In a 2003 speech, Moroccan King Mohammed VI laid out a bold plan to revolutionise the economy. His vision for “one of the greatest economic projects” in Morocco’s history aimed to capitalise on its geostrategic position through the creation of a world-leading port and industrial platform.
Almost two decades later, that vision has paid dividends. Tanger Med port and surrounding network of six activity zones – which include free zones as well as other type of zones (industrial, logistics, services) – has garnered $10.1bn worth of public and private investment, according to figures from Tanger Med Special Agency (TMSA), the public authority established in 2003 to oversee the King’s vision for integrated regional development.
“Tanger Med consolidates the kingdom of Morocco’s anchoring in the Euro-Mediterranean area and enhances its vocation as a pole of exchange between Europe and Africa,” says Jaafar Mrhardy, a member of TMSA’s executive board and the general director of Tanger Med Zones (TMZ), which operates the network of activity zones developed within a 25km to 80km radius of the port.
Today, TMZ hosts more than 1000 companies from 36 countries across several sectors — including automotive, aeronautics, electronics, logistics, services and textiles — and has created more than 80,000 jobs to date, according to TMZ figures.
The success of TMZ in attracting new inward investors and creating jobs for Moroccans has propelled it up fDi’s Global Free Zones of the Year Awards. In the 2020 ranking, TMZ regained its crown as Africa’s leading free zone and placed second globally — its highest ever standing.
Network of zones
TMZ consists of six activity zones spread across Morocco’s northernmost Tanger-Tetouan-Al Hoceima region, and has been central to the country’s development, affording investing companies benefits ranging from tax, customs and foreign exchange incentives.
Tanger Free Zone, the first plot of land developed by TMZ in 1999 next to the city of Tangier’s airport, has alone attracted more inbound greenfield projects than any other free zone in Africa, according to greenfield investment monitor fDi Markets.
When accounting for the remaining five zones within TMZ across Morocco’s northernmost region — Tanger Automotive City, Logistics Free Zone, Tetouan Shore, Tetouan Park and Renault’s TMZ plant — the industrial platform exceeds other African zones by far in terms of inbound projects.
With each zone dedicated to specific sectors, such as automotive (see page 112), logistics (see page 108) and offshoring services (see page 115), TMZ has created clusters for prospective investors to serve their customers and tap into talent pools catered to their operating needs.
While TMZ has attracted investment into Morocco’s traditional industries of agribusiness and textiles, the automotive sector has seen the starkest growth, bolstered by Renault’s decision to build Africa’s largest car plant within TMZ (see page 110).
In light of this, TMZ has played a key role in Morocco’s industrial acceleration plan. The first phase of this, between 2014 and 2020, aimed to increase industries’ contribution to Moroccan gross domestic product (GDP) from 14% to 23%, with the second phase next year set to consolidate progress made.
A recent study of the impact of TMZ and other special economic zones (SEZs) on Morocco’s economy, conducted by Massimiliano Bencardino and Vincenzo Esposito at the University of Salerno, Italy, found that the number of industrial placements in the services and manufacturing sectors in the Tanger-Tétouan-Al Hoceima region rose by 57% and 39%, respectively, since 1999.
“Our study demonstrates how the presence of SEZs in northern Morocco has had positive impacts on the increase in national FDI and on the increase in industrial locations within the Tanger-Tétouan-Al Hoceima region,” the researchers told fDi, adding that TMZ is “among the best” of the more than 5000 SEZs globally.
Since 2005, more jobs have been created by inbound greenfield FDI in Tanger-Tetouan-Al Hoceima than any other region or state across the whole of the African continent, according to fDi Markets figures. More than 78,500 jobs have been created (including estimates) by inward investment to Morocco’s northernmost region, compared with just over 69,000 jobs in the Casablanca-Settat region, which hosts Morocco’s business and financial capital Casablanca.
Given this success, TMZ has helped to address one of Morocco’s major economic hurdles. Unemployment among Moroccans aged 15–24 has been on the rise over the past decade, standing at more than 20% since 2014, according to the International Labour Organization.
Jesko Hentschel, the World Bank’s director for the Maghreb region, says that in a country where employment and skills is the “Achilles heel” of those in working age — and especially the young — the job creation in TMZ is a “huge boost”.
The city of Tangier, the capital of Morocco’s northernmost region located 40km to the west of Tanger Med port, has also benefited from the success of TMZ. The city has grown from being Morocco’s fifth largest by GDP contribution in 2005, to become the second largest in 2019, after Morocco’s business capital Casablanca.
Since its inauguration in 2007, Tanger Med port has grown exponentially to become the busiest by container volume and best connected across the whole of Africa, according to Unctad’s liner shipping connectivity index.
The decision to build the port 40km east of Tangier on Morocco’s Mediterranean coast, just 14km from Europe, has allowed it to be along major maritime routes from both East to West, and North to South, “offering minimal vessel deviation for shipping lines”, says Chantal McRoberts, a principal consultant at Drewry, an independent maritime research company.
“Morocco has positioned itself with Tanger Med as one of the most modern transshipment ports in the world,” says Mr Hentschel of the World Bank.
“The top-quality infrastructure, shipping companies, logistics and service providers to run the whole operation is a signal for the country’s development,” he adds.
With connections to 186 ports in 77 countries, Tanger Med has also solidified its position as an attractive location for companies wanting to export into markets across Africa, Europe, the Americas and Asia-Pacific.
In 2019, TMZ posted record exports worth $8.8bn, up by 6% from a year earlier, and a more than 20% increase from 2017, according to TMZ figures.
Following the inauguration of a second terminal at Tanger Med in 2019, the container capacity increased to 9 million twenty-foot equivalent units (TEUs), providing even further scope for export-oriented companies to set up in the industrial platform.
Yasmina Abouzzohour, a visiting fellow at the Brookings Doha Center, says that Tanger Med port stands out internationally, owing to its strategic location along the Strait of Gibraltar, with the government hoping this will increase job creation and foreign investment.
“In terms of youth unemployment and given the growing population, Morocco requires upwards of 349,333 jobs to be created per year,” she adds, contending that the port is unlikely to meet these goals in the immediate term.
While it might not meet immediate job creation goals, Tanger Med has made a significant contribution to the increase in Morocco’s inward stock of FDI, which rose from $8.8bn in 2000 to more than $66bn in 2019, according to data from Unctad. This is higher than any other country within the Maghreb region.
Central to TMZ’s offering to foreign investors is that it is a single point of contact and simplifies Morocco’s sometimes complicated legislative regime (see page 114).
“Morocco has multiple legal regimes for land, so it can sometimes be quite complicated for investors when choosing a site as there are different stakeholders and ministries,” says Saad El Mernissi, a partner at global law firm DLA Piper, who has advised inward investors to Morocco for over 13 years.
“The one-stop shop offered [by TMZ] streamlines the process as investors can discuss directly with the free zone operator on matters such as authorisation, contract agreements and tax,” he adds.
Mr Mrhardy says that new tenants are also “welcomed and supported by the immense pool of talents coming from our specialised training institutions, and universities, to work for high-performing corporations across a range of cutting-edge sectors of activities”.
Specialised institutions for target industries include Morocco’s automotive training school IFMIA, and the recently created renewable energy training institute IFMEREE.
With a total population of 35.3 million inhabitants in 2016, according to figures from the country's High Commission for Planning, 64% of which are under the age of 34, Morocco has a demographic advantage for companies making long-term investment decisions.
Morocco has vastly improved its business climate in recent years. The country ranked 53rd out of 190 countries in the World Bank’s 2020 Ease of Doing Business report — jumping 75 places from a decade earlier.
The introduction of a new public–private partnership (PPP) law in 2014 has also reshaped the attractiveness of Morocco and TMZ to transport sector investment, which has vastly improved in recent years. Since then, the length of roadways and railways increased by 45% and 23%, respectively, according to a 2018 Oxford Business Group analysis.
The PPP Knowledge Lab, a knowledge source for PPPs launched by various multilateral development finance institutions, has tracked 31 such projects in Morocco with a total of $22.1bn committed since 1990. All projects are in energy, IT, transport, and water and sewage services.
Morocco’s industrial transition has been helped by these large infrastructure investments, including both the Tanger Med port and Africa’s first high-speed rail link between Tangier and Casablanca, providing a platform for foreign investors to contribute, operate and set up operations in the country.
Opportunities for foreign investors are set to continue with the kingdom’s 2030 national port strategy, which has allocated $7.5bn to expand and upgrade the country’s ports along the Atlantic and Mediterranean coasts, including the new Nador West port 400km east of Tanger Med, which is due to come online in 2021 and sees TMSA among its shareholders.
Renewable energy has emerged as a compelling opportunity for foreign investors in Morocco in recent years, owing to the kingdom’s ambitious goal to have 52% of its total power generation to come from renewables by 2030, up from the previous target of 42% by 2020.
Saudi Arabia-based renewables giant ACWA Power has invested into several projects, including a 120MW wind farm 30km from Tangier, which supplies some of TMZ’s industrial clients, and the 510MW Noor solar park in southern Morocco, which is the world’s largest concentrated solar farm.
This readily available clean energy has enabled Renault to operate its TMZ plant carbon neutrally, with two-thirds of its electricity coming from wind power and the remainder from biomass.
Siemens Gamesa Renewable Energy, a subsidiary of the German engineering specialist, has also operated a wind turbine manufacturing plant in TMZ since March 2017 — the first of its kind to be opened in the Middle East and Africa.
Morocco has not been unscathed by the economic challenges posed by the pandemic. The IMF estimates real GDP to decline in 2020 by between 6% and 7%. Yet GDP growth is expected to rebound to 4.5% in 2021, as the effects of the recent drought and pandemic wane.
Following the IMF’s remote mission to Morocco, which ended on November 2, senior economist Roberto Cardarelli said that the 2021 budget “continues to support the recovery over the next few years, mainly through the impulse to investment and the reforms of the social protection system announced by the [Moroccan] authorities”.
Mr Cardarelli welcomed the progress made in preparing the legal framework for the digitalisation of the public administration and the simplification of procedures, implementing the education reform, including the overhaul of the vocational and professional formation system, improving governance and fighting corruption.
Morocco ranks 80th out of 198 countries in terms of perceived level of public sector corruption, according to Transparency International’s 2019 Corruption Perception Index.
Mr Bencardino and Mr Esposito say that the effects of Covid-19 on Tanger Med “will depend on the trend of world trade, and the geostrategic repositioning of the economy and ports of the Mediterranean area, in particular those of southern Europe”.
While significant challenges have been posed by the pandemic, reevaluation of supply chains across the globe could yet present a further boost to Tanger Med and its surrounding industrial platform.
“With Covid-19 and the potential of nearshoring, the north of Morocco and Tanger Med have significant potential,” says the World Bank’s Mr Hentschel.
This article first appeared in the December/January print edition of fDi Intelligence. View a digital edition of the magazine here.