Morocco, Gateway To The Afrıcan-Eu Market
We listened to Ahmet Aydın Doğan, Ambassador of Turkey to Morocco, talking about TurkeyMorocco trade relations and his suggestions to entrepreneurs who want to invest in both countries.
In the post-pandemic period, both commercial and financial moves and relations between countries have been reshaped. In this issue, where we examine Morocco in-depth, it was also highly important to examine the Moroccan economy and finance after COVID-19. In this context, we listened to Ahmet Aydın Doğan, Ambassador of Turkey to Morocco, talking about Turkey-Morocco trade relations and his suggestions to entrepreneurs wishing to invest in both countries.
COULD YOU PLEASE INTRODUCE THE MOROCCAN ECONOMY AND FOREIGN TRADE REGIME TO OUR READERS?
The Moroccan economy is based on agriculture, phosphate, tourism, and developing industry. Fresh fruits and vegetables and fish products stand out in agriculture. Although the country is a self-sufficient agricultural country other than grain production, its agricultural yield depends on rainfall. Morocco is the third country in the world in phosphate production after the USA and China, and the first country in terms of reserves. The Office Chérifien des Phosphates (OCP) is the country’s most important stateowned enterprise. Morocco is also an important tourism destination. The country attracts about 12 million tourists every year. In the last 10 years, we see that the country has been focusing on industrialization both to decrease imports and to increase export revenues. Automotive, textile, aviation, and phosphate derivatives are the main export sectors of the industry. With a relatively open economy, Morocco has been applying for financial support from organizations such as IMF, World Bank, OECD, Paris Club, African Development Bank, Arab Countries Development Funds since the 1990s. While inflation is low, economic growth is around 3%. Of course, these all reflect the conditions before COVID-19.
As a result, the Moroccan economy is shrinking. Moreover, Morocco has made Free Trade Agreements (FTA) covering 54 countries with the EU, the USA, Turkey, and the Arab countries as main partners, aiming to be an attractive production and export point. We can say that Morocco has partially achieved this goal. Because while its foreign trade performance is good in some sectors such as automotive and in the West African market, in general the country has a foreign trade deficit. Morocco also carries out an active economic development and expansion policy towards Africa.
HOW ARE THE TRADE RELATIONS BETWEEN MOROCCO AND TURKEY?
The two countries signed an FTA on January 1, 2006. Subsequently, our exports increased by 533% between 2005- 2019. Morocco’s exports to Turkey increased by 400 per cent in the same period. The mutual foreign trade volume exceeded $3 billion in 2019, and we had a foreign trade surplus of $1.6 billion. Our exports increased by 17.9% in 2019 compared to the previous year. On the other hand, Morocco has started implementing protective measures against our various industrial products such as iron and steel, and textiles since 2015, when the customs duties on our industrial products were zeroed. Upon Morocco’s request and as a result of negotiations, Agreement Amending the FTA between Turkey and Morocco was signed on August 24, 2020, to achieve balance in the trade course. The Amending Agreement proposed a five-year customs duty on approximately 900 industrial items of which about half are already taxed as part of protective measures. The agreement will enter into force after the parliamentary ratification processes are completed in both countries. Turkey sees Morocco not only as a trade partner but also as an important economic partner for investment and contracting areas. Indeed, around 160 Turkish companies employ more than 10 thousand Moroccans in areas such as automotive, logistics, construction, textile, retail, and furniture. The worth of projects conducted by Turkish contractors in Morocco has reached $4.1 billion.
HOW HAS THE MOROCCAN ECONOMY AND FINANCIAL SYSTEM BEEN AFFECTED BY COVID-19? HOW DO YOU THINK THE POST-PANDEMIC PERIOD WILL TURN OUT IN TURKEY-MOROCCO TRADE RELATIONS? WHAT KIND OF POTENTIALS ARE THERE IN MOROCCO FOR TURKISH EXPORTERS? WHAT ARE YOUR SUGGESTIONS FOR DEVELOPING TRADE RELATIONS?
The Moroccan economy was negatively affected by pandemic like other countries. Bank Al Magrib (Central Bank) announced that the economy is expected to shrink by 6.3% in 2020 and grow by 5.3% in 2021. In addition to the pandemic, drought was also effective in this shrinkage. In the same statement, it was noted that the inflation rate is expected to be 0.4% in 2020 and 1% in 2021, and the foreign exchange reserve is expected to reach approximately $29 billion by the end of 2020. The pandemic also affected the country’s foreign trade. As of September 2020, Morocco’s imports fell by 16.2% to 307.5 billion dirhams, and exports by 11.8% to 187.1 billion dirhams. We can say the same things for the Turkey-Morocco trade. Our export to Morocco decreased by 13% and Morocco’s export to Turkey by 16% in the first ten months of 2020. In the global economy, multinational companies are expected to shift their production after the pandemic from the Far East to closer points to the USA and Europe. This development could increase investments in countries such as Turkey and Morocco, and it could create a synergy effect on the economic and trade relations between these countries.
In Morocco, we see that there is export potential for our companies in areas such as general consumption materials, machinery and equipment, construction materials, automotive and spare parts, copper wires, electronic devices, food processing and packaging, textile, cosmetics, furniture, cleaning products, cooling and air conditioning, and paper. On the other hand, we should underline that significant investments have been made in areas such as automotive, aviation, renewable energy, banking, insurance, and retail in the country recently. If Turkish companies direct their investments in these areas, it will both strengthen bilateral relations and facilitate the opening to Africa, EU countries, and the USA. The healthcare sector will also become prominent in terms of trade, tourism, and investment in the upcoming period. The business languages in Morocco are Arabic and French. This is the most important point that our investors wishing to get into the Moroccan market should take into consideration. Those who wish to do business in the country must consider employing persons who know these languages well. Another issue is the Western Sahara issue. Morocco sees this region as an integral part of the country. Therefore, it is important for our entrepreneurs not to use the expression “Western Sahara” in their contacts with Morocco and not to show the region separate from Morocco.
Interview: Fatma Çınar