According to the Wali of Bank Al-Maghrib, who spoke on Tuesday in the House of Representatives, during a meeting with the Finance and Economic Development Commission, “the investments are quantitatively sufficient in the Kingdom, it is rather their profitability that lack”. Indeed, investment has accelerated over the past twenty years, recording an average growth rate of 6.7% per year, between 2000 and 2019. Over the same period, economic growth has not, however, changed. than an annual average of 4.1%. Why ? The reasons.
During his meeting, held Tuesday in Rabat, with the members of the Finance and Economic Development Committee of the House of Representatives, on the theme of “Investment in the Kingdom”, the Wali of the Central Bank, Abdellatif Jouahri recalled… a truism. This is the low profitability of investment in our country. Speaking on this subject, the head of Bank Al-Maghrib (BAM) notably noted that “the Kingdom’s investment effort, in terms of value, reached 32.3% of gross domestic product (GDP) between 2000 and 2019 once morest 25.6% as the world average, i.e. a figure “in principle sufficiently significant” to make it possible to achieve a certain economic growth and a level of investment equivalent to that recorded in countries having achieved “economic miracles” “. Continuing his remarks, the Wali of BAM added that “although the Kingdom’s investment efforts remain sufficient from a quantitative point of view, there is still a long way to go to reach the level of developed countries and reach, by extension , a real economic take-off”. Why ? “Because investments have low profitability in our country. Between 2000 and 2019, the main index, namely the marginal coefficient of capital (ICOR), which is equivalent to the number of points of investment necessary to achieve one point of economic growth, averaged 9 .4 points”, he concluded.
The rate of investment higher than that of growth
To sum up, according to the Wali of BAM, investment has accelerated over the past twenty years, with an average growth rate of 6.7% per year between 2000 and 2019. As for economic growth, it has evolved at a lower rate, ie at an annual average of 4.1% over the same period (see graph). It is this persistent gap in Morocco, in terms of progress between these two variables, measured, among other indicators, by the marginal coefficient of capital (ICOR: Incremental Capital Output Ratio), that must be erased. How? ‘Or’ What ? The Wali of BAM believes that the various bottlenecks that impact investment in Morocco must be removed. To begin with, he recommends improving the quality of institutional mechanisms as well as the enforcement of contracts and property rights, lowering the level of uncertainty, removing income inequality and readjusting monetary policy which impacts investment through the channels of bank credit, interest rates, etc. Jouahri also suggests raising the investment capacity of very small businesses (TPE), which is still very low in our country.
Indeed, only 29.4% of VSEs claimed to have made investments between 2016 and 2018, compared to 49.5% for SMEs and 50% for large companies. The structure of investment dominated by the construction sector Finally, the boss of BAM pointed to the payment delays which are suffocating companies. According to him, “the lengthening of payment terms is still a major obstacle to the development of companies in Morocco and continues to affect their health, in addition to reducing liquidity and increasing the level of doubtful debts of these companies. It is therefore imperative to strengthen the means of payment with a view to their better control”. Jouahri is absolutely right to plead in favor of VSEs, qualified, under other skies, as startups. The latter, which mainly operate in services, do not have easy access to bank credit and therefore do not make sufficient investments.
However, they are the ones who innovate and sell products with very high added value and who should therefore attract significant investments to put the structure of Moroccan investment back on track. Indeed, as revealed by the High Commission for Planning (HCP) in 2016, the structure of investment is sorely lacking in intensity in Morocco. Instead of being driven by the services sector, which continues despite everything to record a high growth rate (more than 10% per year over the period 2000-2019), Gross Fixed Capital Formation (GFCF) is dominated by the construction industry. Investment in this sector has, in fact, represented 47.3% per year on average of total GFCF in current dirhams over the period 2000-2014. It is followed by industry (38%), services (12%) and agriculture (2.7%).
The lower the ICOR, the higher the efficiency of the investment
According to HCP calculations, the marginal coefficient of capital in Morocco was 7.2 points in 2014 (6 points on average over the past five years). This means that it took 7 units of investment to achieve 1 unit of growth. The benchmark carried out by the HCP showed that countries such as Turkey (5.2), Chile (4.2), Malaysia (3.5) and, even better, South Korea (2.9) had a ICOR lower than that of Morocco, therefore greater investment efficiency. With an investment rate of approximately 28% of GDP, noted the HCP, emerging and developing countries have achieved an economic growth rate, over the last fifteen years, higher (6% per year on average) than that of the Morocco (4.4%), even though it maintained throughout this period an investment rate above 30% of GDP.
Aziz Diouf / ECO Inspirations