// SMI 12 | Nearshoring – Reshaping Supply Chains
When businesses think about looking for suppliers or partners in Morocco, they often need a helping hand. Michael Sauermost has spent the last three-and-a-half years living there. As a correspondent for Germany Trade & Invest (GTAI) in Casablanca, he reports on market opportunities for medium-sized German companies. In this interview, we find out which sectors are currently the most active.
Michael Sauermost
Correspondent for Germany Trade & Invest (GTAI)
“As a result, global supply chains have been restructured, and Moroccan companies now prefer direct supply relationships.”
How important a trading partner is Morocco?
Generally speaking, Morocco is a key partner for Europe’s economy. The free trade agreement with the EU offers excellent conditions for this. French and Spanish companies are ahead in many areas for historical or linguistic reasons. Nonetheless, more and more German companies are establishing a presence in the country.
Why is that?
This is mainly a consequence of the coronavirus pandemic. As a result, global supply chains have been restructured, and Moroccan companies now prefer direct supply relationships. Prior to this, the picture was somewhat distorted. It was common practice for “Made in Germany” products to be dispatched to Moroccan ports through French or Spanish sales partners or subsidiaries. These exports were then reported in those other countries’ trade statistics. This triangular approach is slowly being abandoned, though. The pandemic has meant that German companies are now increasingly looking for direct contact with business partners in Morocco. And they can tell that Morocco has that sense of momentum.
What do you mean by that?
There is a lot going on right now. Morocco reaching the semi-final of the Football World Cup at the end of 2022 – the first African nation to do so – is symbolic of this. This is because Morocco has also established itself as an economic pioneer on the continent of Africa. The progress it has made in terms of renewable energy is impressive. The focus is on solar and wind in equal measure. Morocco will also pass on its experience and insights to other African countries. The next steps include producing green hydrogen and expanding electromobility. Morocco’s automotive sector is now the biggest in Africa, and it will continue to develop through the use of next-generation technology. This is a country focusing firmly on the future. The same applies to football: Morocco is bidding to host the 2030 World Cup, jointly with Spain and Portugal.
The country is often called the gateway to Africa.
That’s right. And for good reason, given its geographical proximity to Europe. The country is already well connected to the south, at least with French-speaking Africa. Consultants and lawyers have already put out feelers in that direction, and companies that already have a foothold in Morocco can benefit from this as well. However, there needs to be progressive growth of free trade among the African states to truly open up this gateway. It will take a considerable amount of time to implement the African Continental Free Trade Area that was agreed. Moreover, the logistical and infrastructural requirements for this still need to be fulfilled in some countries.
How would you describe the Moroccan economy overall?
Essentially, there are two major parts. Firstly, there is the non-organized sector, which is made up of many small businesses that are often run by families. They include retailers, craftspeople, and businesses operating in the agricultural or tourism sectors. These small companies continue to form the backbone of Morocco’s economy. Informal businesses rarely get a mention on the international scene, however.
And the other part of the economy?
This consists primarily of the export industries. Morocco has a very international focus. Both the Moroccan government and its King want industry to diversify and modernize – this is still crucial. In particular, the industrial funding program from 2014 to 2020 required pioneering advances. International manufacturers in the automotive and aerospace industries set up in industrial zones. The entire development was accompanied by the creation of first-class infrastructure. Two prestige projects in particular stand out: The deep-sea port of Tanger Med is now the largest in the whole Mediterranean region – and the largest in all of Africa. Also, high-speed trains operate between Tangier and Casablanca. Further express train connections to Marrakech and Agadir are being built, too.
How is industry evolving?
The government aims to position the country even more broadly as an industrial and export nation, and increase recognition of the “Made in Morocco” label both nationally and internationally. In addition to automobiles and aviation technology, export sectors identified as having potential are textiles, food processing, pharmaceuticals, and IT outsourcing. The Ministry of Industry is working on the concept for import substitution. The aim is to reduce the amount of imports by promoting local industry. Sardines are a classic case in point: Sardines should not have to be exported to Spain, and then reimported back into Morocco in canned form. Generally speaking, it is safe to assume that German-Moroccan trade can benefit from the initiatives in both directions. On the one hand, Morocco is growing in popularity as a procurement market. On the other hand, more machines are required on production sites.
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