Morocco’s finance minister said the country must adapt its economy to meet the escalating threat from climate change, with more frequent droughts requiring investment in water technologies and an acceleration of its push into growth sectors such as car manufacturing.
The kingdom’s vital grain harvest was slashed last year due to a lack of rain, just as Russia’s war in Ukraine forced the government to pay higher prices for wheat and energy and to increase subsidies. Morocco’s economy grew 1.2 per cent in 2022, according to the World Bank, down from 7.9 per cent a year earlier. The bank expects growth of 3.1 per cent in 2023.
Nadia Fettah Alaoui, Morocco’s economy and finance minister, said years of below-average rainfall linked to climate change had forced a rethink, adding there were times in 2022 when “we were really anxious about being able to [supply] drinking water for everyone”.
“For many years we talked about drought as an exception . . . Now we will live as if we don’t have enough water,” she said of the north African country’s new approach. “[2022] was the year we decided we don’t need action plans for specific years, we need a long-term vision.”
Economic growth in Morocco has long been tied to rainfall because a third of the population works in agriculture, even if the sector accounts for only 12 per cent of gross domestic product.
While farming businesses producing crops such as citrus fruit for export use modern irrigation methods to save water, small farmers growing staple cereals for the domestic market are dependent on the rain.
Youssef Brouziyne, head of Middle East and north Africa at the International Water Management Institute, said 2022 was “very difficult because it was the fourth dry year in a row”, depleting vital reservoirs. He added that climate studies suggested Morocco and its region faced more regular droughts and more frequent water shortages with higher intensity.
In a sign of the wider challenges Morocco faced, the IMF said this week that the kingdom had requested a $5bn credit line to draw upon if needed as it battled a “highly uncertain global environment”.
Alaoui said climate change would require an acceleration in investments in desalination plants, dams and water recycling systems. “We want to have desalination through public/private partnerships,” she said. The cost of water for households would be supported while industry and other big users paid a “proper price”, Alaoui added.
The minister also cited increasing investor interest in renewables, including wind and green hydrogen made via the electrolysis of water using renewable power. The kingdom already generates more than a third of its electricity from green sources.
“In Morocco, it’s either windy or sunny every day,” said Zaid Belbagi, who runs political advisory firm Hardcastle. The “trajectory is for larger renewable power production: Morocco could become Europe’s electricity supplier par excellence”.
Another strand involved diversifying Morocco’s economy towards new sectors such as the manufacturing of vehicles for European markets, which Alaoui said included training up thousands of skilled workers. Stellantis, owner of brands including Peugeot, said recently it was investing €300mn to double capacity at its plant near the city of Kenitra.
The kingdom’s automotive exports rose more than a third to $10.6bn in 2022, according to official figures. Alaoui said “the value proposition of Morocco is much more sophisticated than just being close to Europe and cheaper”.
Rachid Aourraz, non-resident economic scholar at the Middle East Institute in the US, said the kingdom’s diversification efforts had delivered “good results in terms of revenues, exports and employment” but it was still “less than what’s required”. Water-intensive agriculture “no longer had the same central role” in the Moroccan economy “but it’s still vital”, he added.
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