19 Jun Interview with H.E. Ryad Mezzour, Minister of Industry and Commerce, Kingdom of Morocco
How important is the industrial sector to Morocco’s development? What are the main industries present in Morocco and could you give us some key figures to illustrate the share of the secondary sector in the Moroccan economy?
The industrial sector represents around 15% of our country’s GDP and comprises essentially six or seven sectors. The first and most important sector today is the automotive industry, which weighs in at around US$ 13-14 billion in exports. Interestingly, this sector hardly existed 15 years ago. The second sector is the fertilizer industry, based on fertilizers and phosphate processing, which represents around US$ 7 billion in industrial exports depending on the price fluctuation because it’s closely linked to the price of phosphate. The third sector is agribusiness and the fourth sector is the textile industry, both are more or less equivalent with exports of around US$ 4 billion each. Then there are two other growth sectors, electronics and aeronautics, which are quite interesting growth relays, with annual exports of around US$ 2.5 billion. These are the six flagship sectors we have, which are obviously supported by a number of other segments such as the metallurgical industry, or the chemical industry. Another sector that is also extremely interesting, but less export-oriented, is the pharmaceutical industry.
The public sector as a direct operator, is virtually non-existent. As a shareholder, it has an extremely large stake – 95% in the case of OCP, the leading fertilizer manufacturer – otherwise, through public funds participation. These are two types of actions: funds that already exist to support industrial development with a minority stake and the Mohamed VI Fund that is being set up to support the country’s general economic and industrial development. This is to support investors and reassure them. National and foreign investors often like to have a partner they can trust and a partner of choice, who invest in the same things that they also believe in. However, apart from OCP, which is responsible for developing the country’s natural resources, the State has very little involvement in this development.
A new industrial strategy is being developed to accelerate the development and competitiveness of the industrial sector. Could you outline this new strategy?
The idea of this new industrial strategy is to maintain and accelerate the momentum and leverage Morocco’s current strengths. Morocco’s assets are its demographic assets, its geographical proximity, its infrastructure and its openness to new markets, so that we can conquer them in an opportunistic way, based on the complexity of what we could achieve in light exports very quickly. We chose the automotive, aeronautical and agri-food sectors i.e. global businesses that enabled us to offer our products to consumers in the region and particularly in Europe. It has been quite successful: it has enabled us to ensure an industrial take-off, to become an industrial platform today that’s beeping on certain radars. It has also enabled us to ensure that 85% of the value of our goods exports are based on processed exports, which is quite rare for a developing economy. Today, we have a second level to reach, which is being able to meet a need for our country and a need, in any case, for the region. We’re entering a new world where we need to have several sources of supply, where we need energy independence, where we need to move upmarket in terms of what we produce because there are technological breakthroughs and so on.
The first objective of this strategy is to ensure a kind of regional sovereignty. The first breakthrough is to be a base that helps support and strengthen our region’s energy, industrial, food and health sovereignty. The second extremely important breakthrough is our ability to ensure the energy transition. It’s convenient for us, since we’re not a country with large hydrocarbon resources, we can develop our potential as a green energy production zone, whether in the form of electrons or molecules at very low cost and to ensure the sustainable transformation of our overall national production.
The third major breakthrough in our strategy is the upmarket move, by integrating the various technological breakthroughs and becoming a supplier of new solutions – be they process solutions, design solutions or even completely innovative solutions. The fourth breakthrough, which is linked to our national sovereignty ambitions, is to start developing ecosystems where we are the decision-makers, where we own the brand, where we also own the decision-making center. So those are the four breakthroughs that we are introducing in the new strategy, while at the same time accelerating what we’ve been doing so far.
We’re aiming to significantly accelerate our contribution to job creation at national level. Today, industry directly creates between 50,000 and 70,000 net new jobs every year and we’re aiming to add a significant and consistent multiplier factor to this rate. As we speak, we have 1,700 industrial projects approved, corresponding to an investment envelope of over $45 billion and set to create around 270,000 direct jobs. The total job creation envelope, including indirect jobs will be around 600,000 jobs. And that’s only about the projects currently identified.
In terms of infrastructure, how many industrial complexes does Morocco have? How has the country’s supply of industrial complexes evolved over the past ten years?
Morocco has around 80 provinces and districts, but let’s consider we have about 75 provinces, because it’s very difficult to set up industrial zones inside cities today. Out of the 75 provinces we’re working on, 69 now have quality industrial zones, so we still have six to cover. We have around 156 qualified industrial zones. Within these, there are 13 industrial acceleration zones.
As part of this set-up, we have 13 zones dedicated to multinationals, which we welcome with a slightly higher level of service and which we support to facilitate certain procedures and make it easier to welcome them. These 13 zones are also spread across six regions of the kingdom and we plan to cover the other six in the coming months.
How is Morocco managing its industrialization process in the context of the country’s energy transition and decarbonization efforts?
First of all, we have an extremely recent industry that is highly export-oriented. This means that 50% of our industrial added value is export oriented. This makes it one of the cleanest industries in terms of ecological footprint in general and carbon footprint in particular. And behind all this, we also have the opportunity to offer low-cost green energy compared to many other countries with similar productivity or competitiveness. As a result, our production factors for green kilowatt-hours, or for green molecules such as hydrogen, are among the lowest in the world. That’s due to the fact that, in an extremely stable country with extremely windy coasts, we have a lot of sunshine. The land in these same areas is sparsely populated. As a result, we can produce wind, onshore wind and solar power in the same location and it’s safe, because it’s close to one of the world’s largest energy consumption markets. We’ve been blessed by this positioning, which means we can produce green energy for our manufacturers and that costs less than carbon energy.
The idea now is to generalize this. Most of the automotive complexes we have are net zero in terms of carbon footprint. Now we need to go all the way round and get into the SMEs. At the SME level, we’re in the process of making regulations a little more agile so that they can access this green energy more fluidly. We’re in the process of equipping them and we’ve set up an investment support program to green SME production, called Tatwir croissance verte, with support for teams and equipment. It’s working quite well. There’s strong support from SMEs, for the simple reason that it’s more competitive. Paradoxically, unlike in other places where it’s an extra cost, being green makes us more competitive. What’s more, it makes us a little more sovereign, since we have more wind and sun than hydrocarbons and it also opens up a lot of international markets and financing, where we have more opportunities than our competitors. So it helps us to create a larger market space.
Morocco recently joined the integrated industrial coalition for sustainable economic development comprising the United Arab Emirates, Jordan, Egypt and Bahrain. What is this coalition and how can it benefit your country?
The idea is to pool our strengths, pool our markets, pool our production tools to generate synergies that will enable us to create value together. From there, we identify projects that we domicile with each other, where there’s continuity in terms of value checks, where there’s joint financial support, there’s joint market access support, there’s joint support for continuity of value enhancement. We’re creating a common industrial space based on very concrete projects that we’re trying to roll out. Today, in the last session, we validated three or four projects and in each session, the teams work together to bring out projects that we domicile with each other.
Morocco has signed a number of trade treaties and free trade agreements, notably with the United States. How would you assess the competitiveness of Moroccan companies and industries and their level of internationalization?
Today, around 50% of our industrial sales are made abroad. So our industry is as much oriented towards the domestic market than towards exports and increasingly so. 85 percent of my exports will be manufacturing goods. In terms of competitiveness, we have levels of competitiveness in certain sectors that are similar to China or South-East Asia. In the automotive sector, we are at these world-class levels of competitiveness. In the aeronautics sector, we’re in the top 3, if not number 1 in certain segments. In fertilizers, our competitiveness far exceeds that of any other country in the world. In the textile sector, we’re very competitive in the fast-fashion sector, a little less so in very, very large production runs. On the electronics side, for example on the microchips side, we’re very competitive on the back-up side, a little less so on the front-end side. So we have some very interesting competitive levers at world level, in around ten areas and we’re quite proud of them.
What is Morocco’s strategy of tripartite alliances for the development of the African continent, aligned with His Majesty’s Vision to diversify alliances and strengthen the continent’s economic and industrial system?
The orientation is very simple. We have demonstrated, through the example of Morocco, that it is possible to achieve industrial transformation in a very short space of time. Over the past 15 years or so, we have succeeded in transforming the Moroccan platform into a world-class industrial hub. The idea is to work with our willing African partners on the same continent to support them to ensure this transformation in a co-development approach, where we will work together to bring about the emergence of industrial ecosystems according to the know-how we may be able to share. We work with partners who wish to do more business with Africa, to trade more with Africa, to invest in Africa, also using our knowledge of the continent.
We develop integrated programs with all our partners, be they countries, communities of countries or support institutions, international financing institutions with whom we work to develop very concrete projects together, be they infrastructure projects or productive economy projects in certain countries on the continent. Morocco is an extremely committed investor on the continent, it is the second largest African investor in Africa, it has one of the largest banking networks on the continent and it has made very heavy investments in industry, real estate and infrastructure in Africa. Morocco is an African country that believes in Africa and is mobilizing for Africa’s development.
How can the USA play a greater role in Morocco’s industrial development?
We’re one of the few world-class industrial production platforms that is a historic ally of the United States and we’re right on Europe’s doorstep. We have free trade agreements with the United States and free trade agreements with the EU. We’re practically the only country with this strategic positioning. So, we are the gateway for American companies to gain competitiveness and serve Europe. American companies looking to double their market share by having more European footprints with a competitive production and deployment base, will find their Eldorado in Morocco.
Many of them are doing just that, whether in the aeronautics industry or elsewhere. For example, Boeing’s suppliers in the United States are coming to Morocco to supply Boeing’s European competitor and it’s working out very well. American automotive suppliers who supply the American automotive ecosystem, whether from the United States or countries close to the United States, come to Morocco to set up shop and supply the European production eco-system from Morocco. Setting up in Morocco enables them to double their global market share. It’s as simple as that.
Morocco and the United States have the same mindset for freedom, the same mindset for humanity, the same mindset for joy of living, the same mindset for realizing the ambitions and dreams of each individual and of humanity. I invite our American friends to come to Morocco; it is a cultural discovery in a welcoming and caring environment. Morocco is also a land of business, a land of openness, a land of investment, of competitiveness and productivity. Finally, there’s an enormous wealth of culture, know-how, local produce and cultural craftsmanship that we’re developing here, high-quality, highly competitive industrial products. The Moroccan brand and the made-in-Morocco brand are highly valued and very well received in the United States. We’d be quite happy to serve America with high-quality products that have a brand premium that’s extremely attractive to the American market.