Business Brief: Unsteady Signals on Morocco’s Economy; Trade Deficit Widens; Corruption Called Out by Head of Government; Jobs Report Continues to be Weak; and PJD Promises Educational Reforms – Jean R. AbiNader

Jean R. AbiNader, Moroccan American Center

Jean R. AbiNader, Moroccan American Center

Jean R. AbiNader
August 7, 2018

Economy Jolted by firing of Minister of Finance and Economy Mohamed Boussaid three days after King criticized slow pace of social and economic development; no reasons yet given from the Royal Palace. Although the RNI politician is considered by some to be one of the best and brightest in the cabinet and may not have direct responsibility for the issues raised by King Mohammed VI, there are a number of economic deficiencies that are plaguing Morocco.

For example, according to Moroccan authorities quoted in a Reuters article, “Morocco’s trade deficit widened by 7.8% to $10.7 billion in the first six months of 2018 compared with the same period last year.” At the same time, foreign direct investments plummeted 33.1%, $1.1 billion down from $1.5 billion a year earlier.

Around the same time, Ahmed Lahlimi, head of the High Commission for Planning (HCP), warned that the external debt of public companies was slated to surpass the government’s debt, leading to higher financing costs that “May a exacerbate a slowdown in investment growth, hurt competitiveness, and potentially dim foreign investors’ interest if state-run companies don’t rein in their external borrowing spree.”

In remarks to a PJD-related engineers group, “Head of Government Saad Eddine El Othmani has said that corruption wastes approximately 7% of Morocco’s GDP every year and claimed that the most effective way to deal with Morocco’s enduring economic and social problems is to fight corruption in public administration.” According to a Morocco World News posting, “In what seemed to be a direct response to King Mohammed VI’s Throne Day speech which called for immediate action to solve Morocco’s social and economic issues, El Othmani said that Morocco’s economy is suffering from dysfunctional public services and an ineffective redistribution of national resources.”

He went on to remark that corruption is the biggest obstacle for Moroccan progress and added that other corruption-related practices, such as poor coordination between different ministries, also impede Morocco’s path to development. Echoing the King’s earlier comments, El Othmani “Concluded that a new development model for Morocco should include a responsible public service built on merit and political accountability.”

To underscore the growing jobs deficit, Reuters reported on the latest labor statistics and comments by the head of HCP. “One in three Moroccan university graduates cannot find a job due to slow economic growth, under-investment, and an education system that fails to develop employable skills,” Mr. Lahlimi said in an interview. “In the last five years, an average 60,000 people have graduated annually from Moroccan higher educational institutions, of whom 20,000 can’t find a job.” The slight uptick in employment reflects agricultural workers that benefit from abundant rainfall. However, this will not be the case in the coming year.

“With such slow growth, Morocco is not doing enough to significantly curb unemployment and bridge social disparities. The impact of growth on job creation has continued to diminish since 2000,” he said, emphasizing that the education system needs improvement ranging from pre-school to university. “Education is the social ladder that could lift people out of poverty, reduce disparities and fight social inequalities.” Unfortunately, there are jobs available in the vocational and technical skills sectors but there is little motivation for students to take up skills training as there are cultural stereotypes about these jobs. As Lahlimi pointed out, “Vocational training is key but it continues to attract largely failed students. [It] should attract people who are motivated to do jobs that meet the needs of the job market in tandem with technological advancements.”

Regarding educational reform, the Othmani government claims that it will “revolutionize” the sectorthrough a series of reforms. In remarks at the opening of the 14th session of the PJD’s National Assembly, Head of Government Saadeddine El Othmani said that his government is currently prioritizing education, health, and employment to achieve the targeted reform. In the education sector, only 71.7% of the population can read and write, while just 64.4% of the working-age population has completed secondary education or above, according to the review by Morocco World News.

It reported that “Morocco’s Minister of Education Said Amzazi has unveiled his new national education plan which focuses on totally reforming the sector. The new plan aims to develop infrastructure and staff, rethink pedagogy, expand student enrollment and accessible education, support students against violence, and reform education in the private sector.”

While promising educational reform is not a new exercise for Moroccan governments, it is hoped that the King’s recent harsh criticism of the underperformance of the government’s efforts in social, health, and educational matters will give a strong impetus to achieve beneficial results as soon as possible.

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