Morocco is investing heavily in its transport infrastructure as it looks to build up key industries and position itself as a trade and transport hub for Africa.

It is also upgrading its transport facilities to attract more foreign investment into the country and reduce its reliance on foreign aid. Developing a more export-oriented economy should help the government tackle its widening budget deficit.

Morocco’s budget deficit stood at 8.4 per cent of gross domestic product (GDP), as of March. This compares with a 2 per cent budget surplus the government enjoyed in 2006.

Investment opportunities

Multibillion-dollar aid packages from The World Bank, the Washington-headquartered IMF and regional governments have helped to prop up state coffers.

In the long term, however, Rabat needs to become less dependent on aid. It needs to attract more private investors to support its various industries, as well as increasing the volume of exports, which will strengthen trade relations with emerging markets.

“Morocco will remain a prime destination for investors. It has certainly tried to position itself as a hub for investment and trade in Africa and that is likely to continue,” says Geoffrey Howard, associate analyst for the Middle East and North Africa region at UK-headquartered risk consultancy firm Control Risks. “Morocco’s standing as a foreign investment destination has also been buoyed by the instability in neighbouring countries.”

According to US ratings agency Moody’s Investors Service, Morocco managed to maintain net foreign direct investment (FDI) at 2-2.5 per cent of GDP in 2011 and 2012, whereas it collapsed in Tunisia and Egypt, falling from 5-5.5 per cent to 1 per cent in 2011.

Morocco is having some success in attracting foreign investors. In 2012, FDI totalled $2.84bn, marking an increase of more than 60 per cent on the previous year, according to the UN Conference on Trade and Development. The country now attracts 25 per cent of all FDI in the North Africa region.

Recent examples of foreign investment include France’s Renault opening a factory near Tangier in February 2012 – the car manufacturer’s second production plant in Morocco.

More recently in February, the US’ Bombardier Aerospace opened a temporary components facility near the Mohammed V International airport, in the Casablanca region, and close to the location of a planned permanent facility. The factory started operations with 18 aircraft assemblers with this expected to increase to about 100 fully trained assemblers by the end of the year. 

Also this year, Spanish group Europac invested e3m ($3.9m) in Morocco, opening a packaging plant in Tangier.

Morocco’s ports, in particular Tanger-Med port, are playing a vital role in attracting foreign businesses by providing the infrastructure and transport links to support their operations. Tanger-Med port, located just outside the city of Tangier on the Mediterranean coast, is Africa’s largest port. Tanger-Med has been so busy since its opening in 2007, that the Tanger Port Authority brought forward the second phase of its development. Container throughput is rising rapidly, with traffic in the first half of this year totalling 1.2 million 20-foot equivalent units (TEUs), an increase of 36 per cent compared with the same time period last year.

Port expansion

Given the volume of business being conducted at the port, a further two terminals are now being built. The expansion of Tanger-Med forms part of the wider National Port Expansion Strategy 2030, a scheme launched in 2010 to expand and upgrade all Morocco’s ports.

The strategy, which is managed by the National Ports Authority (ANP), covers 13 ports that handle imports and exports, including Tanger-Med, Casablanca, Kenitra, Mohammedia and Safi, as well as 19 fishing ports and six cruise or leisure ports.

The second phase of the Tanger-Med port development was launched in 2009, far ahead of the original planned schedule.

Currently, the port has a container capacity of 3 million TEUs (with terminals 1 and 2 able to handle 1.5 million TEUs each), a dedicated car terminal (which supports the Renault factory in the Tanger-Med Freezone) and a passenger terminal. It also has a hydrocarbons terminal used for the bunkering of ships moving through the Strait of Gibraltar, as well as the import, and trans-shipment of refined products. 

The expansion will see the construction of terminals 3 and 4, adding a further 5 million TEUs of capacity. Construction is now 70 per cent complete.

“The berths will be constructed as soon as we have commercialised the terminals. One terminal has already been commericialised and we are working to finish it in 18 months,” says Najlaa Diouri, general manager at Tanger-Med Port Authority. “Once we have signed with a concession operator, they have 18 months to import their cranes and equipment and we have 18 months to finish the berth.”

The concession for Terminal 4 was granted in 2009 to national port operator Marsa Maroc. Negotiations surrounding an operator for Terminal 3 are still continuing.

Before the opening of Tanger-Med, Casablanca port was one of Morocco’s busiest. It is also being expanded. A third terminal is being built at the port, increasing capacity from 1.6 million TEUs to 3.3 million TEUs a year. In February, ANP awarded a 30-year concession for the third terminal to Marsa Maroc.

The Casablanca port expansion also includes the development of a cruise terminal. A tender was issued for the study for the terminal earlier this year.

Transport interconnectivity

Another new terminal will be built at the port of Mohammedia, which lies just 23 kilometres north of Casablanca port. In August, the ports agency invited consultants to bid for contracts covering the technical and economic feasibility studies for a second terminal and chemical tanker terminal at the port. Tender documents are available to collect until mid-September.

Morocco has certainly tried to position itself as a hub for investment and trade in Africa and that is likely to continue

Geoffrey Howard, Control Risks

There are also plans to create a new port at Kenitra in the northwest of Morocco. In June, the ports agency launched a study to identify new opportunities for the infrastructure and land surrounding the facility, situated on the Sebou River on the Atlantic coast between Tangier and Casablanca.

Meanwhile, a new commercial terminal to be built at Safi on the Atlantic coast will directly support key Moroccan industries.

It will handle industrial exports and imports for the Office National de l’Electricite et de l’Eau Potable’s thermal power plant and the new phosphate production hub being developed by national phosphate producer Office Cherifien des Phosphates. The hub will cover 1,300 hectares and include five sulphuric acid production units, with a capacity of 1.4 million tonnes a year (t/y), and five phosphoric acid units, with a capacity of 450,000 t/y.

In May, Turkey’s STFA Marine Construction Company won the contract to build the new facility, located 15km south of Safi. The project will be carried out in three phases. The first is set to cost about $470m and is due for completion in August 2017.

To support the anticipated rise in freight moving in and out of the expanded ports, Morocco is also improving its railways. Freight and passenger traffic on the country’s major railways has been growing. In 2012, freight volumes, excluding the transport of phosphate, hit 9.1 million tonnes, according national railway operator ONCF.

Last year, ONCF launched a scheme to improve the existing railway connection between Tangier and Marrakech. The project comprises two sections – the Kenitra-Rabat-Casablanca line and the Casablanca-Settat-Marrakech line. The Kenitra-Casablanca project was officially launched in September 2012 and involves plans to build a new line next to the existing lines, as well as the modernisation of signalling equipment.

Investment… will enable Morocco to build on its reputation as an attractive location for international firms

The first phase of the upgrade of the Settat-Marrakech line was officially launched in November. It will be partially financed by the African Development Bank and funds from ONCF. The entire project is scheduled to be completed in 2016. Morocco is also building a high-speed rail link between Tangier and Kenitra with a capacity of 8 million passengers a year.

Freeing up capacity

The need for the passenger line has been partly driven by the country’s tourism industry as well as the opening of Tanger-Med port and the high volume of freight needed to be carried by rail in and out the port. Moving more passengers onto the high-speed train will free up capacity on the conventional lines for freight.

The high-speed railway, first broached in 2007, has not been without controversy. Many Moroccans have protested that the project is too expensive and not a good use of state funds.

However, the project continues to move forward. In April, a consortium comprising French firms Colas Rail (and its subsidiary Colas Rail Maroc) and Egis Rail won the e136m design and build contract for the high-speed line. A contract covering the design and supply of signalling and telecommunications equipment for the project was also awarded earlier this year to another French group of Ansaldo STS and Cofely Ineo. The railway will be operational by 2015.

The investment in a modern interconnected transport system will enable Morocco to build on its reputation as an attractive location for international firms looking for a low-cost manufacturing base close to Europe and African markets. It is all the more important that progress is being made now, with other North African countries continuing to experience political unrest, so Morocco can position itself as a safe haven.