91775 THE WORLD BANK Morocco: IMPLEMENTING AN AMBITIOUS SOCIAL AND ECONOMIC TRANSFORMATION AGENDA IBRD Results SYNOPSIS Morocco’s sound economic management in recent years has yielded strong growth and investment grade status and it is weathering the negative impacts of the global crisis impressively well. Morocco is now addressing persistent social problems by reducing absolute poverty rates, investing in human capital through quality education, expanding access to drinking water, and linking rural areas to markets through investment in roads. Challenge past decade, in particular. Overall illiteracy rates and gender disparity in access to secondary education Morocco has launched a far-reaching process of remain high and the country continues to suffer social and economic transformation, positioning poor outcomes on infant and maternal mortality. It itself as one of the leading reformers in the region. also needs to diversify its economy, become more During the past ten years, successive governments competitive, and integrate further into the global have invested in solid macro-economic management economy if it is to reach higher growth levels. The resulting in sustained output growth, falling government has recognized this challenge and has unemployment, rising investment, substantial put in place an ambitious process of legal, policy, reductions in public debt, and lower inflation. and institutional modernization that has far-reaching Economic growth averaged 5.1 percent over 2001– political, economic, and social dimensions. It has 2009, almost twice the average of the previous designed and is now implementing a comprehensive decade. This performance spurred per capita set of new sector strategies that respond to the income to almost double, reaching US$2,590 in overall national vision and that target development 2008, and it brought about unprecedented rates of challenges with clear, measurable goals and poverty reduction, with absolute poverty decreasing indicators. from 15 percent to 9 percent. Unemployment declined to 9.6 percent from 14 percent and private Approach investment (domestic and foreign) increased sharply to 36 percent of gross domestic product (GDP). The World Bank has focused its program on Morocco is also showing resilience in the global maintaining flexibility to align support from the crisis, a result of solid macroeconomic management International Bank for Reconstruction and and strong capacity for managing external shocks. Development (IBRD) with the government’s vision. Economic growth is estimated at 5 percent in 2009, The Bank’s program in Morocco has so far been a very good outcome brought about by strong implemented in a flexible manner that has allowed it agricultural output and a strengthening of the to remain aligned with the country’s development services sector. program and the government’s vision, including the evolution of sector strategies. This flexibility has Morocco, however, faces challenges on human been critical to IBRD’s relevance allowing it to development outcomes despite progress over the respond to new and arising challenges. September 2010 2 MOROCCO: IMPLEMENTING AN AMBITIOUS AGENDA IBRD has played a key ‘ Knowledge Bank ‘ role in percent of households, and 60 percent of women Morocco. An important element of IBRD’s work in and youth reported increased access and use of Morocco is its technical and analytical support that basic infrastructure after sub-project implementa- is delivered both as an integral part of lending tion; and (iv) 46 percent of households reported that operations as well as through stand-alone reports. their livelihood has improved. The government and The Bank’s analytical and advisory activities (AAA) its partners in the INDH are concentrating on have nourished strategies in several sectors and its ensuring greater inclusion and empowerment of policy dialogue and advocacy roles are also evident women, youth, and vulnerable groups in all phases in the increasing importance being placed on of implementation and in all structures as emerging global issues such as managing the beneficiaries and decision-makers. impacts of climate change and developing a comprehensive risk management strategy to mitigate Investing in rural roads to have an impact the impacts of external shocks. across multiple sectors. The National Program of Rural Roads remains a cornerstone of the gover- IBRD resources have also played an important role nment’s approach to fighting poverty in rural areas in providing comparatively high levels of financing of Morocco. The World Bank and other donors are while at the same time catalyzing investments from supporting this program through a sector-wide other donors and actors. From June 2005 to June approach (SWAP), with IBRD delivering financing 2010, the Bank delivered a total of US$1.86 billion, of US$36.9 million in 2004, US$60 million in 2006, with development policy lending accounting for and additional financing of US$81.5 million in two-thirds of total new commitments. In fiscal year FY10. The first phase of the program was 2010 alone, lending reached a record level of implemented between 1995 and 2006 with the goal US$730 million and the same volume of financial of increasing rural road accessibility to 54 percent. support is under preparation for FY11. In parallel, The second phase of the project began in 2006 and donor coordination has improved and IBRD is is still under implementation. It expands on these delivering its support increasingly through efforts in terms of increasing the percentage of rural coordinated approaches around clear national sector population given access to an all-weather road from strategies. 54 percent at the start of the program, to 80 percent when the program is completed in 2012. It is doing Results this by rehabilitating 15,000 kilometers of rural roads. As part of this program, 2.9 million people IBRD is a partner in the main poverty-focused would benefit directly and about 760,000 people national program. IBRD is one of several partners indirectly from roads constructed, representing a with the government that are supporting the total population of nearly 3.6 million people, National Initiative for Human Development including people living in villages of less than 50 (INDH) which is the main nationwide poverty- households. fighting program launched by the King in mid-2005. Diversified IBRD support for the water sector. The first phase of the INDH program covering The 2006–2009 Country Assistance Strategy for 2005-2010 is for a total of US$1.1 billion, of which Morocco substantially contributed to the evolution IBRD is financing US$100 million. The INDH and implementation of new water policies and program relies on bottom-up participation and infrastructure priorities in Morocco. In 2007, a planning to improve living standards and give US$100 million Morocco Water Sector greater voice to the poor in targeted communities. More than 20,000 sub-projects have been financed Since 2005, INDH has financed more than 20,000 so far and the evaluations currently underway of the sub-projects, targeting more than 4.6 million first phase are showing some impressive results: (i) people, in 264 urban neighborhoods and 403 rural the rural poverty rate has decreased from 36 percent communities. “We have already seen some in 2001 to 14 percent in 2007; (ii) 19 percent of significant results from the field,” says Mohamed households reported that they participated in all or Medouar, the lead on the World Bank’s National Initiative for Human Development support project. part of the INDH participatory process; (iii) 62 IBRD RESULTS 3 development policy loan supported comprehensive regarding quality of service delivery were less water reform in Morocco to address legislative, positive. From 1990/91 to 2008/09, national net institutional, financing, and planning gaps, as well as enrollment rates increased from 52.4 percent to 90.5 inefficiencies across the sector. In parallel, the Bank percent for primary education, and from 17.5 carried out comprehensive analytical work that fed percent to 42.7 percent in middle school. The Bank into a reform program in which water-demand recently approved (in FY10) a US$60 million management, conservation and resource protection development policy loan to the education sector became new thrusts in Morocco’s water strategy. In with the goal of continuing IBRD support to the parallel to policy reform, the country’s water sector government for its education reform agenda. investment program was designed to build infras- tructure while supporting implementation of new Mobilizing Response to Climate Change. More policies by central and decentralized agencies on the recently, the Bank has been able to play a greater ground. IBRD provided support through different role in mobilizing and supporting the government’s instruments. In FY06, the Bank approved a Rural response to the impacts of climate change in Water Supply and Sanitation project which supports Morocco. The Bank’s support has focused in the national program to increase sustainable access particular on the water and energy sectors, although to potable water in rural areas, while promoting it is now expanding to help assess the impact of improve wastewater management and hygiene climate change on coastal cities, agriculture, social practices. In 2007, the Bank supported an innova- development, migration, among other issues. It is tive and successful large-scale pilot in poor, un- also supporting the formulation of a risk zoned peri-urban neighborhoods of three big cities management strategy to manage external shocks, to demonstrate output-based aid mechanisms for and also an adaptation strategy. More recently, the the promotion of water and sanitation service Government of Morocco launched the Morocco connections in chronically under-served areas. The Solar Plan with the intention of building the biggest recently-approved Country Partnership Strategy for solar power plant in the world and it has asked for FY10-13 confirms the commitment of the Bank to IBRD to be a main partner in this project. the water sector, underscored by the approval of three new water-related projects in FY10 for a com- Bank Contribution bined total of US$285 million. As a result of an accele- ration of rural water supply programs, potable water As of August 2010, IBRD’s lending portfolio in access has risen to over 87 percent in 2009 from 50 Morocco consists of 12 active projects for a total of percent in 2004. Morocco is now on track to exceed US$1.16 billion in sectors such as water, education, the targets for water and sanitation services contain- rural roads, agricultural development, poverty- ned in the Millennium Development Goals (MDGs). reduction (INDH), energy, public administration and financial sector. IBRD lending in FY10 Providing Long-Term Support to the Education increased considerably to US$730 million and Sector. IBRD has a long history with and an active lending levels are expected to remain around engagement in Morocco’s education and other US$600-US$700 million for FY12. social sectors. Over the past decade, four relevant projects – Social Priorities (Education Program), In August 2010, Hajar Biyad, 15, was working out Alpha Maroc (Adult Literacy) Project, Social on gymnastics equipment in the courtyard of her Development Agency Project, and the Basic school in Sale, Morocco. Suspended on ropes high above the ground, she was a picture of grace and Education reform Support Program were fully strength. Four years ago, Biyad was an 11-year-old executed. These operations assisted the government runaway on the streets of Rabat and Sale. Today, in increasing access to basic education, literacy and she is a student at an alternative school, l’Ecole du other social services, and improving the quality and Cirque, that teaches acrobatics along with reading effectiveness of service delivery. Overall, these and math. “God willing, I will be an artist and work projects were implemented successfully with respect in a circus,” she says. Biyad was once one of the to the objective of increasing access to basic services 50,000 people living in extreme poverty that and promoting participatory approaches and Morocco’s 5-year-old National Initiative for Human Development (INDH) seeks to help. partnership arrangements, although achievements 4 MOROCCO: IMPLEMENTING AN AMBITIOUS AGENDA Partners Investment Bank, France, US (through USAID and Millennium Challenge Corporation) and other Donor aid in Morocco accounts for a small bilateral agencies such as those from Spain, Japan, proportion of government financing—between 4 German and Italy. and 5 percent in 2007. Aid volumes have been increasing over time, more than doubling from 2004 Moving Forward to 2007. Morocco is the only country in the MENA region to have signed an advanced status agreement The World Bank Group’s objective over the next with the European Union, which represents both a four years —as articulated in the recently-finalized strong signal of sustained political and legal reform Country Partnership Strategy—is to support and an act of international recognition for the implementation of the government’s reform reform process. The international development program. The focus of the program will be on community recognizes the relevance and quality of facilitating institutional reform, sequencing of its development program and is providing increased reforms and contributing toward the “how to” of levels of resources and support. Financing from implementation. The World Bank Group will development partners complements the continue to work on inter-agency coordination and government’s own mobilization of resources and its capacity-building and the program will pay particular impact can be assessed as contributing to the overall attention to results orientation both within World objectives of the government’s programs. The main Bank-financed activities and in the government’s donors in Morocco include IBRD, African overall program. Development Bank, European Union, European IBRD RESULTS 5 LEARN MORE – Country website – Country Brief – Country Partnership Strategy – Data and Statistics – Active projects l Lending summaries – Economic and Sector Work l All publications – Doing Business in Morocco – Millennium Development Goals Multimedia – Morocco Fights Poverty Through ‘Human Development’ Approach – Morocco: Serving Youth – Running against time”, documentary illustrating the Country Economic Memorandum – Videos on the Middle East and North Africa