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A major economic and social role

OCP Group is the world’s largest exporter of phosphate rock and phosphoric acid. It provides between 15 and 20% of the country’s foreign exchange and is also the largest company in Morocco with a staff of over 20,000 and a turnover of €5bn in 2011. OCP therefore plays a major economic and social role both at national level and at local level in the regions where its mining centers (Khourigba, Ben Guérir, Youssoufia and Boukra) and industrial-port centers (Safi and El Jadida/Jorf Lasfar) are located.

Desalination plant in Laayoune, © OCP

Preserve water resources

AFD’s financing will support OCP’s ambitious industrial development program, while preserving Morocco’s water resources. Indeed, despite the fact that it will double its production capacities by 2020, OCP has pledged to stop withdrawing groundwater for its own needs.

Khourigba Wastewater Treatment Plant, © OCP

Unconventional solutions

OCP’s strategy is emblematic in that it mobilizes non-conventional resources, which include two desalination units and three wastewater treatment plants with the reuse of treated wastewater.

With €240m of financing allocated in 2009 for a 187 km slurry pipeline, OCP has become AFD’s largest non-sovereign counterpart (total commitments of €420m).

Charles Fries, Ambassador of France in Morocco, Mostafa Terrab, CEO of OCP, and Joël Daligault, Director of AFD Agency in Rabat

A rapidly developing method to finance the economy

The work of the conference reviewed the practices, products and volumes of this financing method, which is experiencing rapid development with a billion dollar turnover and an annual growth rate of 30%. It also highlighted the results of a study jointly led by CGAP and AFD.

This conference was organized in the context of the partnership agreement signed last January between AFD and the Islamic Development Bank (IsDB).

The exchanges were rich and lively and brought to light the strengths and weaknesses of these tools, which are increasingly requested in a number of countries where AFD operates. They also more clearly identified the needs of beneficiaries, financial institutions and central banks, which play an essential role in terms of the regulatory framework and regulation.

A whole host of innovative experiences in the field 

Several observations were made: the existence of a strong demand for this type of financial product, particularly from the poorest; the proliferation of innovative experiences in the field, which are often poorly identified; the need to launch benchmarking exercises in order to build technical, financial and institutional references. 

A knowledge platform on the Internet

It was agreed that the various donors and institutions concerned, including IsDB and AFD, will support this process by promoting the implementation of information and exchange tools, such as a knowledge platform backed up by a dedicated website, and by holding an annual conference. An invitation was launched for the next one to be held at AFD’s headquarters in Paris. 

Bilateral talks were held between AFD’s Chief Executive Officer, Dov Zerah, and the President of IsDB, Mr. Ali, on the sidelines of this conference, and meetings between the respective operational departments defined practical ways of implementing the agreement, notably the possibility of staff exchanges and the first cofinancing operations in the Mediterranean.

The proposals made by the study aim to reduce the average cost of migrant remittances and to optimize their impact on the development of African countries. They specifically focus on improving linked bank accounts (dual bank accounts for migrants in their country of residence and in their home country with activities coordinated between the banks of both countries), the development of innovative financial products, support for electronic payment technologies and the adaptation of regulatory and legislative frameworks.

What are the lessons learned from the study?

Due to their importance for the recipient communities, the flows of money from migrants tend to remain stable and are less sensitive to changes in the economic climate.

How to optimize remittances and their impact on development

• Reducing the cost of migrant remittances will increase their contribution to development.
• An understanding of the local context is the key to reducing the cost of remittances and informal flows.
• It would appear that the cost of remittances in the Maghreb region and franc zone has stabilized at a level that remains too high.
• While the profile of actors is becoming more diverse, there is still a need to develop the range of services in order to be more competitive.
• An overhaul of regulatory frameworks, with the aim of promoting diversification in the range of services and financial products, would help increase competition and reduce the cost of remittances.
• Four types of financial and technological services and products can contribute to reducing the cost of remittances.
• Actors, services, tools, new technologies…: there are ultimately five areas to be explored in order to expand and strengthen the range of banking and non-banking products and encourage both a reduction in the cost of remittances and co-development.

The Green Morocco Plan, a new strategic direction to revitalise and reform the agricultural sector

Realising the importance of agriculture for its economic and social development, Morocco adopted its Green Morocco Plan in April 2008 in a strategic move to revitalise and reform the agricultural sector, which is seen as fuelling growth and employment and a means of fighting poverty.

The plan, designed to boost investments and reform in the agricultural sector to increase its productivity and creation of wealth and employment, is a new strategy that involves raising public funds both nationally and internationally to support family farming.

Agriculture – Morocco’s leading employer

The agricultural sector contributes 16% of Morocco’s GDP on average, with wide inter-annual variations (12 to 24%) due to climate fluctuations. Agriculture also accounts for almost 18% of Morocco’s exports, of which 60% go to the EU.

photos AFD - E. Baudran

In particular, agriculture is the leading provider of employment in Morocco, creating income for 43% of its active population and up to 80% in rural areas, in a context of high urban unemployment (almost 15%).

The strategy was developed from an in-depth diagnosis of opportunities and constraints for Morocco’s agriculture, conducted by the McKinsey consultancy in 2007. It was validated by the Minister for Agriculture and Deep-Sea Fisheries, Aziz Akhannouch, and presented to King Mohammed VI in April 2008 during the Agricultural Assizes. The Green Morocco Plan was then introduced in the country as a whole in the form of 16 regional plans setting out sectors for priority support according to the specific situation of each.

A new approach for Morocco: development in the agriculture sector  

Previous public funding for agricultural development was essentially devoted to expanding irrigation capacities through a relatively technology-centred approach. The Green Morocco Plan takes a different approach, by catering for the development of the entire agricultural production chain, from input supplies to product marketing.

Innovative “aggregation” models are being explored to integrate farmers into the different sectors and thus improve links the between production and markets as well as advisory services for farmers, access to financing, and so on. By financing productive projects submitted by groups of farmers, the Green Morocco Plan recognises the contributions of farmers and their organisations to the success of agricultural development projects. It stresses the importance of training to help farmers implement their projects, as well as the need to organise inter-professional agricultural bodies.

Public investments and incentives to private financing

The Green Morocco Plan is designed to boost both public investment and private financing incentives for Morocco’s agriculture, with differentiated provisions according to players and regions.

Two “pillars” and one cross-cutting line of action are set out:

• a series of incentives to private investment to boost the development of high added-value agriculture in productive zones and advanced agricultural systems: 400 000 to 600 000 farms will benefit from of total of nearly 7 billion euros in private investments over 10 years ("pillar 1")
• major public investments in family farming in the more disadvantaged zones: 600 000 to 800 000 farms will benefit from public investments of 1 to 1.8 billion euros over 10 years ("pillar 2")
• cross-cutting activities, mainly for infrastructure and rehabilitation of agricultural zones, improved land registration, research and development, etc.

AFD financing for “Pillar 2” of the Green Morocco Plan  

The AFD has been providing financial support to implementation of the Green Morocco Plan since 2010, through a sovereign low-interest loan of 40 million euros and a grant of 500 000 euros to the second phase of the infrastructure project for the irrigated area to the north of Fez, in the Sébou and Inaouen valleys.

This project aims to develop water-saving irrigation and its management by user associations, thus contributing to the cross-cutting components of the Green Morocco Plan.

On request from the Moroccan government, the AFD is supporting “Pillar 2” implementation in the field by financing a support programme in the north of the country.

The programme was defined after an in-depth feasibility study, conducted from January to April 2011 by a French consultancy recruited by the Moroccan authorities through an international call for tenders, and several AFD evaluation missions in close collaboration with Morocco’s Ministry for Agriculture and Deep Sea Fisheries.

Cost and financing

Of the total cost of 68 million euros, the AFD is providing 50 million euros to the programme in the form of a concessional loan (cost partly covered by the French State) to the Kingdom of Morocco. A 300 000 grant has also been awarded to cover additional expertise.

18% of the total is being financed by the Moroccan State and 8% by the beneficiaries. The programme will be implemented by the Ministry for Agriculture and Deep Sea Fisheries and its regional agencies, and coordinated by the Agricultural Development Agency (ADA).

By financing the plan’s regional components in the north of the country, the AFD is supporting the kingdom of Morocco’s efforts to develop smallholder farming and reduce territorial and social inequalities.

During the signing, Ibrahim Mayaki, Chief Executive Officer of the NEPAD Planning and Coordinating Agency (NPCA) and former Prime Minister of Niger, and Yves Boudot, Director of AFD’s Sub-Saharan Africa Department, had the opportunity to discuss – in addition to ICT development in Africa – the headway made by the Programme for Infrastructure Development in Africa (PIDA), an initiative led by the African Union Commission, NEPAD and African Development Bank.

AFD’s long-standing support to NEPAD’s New Information Technologies initiatives

Since 2003, AFD has been supporting NEPAD’s activities in the telecoms sector (e-Africa Program) via an earmarked grant and the joint AFD-DBSA Project Preparation and Study Fund. These funds have cofinanced preparatory services for NEPAD’s ICT operations and have provided a residential technical assistant (on assignment since July 2009) to support the project for the UMOJANET (“umoja” means “union” in Swahili) broadband transmission virtual network.

This new financing has been delegated from the European Infrastructure Fund (EU-ITF) and follows on from an €850,000 AFD grant (allocated in 2006) to support NEPAD’s initiative to develop a continent-wide broadband transmission virtual network.

Umojanet is extending Uhurunet

The grant that has been allocated will finance the study program that results from the technical assistant’s research to finish off the design of the concept and of the UMOJANET network. The aim is to extend it to the 29 countries in North, West and Central Africa. This will complete both coverage on the continent and the UHURUNET project for Southern Africa.

This project aims to offer African operators a pan-African network of fiber-optic transmission channels. The resulting interconnection offer is required to meet criteria for comprehensiveness, guaranteed quality, open access, non-discrimination and lowest possible cost. The bid invitations will be published in February 2012.
AFD’s approach in supporting NEPAD’s activities is based on its research on promoting regional integration via the construction of major communication networks as a complement to the private sector. This strategy is in line with those adopted by other donors (World Bank, ADB, EIB, KfW, DBSA…). It previously prompted AFD to provide USD9.5m of cofinancing alongside other donors in 2007 for the Eastern African EASSy submarine cable project.

The signing of this additional financing for the implementation of the UMOJANET project should allow NPCA to present an effective implementation plan for a fiber-optic broadband network in West, Central and North Africa over the next 12 months. This will complete both coverage on the continent and the UHURUNET project for Southern Africa.