I. Overview
Morocco presents an interesting case in regard to the liberalization of
financial capital and continued progress towards globalization. Among the
countries of the Middle East and North Africa (MENA), Morocco has
instituted reforms which lead one to believe that it is effectively in the
process of transforming itself to a constitutional democracy. However,
Morocco is still in the developmental phases, and indeed, it has gone
through three constitutions since its independence from status as a French
protectorate in 1956. Currently, Morocco is a constitutional monarchy
under the rule of King Hassan II, the head of State, and governed by Prime
Minister Filali.
The monarch (Commander of the Faithful), in the Moroccan case, serves as
the secular and religious leader who is given sufficient powers to ensure
control over the political institutions functioning within the country.
The monarch has the ability to appoint and dismiss the prime minister and
other government ministers and presides over all important government
bodies such as the Council of Ministers, the Supreme Council of the
Judiciary, the Supreme Council for National Development and Planning, and
the Supreme Council for Education. The king also possesses a form of veto
power over legislation.
The political regime in place was characterized as authoritarian utilizing
forms of patronage since 1958. The patrimonial rule kept the opposing
political parties pitted against one another and stemmed from the royal
family’s makhzan. After 1983, the IMF and World Bank imposed measures for
economic liberalization which were also meant to stifle traditional forms
of patronage. The makhzan’s purchase of Omnium Nord-African (ONA) in 1980,
provided the monarchy a new method by which to maintain control over
political and economic reform while meeting international commitments,
thereby extending the patronage of the monarchy. The ONA was utilized to
establish a solid foundation in the commercial banking industry before
starting to privatize and lift credit restrictions. The end result was a
policy of liberalization of financial capital and yet providing the
opportunity for this highly powerful conglomerate to establish control over
the liberated economy.
Morocco’s economy depends mainly on services, agriculture, and the
mineral industries. In 1995, the services sector comprised 52.5% of the
total Gross Domestic Product (GDP), industry comprised 33.2%, and
agriculture comprised 14.3%. Morocco’s agricultural sector is mainly
devoted to the production of cereals such as wheat, barley, corn, and oats
which are mainly used for domestic consumption, but overall Morocco is a
net importer of cereals. Modern farms also produce citrus and vegetable
crops for export. The agricultural sector is contains a substantial share
in livestock raising, fishing, and forestry. The manufacturing sector of
the economy includes the production of foodstuffs, chemicals, metal
products, and construction materials, accounting for approximately 19.2
percent of GDP in 1995. The natural resources found here also include a
large supply of minerals, especially phosphates and phosphate derivatives
that account for over a quarter of Moroccan exports. Morocco also
imports a substantial amount of oil, machinery and transportation equipment.
Two statistics were calculated to determine the change in the "openness"
of the economy, the first concerning trade and the second concerning
investment. The calculation for trade determined that the factor had
roughly doubled over the past 10 years. The calculation for investment
determined that there was a large increase from .0016 to .025. The
statistics allude to the reality that the privatization efforts begun in
1991 have had a substantial effect in "opening" the Moroccan economy to
international trade. Total tax revenues increased for the period between
1988 and 1990. The proportion of tax revenues coming from direct taxation
rose from 28 percent in 1988 to 32 percent in 1990. The amount of foreign
direct investment within Morocco has also increased substantially, from $20
million in 1985 to $818 million in 1995. Much of this foreign investment
comes in the form of grants and loans given by entities such as USAID, the
World Bank and the IMF.
II. Financial Sector
Morocco’s Central Bank, Bank al-Maghrib, founded in 1907, became publicly
owned in 1959, and prior to the privatization efforts of 1991, maintained
strict controls over interest rates and credit restrictions. There are
currently two public sector banks, the Banque du Credit Populaire (BCP),
and the Banque Marocaine du Commerce Exterieur (BCME), and the banking
oligopoly also consists of five medium-sized private banks. The commercial
banking sector can be classified as highly concentrated falling under the
"German" variant of capitalization which is defined by a small number of
banks that "are privately owned and universal, operat(ing) like an
oligopoly, and provid(ing) most of the finance capital to the real
economy." Moreover, the Moroccan system has an HHI ratio equal to 20.6%.
The Casablanca Stock Exchange (the Bourse des Valeurs) remains relatively
small with only 71 companies quoted out of more than 4000 firms registered,
but the privatization program begun in 1991 has increased the volume of
trading.
III. Politics of Liberalization
The World Development Indicators provided by the World Bank show an ever
increasing trend in the total debt which is outstanding by Morocco. The
total debt service covering the same period of time seems to be increasing
as well, in fact more than doubling from the period between 1985 and 1995.
World Bank commitments to Morocco fluctuate and by 1995 were $433 million.
In addition, IMF involvement was $52 million in 1995. External Debt as a
percentage of GNP has also increased dramatically between 1980 and 1990,
but has decreased more recently to 71 percent in 1995.
Reforming and liberalizing Morocco’s financial sector made significant
progress over the period of 1986-96. Foremost in the progress is that of
generating a greater sense of autonomy for the Central Bank and increased
competition among private sector banks. Clearly, the private sector
banking industry in Morocco has witnessed the shedding of many of its
inefficient banks to produce a leaner and more competitive banking
industry. The liberalization of interest rates allows the banking market
to fluctuate and find its own equilibrium and access to alternative
financial instruments were expected to induce greater savings and
investment. An evaluation of the reforms shows an increase in the ratio of
M2 to GDP which attests to the increasing volume of financial
intermediation. However, it can also be argued that these reforms were
more beneficial for strengthening the control of the oligopoly in the
banking sector and the political monarchy behind this oligopoly.
From Zysman’s standpoint, it could be argued that the Moroccan case
illustrates the situation of state-led development with a caveat. It is
true that the government bureaucracy attempted to channel the adjustment of
the economy by influencing the positions of particular sectors, or even
individual companies. Certainly, the ONA could be classified as a
particular entity which, interestingly enough, gained greatly through the
privatization of 1991. Morocco had the ability to make the further
transition towards a constitutional democracy from a patrimonial regime,
but by gaining a controlling interest in a number of banks, the monarchy
preserved the patronage system further insulating itself.
1975 1980 1985 1994 1995
Total Exports: (billions US$) 2.49 2.17 4.013 4.802
Fuels, Minerals, Metals 1.128 0.686 0.563 ---
Other Primary Commodities 0.774 0.605 1.161 ---
Manufactures 0.585 0.879 2.267 ---
Total Imports: 4.16 3.85 7.188 8.563
Food 0.824 0.674 1.156 ---
Fuel 0.982 1.074 0.973 ---
Machinery and Transport Equip 0.882 0.697 1.927 ---
GDP (billion $): 9 12.9 30.3 32.4
FDI 0 0.02 0.601 0.818
Openess:
Concerning trade:
(X+M)/GDP 2.468449612 4.250227723 5.066290123
Concerning development:
FDI/GDP 0.001550388 0.019834983 0.025246914
Composition of GNP: (%of GDP)
Agriculture 17.3 16.6 18.4 14.3
Industry 34.7 33.4 31.5 33.2
Manufacturing 16.6 18.6 17.6 19.2
Services 48 50 50.1 52.5
(Source: World Development Indicators CD-Rom, World Bank, February 1997.)
1988 1989 1990
Taxation: (DH Millions)
Total Tax Revenues 30,746 37,488 43,617
Direct Taxes: 28% 29% 32%
Indirect Taxes: 72% 71% 68%
**Estimated Tax Revenues 1988-1990,
(http://www.I-trade.com/infosrc/pw/mor/mustpay
1975 1985 1994 1995
External Debt: (millions US$)
Total debt outstanding 2,353 15,753 21,587 22,147
Total debt service 172 1,429 3,338 3,541
World Bank program
Commitments 33 379 127 433
1980 1990 1993 1995
External Debt / GNP (%) 50.7 95 81 71
(Source: World Development Indicators CD-Rom, World Bank, February
1997.)
Pre-reform Reform
M2/GDP 40.3 53.4
Real Interest rate -2.3 5.5
Credit to Non-government sector 17.5 23.6
Reserve Money/deposits 55.6 42.1
National nongovernmental saving 19 21.7
Nongovernmental investment 15.5 18.3
*Pre-reform=1970-1985
*Reform=1986-1996
(Source: Finance & Development September 1997)
Capital Structure of Moroccan Banks
Bank Public sector Private sector Misc. Foreign
BCP 100%
BMCE 58.73 28.71 12.56
BCM 32.72 42.52 24.76
Wafa 100
BMCI 2.31 44.69 53
SGMB 32 18 50
CDM 26.46 10.02 20.32 43.2
SMDC 50 50
UNIBAN 100
SBC some ONA 100
Algemen 50 50
BMAO 100
Arab Bank 50 50
Citibank 50 50
(Source: Henry, Clement M., The Mediterranean Debt Crescent, (Florida
1996), p. 151.)
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"There are going to be times when we can't wait for somebody. Now,
you're either on the bus or off the bus. If you're on the bus, and you get
left behind, then you'll find it again. If you're off the bus in the first
place - then it won't make a damn."
Ken Kesey
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James D. Lindley, Jr
MPAff Candidate - LBJ School of Public Affairs
MA Candidate - Center for Middle Eastern Studies
University of Texas at Austin