Morocco Oriental Region

Morocco 2013Oriental Region

ECONOMY TOURISM TELECOMS & ITINDUSTRY CONSTRUCTION EDUCATIONTRANSPORT REAL ESTATE AGRICULTURE

ORIENTAL CONTENTS 3

THE REPORT Morocco 2013

ISBN 978-1-907065-77-4

Editor-in-Chief: Andrew JeffreysEditorial Director: Peter Grimsditch

Chairman: Michael Benson-Colpi Director of Field Operations: ElizabethBoissevain

Regional Editor: Robert TashimaEditorial Manager: Willem Oosterveld

Regional Director: Karine LoehmanCountry Director: Miranda Stobbs

Project Coordinator: Mahmoud ElHafoudi

Chief Sub-editor: Alistair TaylorDeputy Chief Sub-editor: JenniePattersonWeb Editor: Barbara IsenbergSub-editors: Sam Inglis, Sean Cox,William Zeman, Danya Chudacoff,Mariah Pittman, Krystell Jimenez,Oliver Ayyildiz, Martin Stegman, EstherParkerContributing Sub-editor: MiiaBogdanoff

Analysts: Cailin Birch, Yinka Ibukun,Francisco Serrano, GenevieveTheodorakis, Ruairi Patterson

Senior Editorial Researcher: SusanManoğluEditorial Researchers: Souhir Mzali,Thomas Bacon, Adeline Oka, JennaOelschlegel

Art Director: Yonca ErginDeputy Art Director: Cemre StrugoArt Editor: Meltem MuzmuzGraphic Assistant: İlayda GedikIllustrations: Shi-Ji LiangPhotography Editor: Mark HammamiPhotographer: Gregory Dziedzic

Production Manager: Selin Bolu

Operations Manager: Yasemin DiriceLogistics & Distribution Coordinator:Esen Bar›nOperations Assistant: Öznur Usta

Field Operations Executive: MeltemOkurField Operations Coordinator: ZeynepAkdamar

Nothing’s quiet onthe eastern frontPage 5

The Oriental region’s economy has tradition-ally relied on agriculture, industry and mining.Infrastructure upgrades, including a highwayrunning from Oujda to Fez, implemented overthe last 10 years are expected to boost thetourism sector’s contribution to the mix.

A welcome faceliftPage 21

With the Oujda Urban Development Plan 2010-16, the region's capital city is undergoing atransformation, which will include 56 projectsaimed at improving the city at a total cost ofDh2.1bn (€186.7m). Residential and commer-cial spaces will be built to meet demand. Theiconic train station is also being restored in thehopes of adding to the city’s historic appeal.

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Nothing’s quiet on the eastern front: Growinginvestment and national integration boost theregion

Interview: Mohamed Mbarki, Director, Agencede l’Oriental

Rural potential: Niche tourism is offering investment opportunities away from beachresorts

Next door neighbour: An open border could further boost economic cooperation

A welcome facelift: Revamped centres anddevelopment of cultural spaces in the capital

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Living off the land: The region aims to increaseagricultural yields and expand agro-industry forexport markets

Pushing for industry: Better connected transport infrastructure eases exporting

Digging it up: Legal reforms and added incentives should boost mining investment

Funding growth: A new development fund isputting small businesses on the map throughequity investment

ORIENTAL OVERVIEW

Some 4% of new projects fall under the category of tourism

After a decade of investment, Morocco’s Oriental regionis ready to build a strong reputation in the Mediter-ranean. Nestled between the Algerian border and theMediterranean Sea, Morocco’s Eastern Region is strate-gically located along the southern European basin.After decades of underdevelopment, it has becomethe recipient of extensive governmental investment.

Morocco’s government has often channelled fundsinto the central areas of the country, with urban,industrial areas in cities like Tangier in the north andOujda in the east suffering as a result. For years, theOriental, as the Eastern Region is known, sufferedfrom insufficient transport connections to the rest ofthe country and a lack of the infrastructure neces-sary for supporting the development of family-ownedbusinesses and strategic industries. Adding to this, theclosure of the Algerian border almost 20 years agodealt a serious blow to an area of the country withstrong cultural and family links with its neighbour.

However, an increased focus by the government ondevolving some decision-making powers as well asimproving both growth and social development indi-cators in areas outside of Casablanca and Rabat hasled to a shift in policy and the influx of governmentsupport of the kingdom’s regional governments. ADDING INTEREST: As a result, over the past 10 years,infrastructural upgrades of road, air and sea transportlinks have greatly improved the business environmentin the Eastern Region. And with the establishment ofa comprehensive regional development strategy focus-ing on industrial expansion, tourism promotion andagricultural output, the Oriental is hoping to see a sig-nificant expansion in both trade and capital flows overthe medium term. Attracting private investment hasbeen a main priority. According to figures by the Region-al Investment Centre in Oujda, the Oriental attractedDh7.9bn (€703.2m) of private investment in 256 dif-ferent projects in 2012. About 83% of new projects werein the building and construction sector, along with 6%in secondary industries and 4% in the tourism sector.

A ROYAL INITIATIVE: Much of the drive to equip theOriental with the necessary means for developmentstarted in March 2003, with a visit by King MohammedVI. The push by the monarchy, which also sought toimprove development in other previously ignoredregions, such as the North, represents a new econom-ic positioning of the region, with an emphasis on gen-erating domestic consumption and output rather thanrelying on neighbouring Algeria to galvanise trade-driv-en economic expansion.Historically, the Oriental’s econ-omy has been based on agriculture, animal rearing,industry and mining. It has also benefitted from fish-ing along its Mediterranean coastline and had reliedsignificantly on cross-border trade with Algeria.

In the 1960s, however, in what would prove to bethe first blow to the region, a large portion of miningactivity stopped, prompting heavy unemployment (atrend that has continued, standing at 17.7% in 2011).And after a political spat between Morocco and Alge-ria following a terrorist attack in a hotel in Marrakech,which was stoked by ongoing tension over the Moroc-can/Western Sahara, the border between the twocountries was closed in 1994, during Algeria’s civil war.These factors, in addition to low agricultural yields,encouraged a migration wave to both other parts ofthe country and to Europe. One-third of Moroccans liv-ing abroad today come from the region.COMPOSITION OF THE REGION: The Royal Initiativefor Development of the Eastern Region launchedAgence de l’Oriental in 2006, with the goal of helpingthe region’s local authorities to establish developmentstrategies and stimulate economic activity. Additional-ly derived from the royal initiative was the creation ofthe Regional Investment Fund, put in place to supportlocal business growth through equity investment in theregion’s companies (see analysis).

The Eastern Region is located in the north-easterncorner of the kingdom, with a 200-km Mediterraneancoastline to the north. To the east lies Algeria, wherethe border is closed only a few kilometres away from

In 2012 the Orientalattracted Dh7.9bn(€703.2m) of privateinvestment in 256 projects;the overwhelming majorityof these are in the buildingand construction sector.

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The Royal Initiative forDevelopment of theEastern Region createdAgence de l’Oriental andthe Regional InvestmentFund to help stimulateactivity and develop localbusinesses.

Nothing’s quiet on the eastern frontGrowing investment and national integration boost the region

ORIENTAL OVERVIEW

the region’s capital and largest city, Oujda. Oujda is theregion’s main urban centre with a population of 500,000and Morocco’s easternmost city. It houses the region-al council and it is the Oriental’s centre for businessand government administration. It hosts the OujdaAngads Airport, the Université Mohamed Premier andthe Al Farabi Hospital. The city is also undergoing majorurban renewal (see analysis). A brand new Dh525m(€46.7m) University Hospital Centre is under construc-tion and will improve health service provision in theregion and training capabilities for regional health staff. To the west, the Oriental is linked to the adjourningregions of Taza-Al Hoceima-Taounate and Fez-Boul-mane. To the south-west, is the region of Meknés-Tafi-lalet. On a peninsula on the region’s Mediterraneancoast is the Spanish enclave of Melilla. With a population of 2m people and an area of 82.8 sqkm, the Eastern Region is the second biggest of the king-dom’s 16 regions in terms of area, occupying 11.6% ofnational land. The region is divided into the prefectureof Oujda-Angad and six provinces: Nador, Driouch,Berkane, Taourirt, Jerada and Figuig. These include 27urban communes and 87 rural ones. CHALLENGES: The closed border has had a significantimpact on the regional economy, particularly in termsof contraband and informal activity. The Regional Strate-gic Plan for the Eastern Region, which was publishedin 2011 by the regional council, estimated that some46% of commerce activity in the region was informal,

based on 2009 figures. This is a challenge that author-ities face when trying to improve the governance oflocal businesses and structures, especially in theirefforts to spur greater investment and activity. Bank-ing credit and capital investment in equity, which canbe harnessed to help grow local businesses, require stricttransparency rules. “Many companies in the region arefamily-owned and have part of their business in theinformal sector, and it can take a long time to integratethem into the formal sector and encourage them tobecome more transparent,” said Ali Belhaj, the presi-dent of the regional council.TACKLING ISSUES: Such a high figure for informalactivity is not surprising nor particularly unique to theregion – estimates of the informal economy in Moroc-co can range well above one-third of total activity. In alot of ways, the challenges of the Eastern Region remainthe same as other regions in Morocco, bar for the factthat, for several years, these have been compoundedby its isolation and insufficient economic integrationwith other more developed parts of the kingdom.

Unemployment is also an issue in a region that hasfor years contributed heavily to the Moroccan diaspo-ra, especially in Europe, where about 1m emigratingMoroccans are from the Eastern Region. As a result, anumber of broader national strategies should also helpunshackle growth drivers in the Oriental to varyingdegrees. The Green Morocco Plan – launched to devel-op the agricultural sector – is being translated into a

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The largest city is theregional capital, Oujda,which is home to the OujdaAngads Airport and the AlFarabi Hospital, along withother key infrastructure.

ORIENTAL OVERVIEW

total of 77 agricultural development programmes acrossthe region. Plan Azur, which oversaw the creation ofsix beach tourism areas, had an impact on the region’snorth coast with the building of the Saïdia Resort.Morocco’s industry development strategy, the Nation-al Pact for Industrial Emergence (Pacte National pourl’Emergence Industrielle, PNEI), was put in place in 2005to focus on the expansion of industrial capabilities upto 2015, and will manifest itself in the region throughthe establishment of industrial areas to attract new com-panies and increase production capabilities. HIGH AIMS: The regional government has also beenaggressive about setting its own targets for growth. Localauthorities want to create 137,500 new jobs andincrease the number of people working from 538,700in 2009 to 676,200 by 2020. To sustain this, the regionis aiming to maintain an annual growth rate of 7.3% toraise regional GDP from Dh35bn (€3.1bn) in 2009 toDh77bn (€6.85bn) in 2020. This goal might be difficultto achieve, considering the economic downturn inEurope and regional instability in neighbouring NorthAfrican countries, as well as the kingdom’s overallgrowth rate, which is half that. Significant work willneed to be done to make that target feasible – whichexplains in part the extensive work going into theupgrading of both hard and soft infrastructure.

“We need to think beyond the current internation-al context of financial crisis and make sure that weestablish the infrastructure necessary for receivingnational and international investment,” said Belhaj.

Agence de l’Oriental, which promotes internationalcooperation for regional development, has concludedagreements in various areas, both at the bilateral andmultilateral levels. "These include a project with UNC-TAD on attracting foreign investment; with UNDP to com-bat unemployment; an agreement with the Andalusianauthorities to promote the EU’s neighbourhood poli-cy; and a partnership with the French city of Lille to devel-op rural tourism,” Taoufiq Boudchiche, director of inter-national cooperation at the agency, told OBG.CONNECTING THE DOTS: Some of the largest strides,are being made in the area of infrastructural improve-ment, particularly to road and rail networks. “Highwaylinks are definitely helping to bring logistics costs down.Transport spending has traditionally been slightly high-er for companies based in the Oriental. In our case, someimported products might end up costing us an extra8% because we have to bring them all the way here,”Ahmed Nasri, the regional director for hypermarketchain Marjane in the Eastern Region, told OBG.

Transport has been one of the government’s top pri-orities in the Eastern Region. Over the past few years,increased connectivity has alleviated the region’s iso-lation and eased access for local industries that needto send goods to other areas of the kingdom or reachMorocco’s main export points into European markets.

Much has been accomplished in terms of road trans-port and the regional road network now measures6000 km. Three projects have specifically affected theflow of goods and movement of people to the region.A new 320-km highway running from Oujda to Fez has

connected the Oriental’s largest city to the country’smotorway network. The coastal highway, known as LaRocade Mediteranéenné, runs from Saïdia to Tangier,reducing travel time from the resort at Saïdia to thecountry’s largest deepwater port at Tangier from some11 hours to seven. It was built at a cost of Dh7.2bn(€640m). The 120-km dual carriageway from Oujda toNador, currently under construction, should also easetransport of goods into the future Nador West Med port.

Improvement of rural roads in the Berkaneprovince, the region’s largest agricultural exportingarea by volume of produce, will also improve inter-nal congestion and distribution. Investment is dueto reach Dh700m (€62.3m) over the next sevenyears, according to the governor of the Berkaneprovince, Abdelhak Haoudi. Should the Algerian bor-der open, the region would also be connected to theAlgerian highway network, facilitating easy accessto the nation’s two largest cities, Oran and Algiers.LIFT OFF: The region now has two airports. The larg-er of these, Oujda Angads, is located approximately 10km from the capital city. Equipped with two runways,

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Efforts are being made to improve rail and road networks

Despite recent turmoil inother nearby North Africannations, the kingdom hasset ambitious growthtargets, one of which is tocreate a total of 137,500new jobs by 2020.

New investment projects by sector, 2012

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Cen

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Régi

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Construction

Energy & mining

Tourism

Commerce

Services

Industry

83%

2%

4%

3%

2%

6%

ORIENTAL OVERVIEW

the longer running some 3000 metres, it has the capac-ity to receive commercial aircraft. Work was recentlycompleted on a new 30,000-sq-metre terminal thathas increased the airport’s capacity to 3m passengersa year, but airport authorities expect capacity to beraised to 3m passengers in the coming years. “We cur-rently operate at one-fifth of potential capacity, receiv-ing some 600,000-700,000 passengers per year. Theairport can thus be a great generator for economicdevelopment,” said Mohcine Benhadouche, managerof Oujda Angads Airport.

The smaller Nador Aroui International Airport, 24km south of Nador, can receive up to 750,000 passen-gers a year and has several daily flights to Europeancapitals. Also close by is the EU-regulated Melilla air-port which has daily connections to several cities inSpain. In the south, the small Bouarfa aerodrome hasthe potential to serve tourism expansion by cutting thefour-hour drive from Oujda to a short flight. This wouldgive foreign visitors easier access to the Figuig Oasis. UNDER STUDY: Only one small port serves the region:the Nador Port at Beni Ansar, which can receive shipsof up to 200 metres and is equipped with five quays.

The port is nonetheless underused. Its proximity to theSpanish port at Melilla as well the lack of sufficient com-mercial cargo and container lines serving it has changedits focus to passenger traffic; 598,710 passengers and2.5m tonnes of trade passed through it in 2011. Hop-ing to modify this, a feasibility study is under way bythe regional office of the General Confederation ofMoroccan Businesses (Confédération General des Entre-prises Marrocaines, CGEM) to assess the tonnage in theregion that could be shipped through the Nador Port.“If we do not have enough tonnage, we might be ableto work in conjunction with the neighbouring regionsof Fez and Meknés,” said the Oriental regional presi-dent of CGEM, Abdelkrim Mehdi. A key component ofthe region’s attempt to boost maritime trade – and alsoincrease access for both exporters and imports – is theNador West Med Port, a Dh6bn (€533.4m) project cur-rently in progress that will not only try to replace theexisting Nador Port, but also serve as the key maritimeconduit for the Oriental to Europe and the Mediter-ranean Basin. The project is slated for completion infive years (see analysis).LAYING TRACKS: Railway links are fairly limited, andthe country’s planned high-speed rail will – at least inits first phase – bypass the region. Currently, a 650-kmrailroad links Oujda to Casablanca, and a new terminalstation is in the works. An old one-way line establishedbetween Oujda and the remote town of Buarfa is stillin operation today, mostly for tourism purposes throughthe Oriental Desert Express to the south. The city ofNador is connected to Oujda by a 117-km line. Thereare plans for Nador West Med Port to be connected tothe national railway grid through the Nador line. PLUGGED IN: Over the years, the Oriental region hasreceived most of its energy from the Jerada coal-fuelledelectricity plant, with a production capacity of 165 MW,as well as two hydroelectric stations in Mohamed KhamisEl and Bou Ateg. It is also connected to the Algeriangrid, enabling it to receive an additional 950 MW fromits energy-rich neighbour.

However, solar energy is proving to be an attrac-tive resource for both domestic production as well asfor export to Europe. Capacity was extended with thebuilding of the Aïn Beni Mathar thermo-solar station,in the province of Jerada. The 472-MW plant was builtat a total cost of around Dh4.6bn (€408.9m) andstarted production in 2010, using a combination ofsolar and gas energy production. The plant was pri-marily financed by the African Development Bank inpartnership with the Global Environment Facility andthe National Electric Authority.

Solar capacity will also be increased through theconstruction of a 2000-ha solar park due to be estab-lished close to the Aïn Beni Mather plant. The newpark, which is scheduled to start operations by 2020,will have a 400-MW production capacity and will be oneof the five solar parks to be built under the MoroccanSolar Plan across the country. Indeed, the Oriental hasbecome one of the leading areas in terms of solar ener-gy production in the country under the kingdom’sobjective to increase its usage of renewable energies.

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The Oujda Angads Airport is the larger of the region’s two airports

The Nador West Med Port isunder development withthe overall aim of replacingthe underused Nador Portand allowing improvedaccess to Europe and theMediterranean Basin.

www.oxfordbusinessgroup.com/country/Morocco

SOURCE: Centre Régional d'Investissement

Breakdown of investment projects by sector, 2012

Total

Activities No. of projets Investment (Dh m) Expected job creation

Textiles & leather 1 0.91 21

Agro industry 22 419.45 1081

Wood, paper & cardboard 2 6.81 22

Ironworks & electric enginering 18 57.3 310

Chemicals 4 30.5 303

Construction & public works 58 5067.91 1635

Energy & mining 84 157.72 761

Tourism 8 298.66 225

Commerce 27 240.7 653

Services 19 195.29 256

Total 243 6475.24 5267

ORIENTAL OVERVIEW

Authorities also hope that the added focus onrenewable energy will spill over into local industrialcapabilities. National renewable energy developmentplans include the goal of procuring 30% of the nec-essary clean energy technology from Moroccan com-panies. The Oujda Technopole, which is set to include500 ha for industrial development, has already start-ed commercialisation of a 107-ha section, of which40 ha will be devoted to clean energy technologiesand equipment firms (see analysis).CONSTRUCTION: Boosted by the slew of infrastructuredevelopment projects over the past decade, the region’sconstruction materials sector, which has traditionallybeen composed of small and medium locally basedcompanies, has seen robust growth in recent years.The increase in the establishment of quarries, whichgrew from three to 12 in the region between 2000 and2010 highlights the jump in activity.

“The region has a lot of land available that could bedeveloped for commercial purposes, which presents agood opportunity for the region,” said Driss Houar, theCEO of Houar Enterprise, a construction firm in Oujda.

The province of Nador, which has long been a cen-tre for the brick manufacturing industry, now has over23 local companies, some of which export across thecountry. Sonasid is present, with a steel productionunit in Nador that manufactures 600,000 tonnes a year.Major foreign players are active as well. Swiss cementmanufacturer Holcim has been in the region since 1979

and became majority shareholder of a cement facto-ry in Oujda in 1992. “Construction activity in the regionhas significantly increased since 2004, following the roy-al decree. Many of the big projects needed a lot ofcement. Now, more projects are private and of a small-er scale,” said Khalid Kaaouachi, the director of Holcim’scement production unit in Oujda.

Indeed, while it had been public spending that spurredthe majority of initial development activity, nowadaysconstruction companies in the region are increasinglycatering to more private projects. Much of the EasternRegion’s urban areas are now being renovated andincreasing the number of affordable housing units hasbeen one of the priorities.

Partnerships between private and public real estateoperators are helping to build more than 33,000 afford-able homes between 2010 and 2020, at a total invest-ment of Dh8.2bn (€729m). In the coming years some14,749 housing units will be built in the prefecture ofOujda-Angad, along with 11,608 units in the provinceof Nador, 4470 in the province of Berkane and over 2000units in the town of Jerada. FINDING THE EDGE: Smaller roads in a number of theregion’s provinces are also currently under renovation.Competition between local construction companies ispushing prices down and affecting revenues.

“Prices offered for projects have decreased,” saidNoureddine El Gourdi, the administrative chief forSociété D & CRB, an Oriental-based construction group.

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Private and public realestate operators areforming partnerships tobuild more than 33,000affordable homes between2010 and 2020 at a totalinvestment cost of Dh8.2bn(€729m).

ORIENTAL OVERVIEW

“There are too many companies active in this sector inthe Oriental, so new niches will need to be explored.”

Given the surge in government investment that hasoccurred since 2003, construction firms and materialsmanufacturers might find it hard to sustain growth lev-els from this period, although the Nador West andMarchica ports and the expansion of the Saïdia Resortshould help bring renewed activity to the region. REELING VISITORS IN: With a variety of sites of inter-est that include a 200-km coast, mountainous areas,thermal springs and the southern oasis region of Figu-ig, the tourism sector is not lacking in attractions, butdoes need an overhaul in terms of hotel capacity andinfrastructure. The region’s total capacity is currentlyaround 8000 beds, according to figures from the Region-al Delegation of Tourism in Oujda. The overall goal is toendow the region with a total of 120,000 hotel bedsbefore 2025, a massive increase in capacity. As with therest of Morocco, tourism is considered a crucial com-ponent to improving the regional economy. The tourismsector is one of the kingdom’s largest foreign curren-cy earners, but the slowdown in its most significant mar-ket, the EU, has had an impact recently.

Still, the central government has pushed ahead in abid to entice tourists from new non-traditional mar-kets, with the national Plan Azur strategy, which aimsto expand beachfront tourism (see Tourism chapter).A key part of Plan Azur was the construction of a num-ber of new resorts, including Saïdia in the Oriental.

Over the past four years, most of the region’s tourismdevelopment focus has been geared towards the Saï-dia project, the first resort to be developed under PlanAzur. The Saïdia Resort was inaugurated in 2009 throughthe opening of its first two five-star hotels. A third onewas eventually added, bringing the total bed capacityto 4000, or half of the region’s total accommodationcapacity. In the first three and a half months of activi-ty, Saïdia received some 37,000 tourists. WORK TO COME: But the project is still some steps awayfrom its final goal of a 30,000-bed capacity, distributedover a total of nine four- and five-star hotels and 3000residential villas. Amenities will also include three golfcourses and a 1350-berth recreational marina, of which750 berths are already open. Original plans have beendelayed due to the developer’s inability to secure cred-it under difficult financial conditions.

Initially, the Society Organisation of Saïdia (Sociétéd’Aménagement de Saïdia, SAS) owned 10% of theproject, partnering with the government’s develop-ment agency, CDG Développement, which had 60%,and the state’s investment arm for the tourism sec-tor, the Société Marocaine d’Ingénierie Touristique.The New Company of Installation of Saïdia was setup in 2011 to oversee the completion of the project.SAS pulled out of the tourist side of the development,selling its share to CDG for Dh1bn (€88.9m), but isretaining ownership of the project’s residential com-ponent. CDG has agreed to add the next 3000 bedswith the building of three more hotels by 2014. Morepublic works for the town’s water management network have also helped with improving standards.

Despite being dogged by a slow start and construc-tion delays, Saïdia is already having an impact on diver-sifying tourist arrivals in the Eastern Region. “Beforethe opening of the Saïdia Resort, visitors to the regionwere 51% Moroccans and 49% foreigners,” Amine Abdel-laoui, the regional delegate for tourism told OBG. “Nowthe mix of nationalities is slowly changing, and 67% oftourist arrivals to the region in 2012 were foreigners.”SEASONAL EFFECTS: Moroccans living abroad havelong been an important component of the visitor pro-file (in fact they are counted as foreigners for tourismpurposes), but the resort has had some notable suc-cess in boosting the number of European travellersover the past two years, with new tourists from Polandand Russia brought in by charter flights to the OujdaAngads Airport in the summer. Seasonality remains oneof the main challenges of the resort, which has an 84%occupancy rate in the summer months, but drops to34% during the remainder of the year, which is consid-erably below the average yearly occupancy rates forhotels across the country. “Saïdia is the region’s call-ing card, but we need to develop additional products

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The region is not short of sites and attractions to entice tourists

With the economicslowdown in the EU, themain source of foreigntourist arrivals, attractingvisitors from non-traditional markets iscrucial. Charter flights areincreasing access for Polishand Russian tourists.

Citrus Olives Vine Sugar Redmeat

Whitemeat

Almond Dates Honey Milk Cereals0

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Regional contribution to national agricultural production, 2011(%)

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ORIENTAL OVERVIEW

around the region that will allow the visitors comingfor beach tourism to extend their stay,” said Abdellaoui.

Another large-scale tourism resort is set to becomeone of the region’s most ambitious projects in termsof investment volume as well as with regards to itssheer size. The Marchica Med tourism zone, which willinclude seven newly built towns, is set to transform the25-km-long Nador lagoon into a high-end tourism zonegeared towards local and foreign visitors. With a totalinvestment of Dh46bn (€4.1bn) and an area of 4000ha, the project will be under development over thecoming years. Total hotel capacity is set to reach 84,000beds after its expected completion in 2025.

Driving this ambitious project is the Marchica MedDevelopment Company, set up in 2008 with capitaltotalling Dh500m (€44.5m), divided in equal partsbetween the state and the Hassan II Fund. For eachof the seven specific tourist towns to be createdaround the lagoon, a specific development companywill be created with the input of private investors. Theprojected impact of the project on the region is sub-stantial. It is estimated the development will create80,000 direct and indirect jobs, 15,000 of which willbe brought in during its construction phase. Besidesseveral hotels, the resort will also include 2400 apart-ments, 1000 villas and an ambitious six marinas.

Cité d’Atalayoun, the first section of the project,expected to be completed in 2014, will be built in a45-ha area. Its design includes a 360-room hotel, 650villas, 2230 apartments and two marinas. The secondtourist town, Cité des Deux Mers, will be built closeto the spot where a channel opens the lagoon up tothe Mediterranean. It will have 320 villas, 193 apart-ments and 280 hotel rooms, for a total capacity of3252 beds. Completion is set for 2014, and the proj-ect will include the establishment of a new waterchannel to the sea to reduce currents inside the lagoonand allow for better flow of water.THINKING SMALL: Despite the considerable efforts andinvestment being directed towards seaside mass

tourism, several other regional attributes can be devel-oped for smaller-scale niche tourism. This will helpdiversify tourism in the Eastern Region, protecting itfrom the volatility that has affected other major touristdestinations such as Sousse and Hammamet in Tunisia,and should also have a positive impact on the more iso-lated areas to the south. Authorities have identified over30 specific sites that could be developed to expand thebenefits of tourism to other areas inland from theMediterranean coast (see analysis).

The size of the Marchica and Saïdia projects cansupport the region’s economic growth. However, giv-en the hesitant nature of lenders in Europe and theUS, authorities might find attracting private capitalto be harder than initially planned. This may poten-tially delay the completion of the two projects pasttheir established deadlines. Another challenge forthe local tourism sector will be to train enough skilledlabour to support the Marchica and Saïdia projects.The Saïdia Hotel School trains between 80 and 100students a year. Added to this is the country’s Bureaufor Professional Training and Employment Promotion,which opened an office in Nador to respond to thefuture needs of the Marchica Med resort. OFFSHORING: The region’s geographic proximity toEurope is advantageous for activities other than tourism,with the government targeting increased investmentin information technology (IT), and in offshoring andnearshoring in particular, which all offer the potentialfor job creation and improved tertiary sector activity.The expansion of the IT services sector is already partof the PNEI, which aims to position the kingdom as akey destination for the sector, and includes a target foroutsourcing to create 70,000 new direct employmentpositions between 2009 and 2015.

In the Oriental region, offshoring activity got a boostfrom the arrival of SQLI, a French IT services providerwith operations in several European countries. Thecompany arrived in the regional capital in 2005 underan agreement with the Université Mohamed Premierin Oujda, opening an IT services centre as well as aresearch and development unit within the university,which focused on open source technology. The com-pany currently employs over 100 people in Oujda.

The region expects more activity to come with theopening of Oujda Shore, an industrial park specificallyfor offshoring activities within Oujda Technopole. Theproject, managed by MEDZ (a subsidiary of CDG) andthe Ministry of Telecommunications, is set to open in2013, aiming to attract IT outsourcing companies toits 22-ha park. The overall investment in Oujda Shorewill be €500m, and the government expects that a

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Human resource training through new hotel schools will be key in the development of regional tourism

A plan to create seventourist towns around theNador lagoon is expectedto create 80,000 direct andindirect jobs, with 15,000of those during theconstruction phase.Smaller-scale niche tourismis also being explored in aneffort to diversify thesector.


SOURCE: Regional Council for the Oriental

Regional development objectives for 2009-20

2009 2020

GDP (Dh bn) 35 77

Employment (active citizens) 538,700 676,200

Total investment (Dh bn) – 120

Informal sector's % of local commerce 46% 35%

ORIENTAL OVERVIEW

successful replication of offshoring parks created inRabat and Casablanca will attract businesses lookingto take advantage of the region’s competitive salariesand Spanish- and French-speaking workforce. HUMAN RESOURCES DEVELOPMENT: The ability ofthe IT outsourcing sector, along with other secondaryand tertiary sectors, relies heavily on the region hav-ing a qualified labour pool. There is a disconnect – asthere is throughout Morocco – between the skill setsof recent graduates and the job market’s needs, whichhas led to a worryingly high youth unemployment rate.However, the basics are in place to improve the situa-tion, which is crucial given that over half of the region’spopulation is under 25 years of age. FRAMEWORK IS SET: The Oriental’s higher educationinstitution, the Université Mohamed Premier, was estab-lished in 1978 and currently has over 35,000 studentsat its three campuses in Oujda, Nador and Al Hoceima.The university is designing its teaching policy aroundsome of the activities prioritised under the PNEI, suchas agro-industry, renewable energies, civil engineering,transport and logistics, and IT. This will be essential tocreate the region’s future pool of professionals, whoare increasingly seeking opportunities in the Orientalrather than in other regions. “It is encouraging that grad-uates who initially moved to Casablanca and Rabat towork are now returning to seek opportunities in the East-ern Region,” said Aomar Anane, the vice-president forresearch at Université Mohammed Premier.

The university is also focused on cooperation withthe private sector, by allowing new business venturesto establish themselves at its entrepreneurship centre,Maison de l’Entreprenariat. This opens up basic infra-structure for new developing companies whilst alsoallowing university students to get work experiencethrough internships. “As the country moves into region-alisation, we also want to decentralise our teachingthroughout the region,” said Abdelaziz Sadok, the uni-versity’s president. The university is also consideringopening a tourism campus in Saïdia over the coming

14

A greater number of university graduates are staying in the Oriental region to work

The region’s university isdesigning its curriculaaround fields such as agro-industry, renewableenergies and IT, in an effortto give students the skillsets demanded by the localjob market.

The Bureau for ProfessionalTraining and the Promotionof Employment wastraining 17,025 interns in2010-11, according to a2012 UN study.


years to eventually increase the number of trainedhuman resources (HR) for the growing tourism sector.

Morocco’s Bureau for Professional Training and thePromotion of Employment (Office de la Formation Pro-fessionnelle et de la Promotion du Travail, OFPPT), has25 offices in the region. According to a regional studypublished by the UN in 2012, the OFPPT was giving train-ing to 17,025 interns in all sectors in 2010-11. Throughits regional offices, the bureau has been focusing onmore training for tourism, IT and offshoring activities. THE RISE OF RETAIL: The boost in public spending andimproved physical infrastructure has begun to stoke localconsumption, with domestic trading also on the rise.Authorities expect that the informal sector’s influenceon local commerce can be reduced to 35% by 2020.Illegal trading is conducted mostly in petrol and daily-use products such as household items. But contrabandactivity has become less attractive given the reducedimport duties as part of the Morocco-EU AssociationAgreement and the potential drops in government sub-sidies due to the country’s twin deficits.

Other signs that informal activity is less of a threathave come from the success of newly arrived retailoutlets, which have risen in number since 2007. Thehypermarket chain Marjane was the first to arrive inthe region, and currently has two stores in Oujda, onein Saïdia, one in Nador and, most recently, a fifth storein Berkane. It was followed by Aswak Assalam, anoth-er retailer with three stores in the region; Carrefour,present in Oujda and Nador; and Metro and Label’Vie,which each have one store in Oujda.

The extent to which informal activity contributes tothe domestic economy nonetheless skews retail activ-ity to a greater extent than elsewhere in the region. Con-traband products include cooking oil, detergents, flour,cookies and kitchen utensils. The same five-litre bot-tle of cooking oil priced around Dh65 (€5.78) in a Mar-jane store can be found at about Dh50 (€4.45) in theinformal market in central Oujda. According to super-market chain’s representatives in the region, morechoice and better product standards are helping tomove consumers away from contraband products. “Con-sumers want what is new and like the availability andvariety of brands. The establishment of retailers in theregion is also helped by the large number of Moroc-cans living abroad that are used to brands available inEurope and want the same type of products when theyreturn home,” Marjane’s Nasri told OBG, pointing outthat sales at its Oujda store have been growing at anannual rate between 4% and 8% since it opened.OUTLOOK: The Oriental region has made a key choiceto invest in infrastructural development. Over the pastdecade, this has equipped the region with the neces-sary conditions for its companies to expand into oth-er domestic regions as well as to target European mar-kets. The region’s fortunes will also be enhanced withfurther integration with Morocco’s neighbours. An openborder with Algeria could have a positive economicimpact on growth. Sustained investment in new indus-trial zones and the regional focus on strategic sectorswill also help to foster a strengthened private sector.

ORIENTAL INTERVIEW

Mohamed Mbarki

To what extent does the closed border with Alge-ria affect the development of the Oriental region?MBARKI: Since Moroccan independence in 1956, theborder has been closed more often than it has beenopen. Economic experts have identified that this caus-es up to 2% GDP loss across the Maghreb region. How-ever, the current rate of economic development in thearea has made it less affected by the closed border, par-ticularly in wake of the launch of the royal initiative forthe region’s development in 2003.

At the same time, the region should also prepare forthe border to open so as to play a key role in theMaghreb – and indeed to partake in the Euro-Mediter-ranean region as a whole – as well as to reinforce itslinks with the national economy. Given the importanceof trans-Mediterranean exports, a port like that ofNador West Med can play a key role in global shippingflows and further develop the region as a consequence.

In what way does the informality of the economyimpact on development in the Oriental region?MBARKI: The informal economy is a manifestation ofa sub-optimally functioning economy. The Oriental isnot more affected by informality than other borderregions in the country, or comparable regions else-where. Up to now, a common strategy for pushing backthe informal economy was through repression and con-trol, but this is not a very effective strategy. It would bebetter to tackle this issue via economic means.

For instance, contraband can be pushed back whenlarge retail stores arrive giving people more choice atcompetitive prices and with quality assurances. Butpeople engaged in the sale of contraband also to devel-op certain commercial skills that could be useful if theywere to work in the services sector for instance. A studyundertaken by the Chamber of Commerce of Oujda hasshown that the informal sector creates jobs and destroysjobs at the same time. However, the balance in thatregard is negative in the end, whereby the differenceis made by taxation and subsidies that enable infor-

15


Great expectationsOBG talks to Mohamed Mbarki, Director, Agence de l’Oriental

mality to occur. In general though, the economy is grad-ually formalising, with more young people being attract-ed to stable jobs in the formal economy.

What is the best strategy to pursue in tackling thehigh rate of youth unemployment in the region?MBARKI:This is at present a worldwide problem, thoughmore fragile economies are most affected. The princi-pal cause of youth unemployment is that the numberof graduates has exceeded the number of available jobsnow for some years. There is also the issue that the skillsof today’s graduates do not correspond to thosedemanded by employers. The Oriental region has dis-tinguished itself for the quality of its university gradu-ates. However, improving basic education levels and lit-eracy rates is not just a regional priority, but a nationalone. To address these problems, pre-schooling needsto be further developed, and it is also important tonurture a spirit of entrepreneurship. In this respect, theagencies concerned now need to take responsibilitysince the means, the money and the political will arenow available, even if implementation is not alwayseasy. Through these initiatives and in cooperation withcivil society organisations, we have been able to cre-ate about 2500 new jobs.

How can the development of value-adding indus-tries be further encouraged in the region?MBARKI: For us it is clear industrialisation is key todevelopment. In creating a strategy, we have focussedon developing three industrial zones: the first is nearNador, which is completed and is being commercialised.With the new port of Nador and the Marchica Med, thisis a key zone for development. Next is the Agropole ofBerkane, built around the clementine business inBerkane and aimed at creating value-added products. Finally, the Technopole at Oujda provides an integrat-ed industrial zone to bring about renewable energydevelopment and environmentally-friendly technolo-gies, and includes an export-oriented offshoring zone.

ORIENTAL ANALYSIS

The region hopes to draw tourists to its southern provinces

investment is also being directed at training for lodgeowners, and will be implemented up to 2015.

According to Amine Abdellaoui, the regional tourismdelegate, the big challenge is to equip the rural areasacross the region with quality accommodation. “The cityof Oujda has 2000 to 2500 hotel beds, but otherprovinces do not have many beds, or at least, not a lotof tourism-qualified hotel capacity” he told OBG.TRAIN TO BOUARFA: The first niche tourism projectin the region is being designed using a railway that wasoriginally built in colonial times. The 350-km line link-ing Oujda to Bouarfa, 108 km south of the Figuig Oasis,is the remains of an ambitious project to create a rail-way connection between the Mediterranean coast andNiger. The Errachidia-based travel agency SuprateamTravel initially tested the railway line as a desert trainconcept with 700 tourists. “The desert train pilot proj-ect has had good results and it has the potential to devel-op into a very distinctive tourism product. However, werequire a better train for this, it needs to be adaptedfor tourism travel,” said Abdellaoui. “Nowadays, all wehave is one from the National Office for Railways ofMorocco, so the government might have to put out atender to get someone to supply a tourism wagon.”

A total of 32 places of interest have been identifiedas good rural tourism spots. These include the thermalstations of Sidi Charfi and Fézouane, the forests ofLouassa El Hamra and the mountain of Jbel Lakhdar.One of the region’s star attractions is the Figuig Oasisby the Algerian border in the far south of the region.The CCISO report showcases opportunities to invest innew restaurants, transport infrastructure and the estab-lishment of residential lodges.

The focus on niche rural tourism will help to improvethe livelihood of more isolated communities that aredisconnected from the major investment drive takingplace in the north. However, by creating improved con-ditions on tourist sites to the south, the region mightbe in a position to encourage travellers coming for theMediterranean beach resorts to also explore the south.

The publication of a reportassessing the region’seconomic potential in 2012has put added focus onecotourism projects andincentivising the localpopulation to remain in the area.

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Rural tourism attractionsinclude the thermal areasof Sidi Charfi and Fézouane,the forests of Louassa ElHamra and, of particularimportance, the FiguigOasis.

Rural potential Niche tourism is offering investment opportunities away from the busybeach resorts

Much of the Eastern Region’s history was founded onthe variety of its attractions, which range from sandybeaches to desert oases. Now authorities are keen tocreate niche tourism projects that help preserve thenatural environment while sustaining local communi-ties through low-impact tourist inflow. Emulating thesuccess of other sustainable tourism ventures creat-ed across regions of the kingdom, notably in the AtlasMountains or the desert area of Ouarzazate, the Ori-ental is seeking to sustain local traditions and expandthe economic growth to its isolated, southern-mostprovinces via tourism. Although Morocco has severalestablished ecotourism circuits that are international-ly recognised, these rarely involve the Oriental region,due to its distance from other tourist hotspots and thelack of sufficient promotion over the years. STAYING LOCAL: In a 2012 report analysing the East-ern Region’s economic potential, the Oujda Chamberof Commerce, Industry and Services (Chambre de Com-merce d’Industrie et de Services d’Oujda, CCISO) under-lined the potential ecotourism projects based aroundthe desert and its rural communities as effective waysto promote growth, as well as to encourage rural pop-ulations to stay. In the report, the chamber highlight-ed the initial potential to draw 1000 to 5000 visitors ayear. These numbers are ostensibly small comparedwith the potential of the Mediterranean coast resortprojects to the north, but the region’s natural settingencourages the development of niche products aimedat higher-end travellers from Europe and the US. MEETING CHALLENGES: However, existing infrastruc-ture is insufficient to accommodate tourism growth.Although small compared to the huge undertakings ofthe Eastern Region’s two beach resorts of Saïdia andMarchica, the government is already channelling invest-ment to the rural areas away from the Mediterranean.In 2012, Agence de l’Oriental announced a plan toinvest Dh28m (€2.49m) in rural tourism. The main pri-ority of this investment is to rehabilitate existent lodgesin rural areas, as well to build new units. Part of this

ORIENTAL ANALYSIS

Trade of goods across the Algeria-Morocco border ended in 1994

An open border between Morocco and Algeria wouldenhance growth in the Oriental, and raise trade activ-ity across North Africa. The closing of the Moroc-can-Algerian border in 1994 represented a direct hitto the Oriental’s economic prospects, prompting afall in trade and the prevention of movement of peo-ple between the two countries. Indeed, the impactof the event was felt at all levels of the region, withimplications that extend beyond eastern Moroccoand western Algeria. It has been a source of con-tention that has stalled negotiations aiming forstronger regional ties, and has become a touchysubject blocking political and economical coopera-tion between the region’s countries.

The centuries-old trade route that would allowtraders from the old Moroccan capital of Fez to dobusiness with what is present-day Algeria was thesource of a strong cultural flow between the Orien-tal region and cities in present-day Algeria. Nonethe-less, and despite associated economic costs for bothsides, the closed border is seen more as an issuebetween the two governments than the two peo-ples. Citizens and civil society on both sides haveexpressed willingness for an open boundary.

In October 2012 Algerian and Moroccan activistsstaged a peaceful protest, during the secondMaghreb Social Forum held in Oujda. The sit-in atten-dees were demanding the free circulation of peo-ple between different Maghreb countries and under-lined the benefits of increased trade for the twonations. The issue is especially pertinent for fami-lies that are spread out between Algeria and Moroc-co, who cannot cross easily to visit their relatives onopposite sides of the border. OFFICIALLY CLOSED: The border between Moroc-co and Algeria has been closed since 1994. The bor-der issue has region-wide implications, especiallyregarding the development of the Arab MaghrebUnion. Created as a regional trade block to facilitatecommercial exchanges between Morocco, Algeria,

Libya, Tunisia and Mauritania in 1989, the union hasbarely held a meeting since 1994. CREATING UNITY: A report published in 2012 by theAfrican Development Bank (ADB), titled “UnlockingNorth Africa’s Potential through Regional Integration”,argues that the low level of economic cooperationamong countries represents a loss for the entireregion. “Despite strong ties due to a common histo-ry, religion and language, the North African regionremains poorly integrated. The economic cost of thislack of integration is estimated to be around 2-3%of GDP,” the report states. The report further arguesthat the North African region has remained one ofthe continent’s most important economic regions,representing a third of Africa’s annual GDP andencompassing a population of 170m. STILL FEELING THE PINCH: Intra-regional traderemains weak; as an example, trade with other coun-tries in the Maghreb represents 5% of Morocco’stotal trade and only 3% of Tunisia’s, according to theADB, among the lowest of any regional economicgrouping on the continent. The current economicsituation in Europe might help shift focus to strongercooperation. North African economies, long depend-ent on European growth to encourage investmentand industrial output, have in some cases been heav-ily affected by the continent’s economic woes. Fur-thermore, economic consequences of the ArabSpring, which have been especially prevalent inTunisia, Libya and Egypt, have also weakened growthexpectations across the region. This has put anemphasis on the need for closer integration betweenthe neighbours in order to spur growth.

The Arab uprisings encouraged regional capitalsto begin engaging again for integration. In February2012 the various foreign ministers of the ArabMaghreb Union countries met in Rabat. It was thegroup’s first meeting in 18 years. Other steps thathave already been taken in 2013 might help open apath to eventually solve the border issue. In January

The North African regionrepresents a third ofAfrica’s annual GDP and atotal population of 170m,and its enormous potentialcould be better harnessedthrough integration,according to a 2012 reportby the ADB.

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Next door neighbourAn open border could further boost economic cooperation

ORIENTAL ANALYSIS

2013 the five countries of the Maghreb Union(Morocco, Tunisia, Algeria, Mauritania and Libya)announced the creation of an investment bank tofoster infrastructure development across the region.The plan, in discussions since 1991, had been stalledby the ongoing dispute between Morocco and Alge-ria. The bank will have an initial capital of $100m, inwhich the five countries participate equally.

Relations between the two countries were framedunder encouraging signs last year. In January 2012Morocco’s foreign minister, Saad Eddine El Othmani,visited Algiers with the goal of reviving the ArabMaghreb Union discussions. The trip was the first bya Moroccan foreign minister to Algeria in 10 years.Additionally, in a televised speech, King MohammedVI said, “Morocco will carry on with its endeavoursto reinforce its bilateral relations with all its Maghrebpartners – including our neighbour and sister nationAlgeria – in order to respond to the pressing, legit-imate aspirations of peoples in the region.”LOCAL IMPLICATIONS: For the Oriental, a closedborder with Algeria has had an impact on the localeconomy, prompting a rise in the exchange of con-traband products between the two sides, and mak-ing it more expensive and time-consuming for localindustries (and companies in most other areas ofMorocco) to export the their products to the largeand wealthier market next door. For businesses inthe Eastern Region, Algeria is frustratingly close, as

20

Steps to supportinfrastructure developmentare already being taken inthe Maghreb region, whichincludes the Oriental. Oneof these was theannouncement in early2013 of the establishmentof an investment bank bythe Arab Maghreb Union.

it is far from easy to access. However, the flow ofinvestment that has filtered through to the Orien-tal is a sign that local authorities have decided todevelop the region rather than relying an open bor-der to neighbouring Algerian as a precondition foreconomic growth. AT THE READY: For the Eastern Region, waiting isno longer an option, but nor is it now an obligation.The investment in roads, ports, urban renovation,agriculture and technology training are geared attransforming the Oriental into a new economic cen-tre in the Mediterranean.

“The border could open tomorrow, in six monthsor in 10 years,” said Ali Belhaj, the president of theregional council for the Oriental. “Since we do notknow when the border will open, we need to devel-op in accordance to the reality today, preparing theregion so it can survive with a closed border, but beready for when the border opens,” he told OBG.

The impact of an open border could be consider-able for all Maghreb countries by facilitating region-al integration. Local commerce would be consider-ably enhanced and trade between Algeria andMorocco would also be facilitated. A large amountof exports would begin to pass through the region.Regardless of the border situation, however, invest-ment in infrastructure and industry looks set to con-tinue apace, meaning the Eastern Region will devel-op without having to depend on its eastern neighbour.

ORIENTAL ANALYSIS

Improved city squares with new shopping areas are being built

The region’s capital city is under renovation with newroads and low-income housing being built. Locatedjust 15 km from the country’s border with Algeria, andhome to about 500,000 inhabitants, the city of Oujdahas historically been a trading conduit between Moroc-co and its eastern neighbour, and serves as the capi-tal of the Oriental region. The city suffered from a lackof public investment throughout the 1980s and 1990s,which has resulted in deteriorating housing and trans-port infrastructure. A component of the regional devel-opment strategy is thus the revamping of the city andthe surrounding 82 sq km of greater urbanised area. PLANS SET: Although work remains to be done, muchis being achieved under the Oujda Urban DevelopmentPlan 2010-16. Led by the Oujda Urban Commune, theplan’s stated objective is to give the city a new look andimprove conditions in some of its degraded areas.

Many challenges outlined in the city’s developmentplan are the result of organic, unplanned growth thathas shaped the capital. Oujda grew mainly throughinternal migration from other more rural areas of theregion, which has had a negative impact on some ofthe surrounding districts, in terms of economic activ-ity and pressure on infrastructure. The disorganisedurban growth led to insufficient water and electricityinfrastructure, as well as a spate of informal construc-tion. The plan also pinpointed road degradation and theprevalence of the informal sector as two major chal-lenges to the city’s economic development.

The plan designated 56 projects budgeted at a totalcost of Dh2.1bn (€186.7m) to improve the city. Theserange from urban reconstruction to improving the city’sgovernance structures. It also established measuresfor employment promotion through the renovation ofcity spaces and enhancement of its cultural offering. OUJDA URBA PÔLE: A big push for the city’s urban repo-sitioning will be done through a revamping of one ofits main areas, next to the city’s iconic train station. TheOujda Urba Pôle project aims to transform 30 ha of thecity centre. The first phase, budgeted at Dh300m

(€26.67m) will include the building of residential andcommercial units, as well as office space. A new trainstation is also in the works and is expected to be com-pleted by 2015. The old station is due to be restoredfor its historic value, with a museum created. Therevamped square will also include new shopping areas. AIMING AT ALL SEGMENTS: Developing low-incomehousing is part of the plan to improve living conditions,and authorities expect that up to 14,749 units will bebuilt in the Oujda-Angad prefecture alone between2010 and 2020 with a total investment of Dh3.6bn(€320m). To avoid speculation and encourage privateparticipation in the construction of low-income hous-ing, the government sells land to private developersunder the condition that a specific number of homesin this segment are included in development projects.

For years, the region has been working to eliminateshantytowns as part of the government’s broader “CitiesWithout Slums” programme, and 95% of them havebeen cleared away, according to Mohamed Derdouri,the director-general of Al Omrane in Oujda, a govern-ment real estate developer that focuses on building low-income housing across the country. Since 2008, AlOmrane has been putting up social housing in Oujdaunits that cost around Dh140,000 (€12,446) each. Atotal of 5000 of these 50-60-sq-metre units are dueto be built in 2013. Another affordable housing initia-tive is the Ennasr project, which was built by a consor-tium consisting of a joint venture between Morocco’sDouja Promotion Groupe Addoha and ALEM, and whichhas started to sell 10,500 low-income units in Oujda.

Changing cultural habits is adding pressure on hous-ing needs, even as supply is rising. “One problem withsocial housing is that people do not like to live togeth-er. So, whereas entire families lived together before, nowcouples want to have their own home, so a lot moreunits need to be built nowadays,” said Derdouri.

Middle and high-end accommodation is also underconstruction, both in terms of new building and ren-ovated older units. “During the period between 2001

The Oujda DevelopmentPlan 2010-16 seeks toupgrade the appearance ofthe Oriental’s regionalcapital through therenovation of city spacesand expandedinfrastructure.

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In line with the wider“Cities Without Slums”project, 95% of the region’sshantytowns have beeneliminated, creating spacefor increased constructionof low-income housing.

A welcome faceliftRevamped centres and development of cultural spaces in the capital

ORIENTAL ANALYSIS

and 2004, conditions were more difficult for sellingnew houses and apartments; even if prices back thenwere lower than today. So the economic upswing ofthe region has made a tangible difference on theavailability of homebuyers,” said Derdouri. Besidesapartments, the state-owned developer is also build-ing villas in the region, with 1910 of a total of 4500projected units already completed. NEW LOOK: With such a wide array of public worksand private developments under way, the end resultis that whole neighbourhoods are being improved.An investment of Dh28m (€2.49m) is being used toupgrade sanitary conditions in the north-west neigh-bourhoods of the city, through the expansion of theexistent wastewater network of 22 suburban neigh-bourhoods around Oujda. Roads are also being fixedunder a Dh350m (€31.1m) programme of road ren-ovation and expansion, which will likewise include thecity’s public lighting grid and sidewalks.

Despite the relatively small size of the city, a studywill be done to consider the construction of a tram-line. An added Dh80m (€7.1m) will be spent on newpublic squares, sports fields and parks around thetown. On the cultural front, the city has put Dh40m(€3.56m) towards building a new 1000-seat theatrecomplex. The Sidi Yahia Oasis, located just 6 km fromthe city, will be revived as a tourism site through thepromotion of an annual festival including Bedouinpoetry and shows. Furthermore, over Dh20m (€1.78m)

22

With small businessesaccounting for anestimated 55% of Oujda’seconomy, much effort isplanned through 2016 toregister informal businessactivities and organisethese enterprises intocooperatives.

will be spent on building sports facilities and on thecomplete renovation of the city’s municipal stadium. EMPLOYMENT MEASURES: Although the city’s urbandevelopment authorities have a limited ability to affectemployment creation as a whole, the city’s 2010-16strategy is also putting in place several measures topromote family-owned business. There is certainly aneed for this, given that the city’s overall unemploy-ment rate is around 22% – and 35% for women – wellexceeding the national average.

According to the Oujda Urban Commune, 55% of thecity’s formal economic fabric is based on small com-merce, which has placed a heavy emphasis on improv-ing the business environment for small and medium-sized enterprises and increasing formal economicactivities. Between 2011 and 2016, a total of Dh8m(€711,200) will be spent on registering informal busi-ness activities and encouraging their organisation intocommercial cooperatives. An extra Dh9m (€800,100)will be used to create new markets around the city topromote the organisation of commerce. The formali-sation of trade will have a double impact by increas-ing the opportunities for formal employment and byraising Oujda’s communal tax revenues.

Urban development taking place will have a hugeimpact not only on Oujda’s economic development,but also on the city’s overall ability to convince new pop-ulations to settle down. This should help the Orientalbecome a regional focus point for economic growth.

ORIENTAL ANALYSIS

The Eastern Region has 8.5% of the nation’s usable agricultural land

Although mining and trade have long played a crucialrole, the Eastern Region has always depended heavilyon its agricultural sector for economic growth. With anarray of different climates and about 8.5% of the nation-al usable agricultural land, the region has the naturalsetting for production of several goods. According tothe Ministry of Agriculture, it produces 13% of Moroc-co’s fruits, has 10% of its olive trees and 10% of its vineplantations. The Eastern Region is also responsible forraising 8% of the nation’s red meat. The Ministry ofAgriculture estimates there are 134,000 farms in theregion, although the majority of them are small plotsusing traditional means of production. The total cul-tivable area is about 700,000 ha – 109,236 ha of whichare irrigated, according to a UN report on the Orientalregion that was published in 2011. More than 70% ofavailable irrigated lands are located in the region’sprovinces of Berkane and Nador. SMALL ROADBLOCKS AHEAD: However, agriculturein this corner of the country faces a number of similarissues that affect the sector in other areas of the king-dom. Irregular rainfall, division of land into small plotsand relatively low levels of access to credit for purchas-ing modern farming equipment have all hindered theprocess of bringing a boost to agricultural production.As such, encouraging much needed investment to theregion to ensure produce can be taken to markets fur-ther afield, both domestically and outside of the coun-try, remains an ongoing challenge.INVESTING IN THE LAND: Under the Green MoroccoPlan (Plan Maroc Vert, PMV), the national strategy foragriculture development, policy devolution is crucial.There are 16 regional-level schemes known as region-al agriculture plans, which allow the overall strategy tobe implemented locally, thus taking into account dif-ferent agricultural contexts around the country. In theEastern Region, this will translate into the developmentof a total of 77 projects at a total investment of Dh9.1bn(€809m) until 2020. This will benefit the region’s mainagriculture products: olives, citrus fruits, dates, animal

husbandry, milk and almonds. It also puts an emphasison the need to attract private investors.

Of the total investment under the plan, 63.6% will begovernment expenditure, with the remaining 36.4% tobe brought in by private companies wanting to set upshop the region. Authorities expect that cheaper labourcompared to other regions and the natural availabilityof agricultural inputs for large-scale industrial produc-tion will help to attract new business. Under the PMV,the government expects to increase the number ofagro-industrial outfits in the region from around 65 in2012 to 142 by 2020, according to the Ministry of Agri-culture. Exports of fruits are targeted to grow from80,000 tonnes to 345,000 tonnes by 2020. BUILDING ON SUCCESS: The key to the plan is thedevelopment of existing competitive advantages, ratherthan trying to cultivate new segments. Most of theprojects will be designed to increase the production ofstrategic products and bring them closer to industrialprocessing and packaging areas to facilitate expeditionto markets. The biggest single investment per productclass will go towards increasing agro-industrial pro-cessing of fruits, which will receive a total of Dh1.2bn(€106.7m) between 2010 and 2015 for six projectsaimed at enlarging production areas around packag-ing stations. Building on the existing production andprocessing of olives, especially in the region of Taourirt,that are largely exported to the US and Europe, theregional agriculture plan will put in motion 11 projectsthat will convert 29,000 ha of cereals cultivation intoolive production in Driouch, Nador and Berkane, withan overall investment of Dh407m (€36.18m) between2010 and 2016. This will be crucial for the growth ofolive processing in the region, which is ultimatelydependent on the availability of enough produce.

“Over the last two years we have seen the price wepay to local producers double because of weaker cropyields and lower availability of produce,” said NaimaEssenhaji, the owner of Triffa Conserves, a local oliveconserves manufacturer based in Oujda that exports

The national strategy foragriculture developmentcalls for an increase in thenumber of agro-industrialoutfits in the region from65 in 2012 to 142 by 2020.

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A large share of upcominginvestments will go towardsraising agro-industrialprocessing of fruits in aneffort to enlargeproduction areas aroundpackaging stations.

Living off the landThe region aims to increase agricultural yields and expand agro-industry for export markets

ORIENTAL ANALYSIS

85% of its annual production to France and Belgium.The total olive plantation area in the Eastern Region isset to double, reaching 119,000 ha by 2020. Interna-tional olive certification programmes have allowed forsmall local units to upgrade and start focusing on morevalue-added products such as bio-olives for Europeanmarkets. Some cereal plantation areas will also be trans-formed to create 8250 ha of new almond plantationsin the provinces of Oujda, Taourirt, Jerada and Berkane,with an investment of Dh162.6m (€14.42m) by 2014. OPENING FLOWS: Strengthening the reliability of watersources will be essential to sustain an increased agri-cultural output in the future. “The region had issues withirrigation, but with the PMV, this has changed,” said KamalKantari, director-general of Station Kantari, the region’sbiggest clementine exporter, based in Berkane. “Watersupplies are now automated, and water is stored to mit-igate weather and rain patterns. Compared to ourcapacity in 2005, production could be tripled by 2014.”Station Kantari exports between 60,000 and 70,000

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Citrus fruits, including clementines, are a major export product

Developing irrigationsystems and aggregatingland into larger farms areboth tactics to help makethe sector more attractiveto private investors. Agro-industrial areas are alsobeing developed to createadded value.

tonnes of agricultural products a year to the US, Rus-sia, Europe and the Middle East. Increases in the totalarea of irrigated land will ultimately allow the firm totriple production between 2005 and 2014. The groupexpects to increase value-added products by addingorange juice for export, and hopes to take advantageof government facilities to boost processing activities. AGROPOLE DE BERKANE: A large part of the effortsto attract private investment to agriculture has beendirected towards the creation of the Agropole deBerkane. Construction work was started by KingMohammed VI in May 2010, and the total cost for theproject is set at Dh473m (€42.05m). This 100-ha zonewill be created as an agro-industrial area, focused onadding value to the region’s production through thecreation of an agro-industrial cluster.

The first 52-ha section has already been completedand 86% of it has been allocated for development byprivate companies. The key aim is to attract medium tolarge agro-industrial units, with the biggest plots ataround 7000 sq metres in size.

Work on the next 20-ha section is due to start in ear-ly 2013. The project is set to include an agro-foods sec-tion, an area for the processing of agricultural produceand a third zone focusing on logistics. Additionally, itwill also include research centres dedicated to train-ing staff as well as product testing.AGGREGATION: Creating conditions for new invest-ment into the region will be important. Increasing landaggregation could also have a positive impact on agri-cultural investment in the Oriental. “The fragmentationof land is posing a problem, in particular for small coop-eratives. This is discouraging investment, as some 20%of the land is made up of micro-plots,” said Kantari.

Over the long run, the sector will also benefit fromincreased accessibility to export channels. “In order toexport our olives we always need to go to Casablanca,and use the port there, and this reduces our compet-itiveness. It is a disadvantage for local companies,” saidEssenhaji. The region’s agriculture sector will thus needto integrate more to take advantage of its attributes.

ORIENTAL ANALYSIS

Infrastructure upgrades are expected to help attract new industries

Given the need to create employment opportunitiesfor its growing population and increase manufactur-ing output, authorities are aiming to establish newlabour-intensive industries in the Eastern Region. Foryears, overall business conditions, including poor infra-structure, made attracting manufacturing companiesa difficult mission. But with rising investment in logis-tics and a network of sector-dedicated industrial parksbeing developed across the region, a more invitingenvironment for new businesses is being created.MED-EST: Under the Emergence Plan, which waslaunched in 2005, the government established a strat-egy to increase Morocco’s industrial infrastructure andenhance the level of its production units. As part of this,the Agency for the Development of the Oriental hascreated a region-specific industrial development pro-gramme. The national Emergence Plan resulted in thelaunch of the Med-Est project, which aims to capitaliseon the improved accessibility brought about by theTanger-Med port in the north by creating clusters ded-icated to technology and industrial development aswell as a brand new logistics and distribution site. Theultimate aim is to upgrade the ancillary networks andlabour pool in the Oriental to allow it to compete moreeffectively in attracting foreign investment. DRAWING INTEREST: The region’s industrial develop-ment has been minimal over the last few decades.According to a 2012 report by the French Chamber ofCommerce and Industry in Morocco, the Oriental ishome to a total of about 300 industrial companiesemploying around 7000 people. Most of these arelocated in Nador, which has a legacy of small-scalemanufacturing, traditionally focused on constructionmaterials. Despite the existence of a handful of big fac-tories, such as Moroccan steel company Sonasid’s facil-ity in Nador and Swiss cement manufacturer Holcim’sfacility in Oujda, most of the region’s industrial outfitsare small or medium in size. Traditionally, most indus-trial firms have been in the agro-industrial sector, whichemploys about 30% of industrial workers in the region.

“There is need for an industrial transformation. Andone of the great advantages, besides our location, isthat labour in the Oriental region is cheaper than else-where in Morocco,” Rachid Slisli, the director of theOujda Chamber of Commerce and Industry, told OBG.THE NEW NADOR PORT: Much of expected increasein industrial output over the coming years is set tooriginate from the agro-industrial sector, as the regionworks to add value to its agricultural exports. TheBerkane Agropole industrial zone currently under devel-opment will house agro-industrial processing firms asa way to add value to the agricultural sector.

However, the government is also focusing onencouraging new industries to reduce the vulnerabil-ity of both output and employment for a handful ofareas. As part of this, there is a move to expand trans-port infrastructure to boost export capacity in non-traditional areas, such as petroleum products.

While the port of Nador Beni Ansar is already in oper-ation, the creation of a new seaport, Nador West Med,is under construction on an 850-ha plot of land locat-ed 30 km from the city of Nador on the Mediterraneancoast. The first phase alone is set to cost Dh5bn(€444.5m). The new port will include a hydro-carbu-rant storage zone to manage the transfer of energyexports to Europe, as well as a free trade industrialzone to attract local and foreign companies. There arealso plans for a trans-shipment and container handlingarea, although it is still unclear if this will be built straightaway or if a delay will be considered due to the region’sproximity to the larger Tanger-Med port to the west.

However, Nador West Med port is being billed as animprovement on existent infrastructure for the coun-try’s north coast rather than a replication of develop-ments elsewhere. “This project will not compete direct-ly with Tanger-Med, but it will be a complement thatwill impact the region’s attractiveness,” said Ali Belhaj,the president of the regional council of the EasternRegion. Exporting industries will clearly benefit fromhaving a fully operational port close by. Being in the

Efforts are under way toexpand the region’sindustrial sector. In 2012the Oriental was home to300 industrial companiesemploying around 7000people, with the majority ofindustry located in the cityof Nador.

25


Pushing for industryBetter connected transport infrastructure eases the export process

ORIENTAL ANALYSIS

Oriental increases operating costs because business-es are further from export points. “The port of Nadoris underused today. For many companies, raw materi-als are shipped through Casablanca, which drives uptransportation costs,” Nabil El Harti, the logistics direc-tor at Midi Peinture, told OBG. But this has been chang-ing with improved connectivity. “Recent investmentsin road expansion have helped improve the region's linksto our targeted export markets,” said Hamid Barda, themanager of Bled Conserves, an olive exporter based inTaourirt that sells 80% of its production overseas.PARKING IT: To promote industrial development, thegovernment is putting land aside and investing in basicinfrastructure that can facilitate manufacturers to moveinto the region, providing turnkey facilities and encour-aging clustering. The Med-Est industrial park in Selouaneis being built 12 km from the city of Nador with a totalinvestment of Dh285m (€25.34m). The project, whichis the result of a partnership between MEDZ, a subsidiaryof CDG Développement and the Nador Chamber ofCommerce, Industry and Services, will initially include142 ha of industrial plots with readily available accessto electricity and basic amenities. The park is focusingon small to medium companies and relatively undevel-oped secondary industries. Each plot is sized between1000 sq metres and 5000 sq metres. The first sectionhas been finalised with 72 ha of plots.

However, Med-Est is far from the only such facility inMorocco, with a number of new zones and parks under

26

There will be trainingfacilities at the industrialzones to ensure theavailability of qualifiedlabour in the energy sectorand IT and offshoring, twokey industrial activities.

construction or already in operation in more tradition-al economic areas of the country. To improve its attrac-tiveness to investors, the Selouane park aims to offerlower rent prices than those in other industrial areas.According to figures from Agence de l’Oriental, thebasic price to rent a sq meter for industrial productionwill be €44 a year, lower than the €58 per year for asq metre of industrial space in Casablanca or the aver-age national price of €60 per year. SERVING A MULTITUDE OF PURPOSES: Another indus-trial area, the Oujda Technopole, is working to becomean anchor for the settlement of new businesses intechnology-driven industries. With a total investmentof Dh600m (€53.34m), the zone will eventually covera total area of 500 ha, to be developed in different stagesand with separate focuses. Within the Oujda Technoparkis Clean Tech, an area dedicated to clean energy tech-nologies. Also operational within the industrial area isthe 22,500-sq-metre Oujda Shore, a Dh180m (€16m)IT business outsourcing area developed by the Ministryof Communications and managed by MedZ Sourcing,a MEDZ subsidiary that began operations at the endof 2012 and aims to take advantage of the region’s poolof young graduates to attract IT businesses.

State programmes are set to further develop work-force capabilities. Inside the Oujda Technopole, Moroc-co’s Bureau for Training and Employment Promotion willcreate two human resources training facilities, one forthe energy sector and the other for IT and offshoring.

ORIENTAL ANALYSIS

Phosphate production is strong, with 28m tonnes produced in 2011

Historically, the exploitation of mineral reserves in theEastern Region has played a big role in the economicperformance of the Oriental. It has also shaped the socialfabric of communities. For decades, coal mining wasessential for the livelihood of whole towns, providingjobs as well energy for the region. Despite a reductionin mining’s importance to the local economy, govern-ment plans to revive the sector and pay homage to itssignificance to the region’s identity are set to put theindustry back in a prominent position.

After the discovery of notable deposits in the area,carbon mining began in 1939. The community of Jera-da gained economic growth from mining, initially fromexporting its coal to other regions of the kingdom. In1971 the new thermo-electric power plant was builtand quickly became the biggest consumer of the region’scoal, which allowed the facility to produce about one-third of Morocco’s electricity. SHIFTING SANDS: Things changed in 1990, however,with the exhaustion of available coal reserves and theconsequent economic downturn. Further explorationof potential deposits north-west of the original minesite revealed a disappointingly lower quantity of min-erals than expected. In addition to these bleak prospects,the selling price of locally mined coal became 2.5 timesmore expensive than imported coal.

The mine was eventually closed in 2001, which hada pervasive effect on local living standards. A report bythe Oujda Chamber of Commerce, Industry and Serv-ices classified Jerada as the region’s poorest province,using 2007 figures, with a poverty rate of 22.8%, sig-nificantly higher than the 5.4% poverty rate in the Ouj-da-Angad province or even the 13.8% poverty rate inthe isolated oasis town of Figuig.

Despite losing the lustre it had decades ago, espe-cially in the case of coal production in Jerada, the East-ern Region still accounts for 48% of the country’s leadproduction and around 19% of barite output. LEGAL CHANGES: The mining sector in Moroccoaccounts for Dh53.6bn (€4.7bn) in exports and employs

about 35,000 people, according to a 2011 report bythe National Bureau for Hydrocarbons and Mines (OfficeNational des Hydrocarbures et des Mines, ONHYM).Most of the sector is driven by phosphate production,which accounted for 28m tonnes of the 30m tonnesproduced in 2011, under the management of thenational phosphates company, OCP Group, formerlyknown as Office Chérifien des Phosphates. Over thepast few years the Moroccan government has beenchanging the mining laws to encourage investment inmining other minerals, which exist in lower quantitiesthan phosphate, but have been able to attract someforeign investment nonetheless (see Mining chapter).

In the Oriental region, the government is aiming togarner interest for some of its mineral deposits. Accord-ing to a document published in 2012 by the OujdaChamber of Commerce, Industry and Services, the lead,zinc and silver deposits at Sidi Lahcen in the Debdouregion, the existent manganese mine in Bouarfa, andthe zinc deposits south of the city of Oujda all presentopportunities for development. REVAMPING EXPLORATION: The government is look-ing to sweeten the deal for companies willing to re-open some of these mineral exploration sites or findnew ones. Currently, the mining code is well over sixdecades old and in desperate need of an overhaul.However, a draft law is pending, which, when passed,will help update terms for exploration and commer-cial production, and put in place more rigorous bid-ding and evaluation mechanisms.

Fiscal terms are not particularly onerous comparedto many other mining producers elsewhere on the con-tinent. According to the law for non-phosphate min-eral exploration, all mineral-exporting companiesoperating in the country pay a reduced tax rate of 17.5%tax. Other incentives include 50-70% governmentfinancing for a project’s basic infrastructure needs,such as roads, as well as access to utilities such as waterand electricity. Although the mining industry’s lobby-ing body has long pushed for lower corporate taxes,

Despite a downturn thatbegan in 1990, the miningsector still accounts forDh53.6bn (€4.7bn) inexports and provides jobsfor 35,000 people.

27


Digging it upLegal reforms and added incentives should boost mining investment

ORIENTAL ANALYSIS

rates remain below those in sub-Saharan countrieslike Ghana and South Africa.LICENSED TO DRILL: Investment into mining licencesis managed by the ONHYM, which spends betweenDh100m (€8.9m) and Dh120m (€10.7m) annually onthe exploration of potential mineral areas, accordingto an investment report about the region published bythe UN in 2012. The public entity’s role is to partnerwith investors as well as reduce the risks associated withexploration through initial prospecting. Companiesentering into the sector can partner with the ONHYM,but the government arm can only own up to 30% ofnew mining ventures. For 2013, the state entity has plansto continue to explore for carbon sediments in thecentral region south of Oujda to develop industrial min-eral prospects in the Nador region and to prospect forprecious metals in the Bouarfa region.

Investors have the opportunity to enter the marketin two ways, either through the exploration of a cer-tain region and mining of discovered deposits or throughthe licensing of an existent concession with provenmineral reserves. Exploration licences are given for 16-sq-km plots for a duration of three years and can beextended for an additional four years. Mining licencesare for a four-year period and can be extended forthree additional four-year periods. This latter methodis the most prevalent in the Eastern Region, where anumber of previously abandoned areas still presentopportunities for mining. In 2012 the Regional Invest-

28

Mining licences are managed by a governmentbody that works withinvestors to reduce the risksoften associated withprospecting. Although thegovernment can partnerwith private mining firms, itcan only own up to 30% of anew venture.

ment Centre in Oujda registered 84 new projects in themining and energy sectors with a total overall invest-ment of Dh157.7m (€14.02m).PICKING UP THE PIECES: The Jerada coal mine onceepitomised the region’s potential for underground rich-es, but its subsequent fall and decline – like coal-min-ing towns from Pennsylvania to Yorkshire – has left thearea in a poor state. However, there are moves afootto try and revitalise the area, including through thecreation of an open-air museum. Agence de l’Oriental,in conjunction with the Ministry of Energy and Mines,the Ministry of Culture and Jerada’s Provincial Councilare working to establish the Parc Muséologique Minierà Jerada, hoping to bring increased economic activityto an area with one of the highest rate of unemploy-ment in the entire Eastern Region.

The initial studies for the creation of the park tookplace in 2010. The old mining area will be protectedfrom further development and a museum facility willbe established, which will showcase old mining equip-ment and the region’s broader history. It will includeareas for cultural recreation, sporting areas and a hotel.

However, the project will require amending currentlegislation on historical sites. In 2012 Agence de l’Ori-ental took part in discussions to change the existinglaw that regulates the protection of national heritageto allow it to include industrial sites, buildings andequipment and give them the same status as histori-cal monuments in terms of governmental protection.

ORIENTAL ANALYSIS

A top priority for public spending has been linking infrastructure

One of the first consequences of the Royal Initiativefor Development of the Oriental Region was the estab-lishment of a fund to invest in the region’s small andmedium-sized enterprises (SMEs). The Investment Fundfor the Eastern Region (Fonds d’Investissement de laRégion de l’Oriental, FIRO) was designed to buttress gov-ernmental investment in infrastructure. While publicspending has often focused on linking transport toconnect the region, the establishment of the FIRO wasgeared towards enhancing the private sector andpreparing it for future opportunities of the Oriental.FOUNDING PRINCIPLES: The fund was set up with theinitial target capital of Dh300m (€26.7m) to invest inlocal companies with growth potential but insuffi-cient financial muscle. Its innovative public-privatestructure works with its fundamental objective of pro-moting economic growth in the region through thefinancing of local business capacity. “We must givethe private sector the necessary tools to take advan-tage of the government’s investment efforts,” saidAbdelkrim Mehdi, the director-general of the FIRO.

Accessing finance in any emerging market is a com-plicated task, but setting up an equity fund can be dou-bly challenging in a region of family-owned firms thatlacks the higher level of financial intermediation preva-lent in the kingdom’s central coast cities such as Rabator Casablanca. However, the FIRO has been able topresent an alternative financing vehicle for business-es that also need better operational and managerialstructures. “Before the royal initiative and the heavyfocus on the region, companies did not know whatcapital investment was. They were not even used toaccessing bank credit,” said Mehdi. Banks in the regionhave traditionally accumulated capital in deposits, butnot transferred it towards relevant amounts of creditissuances to finance the local economy. A MIXED STRUCTURE: The multiplier effects of improv-ing financing for SMEs, particularly in North Africawhere they comprise the majority of businesses andaccount for much economic activity, are huge. Increased

credit for entrepreneurs and long-established smallfamily businesses can have an impact on the ability oflocal enterprises to trade with and expand into otherdomestic regions and foreign markets. Using both pri-vate and public money, FIRO’s capital is divided betweennational development agencies and funds, as well asan array of private banks and financial institutions.

More than half of the funds, 57%, comes from threepublic institutions: 20% from the Oriental Region, anoth-er 20% by Agence de l’Oriental and 17% from the Has-san II Fund. On the private side, equal 7.17% stakes werecontributed by Attijariwafa Bank, Banque Populaire,Banque Marocaine du Commerce Extérieur, CDGDéveloppement, Crédit Agricole and the HolmarcomGroup. Governance is divided between an investmentcommittee and a management committee, in order toavoid any political intervention in the form of invest-ment decisions, and to assure the fund is focusedtowards regional development.

“More than half of the fund is government money,but we want to have a management style like any pri-vate fund,” Mehdi told OBG. Since its inception in 2005,the fund has been a key instrument stimulating privatesector development. This is especially important con-sidering that the unemployment rate in the region was17.7% in 2011, according to the High Planning Com-mission, above the national average, and the majorityof firms are small operations without the capacity toabsorb large numbers of employees.

From the onset, investment into large-scale region-al projects was not part of the agenda. “Big projects,such as the new roads or the new port, are the respon-sibility of the Hassan II fund and other dedicated pub-lic funding, so there is no reason to duplicate efforts.We are exclusively focused on SMEs,” said Mehdi. STAKING IT IN: The FIRO capital invested in local busi-nesses is between Dh1m (€88,900) and Dh30m(€2.67m) with total shareholder ownership from 10%up to 35% of capital. Since 2008 the fund has alreadyparticipated in three SMEs with a total investment of

Set up with an initial targetcapital of Dh300m(€26.7m), an investmentfund for the Eastern Regionis providing financing forlocal enterprises.

29


The new regionalinvestment fund is focusedon smaller enterprises,leaving larger projects tofind funding throughprivate sources or othergovernment financing.

Funding growthA new development fund is putting small businesses on the mapthrough equity investment

ORIENTAL ANALYSIS

Dh60m (€5.33m) of investment, a positive record com-pared with the achievements of the profession: 35 exis-tent capital investment funds have signed 120 opera-tions since the emergence of the capital investmentsector in 1999 in the country. SEEING THE CHANGE: So far, FIRO has acquired equi-ty participations in three SMEs. First, in 2009, FIRObought 30% of Oujda-based FIRO Microwarehouse, ane-commerce firm focusing on the sale of hardware andIT that has been operating since 2004. This investmentallowed Microwarehouse to expand its store network.

Then, in 2010 FIRO concluded a shareholders’ agree-ment for its stake in Monlait, a dairy products indus-trial outfit based in Berkane that has been operatingsince 1999. The fund acquired 28.33% of the compa-ny and has been supporting its strategy of product val-orisation and expansion of milk production. It was alsothe partnership with FIRO that allowed Monlait to gainsupport from a USAID programme to increase the com-petitiveness of the national economy. In 2012 the milkproducer was awarded a Dh1.6m (€142,240) grant forthe acquisition of new industrial equipment, helpingto increase the yield and quality of its products.

The third equity deal, also taking place in 2010,allowed the Oriental’s development fund to invest in a26.66% participation in Midi Peinture, a paint produc-er based in Oujda. The company has been operatingsince 1984 and has FIRO shareholder ownership of34%. “Entering the capital structure of these three

30

Since 2009 the FIRO hasbought equity stakes inthree SMEs in the IT, agro-industrial andmanufacturing sectors. Itsinvestment guidelinescover areas such asgovernance, financialreporting and exitstrategies.

companies is quite a feat, given that there is resistanceto the opening of the capital of SMEs. In the Orientalregion the business culture is used to managing com-panies on a daily basis,” said Mehdi.WIDER WINDOWS: This is changing with time andincreased investment in the region. Governmental proj-ects now under development, such as the Oujda Techno-pole, the Med-Est industrial park in Selouane, the Agro-pole in Berkane and the Saïdia Resort, are opening thedoor for more companies to establish themselves in theregion. Newly available plots of land are adding oppor-tunities for industries. This means additional SMEs withpotential will be looking for investors.

Every company in which FIRO buys a stake must bea limited liability company, of foreign or domestic cap-ital. FIRO investing guidelines also require a transpar-ent managing structure and for financial informationto be published. Shareholding agreements signed withthe fund determine FIRO’s exit strategy.

According to Mehdi, a specific deadline for the dura-tion of the equity participation is always established.“Of course the most desired output of an institution-al investor like FIRO is the listing of the company in thestock exchange, proof that the investor succeeded intransforming the company into a structured entitythat meets international standards,” said Mehdi.

FIRO has targets for additional capital investmenttransactions that would fund the shareholding struc-ture of four other companies by the summer of 2013.

ORIENTAL LISTINGS 31


Hotels typically add a 10% service charge on top ofthe 10% tax. Some restaurants add a service chargeof 5-15%. If a service charge is not applied, it is advis-able to add 10-15% to the bill. For taxis and otherservices, it is common to round up to the nearest Dh5.

Mobile phone use is widespread and it is advisableto buy a local SIM card upon arrival, which typicallycosts approximately €2. Wireless internet is widelyavailable as well, although the connection may notalways be optimal, even within major urban centres.

GOVERNMENT MINISTRIESAgriculture

(0537) 760 102

Economy & Finance

(0537) 677 200

Employment

(0537) 760 521

Energy

(0537) 688 857

Foreign Affairs

(0537) 761 123

Foreign Trade

(0537) 735 637

General Affairs

(0537) 687 300

Health

(0537) 761 121

Higher Education, Scientific

Research & Training

(0537) 771 822

Industry, Trade & New

Technologies

(0537) 762 935

Information

(0537) 678 194

Interior Affairs

(0537) 214 000

Justice

(0537) 721 350

National Education

(0537) 771 822

Office of the Head of

Government

(0537) 219 400

Tourism

(0537) 577 800

Transport &

Equipment

(0537) 684 153

STATE ORGANISATIONSCasablanca Stock Exchange

(0522) 452 626

Central Bank

(Bank Al Magrib)

(0537) 818 181

National Ports Authority

(0520) 200 700

Casablanca Regional

Investment Centre

(0522) 481 888

Competition Authority

(0537) 752 810

Economic, Social &

Environmental Council

(0538) 010 300

General Confederation of

Moroccan Businesses

(0522) 997 000

High Planning Commission

(0537) 576 904

Maroc Export

(0537) 307 447

Moroccan Investment

Development Agency

(0537) 226 400

National Airports Authority

(0537) 539 140

National Office of Electricity

and Drinking Water

(0522) 668 080

National Office for

Hydrocarbons and Mines

(0537) 239 898

Rabat Regional

Investment Centre

(0537) 776 400

Royal Cabinet

(0537) 760 122

Houses of Parliament

(0537) 679 603

DIPLOMATIC REPRESENTATIONAlgeria

(0537) 765 474

Austria

(0537) 761 698

Bahrain

(0537) 633 500

Belgium

(0537) 268 060

Brazil

(0537) 714 663

Bulgaria

(0537) 765 477

Cameroon

(0537) 751 836

Canada

(0537) 687 400

China

(0537) 754 056

Côte d’Ivoire

(0537) 655 770

Democratic Republic

of Congo

(0537) 262 280

Egypt

(0537) 731 833

European Union

(0537) 579 800

France

(0537) 689 700

Gabon

(0537) 751 950

Germany

(0537) 218 600

Ghana

(0537) 757 620

Greece

(0537) 638 964/975

India

(0537) 671 339

Italy

(0537) 219 730/8

Japan

(0537) 631 782

Jordan

(0537) 751 125

Kuwait

(0537) 751 775

Lebanon

(0537) 656 949

Libya

(0537) 631 871

Mali

(0537) 759 125

Mauritania

(0537) 658 736

Mexico

(0537) 631 970

The Netherlands

(0537) 219 600

Norway

(0537) 764 084

Niger

(0537) 563 873

Nigeria

(0537) 674 615

Oman

(0537) 672 064

Palestine

(0537) 769 807

Portugal

(0537) 756 446

Russian Federation

(0537) 753 609

Romania

(0537) 738 611

Saudi Arabia

(0537) 633 000

Senegal

(0537) 754 171

South Africa

(0537) 706 760

Spain

(0537) 633 900

Switzerland

(0537) 268 030

Syria

(0537) 757 521

Tunisia

(0537) 730 576

Turkey

(0537) 661 544

United Arab Emirates

(0537) 707 070

United Kingdom

(0537) 633 333

United States

(0537) 762 265

CHAMBERS OF COMMERCEMoroccan-Belgo-

Luxembourgian

Chamber of

Commerce

(0522) 200 061

Moroccan-Canadian

Chamber of Commerce

(0522) 476 483

Moroccan-French

Chamber of Commerce

(0522) 209 090

Oujda Chamber of

Commerce,

Industry & Services

(0536) 500 697

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THE INSIDE EDGE

Documents

Morocco Oriental Region