Made in Morocco – industrial giants just keep on investing

Frederic Reglain/Alamy via Reuters

Some of the names – Renault, Stellantis, Oracle, Safran, Thales, Airbus and Boeing – are familiar; others – CNGR Advanced Material, Bluebird, Gotion, Zhejiang Huayou Cobalt and LG Chem – perhaps less so. 

But all these companies from the US, Europe, China and South Korea are investing in Moroccan industry.

In the aviation sector, 142 businesses employ 17,000 people, producing an annual $2 billion in exports, according to Morocco’s Agency for Investment and Export Development. The government is aiming to increase all three figures.

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Ryad Mezzour, the industry and trade minister, said last week that Rabat is seeking to double the country’s aviation manufacturing workforce by 2030.

European aerospace giant Airbus is expanding its production capacity at a composites plant in Nouaceur. By 2026, the site will make parts for 75 aircraft per month.

Two US companies, Kansas Modification Center and Integrated Aerospace Alliance, are building a facility in Casablanca that will convert Boeing 777 passenger jets into freighters.

The automotive sector is even more deeply embedded in the country. French manufacturers such as Renault and Citroën (now a Stellantis brand) have been making cars, in whole or in part, in Morocco for years.

Stellantis, which has a plant at Kenitra north of the capital Rabat, said last week that it was buying Sopriam, a subsidiary of the holding company Al Mada – its local joint venture partner, which is controlled by the Moroccan royal family. Sopriam distributes Citroën and Peugeot vehicles in Morocco.

Morocco now produces 614,000 vehicles a year and is expected to overtake South Africa as Africa’s largest car manufacturer in 2024, according to researcher BMI.

The government hopes the total will reach 1 million vehicles by 2030.

The electric vehicle battery industry is developing rapidly too. Thanks to Morocco’s large phosphate reserves, a supply chain for lithium-iron-phosphate (LFP) batteries is being set up in the North African country rather than in Europe, according to a senior Volkswagen executive.

Reuters/Youssef Boudlal

Gotion High Tech of China announced plans to make batteries in Morocco in June.

Another Chinese battery maker, CNGR Advanced Material, said last September that it was joining forces with Al Mada to develop a plant.

LG Chem of South Korea is also investing in a Moroccan factory that will make LFP batteries for export to the US market.

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All these deals are important not only because of the uplift they give to what remains a poor country, but also because they provide a model of co-operation with international investors that is rare in the Arab world.

The industrial sector’s contribution to GDP ranges from 20 percent in Bahrain and Iran to only 1 percent in Lebanon. In Morocco and other populous countries with structurally high unemployment, such as Algeria and Egypt, manufacturing accounts for only 15 percent of the economy, according to the World Bank.

Hydrocarbons have tended to crowd out industry – the infamous resource curse – but ponderous state industries also play a part in inhibiting investment.

A new focus on manufacturing

This is now changing across the region. The UAE, the largest Arab investor in Morocco, has just signed a comprehensive economic partnership agreement with Rabat.

The Emirates and Saudi Arabia have also outlined policies to boost industry in their own countries. Abu Dhabi’s Operation 300 Billion aims to increase the size of the industrial sector from AED133 billion.

Riyadh has a national industrial strategy as part of Vision 2030. This seeks to increase industrial output from $88 billion in 2020 to $377 billion by 2035, according to the US-Saudi Business Council.

The region certainly has enough people to do the work. Morocco has a population of more than 37 million and, according to its statistical bureau, the Haut-Commissariat au Plan (HCP), unemployment in the first quarter of this year was nearly 14 percent. This is the highest level since 1999 and has been attributed to external economic shocks as well as the impacts of Morocco’s water crisis and the 2023 earthquake. The figure among young people was 36 percent.

Alexandros Michailidis/Alamy

François Conradie of Oxford Economics in Casablanca has analysed the HCP data and reckons that in the first quarter of this year, nearly 13 percent of all employed people in Morocco – 1.3 million people – were working in industry (including crafts).

Progress has been rapid. Earlier this year, trade minister Mezzour said the country’s manufacturing industries employed 870,000 people in 2022.

The trade and industry minister added that half of Moroccan manufacturing businesses were about 10 years old and three-quarters were less than 20 years old. 

The EU-Morocco association agreement of 2000, which created a free trade area, is coming into its own. Rabat also receives aid from the European Union and the African Development Bank to stimulate its economy and provide jobs, in part to provide alternatives to emigration.

Morocco is now hoping to take advantage of the EU Carbon Border Adjustment Mechanism, which comes into effect in 2026. Rabat is aiming to invest in carbon capture and storage to attract high-emitting industries and export further into the EU.

Francis Ghiles, a political scientist and visiting fellow at King’s College London, says Morocco has “played its cards very well”. But if the economy is to reach growth rates of 7 to 8 percent – real GDP growth was closer to 3 percent last year, according to the International Monetary Fund – there will have to be more trickle-down to small and medium-sized enterprises, he says. 

“You have to cut other people in.”