SALAHEDDINE MEZOUAR Minister of Industry in the outgoing government	MOULAY HAFID ELALAMY President of CGEM

n Morocco, the assets have always been there, but now the logistics, marketing strategies and new belief in itself are showing through

Economics is often about perception. Outgoing Minister of Trade, Industry and Economic Upgrades Salaheddine Mezouar thinks self-confidence is a key psychological factor in market behavior. Morocco’s pharmaceutical industry, for example, covers 80 percent of the country’s demand. But only recently has it turned its eye to the region as a whole. The same can be said of electronics, packaging and car-making. “Globalization is seen as an opportunity provider, as opposed to an unfortunate event. This led us to make choices on the economic level,” says Mr. Mezouar.

The key is to create differentiation factors that single out Morocco from its competitors. One of the main assets is proximity to Europe, only eight miles away on the other side of the Strait of Gibraltar. Cargo ports like Algeciras can serve as launching pads for Moroccan agribusiness or SME manufactured goods. “But geographic proximity is a true advantage only if it’s turned into a logistical asset,” Mr. Mezouar remarks.

Talk among policymakers here is all about investment, exports and growth acceleration. At the core of the ‘Plan Emergence’ is the idea that Morocco’s assets are not the natural resources themselves, but also the logistics and the qualified workforce. Agriculture can go beyond exporting pesticide-free citrus or extra virgin olive oil. There is a whole added-value stage that is based on agribusiness models. For Mr. Mezouar, the idea is to identify eight competitive sectors, upgrade them and open the field for their liberalization.

The new economic openness here is directly correlated to the free trade agreements (FTAs). The software behind the FTAs is working as a mentality changer that has so far broken the myth that Morocco has a competitiveness problem. “We’ve tried to completely change our approach, to get out of sterile debates. Instead, we’ve managed to begin talking about real competitiveness, market opportunities—all of this integrated into the idea of globalization,” he says.

Industry currently represents 17 percent of Moroccan GDP. Mr. Mezouar would like the share to increase to 25 percent by leveling the space for biotechnology firms, for example. Suddenly, multinationals have realized there are qualified graduates in IT-related fields and a growing network of hi-tech parks. Off-shoring of business services is another example of how Morocco can move up the value scale. The role of FDI is to give traction to the country’s ambitions.

“We have to ask ourselves about the product in respect to market demand. This change in perception has helped many companies ask the right questions,” says the minister. Lowering corporate taxes and creating regional economic poles is proof that liberalization is in the air. The government has increased spending for highways, roads, telecoms, seaports and airports. Having assumed a liberal economy and integrated it into the context of globalization, the next step is to build a development model.

Meanwhile, the state is making space for the private sector. Mr. Mezouar, himself a former official at the Moroccan Association of Industries, thinks FTAs will offer privileged access to the largest markets in the world: Europe and the U.S. In Tangiers, an Automotive City is being launched. In Mohammedia, a similar project called the City of Electronics is on the drawing board. For the maritime cities of Agadir and Dakhla, the minister anticipates a logistical role.

Nobody knows the private sector in Morocco like Moulay Hafid Elalamy. The President of the General Confederation of Moroccan Enterprise (CGEM, in its French acronym) has long lobbied for more private sector participation in national development. The CGEM currently represents 2,000 firms. In terms of investment and R&D, the SMEs he represents are ahead of the curve. In Morocco, they employ 50 percent of the workforce and constitute 95 percent of private companies.

“Today, the effects are very simple. We’ve created an open economy, leaving the state behind. We jumped a stage and have passed to an open marketplace where powerful competitors are showing interest in Morocco,” says Mr. Elalamy. Hotels, banking, insurance, agribusiness and fishing have all switched hands. In fact, they act as a showcase to investors. “The sectors that remain in the hands of the state are very limited and likely to pass within the framework of privatization,” he adds.

Profit-sharing is the new buzzword here. Moroccan SMEs have suddenly found themselves in a liberalized environment, but often bereft of political power. That is why the CGEM has encouraged more FDI in sectors like telecoms, where the incumbent state-owned operator, Maroc Telecom, has become a competitive warrior. Among the net results has been a lowering of prices across the board. “Maroc Telecom is the most eloquent model of the country’s transformation process. It has completely changed telecoms,” says Mr. Elalamy.