Morocco

Government and its achievements

le 24 October 2019


When we talk about confidence, it’s very important that we tackle the relationship between government and the private sector, which needs to be a constructive one.

First and foremost, which factors are likely to encourage investment by government?

Over the past two decades, Morocco’s every undertaking, initiated and overseen by His Majesty King Mohammed VI, has resulted in a fundamental and well-established fact, the importance of which needs to be fully acknowledged, which is that persons and possessions are safe and secure.

The role played by the public authorities

A country’s security and stability are two fundamental factors that generate investment. The work that has been done on both border security and homeland security has been invaluable.

This is an important attribute for Morocco.

Similarly, at the political level, institutions are functioning properly, elections are held at the appropriate time, governments are formed, etc.

Political stability is also an attribute for both domestic and foreign investors.

The third positive point is the government’s infrastructure investment policy.

In economics, there are three major players, the government, the corporate sector and households.

In countries such as ours, the government has an important role to play, with government spending, directly or indirectly by state-owned enterprises, accounting for 19% of GDP.

This figure of 19% of government spending represents a considerable financial injection that enables companies to exist in the first instance, and then grow.

The government is also an effective medium of transit. Everything passes through it in terms of the resources injected into the economy, enabling the multiplier effect to kick-in by creating a virtuous circle, thereby generating wealth and acting as a catalyst for economic and social development.

The government also plays a regulatory role. As far as the legal system is concerned, it must ensure that good jurisprudence is applied, meaning, that legislation must be commensurate with the aims and policies of those that devise it, as well as ensuring that it is drawn up correctly, clearly, explicitly and applicably. It is important that the persons responsible for applying it are able to visualise its impact on day-to-day affairs, hence the importance of every operational aspect, for which the Civil Service is normally responsible. The latter must be adequately and effectively resourced at every hierarchical level.

Civil Service processes clearly need to improve, however, so that they comply with the initial goals, thanks to administrative or jurisdictional appraisal systems by the Court of Auditors.

Reducing social and spatial inequalities

Today, the government cannot be criticised for poor economic performance but instead, for its inability to tackle the problem of social inequality.

The public authorities’ role is to decide how much tax is to be levied from the various social categories and how much is to be earmarked for each category of expenditure, policies for which it needs to strike the right social balance.

A highly-experienced senior civil servant provided us with the following lucid insight:

“If, for example, we were able to reduce the difficulties faced by urban working class people by coordinating policy between the various public sector bodies such as central government, the civil service and local authorities, if we were able to improve social infrastructure at a local level, if we were to develop a good public transport policy, if we were able to ensure the most disadvantaged households were taxed evenly and fairly, then the latter would see a huge improvement in their purchasing power, since life would be so much easier as a result.”

Such was the rationale underpinning the policy drawn up by His Majesty the King for the regional and local levels.

The idea of the Civil Service is that the resources earmarked for such-and-such local authority should be mobilised as rapidly as possible and spent as quickly as possible, if they are to make the greatest possible impact on local communities.

All policies appear impressive enough on paper. They need to be pragmatic, however, if they are to make an impact.

Today, local authorities are heavily reliant on central government funding.

The following table shows that local authorities’ tax receipts have continued to rise, up from MAD 24 billion in 2012 to MAD 34 billion in 2018.

Investment spending remains low, however, by comparison with revenues, at between MAD 12 billion and MAD 16 billion only over the same period.

This is all the more surprising given that, even prior to regionalisation and to revenues being allocated to local authorities, the budgets allocated by central government were twice the size of the latter’s spending needs, resulting in budget under-utilisation, as was the case in 2018. Although projected investment was MAD 37 billion, only MAD 16.5 billion was spent, despite tax receipts being more than adequate at MAD 33.5 billion.

What is abundantly clear, is that regional investment has the potential to become a real driver of economic growth and of social equality.

An end to the rent economy and niche sectors!

In all countries, large companies account for the bulk of GDP.

Similarly, in geographical terms, it is the wealthiest cities and regions that spend the most.

But we have to make sure that everyone contributes evenly, without agreeing to any tax adjustments or tax incentives that are not justifiable in the long term.

Growth is, above all, about work and productivity.

If people worked a little more, in a precise and focused way, daily output would be much higher, and that would clearly have an impact on productivity and hence production, in whatever area.

In our country, particularly as far as our Civil Service is concerned, our problem is that we are not well organised and there is a clear lack of productivity.

We have to agree on this diagnosis if we are to find remedies. Although we have many strengths, our country has weaknesses, too.

If we are able tp agree on this means, then we are halfway there to finding a solution.

Finally, the government must address all matters that fall within its remit, working alongside its partners.

But, as far as the private sector is concerned, it alone is responsible for taking the initiative and opting for balanced solutions.

In this regard, the government’s sole responsibility is that of regulator, so as to boost confidence in investment, productivity, etc.

In short, government is a legal entity that brings society together. It is there to try and ensure harmony between the various stakeholders.

If there is harmony and trust, economic and social development will result.

But if one party benefits much more from the community than another, then the resulting imbalance will collectively impact the whole.

And so, when all is said and done, government must ensure that it is not the cause of any potential distortion between different sectors of the economy, by offering unfair incentives.

For example, if a company were to give up on manufacturing in favour of another sector, simply because it was convinced that it would generate more profit because its new sector enjoyed certain benefits that had not been granted to the manufacturing sector…

Afifa Dassouli