Gilles Abensour, Deputy Delegate Morocco, Saint Gobain

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imageedit_2_6608466945.jpgThe direction of construction and manufacturing in Morocco

How can growing industrial sectors help attract foreign direct investment (FDI) in other sectors of the economy?

ABENSOUR: In terms of industrial capacities, Morocco now represents to Europe what Mexico represents to the US – a country on its doorstep that serves as a platform for its automotive industry. In fact, the aerospace and automotive industries have become Morocco’s engine for FDI. Five to six years ago Morocco was not even on the map for the global automotive industry, so I am impressed that so much progress was made in such a short period of time: free-trade zones were designed, a vast number of consortia were formed and governmental incentives were provided. The Hassan II Fund for Economic and Social Development has delivered the financing necessary to enable this rapid development to occur, by providing foreign companies with an incentive of 10-15% subvention, with the Industrial Acceleration Plan 2014-20 playing a major role in facilitating sectoral development as well. Five years ago there were significant doubts about the automotive industry in Morocco, but now the automotive sector is a real and valuable business opportunity that has the potential to have positive flow-on effects for other sectors.

What else can be done to encourage export-oriented manufacturing in the country?

ABENSOUR: The central issue is the cost of transport to Europe, as this makes exportation from Morocco less competitive.

A Moroccan producer will need to import raw mats and components from abroad, which will lead to an average additional cost of 5%. This same disadvantage will occur when exporting finished goods, with an additional cost of 5%. Leading a Moroccan firm to lose 10% compared to a European producer. The Moroccan government should address this issue to help medium-sized firms.

Aside from the challenge of transport costs, Morocco also faces the problem of exporting to African markets, since a lot of African countries do not have trade agreements with Morocco. For instance, if  products were made in Poland and sold in Namibia, taxes would not apply.

However, if a Moroccan company sells goods in sub-Saharan markets, an import tax of up to 15% has to be settled. This would make the label “Made in Morocco a disadvantage.

We live in a globalised world; Morocco’s key point of difference is its relatively low labour costs, we need to address other fields to make the “Made in MA” stronger.

What changes are most needed to increase the efficiency of new construction projects?

ABENSOUR: Our aim in Morocco is to adapt our construction material to the new Thermal Regulation of the Construction in Morocco (Règlement Thermique de Construction au Maroc, RTCM), which is set to make buildings more energy-efficient. Moroccan customers may accept all the solutions and new technologies but would not want to pay much more, so this must be done cost-effectively. In the construction sector companies must produce locally, as the added cost of importing products would make them uncompetitive. The costs of production are more affordable than traditional solutions and the bottom line is that companies need to adhere to market prices – no one wants to pay 30% more for a sustainable solution. The next step is training, informing people of sustainable solutions for their houses, and Moroccan construction workers must be properly instructed on building methods.

What are the main opportunities for new entrants to the local construction sector?

ABENSOUR: The domestic construction sector is in a crisis, vividly exemplified by the consumption of cement, which decreased by 4.5% compared to last year. Overall, the sector is still dominated by bad habits and ongoing problems. However, I believe that there is significant opportunity in the construction sector’s conversion into a high-quality, sustainable segment of the economy. In fact, the RTCM has already improved the sector greatly. Five years ago virtually no construction companies used double-glazed windows for houses, but now it has become the norm. Moreover, mortar facades were incredibly luxurious and only a handful of houses in the district of Anfa with them, yet now it has become a standard range of products. The sector and its standard practices are actively changing and will keep on doing so.

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