Morocco

Democratisation reforms

According to a Moroccan proverb, the earth is a peacock, and Morocco is its tail. Moroccans are proud of their home: hospitable people, breathtaking landscapes, impressive loam castles and colourful markets. King Mohammed VI is highly respected by the population and has initiated reforms to democratise and modernise the country. But the economic and social differences between urban and rural regions are still great: Tangier or Casablanca have multi-lane roads and high-rise buildings; in stark juxtaposition, the rural regions of Morocco use donkeys as their main mode of transport and are far removed from schools or hospitals. German Development Cooperation is focusing on the areas of energy, water and sustainable economic development.

Morocco has excellent conditions for expanding renewable energy sources: it has some of the best locations for generating wind and solar energy in the world, and the country has an ambitious energy strategy supported by the monarchy and political bodies. Morocco, a country that has primarily met its energy requirements with – imported – fossil fuels, has now begun an energy transformation. The objective? To expand the share of renewables to 52 % by 2030. The country is thus also a pioneer with regard to renewable energy even outside the region. The change to renewable energy sources will contribute to global climate protection and secure the country’s energy supply.

The German government is providing support for the energy transition: within the scope of Financial Cooperation, over 650 MW of wind energy and 1,500 MW of solar energy as well as measures to expand the grid and increase energy efficiency are being promoted. One outstanding example of successful cooperation is the co-financing for the Noor I–IV solar power plants in Ouarzazate, which are making a significant contribution towards achieving the Moroccan solar plan 2020 with 580 MW. The FC energy portfolio currently contains over EUR 2 billion in funds. The NOOR Midelt solar complex will consist of two innovative hybrid power plants in the first phase, combining solar thermal energy and photovoltaics in one power plant complex.

Project information solar

Project information wind

Morocco is one of the most arid countries in the world and one of the nations most affected by climate change. In recent years, demand for water rose heavily, especially in agriculture, resulting in sustained overuse of groundwater resources. A total of 85 – 90 % of all water consumption is for irrigated agriculture, which contributes 14 % to the gross domestic product (GDP) and about 40% to overall employment. This increase stands in conflict with the national water strategy, the aim of which is to use water resources efficiently to protect the greatly endangered groundwater supply.

The drinking water supply has been gradually expanded. Nowadays, 98 % of urban households receive hygienically safe water, with the same figure approaching 90 % for the rural population. The significant increase in wastewater has become a challenge. In 2005, Morocco approved an orientation framework for national urban wastewater treatment (PNA) with the aim of connecting 80% of urban households to sewage collection networks and treating up to 60 % of the collected wastewater by 2020. An additional national programme aims to implement rural wastewater disposal.

Taking into account the interests of all water users and simultaneously contributing to a fair water balance that also takes ecological requirements into consideration is the goal of “IWRM” – Integrated Water Resources Management.

KfW is promoting ongoing programmes in Morocco’s water sector with an amount of EUR 700 million.

Morocco has made good deal of progress in recent years. At the same time, development of the private sector and employment remain key issues with regard to the country’s further development: Morocco’s official unemployment rate is around 10%; the real unemployment rate is likely to be much higher. Only around half of 25- to 35-year-olds have a job, many in the informal sector. Small and medium-sized enterprises (SMEs) provide nearly half of the jobs and thus generate employment, income and growth. This is why German Development Cooperation is active in this sector.

Many Moroccan SMEs still find it difficult to gain access to the necessary funding for investments in building and expanding their business operations: for risk-related reasons, most banks primarily grant loans to larger or state-owned enterprises in urban areas. Small and medium-sized enterprises find it hard to gain access to these resources, especially in rural areas. SMEs also lack the equity capital they need to grow. Their employment and economic potential is thus being greatly underutilised. In addition, there are over 2.5 million informal businesses. Most of them are microbusinesses; around half of them have access to microloans. The rest are able to finance their businesses through family, friends and informal suppliers. So, an effective, inclusive financial sector that can provide customised support for Moroccan entrepreneurs’ investments is a key factor.

KfW promotes granting loans and providing equity capital to microbusinesses and small and medium-sized enterprises by providing refinancing funds and accompanying support for banks and microfinance organisations. It helps to establish structures in the financial sector, for example in the area of innovation and start-up financing, for financing more energy-efficient production processes or for providing financing in rural areas.

Partner organisations for this MSME promotion include the state-owned Caisse Centrale de Garantie (CCG), for example through the approach taken by the “InnovInvest” fund, Crédit Agricole du Maroc (CAM), Finéa – a subsidiary of the state-owned Moroccan development bank Caisse de Dépôt et de Gestion (CDG) –, the JAIDA microfinance fund, venture capital firm PMEC and the SANAD Fund for regional MSMEs initiated by KfW.

Project information Sustainable economic development