Over the past half-decade, Morocco has seen a significant improvement in its relationship with the World Bank, International Monetary Fund (IMF) and other multilateral financial institutions. The latest validation of this is a $200 million loan from the World Bank.
This renewed friendship has been driven by a willingness on the part of Morocco to pursue economic and financial reforms, which in turn have propelled it to one of Africa’s most promising economies. Not resting on its oars, the country continues to establish the necessary fundamentals for more economic prosperity, a desire that is clearly expressed in its current move to reduce the strain of subsidies – a gospel of the IMF to African leaders – and public expenditure on growth prospects. It is also promoting access to global markets and investors.
These reforms can be dated back to the global financial crises of 2008 which restricted the growth of other Arab countries. During that period, Morocco improved its economic relations and regional integration effort with African countries, not relying solely on Europe, its biggest trading partner at the time. The economic reforms were set up with the central objective of making Morocco more globally competitive, improving the skillsets of its workforce and strengthening the middle class to serve as the backbone of the entire economy.
Its latest subsidy reduction strategy is certain to land the IMF, as well as other international lenders, as allies. However, tackling unemployment will require more labour reforms and a strategic engagement of the informal sector, which contributes as much as 50 percent of the nation’s GDP.
Beyond supporting its reform agenda, the World Bank also assists with partial financing for the North African country’s projects spanning renewable energy, agriculture and waste management. The recent $200 million loan was released to “support Morocco’s competitiveness strategy and encourage reforms for productivity and growth,” a statement from the World Bank read.
These sort of reforms would usually involve updating regulatory frameworks in order to attract international investors, simplifying business procedures, and ensuring a competitive and transparent business environment, a scenario that attracts these global institutions. “Morocco made good headway in improving its overall competitiveness framework and carrying out business environment reforms.” Simon Gray, World Bank Country Director for the Maghreb, said at the announcement of the loan. Simon, however, noted that bolder reforms, and further diversification of the Moroccan economy will help set the country on a stronger path to join other frontier emerging markets.
Over the past few years, Morocco has grown into a rising African star, charting an economic course for other African nations to follow. In this age of structural reforms and competitiveness, these lessons will be useful to stimulating the economies of other players on the continent.
By Emmanuel Iruobe