• [Essentials]
• Introduction

[Essentials]

• The country’s structural reform programme is continuing to move ahead slowly. Among all the Arab countries it is still fair to say that it is in Morocco that economic and political reforms are being pushed furthest.
• The disappointment for Moroccans is that as yet it is difficult to see the reforms having much effect on the "real economy" - on investment, economic growth and people’s standard of living. The amounts of capital being invested and the numbers of people affected are not large. There is no broadly based surge in activity. The country remains as dependent as ever on agriculture, which is affected by drought in two years out of three. Wealth remains extremely unevenly divided.
• By the standards of eastern Europe, the Moroccan privatisation programme has not moved fast and it has recently been slowing down as it has started to tackle the more difficult prospects - but at least it is showing no sign of coming to a halt. Hampered by an unenthusiastic bureaucracy, it has also suffered from the government wanting to implement it without causing anybody any pain, which may be socially desirable but has probably lessened its impact in changing attitudes in the economy.
• Although the authorities like to play up the liberalisation, in practice the restrictions on capital transfers mean that the dirham remains surrounded by a battery of controls. Tariff liberalisation has come to a halt. Further legislation, governing labour law, competition, consumer protection and patents, trademarks and other intellectual property, has been working its way through the system for several years and is still moving forward, very slowly.
• The reform programme should benefit the "real economy" and should lead to economic growth. But there appears to be rather little new industrial investment taking place. Businessmen claim they will be unable to compete with European goods when their market opens in the next decade. It is thought about a third of existing industries will be able to compete perfectly well with European imports, a third will be able to adapt and a third will collapse.
• Foreign investment increased sharply in the early 1990s, but have recently fallen back. They rose from $227m in 1990 to $660m in 1994, then dropped to $470m in 1995 and about $300m in 1996. GDP growth has been slightly disappointing. The average for the 1990s has been 3.2 per cent (without agriculture still only 4 per cent), which would be acceptable for an industrialised economy but does not suggest a developing economy that is anywhere near taking off.
• It is quite possible that in the autumn of 1997 Morocco will for the first time have a government that is drawn from the opposition parties, and, potentially, this government will have some real power. But the leaders’ lack of experience of government, the contradiction between their old fashioned instincts and the country’s current half-modernised status, and the influence of a very experienced monarch will probably ensure that for a few years very little changes.

Introduction

Two years ago it was easy to be optimistic about Morocco. In the words of the head of research at one of Casablanca’s stock broking houses: "In 1995 we had a story to tell. We had finished financial reform and we had privatisation well under way - and we were waiting to see the results.…..Now," he adds, "we are still waiting".

Nothing has gone badly wrong in the meantime. In 1996 the country had a spectacularly good harvest, and in 1997 the harvest is patchy but, on average, just adequate. The country’s structural reform programme is continuing to move ahead slowly. Among all the Arab countries it is still fair to say that it is in Morocco that economic and political reforms are being pushed furthest.

The disappointment for Moroccans is that as yet it is difficult to see the reforms having much effect on the "real economy" - on investment, economic growth and people’s standard of living. The country is more open to the outside world, and to new ideas, than it was in the 1980s and here and there one sees small, successful new businesses emerging - or small, fast growing economic sectors. But the amounts of capital being invested and the numbers of people affected are not large. There is no broadly based surge in activity. The country remains as dependent as ever on agriculture, which is affected by drought in two years out of three. Wealth remains extremely unevenly divided.

Even the reform programme itself, though commendable by the disappointing standards of the rest of the Arab world, is being advanced very cautiously. When a privatisation project or a new piece of legislation comes up against a social obstacle - in that it involves a price rise, redundancies or increased job insecurity - it is likely to be delayed for a year or two.