Moroccan economy strengthened by privatisation

18/03/2007

Morocco has committed itself to a program of privatisation since 1993, releasing control of dozens of enterprises to the private sector.

By Sarah Touahri for Magharebia in Rabat -- 18/03/07

[Sarah Touahri] Privatisation and Public Enterprises Director Abdelaziz Talbi is pleased with the success of the privatisation program launched in 1993.

Since the first privatisation initiative launched in Morocco in 1993, 45 companies and 26 hotels have been transferred to the private sector, through more than 100 privatisation deals. This process has generated government revenues of nearly $9.6 billion.

Abdelaziz Talbi, Moroccan Director of Privatisation and Public Enterprises, told Magharebia that these results are the product of meticulous planning and supervision, including transparent auditing and assessment of handover procedures.

Talbi believes that in addition to raising money, the privatisation deals have facilitated the deregulation of certain sectors, such as telecommunications and the tobacco industry, and have also encouraged an influx of large-scale private investment with positive consequences for employment and productivity.

This year, the Ministry of Finance and Privatisation anticipates new deals, including the sale of port maintenance company Drapor, national shipping company Comanav and the Banque Centrale Populaire (BCP). An additional division of Maroc Telecom will also be sold off, though the government will remain heavily involved in other areas of the company. A project is also under way to outsource management of 13 general hospitals run by the National Social Security Fund (CNSS).

According to the government's annual budget, revenues are expected to total $530m. Talbi said that the state's current portfolio of 424 companies offers great potential for future privatisation deals and moves to bring in new shareholders, especially since large state enterprises such as Royal Air Maroc, finance conglomerate CDG and BCP are in the process of setting up new companies.

Privatisation was a strategic choice made in the 1980s due to unchecked growth in the public sector following Morocco's independence. The number of large enterprises swelled to 700 -- a huge number considering the fact that in a developed country it is the private sector which is responsible for commerce.

Privatisation, according to Talbi, has led to increased competition between market players. The biggest impact of privatisation, however, has been on the structure of the economy. According to a report by the finance ministry, government revenues have increased since privatisation. Taxes paid by private companies currently account for nearly 25% of all taxation revenue.

According to the finance ministry, the objectives laid out in the privatisation law initially included the emergence of a new generation of entrepreneurs, decentralisation, and the reduction of public expenditure. Globalisation and increased competition, however, pushed privatised companies to expand beyond the domestic front and look for international partners. For instance, Maroc Telecom would not likely have achieved external growth in Africa without foreign assistance.

The privatisation process has not been without its failures. Some hotels and two companies (ICOZ and SIMEF) ran into difficulties, and the state had to intervene. According to officials, this was mainly due to the quality of the buyers. "When you privatise a company, you need to put it in the hands of professionals. Privatisation isn't just about handing over a company for maximum profit. First and foremost, it's about ensuring the survival and future development of the company. To make sure this development happens, you have to choose the right partner."