MOHAMED BENCHAÂBOUN

Morocco 2021 | DIPLOMACY | VIP INTERVIEW

TBY talks to Mohamed Benchaâboun, Former Moroccan Minister of Economy and Finance, Moroccan Ambassador to France, about managing the COVID crisis, the New Development Model (NDM), and goals for Morocco in the coming year.

Morocco's financial and economic management of the crisis has been lauded by the international community. What have been the main challenges, and which achievements are you most proud of?

Morocco is often held up as a successful example of COVID-19 pandemic management. Under the informed leadership of His Majesty Mohammed VI, King of Morocco, this shows the capacity of our country to mobilize its forces and take the necessary steps in timely manner in order to cope with the effects of the current health crisis. His Majesty introduced a special COVID-19 fund that gave people hope and stimulated an extraordinary mobilization. The response to the call for solidarity was much greater than expected, with over MAD34,6 billion (USD3.78 billion) donated, a record and an example that has drawn admiration from all over the world. The first measures were to distribute monetary aid, defer the payment of social security contributions, support access to state-guaranteed funding for companies, and pause the repayment of loans for both families and companies. The planning and execution of its vaccination drive also made Morocco a model, commanding both respect and admiration. All the adopted measures proved useful in curbing the effects of the crisis, evidenced by the preservation of family living standards, the vulnerability index, and even the unemployment rate. Corporate defaults have been kept to a relatively moderate level, thanks to the many measures designed to reduce constraints on company cash flow and solvency. Faced with the magnitude of the health crisis, we implemented various short-term measures to ensure a quick economic recovery. We initiated more actions to accelerate the structural transformation of our economy that will help overcome the new difficulties faced by Moroccan companies. As such, Morocco has opted for the implementation of an ambitious Recovery Plan allowing a rapid return to economic growth. With a budget of MAD120 billion (USD13.11 billion), or about 12% of GDP, the recovery plan includes the densification of stimulus credit support and the scaling up of financial support for direct investment through the Mohammed VI Fund for Investment into priority areas, including industrial restructuring, innovation and growth-promoting activities, including the promotion of SMEs, infrastructure, agriculture, and tourism. An exhaustive reform of the public sector has also been initiated to strengthen the strategic role of Public Establishments and Enterprises (EEP) in socio-economic development to help accelerate structural transformation. In order to tackle the economic and social difficulties, Morocco intends to progressively generalize social coverage, while reforming existing aid programs and the compensation system. In this context, the framework law on social protection, adopted by the parliament, will allow about 22 million Moroccans to benefit from the compulsory health insurance scheme. Finally, significant efforts have been made to improve the business and investment context, particularly through reforms aimed at simplifying administrative procedures, modernizing the legal framework for business, and strengthening economic governance.

In 2021, the New Development Model (NMD) was announced to define the goals and objectives of each sector of the economy over the next decade. What will be the impact of this on Morocco's economy?

On May 25, 2021, under High Royal Instructions, a Special Commission for a New Development Model proposed a roadmap based on four strategic development pillars: the strengthening of economic resilience and the diversification of growth resources; the consolidation of human capital; equal access to inclusion opportunities; and the strengthening of the territories. The Ministry of Economy, Finance, and Administrative Reform will ensure the application of strategies and reforms aimed, on the one hand, at making Morocco one of the most dynamic and attractive economies in Africa, and, on the other, achieving an average annual economic growth of 6%. The success of NMD demands an adequate financing strategy. In this regard, the Ministry of Economy and Finance will play a pivotal role in the mobilization of financial resources, through the establishment of a more efficient fiscal policy, promoting, in addition to the preservation of the competitiveness of companies, the mobilization of additional resources, whose potential is estimated at between 2 and 3% of GDP.

Morocco's green economy is among the most developed in the world and seems to be on track to meet the targets set by the Paris Climate Agreement. How are you engaging and facilitating the development of the green sector?

Our country is highly invested in sustainable development. Following the United Nations Climate Change Conference, COP21, Morocco set the aim of raising the share of renewable installed power generation from 34% in 2016 to 52% in 2030. This ecological approach is embedded in the strategic vision of the NMD, aiming to make Morocco a champion of green energy. The goal is to make Morocco's energy supply sector a key determinant in its economic attractiveness through competitive energy supply predominantly from renewable sources and with decarbonized, responsible, and sustainable production methods. This would promote the accessibility of the Moroccan exportable offer to growth markets and draw in foreign investors looking for green economy sector opportunities. In the agricultural sector, the new 2030 Green Generation Strategy is based on two fundamental principles: the development of human capital; and sustainability in the development of the agricultural sector. The mobilization of private resources is a key condition for the successful implementation of climate actions and commitments, and it requires the support and involvement of all financial sector players. Thus, public authorities have been working to implement the global financial system roadmap signed in October 2016 at COP22 in favor of green finance supporting the transition to a green economy. To this effect, we have established the Green Invest SMB and VSB co-financing program by the Central Guarantee Fund (CCG). This program targets, in terms of eligible project categories, not only energy efficiency and renewable energies, but also depollution, more efficient use of natural resources, and waste recovery. Furthermore, the Casablanca Stock Exchange has set up a benchmark index that measures the price performance of companies against their environmental and social responsibility and good governance. Third is the issuing of green bonds by the banking sector, in addition to the inclusion of environmental risks in the funding assessment for certain projects, and the publication of a specific corporate social responsibility report. Finally, with respect to the development of the insurance industry, specific action targets the promotion of investments in projects relating to the environment and sustainable development, as well as the integration of climate risks and opportunities. Furthermore, the natural catastrophe insurance scheme, CatNat, was established by law allowing for the creation of coverage mechanisms for natural catastrophic events.

What are the goals for 2021, and what will be the role of the financial sector and the economy once the peak of the pandemic has passed?

The financial sector development strategy aims to establish a favorable framework for sustainably financing the economy. This objective is pursued through strengthening financial inclusion, consolidating financial stability, initiating a new dynamic in the development of the capital market and its infrastructure, and developing the insurance and social security sector. Regarding the banking sector, in the future, support and stimulus measures should continue, considering the evolving health situation and the recovery of economic growth. Priorities must be set for Moroccan banks. The objective is to identify ways to boost bank financing for the target populations, including the promotion of access to entrepreneurship bank loans for as many young, qualified project promoters as possible, and support for small and medium-sized businesses.