Tags: Morocco, Africa, WAEMU, Central Africa, investments, exports, Trade and Investment Agreement, TIA
To what extent would a preferential agreement with WAEMU allow international investors to use Morocco as a re-export platform to Africa?
I. The Preferential Agreement between Morocco and WAEMU:
Aware of the strategic, economic, and commercial importance of the WAEMU zone, Morocco has committed to strengthening and diversifying its economic relations with the countries in this region, both bilaterally and within the framework of regional economic organizations.
The proposed Trade and Investment Agreement (TIA) between Morocco and WAEMU is part of efforts to enhance trade relations and economic partnerships between the two parties and to strengthen South-South cooperation.
Morocco initialed the draft Trade and Investment Agreement with WAEMU in 2008, following nine rounds of negotiations that began in 2000. This draft TIA is pending signature and ratification to enter into force.
This agreement focuses on the exchange of tariff preferences within the framework of product lists. It includes tariff preferences aimed at improving access to each other’s markets and contains provisions for removing non-tariff barriers that hinder trade.
The draft agreement also includes provisions aimed at encouraging and protecting investments between Morocco and WAEMU countries.
Full exemption from duties and taxes for a list of WAEMU industrial products;
50% reduction in duties for Moroccan industrial products;
50% reduction in customs duties and taxes for a list of agricultural products from the region;
40% reduction for a list of Moroccan agricultural products;
Provisions aimed at encouraging and protecting investments between Morocco and WAEMU countries;
Realization of true economic integration between Morocco and these countries;
Access to a growing market of 80 million consumers;
Access to the exploitation of abundant natural resources in the region;
This asymmetry, to Morocco’s disadvantage, will be offset by the Kingdom’s long-term interest in this promising market, which accounted for nearly 13.19% of Morocco’s trade with Africa and 36.59% with Sub-Saharan Africa in 2013.
II. Economic Cooperation between Morocco and WAEMU
i. Trade Exchanges
Trade between Morocco and WAEMU reached a value of 4.69 billion MAD in 2013, representing 13.19% of the total trade volume with Africa.
Imports amounted to 346.93 million MAD, representing a share of 0.09% of total imports, with an average annual decline of -3.5% between 2009 and 2013.
Exports reached 4.344 billion MAD, representing 2.35% of total exports, with an average annual growth of 28.15% between 2009 and 2013.
The trade balance is thus characterized by a surplus in favor of Morocco, amounting to 3.99 billion MAD, with an import-to-export coverage ratio of 1252%.
WAEMU ranked first as Morocco’s economic partner in Sub-Saharan Africa, with 42% of exports and 13.83% of imports from this region.
ii. Moroccan Foreign Direct Investments in WAEMU countries:
Morocco is the leading African investor in this zone.
Between 2009 and 2013, FDI flows experienced an average annual growth of 94.85%.
Moroccan FDI covers various sectors, including telecommunications, construction, banking, cement, energy, metallurgy, trade, services, pharmaceuticals, and tourism.
III. The Impact of Signing the TIA on Using Morocco as a Re-Export Platform to Africa:
The current growth in economic and commercial relations between Morocco and WAEMU countries is the result of a renewed strategy in the Kingdom’s African policy. An analysis of trade and investment data from the past five years indicates:
Improved Positioning: Moroccan products have better positioned themselves in the WAEMU market.
Significant Improvement: There has been substantial improvement in both the volumes and values of exports, as well as the composition of exported products.
Limited Growth in Imports: The growth in imports has been relatively modest.
Increased Trade Surplus: The trade surplus has grown.
FDI from Moroccan Economic Operators: Investments from Moroccan economic operators in WAEMU have exceeded one billion dirhams, constituting more than 40.63% of Morocco’s total overseas investments.
WAEMU is Morocco’s leading destination for direct investment in Africa.
Given that the structure of trade between Morocco and WAEMU remains somewhat undiversified, the question of the exportable offer from Moroccan companies for this region arises.
However, Morocco’s sectoral policies aimed at diversifying its exportable offer through positioning in new high-value production niches (such as automotive, offshoring, electronics, agribusiness, and aerospace) have made the country more attractive to foreign investors who wish to establish themselves in Morocco and produce in these sectors. These policies have also enriched Morocco’s exportable offer for this destination, presenting significant potential to boost Moroccan exports to Africa.
Competitiveness is another key issue; thus, any promotion in the WAEMU region must consider not only the local competitiveness of targeted countries but also the marketing strategies of Morocco’s competitors. Countries like China, Brazil, India, and Turkey have captured market shares by offering lower-priced products compared to Moroccan export prices.
In this regard, concluding an agreement with WAEMU, considering the new measures taken in the framework of harmonizing their external tariff with ECOWAS, would strengthen the competitiveness of Moroccan products, enhance existing market shares, and enable penetration into new markets with West African countries.
This would further encourage foreign investors to choose Morocco as a platform for establishing operations and exporting to Africa.
IV. Main Logistical Challenges to Overcome to Boost the Competitiveness of Moroccan Industrial Production for Africa:
The logistics sector is currently seen as a key lever for improving the competitiveness of Moroccan industrial products.
This sector faces challenges that hinder the stimulation of Moroccan industrial competitiveness for the African market, including:
i. National Level:
Lack of Integrated Logistics Groups: There is currently a lack of large integrated logistics groups coupled with the fragmented nature of transport providers.
Monitoring and Measurement Issues: There is a lack of follow-up and measurement of the effectiveness and performance of logistics services.
Implementation of New Logistics Strategy: Implementing the new logistics strategy is a major challenge due to the multiplicity of actors and institutional competencies involved (administrations, local authorities, economic operators, institutional partners) and the significant challenges of managing a comprehensive logistics platform development program.
Integrated Logistics Systems: Establishing integrated logistics systems upstream and downstream that meet international standards.
Development of Logistics Offerings: Developing a logistics offering for handling industrial goods within distribution and logistics subcontracting platforms.
Expansion of Logistics Zones: Expanding logistics activity zones.
Professional Service Shortage: There is a lack of professional logistics services, with inadequate facilities leading to product degradation, limited skilled human resources, and a shortage of end-to-end integrated logistics services beyond storage.
Insufficient Connectivity Infrastructure: Weak connectivity infrastructure necessary for effective export to various African countries.
ii. African Level:
Lack of Developed Intra-African Transport Infrastructure: There is a shortage of developed intra-African transport infrastructure.
Need for Sector Liberalization: Some African countries need to liberalize their transport and logistics sectors to contribute to the development of transport infrastructure, where the public sector plays a major role.
Insufficient Maritime and Air Fleets: There are inadequate maritime and air fleets.
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