New wealth rubs shoulders with old poverty in Morocco

New wealth rubs shoulders with old poverty in Morocco
Analysis: Two decades of economic reform have created thousands of new millionaires in Morocco, but failed to improve the lives of millions of Moroccans.
5 min read
17 August, 2015
Moroccans have taken to the streets to demand change many times since 2011 [Getty]

Morocco's two-decade experiment with economic reform has created thousands of new millionaires, but largely failed to make a dent in the poverty and unemployment that blights the lives of ordinary Moroccans.

According to a survey by South African market researchers, the number of Moroccans worth more than a million dollars has more than doubled to 4,800 since 2000 - yet over the same period levels of poverty, inequality and unemployment among recent university graduates have not improved at all.

Morocco's King Mohammed VI addressed the injustice of the country's economic development in a speech he gave on the 61st anniversary of the King and People's Revolution Day last year.

"I am keen to see economic development go hand in hand with the improvement of citizens' living conditions," he said.

"I do not want a two-speed system in which the rich reap the benefits of growth, thus becoming richer, while the poor are excluded from the development process, thus getting poorer and suffering more deprivation."

I do not want a two-speed system in which the rich reap the benefits of growth, while the poor are excluded.
- King Mohammed VI

While 22 years of economic liberalisation and privatisation has driven economic growth and the rise of a new and loyal business elite worth millions in Morocco, the wealth has not trickled down to the most impoverished in Moroccan society.

Four million of Morocco's 33 million people live below the poverty line, three million of them in rural areas. However, Morocco's 20 million urban dwellers do not necessarily have it any easier: while youth unemployment in the kingdom as a whole is high at 20.6 percent, among the young urban population it is almost double that, at 39.9 percent.

Furthermore, education does not appear to make people more employable in Morocco: only 4.5 percent of manual labourers are unemployed, yet that rises to 21.7 percent of workers with vocational training and 24.6 percent with a university degree.

The poverty and marginalisation that blight the lives of so many Moroccans is paving the way for the growth of violent religious extremism in the country.

Over the past year alone, several cells recruiting for the Islamic State group have been uncovered. The IS call to jihad has not fallen on deaf ears: the Moroccan intelligence services estimated in March this year that 1,354 Moroccans had gone to fight for IS in Syria and Iraq.

Development leaves the poor behind

Morocco's economy expanded rapidly in the decades after independence in 1956. A series of ambitious state-led plans to modernise the economy and increase production saw massive economic growth that improved the lives of many Moroccans.

However, by the late 1970s, the country was mired in high inflation and a growing balance-of-payments crisis that threatened continued economic growth. The 1980s were a lost decade for the Moroccan economy.

In 1993, Morocco began a far-ranging programme of economic reform supported by the IMF and the World Bank aimed at raising living standards, cutting unemployment and boosting growth. Domestic and foreign investment was encouraged, measures were taken to reduce bureaucracy and corruption, and state-owned industries were privatised.

However, the industries that were privatised were not the industries that were failing, but the most profitable industries - the sale of which would secure the highest returns to the state treasury. Many of the less-profitable state-owned industries have not yet been sold off.

The owners of these newly privatised industries were, for the most part, members of the elite, or their friends and relatives. Privatisation created a new class of the wealthy, closely allied to the regime and fiercely supportive of it. The makhzen, the governing elite centred on the person of the king, expanded to include many private business owners, rich from the spoils of privatisation and economic liberalisation.

Education does not appear to make people more employable in Morocco, as it is higher among those with an education.

Many of these wealthy, well-connected individuals have even served in government.

Aziz Akhennouch, one of the richest business owners in Morocco, entered politics and became minister of agriculture and fisheries.

Economic liberalisation but no political liberalisation

Economic reforms aimed at liberalising and opening up the economy have not, for the most part, been matched by political liberalisation.

The king has made several major gestures toward democracy, the rule of law and human rights. In 2004, he established the Equity and Reconciliation Commission to investigate and draw a line under the abuses of the so-called "years of lead" during his father's reign.

The kingdom also managed to weather the storms of the Arab Spring, which saw tens of thousands taking to the streets to protest against economic inequality, corruption, poor social services, a lack of civil rights and police brutality.

The king responded with limited constitutional reform, making the kingdom a constitutional monarchy, and increasing his government's spending on subsidies for food and fuel, on which many poor Moroccans depend.

However, though the prime minister can now appoint government officials and dissolve parliament, the king is still very much in charge. He has considerable executive and legislative powers, especially over the army and security services, foreign policy and religious affairs.

Writing in Foreign Policy, Robert Looney has argued this concentration of power in the king's hands has made reforming the system and turning around the economy more difficult. The king's domination of key areas of policy-making and the relative autonomy of entire departments and agencies from the cabinet has made effective coordination difficult.

Morocco, he argues, has chosen to follow the Chinese model of incremental reform to avoid potentially destabilising shocks to the system.

But 22 years on, it is clear that the pace of change is too slow for many, and what change there has been has left many behind.

Further economic reform of the kind recommended by the IMF would likely aggravate this economic divide, not alleviate it. The IMF has recommended relieving the pressure on the state's budget by further economic reform, removing the subsidies on basic commodities such as food and fuel, which would hit the poorest hardest.

Looney argues the kingdom is running out of time to find a way to deliver the fruits of economic liberalisation to a broader section of the population.

The question, he argues, is whether the king is willing to surrender some of his political prerogatives to do so, and what the cost might be to the kingdom in terms of lives blighted by poverty and the growth of violent extremist groups if he isn't.