aerospace, and pharmaceuticals, with Moroccan firms collaborating with foreign partners to establish integrated supply chains.
Morocco’s economic recovery 2021
Morocco’s economy recovered impressively in 2021, with 7.4 per cent growth in contrast to the 6.3 per cent decrease recorded in 2020, owing primarily to robust development in the industrial and agricultural sectors.
According to Renaissance Capital, growth this year will be a more moderate 3.1 per cent, as the global economy remains sluggish in the face of the extended Covid-19 epidemic, Russia’s invasion of Ukraine, and the attendant repercussions on global demand and supply chains. Manufacturing in Morocco contributes 14 per cent of GDP, somewhat more than agriculture, which accounts for 13 per cent.
Manufacturers have historically been drawn to the nation because of its location, with reduced labour costs prompting corporations to establish manufacturing and processing units aimed primarily at European markets. This strategic advantage has been supplemented by advances in infrastructural developments over the last decade.
Tanger Med, in particular, with a yearly processing capacity of 9 million TEU/year (a TEU is the standard size of a shipping container), is currently Africa’s largest container port by far, greater than rivals in Spain.
The port has stimulated export economy enterprises to establish themselves in and around Tangier, while upgraded rail and road connectivity within Morocco has made it simpler for manufacturers throughout the nation to use the port.
Exports Boosted by Automotives
Automotive was among the first industries to establish itself in Morocco and has become one of its success stories. It is the largest export sector, generating $8.1 billion in 2020, although $900 million less than the previous year.
The country’s yearly manufacturing capacity now exceeds 700,000 vehicles, the majority of which are exported to Western Europe. Stellantis and Renault were the major investors, with exports totalling 358,745 units in 2021, an increase of 18 per cent over 2020.
Renault has opened a new plant in Tangier, while Stellantis has opened a new facility in Kenitra, north of Rabat, connected by high-speed rail to Tangier Med. Stellantis was founded in 2021 by the merger of PSA and Fiat Chrysler, formerly known as Peugeot Citroen. It holds the Alfa Romeo, Chrysler, Citroen, Dodge, Fiat, Jeep, Maserati, Mopar, Opel, Peugeot, and Vauxhall brands.
The automotive business generates many more jobs through component suppliers than car manufacturing and assembly, and Morocco has excelled in this area. Around 200 international automotive suppliers are already present in Morocco, including Lear, a manufacturer of electrical systems and automobile seats in the United States.
Exported vehicles now contain 63 per cent Moroccan components. Both Stellantis and Renault have stated their intention to get 80 per cent of the components used in their Moroccan plants from local suppliers. In March, the government announced an investment of $180 million by five automotive cable manufacturers, including $78 million by Yazaki, a Japanese company expanding its operations in Kenitra and Tangier.
Rabat is now banking on growing international demand for electric vehicles (EVs) to accelerate the sector’s growth. Morocco currently produces over 40,000 electric vehicles every year, and Stellantis has announced plans to manufacture the two-seater Opel Rocks-e electric vehicle in Kenitra. Almost all units will be exported, as Morocco’s electric car sector is relatively small, with just approximately 1,000 vehicles sold each year due to a lack of charging infrastructure. Tesla will, however, build Supercharger stations at the Casablanca Onomo Hotel in 2021 and the Tangier Al Houara Hilton Resort.
Read: Ukrainian businesses thriving in Africa despite racist treatment towards Africans in Europe
Maribat, a Moroccan firm, is investing Dh75 million ($7.6 million) in the country’s first electric battery factory south of Casablanca. Electric batteries are one of the most expensive components of an EV, but manufacturers may be able to use cobalt from Morocco’s mines south of Marrakesh.
Additionally, STMicroelectronics has established a microprocessor manufacturing plant for EVs in Casablanca, while Chinese conglomerate BYD is considering creating an EV manufacturing site in Tangier.
Aerospace a Lucrative Venture
The government has endeavoured to replicate its success in automobile manufacturing in the aerospace industry, which provides comparable levels of high-quality employment and economic advantages.
Boeing and Airbus, along with Bombardier, Thales, and an increasing number of suppliers, have established operations in the country, most notably French company Le Piston, which opened a plant in February with an initial investment of $6 million to produce engine components. Morocco and Israel signed a collaboration agreement on civilian aerospace projects in March.
Morocco’s aerospace exports, according to official estimates, increased by 21.9 per cent last year to $1.6 billion after plunging by over 30% in 2020 as a result of the global aircraft industry crisis prompted by the Covid-19 epidemic. Exports have fallen short of the $1.9 billion milestones reached in 2019.
Morocco’s aerospace sector is vying for a worldwide reputation, despite the country placing third in the Middle East and Africa in a PwC evaluation of aerospace manufacturing attractiveness. According to government estimates, around 10% of the country’s 17,500 aerospace jobs would be lost by 2020. However, this is much less than the global average of 40%. Despite the decline in exports, enterprises preferred to retain personnel, anticipating a transitory crisis.
According to the Moroccan aerospace suppliers’ association GIMAS, enterprises in the industry have transferred their focus to other sectors, including medical equipment, due to the epidemic. SERMP, a Casablanca-based subsidiary of France’s LPG Group, began manufacturing face masks and ventilators but has expanded its focus to include a more extensive range of specialized medical equipment.
Environmental Consciousness
Airbus has stated that it intends to build carbon-neutral aircraft by 2035, and Moroccan manufacturers may have an advantage in competing for a piece of the pie. Solar and wind energy account for 38% of Moroccan capacity, falling slightly short of the government’s target of 42 per cent by 2020. On the other hand, renewable energy sources account for barely 20% of total electricity production due to their intermittent nature. By comparison, coal-fired power plants provide more than 40% of total electricity, demonstrating that the country has a wide road to cover before it can compete with leaders in renewable energy.
Rabat has announced plans for offshore wind projects and is on schedule to attain 1.8 GW of onshore wind power by 2026. Morocco has some of Africa’s most attractive wind resources, with wind speeds reaching up to 11 meters per second in the north, although behind Egypt and South Africa, who are a long way ahead.
Morocco currently has the world’s largest concentrated solar power plant, the 580 MW Noor project, which creates electricity at night, unlike solar photovoltaic. Additionally, green hydrogen, which may be generated using wind or solar energy, may help to minimize the reliance on fossil fuels. Although plans for a ten-gigatonne (GW) project have been established, the final investment decision has not been made.
Promoting pharmaceutical investment has been another critical component of Morocco’s economic policy. Construction on the SENSYO Pharmatech facility in Benslimane, near Casablanca, began in January.
By 2024, the factory, financed by the Swedish pharmaceutical company Recipharm, will produce 116 million immunizations per year, including Covid-19 vaccines. Domestic and international markets will be served by production. The country produces 3 million Chinese Sinopharm Covid-19 vaccine doses each month.
“By collaborating with the other parties involved,” Recipharm CEO Marc Funk stated at the time, “we will be able to work to provide Africa with a tangible means of gradually establishing health independence from Western nations and, ultimately, contribute to ensuring Africa is less vulnerable during times of crisis.”
Another indication of growing economic cooperation between Morocco and Israel following the reopening of diplomatic relations in 2020 is Moroccan company Cooper Pharma’s relationship with Israeli firm Teva Pharmaceutical to promote the latter’s goods. In April, Cheikh Lahlou, CEO of Cooper Pharma, indicated that his company intended to work with other Israeli firms to co-develop breakthrough biotech products.
Read: Africa, European Union join forces to boost digital cooperation
