The African Development Bank is about to launch its new partnership strategy with Morocco for the period 2024-2029. Its overall objective is to strengthen inclusive growth through skills development, employability and entrepreneurship. Added to this is the consolidation of resilience to exogenous shocks through the development of sustainable infrastructure. Significant funding will be mobilized as part of this new country strategy. Details.
The African Development Bank Group (AfDB) is preparing to launch its new partnership strategy with Morocco for the period 2024-2029. This cooperation framework was developed following consultations with various stakeholders (authorities, private sector, civil society, technical and financial partners) held in June 2023. It is notably aligned with government priorities and the directions for 2035 of the Kingdom’s new development model (NMD) published in 2021. The new strategy generally aims to strengthen growth, and make it more inclusive and more resilient to exogenous shocks. It will be broken down through two priority areas: (1) strengthening inclusive growth through skills development, employability and entrepreneurship and (2) consolidating resilience to exogenous shocks through the development of sustainable infrastructure. For this, four strategic sectors have been selected over the period 2024-2029: (1) skills development, (2) transport sector, (3) water sector and (4) energy sector.
In the first priority area, the emphasis is placed on growth and socio-spatial inclusiveness. To do this, the AfDB will support skills development with a spatial granulation approach, drawing on the advanced regionalization process underway in Morocco. Strengthening employability will improve labor productivity, the capacity for innovation and the competitiveness of the economy. Job creation for young people and women will also be induced by the development of entrepreneurship and support for SMEs in urban and rural areas (agricultural value chains). According to ADB estimates, the Bank’s interventions on this pillar will create 200,000 direct and indirect jobs, thus contributing to a drop in the unemployment rate of 3 percentage points compared to the reference year. They will also increase the activity rate of women by 5 points and induce an increase in informal employment from 32 to 50%. Consolidate resilience to exogenous shocks Regarding the second priority area, particular attention will be paid to growth and resilience to external shocks. Thus, the AfDB will support sustainable infrastructure in the water and energy sectors. Sustainable management of water resources will mitigate the effects of water stress on agriculture and, in doing so, strengthen the resilience of the economy in the face of climate change. Among the expected results, improve the yields of production networks (Large from 97.5 to 98, Medium from 95.7 to 96 and Small from 93 to 96), and strengthen the rate of access to water in rural areas from 97.6 to 98%. For the energy sector, the ADB will support the achievement of the ambition that Morocco has set itself to develop its energy mix in which renewable energies will represent at least 52% of electricity production by 2030. To do this, the production of wind and green energy will be of particular importance and will serve to improve agricultural productivity and establish job-creating agro-industries in regional rural basins. On this aspect, ADB interventions will contribute to increasing the construction of renewable energy production plants from 37 to 52% and strengthen r the transit capacity of the electricity transmission network from 28,663 to 30,275 km. In the area of transport infrastructure, interventions will aim to improve the competitiveness of the port of Nador West Med (NWM), allowing Morocco to fully play its role as a hub between Europe and Africa. The resilience of the economy to external shocks would thus be strengthened, by reducing Morocco’s level of exposure in the event of disruption of global logistics chains. Among the expected results, the reduction in travel time between Guercif and Nador from 1.83 hours (2022) to 1 hour (2029) and (ii) the reduction in vehicle operating costs (CEV) on the Guercif-Nador axis. The ADB wants to further support the development of the private sector. Furthermore, as part of this new strategy, the Bank’s support will also aim to boost the private sector to make it play a driving role in growth and will integrate cross-cutting themes. The Bank therefore plans to increase the volume of its non-sovereign operations in Morocco and support the development of the private sector, particularly in the sectors of renewable energy, green transport or sustainable agriculture. Additionally, partnerships will be strengthened to exploit co-financing opportunities and maximize development impact. The cross-cutting themes are: (i) governance, (ii) reduction of gender inequalities, and (iii) reduction of regional disparities and development of rural areas. The indicative program of operations for the period 2024-2029 will include sovereign and non-sovereign operations annually as well as economic and sectoral studies. Thus, regarding the financing of the strategy, Morocco will have access under its 2024 envelope to financing from the ADB window for a total amount of 671.59 million dollars (505 million units of account: UA) in loans. On the private window, the Bank will carry out two operations for a total amount of $172.9 million. The Bank will seek to mobilize additional co-financing or parallel funds as well as technical assistance funds. Over the remaining period of the strategy, the envelope will follow a trend of approximately UA 500 million (1 UA = 1.33 US dollars) per year. Part of this amount will come from the country envelope and part will result from the mobilization of additional resources from trust and thematic funds managed by the Bank such as the Fund for Harmonious Development in Africa (Africa Growing Together Fund: AGTF), the Canada-African Development Bank Climate Fund (CACF), the Clean Technology Fund (CTF), and the Sustainable Energy Fund in Africa (SEFA). Furthermore, the Bank takes a proactive approach to mobilizing co-financing from other technical and financial partners in areas where the Bank has a comparative advantage (transport, water, energy) and where it will be project leader. Between 2023 and 2029, the amount of co-financing mobilized should increase from 70 to 100%. The active portfolio of the ADB in Morocco amounts to more than 3.38 billion dollars. Finally, note that as of April 1, 2024, the active portfolio of the ADB in Morocco is made up of 34 projects for a total commitment of 2.54 billion UA (or more than 3.38 billion US dollars). The portfolio covers eight sectors: energy (24% of total commitments), transport (15%), social (13%), industries & mining (13%), agriculture (12%), water and sanitation (10%), governance/multi-sector (7%) and the financial sector (6%). There are 32 public sector operations. The portfolio includes 5 interventions for operations without sovereign guarantee (more than 18% of the Bank’s commitments in Morocco). According to the AfDB, the implementation of portfolio projects is ongoing. runs efficiently. On average, loan agreements for sovereign projects are signed 4.8 months after approval and come into effect 1.36 months after signing for public sector projects. The average age of public sector operations is 3.89 years. The overall disbursement rate is 60.3%, “which is good in view of the 7 new operations since October 2022”. The performance of private sector operations is also satisfactory with a disbursement rate of 96.3%.
