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Moroccan Economic Sectors

Morocco has two-thirds of the world's phosphate reserves and is the world's top exporter of phosphate rock. In 2003 Morocco mined nearly 22 million metric tons of phosphate rock. Morocco was the world's third ranked producer of phosphate rock after the United States and China. In addition to phosphate rock, the country produced a wide variety of minerals, which included barite, clays, coal, cobalt, copper, fluorspar, gold, iron ore, lead, nickel, petroleum, salt, silver, talc, and zinc. According to the Moroccan Federation of the Mineral Industry, mining and mining related activities contributed about 6% to the GDP and represented about 75% of all tonnage exported by sea, 70% of all tonnage transported by rail, and 20% of foreign trade.

The Office National des Hydrocarbures et des Mines (ONHYM) was the Government entity responsible for the exploration for and the promotion of national mineral resources. State-owned Office Chérifien des Phosphates (OCP) managed phosphate mining and beneficiation and owned most of the phosphoric acid and phosphate fertilizer production facilities. Groupe ONA of Morocco was the leading indirect private sector investor through its equity interest in Managem S.A. and Société Nationale d'Ivestissement S.A. (SNI). Managem had six mines in Morocco: the Akka gold mine, the Bou-Azzer cobalt mine, the Draa Sfar and the Guemassa copperlead- zinc mines, El Ham mam fluorspar mine, and the Imiter silver mine.

Morocco is a minor producer of oil and natural gas. In fact, it is the largest energy importer in North Africa. Crude petroleum production totaled only about 300 barrels per day in 2005. Natural gas production was estimated at 5 million cubic meters in all of 2003.

Morocco has substantial fishing resources. In 2002 the total catch, mostly sardines, weighed 896,600 metric tons. In July 2005, Morocco signed a fishing agreement with the European Union (EU) that gives the EU limited fishing rights within Moroccan territorial waters for the first time since 1999. Under the agreement, the EU is restricted to catching a maximum of 60,000 metric tons of small, open-water fish using 119 fishing boats per year. In exchange, the EU will pay Morocco US$43 million per year. This accord is much more modest than its predecessor, which expired in 1999.

Industry constituted 29.7 percent of Morocco's gross domestic product (GDP) and employed 15 percent of the workforce in 2004. Manufacturing, a subset of industry, accounted for 18 percent of GDP. In 2004 manufacturing output was 41.6 percent higher than in 1992, indicating a relatively slow rate of growth, attributable to low levels of investment and productivity in combination with relatively high wages-higher than in China or India, for example. The worst performing manufacturing segment was textiles, which has experienced no growth since 1994, reflecting competition from Asian countries and a relatively strong domestic currency. By contrast, the top-performing segments-paper and metallurgical products-have grown by 90.9 percent and 86.4 percent, respectively, during this period. Morocco is the world's leading exporter of phosphoric acid, which along with fertilizers is the most important product of the chemicals industry. The food-processing industry exports canned fruit, vegetables, and fish; the European Union is a major customer.

According to a January 2006 estimate by Oil and Gas Journal, Morocco's proven oil reserves total 1.07 million barrels, while its proven gas reserves total 60 billion cubic feet, although additional reserves may lie offshore. Both figures fall substantially short of the corresponding amounts in neighboring Algeria. In fact, Morocco is a net importer of energy, including coal, which is needed to fire the country's two main electric power stations. In 2003 Morocco produced an estimated 17.35 billion kilowatt-hours of electricity but consumed 17.58 kilowatt-hours.

Some 17 foreign energy companies are exploring for energy in Morocco. In 2000 Morocco began to provide tax incentives for offshore oil production and capped the share of foreign oil concessions reserved to the government at 25 percent. Comprehensive liberalization of the energy sector is expected in 2007. The disputed status of Western Sahara places in doubt the legality of oil and gas contracts in that country.

Services accounted for 53.6 percent of the economy and employed 45 percent of the workforce in 2004. Financial services liberalization has been underway since the early 1990s, but it has fallen short of expectations, according to the World Bank. Despite efforts at privatization, many financial institutions continue to be owned by the government. The latest thrust in this campaign involves boosting the independence of the central bank and improving bank supervision and regulation. The latter is urgently needed because many banks suffer from extremely high levels of non-performing loans and inadequate reserves. The insurance sector has been streamlined with the closure of several poorly performing companies. Morocco has modernized the Casablanca stock exchange by introducing an electronic quotation system, centralized settlement, and brokerage rules.

Tourism is Morocco's leading source of foreign exchange. In 2003 Morocco received 2.2 million foreign tourists, with the largest contingents coming from France, Spain, the United Kingdom, Germany, and Italy, in that order. If Morocco is to achieve its goal of boosting tourist visits to 10 million by 2010, it will need to address the shortage of suitable hotel accommodations.