Getting industrious: Three new zones will boost value-added processing in the region

The Moroccan real estate and business park developer MEDZ, a subsidiary of the Caisse de Dêpot et de Gestion (CDG), is working to set up and commercialise three industrial zones in the Oriental region.

MEDZ manages a network of 14 zones nationwide focused on tourism, industry and offshoring, with Oriental hosting a greater concentration of MEDZ projects than any other region. This is an indicator of both the region’s economic potential and the government’s emphasis on developing the area, which was largely marginalised until the 1990s.

BUILDING MATERIALS: Currently, the Oriental region’s strongest industrial segment is construction materials manufacturing. Nador has long been a centre for brick making, and now counts over 23 manufacturers. The sector primarily consists of small and medium-sized enterprises (SMEs), but a few large-scale producers are also present. The Moroccan steelmaker Sonasid has maintained a production facility near the port of Nador since 1974, which now has an annual capacity of 650,000 tonnes. This was the company’s only factory until the establishment of a second site at the Atlantic port of Jorf Lasfar in 2002.

The Swiss cement manufacturer Holcim has been present in Morocco since 1979 and acquired a majority stake in a cement factory 45 km outside Oujda in 1992. The factory produces 1.2m tonnes of clinker and 1.6m tonnes of cement per year, which mainly goes towards local consumption. However, Holcim is expected to boost export traffic from the port of Nador in 2014, thanks to a contract it signed with its sister company in Côte d’Ivoire. The manufacturer will export 600,000 tonnes of clinker to Abidjan via the bulk terminal in Nador over the course of 2014.

MINING: The mining industry has not fared as well over the years. Mining of coal and other minerals used to be a major source of revenue and employment for the region, particularly in Jerada province, where the coal mines were located. However, investment in mining began to peter out in the 1960s and production stopped outright at the coal mines in 2001. As job opportunities dried up in the mining sector, this contributed to the wave of immigration out of the eastern region and raised the unemployment level. The export of minerals such as barite, bentonite and clay continues to account for more than half of annual exports from the port of Nador, but the sector is unlikely to return to previous production levels.

The drop in mining activity and the limited activity in the region during the 1990s highlighted the need to establish industrial infrastructure, enhance competitiveness and let the industrial sector develop organically. All three of the new industrial zones are geared towards specific sectors – such as agro-industry, new technologies, renewable energy and offshoring – that have the most potential for competitiveness. However, the zones will be open to any sort of industrial investment, as long as projects comply with standards for noise pollution and environmental protection.

OUJDA TECHNOPOLE: The project closest to completion is the Oujda Technopole, which is targeting clean tech, information and communications technology (ICT), and renewable energy.

The Technopole has several specific separate sub-zones, including an industrial zone for low-polluting SMEs, a retail park aimed at regional sales, and allotments for showrooms, support services and logistics. Finally, the zone also includes a dedicated offshoring centre, Oujda Shore, and a 40-ha clean tech zone, dedicated to the production and assembly of components for renewable energy and other clean technologies.

A total of 34 companies had signed deals to set up shop in the zone by the first quarter of 2014. According to MEDZ estimates, two-thirds of these projects (23) are in the SME industrial zone, and these will operate in a variety of sectors, including metallurgy, agro-industry, textiles and thermal isolation. Another nine projects will be located in the commercial and retail zone, in sectors such as automotive sales, furniture and industrial materials. Two companies have so far launched operations in the Technopole; both are Moroccan companies involved in retail: a car dealership, Auto Hall, and a tobacco distributer, Imperial Tobacco. MEDZ estimates that another eight firms will launch operations in the zone before the end of 2014.

Oujda Shore will be entirely dedicated to offshoring activity. Similar to Technopolis in Rabat, Casanearshore in Casablanca and Tetouanshore, Oujda Shore aims to accommodate companies in the field of call centres, business process outsourcing, IT outsourcing, accountancy and auditing, and other support services. The park will be oriented towards companies at the Technopole, as well as those elsewhere in Morocco and abroad.

SELOUANE INDUSTRIAL PARK: Selouane is being developed on 444 ha located 12 km south of the region’s sole international port, Nador. It will be the only industrial park in Morocco that counts local public agencies among its investors; the Nador Chamber of Commerce acquired a 32% stake in the private firm created to manage the zone, Société d’Aménagement du Parc Industriel de Selouane, given the zone’s importance to local economic development.

Selouane will benefit from proximity to the port and the region’s strong historical connections to Spain. However, current limitations at the port of Nador, which does not have a container terminal, may prove to be an obstacle to the park’s development. A project to construct a major trade and trans-shipment hub 30 km away from the existing port would help boost export capacity in the long run (see analysis).

Selouane has experienced delays, but the first 50-ha tranche began to be commercialised in March 2014. The zone will be dedicated to light processing industries and various support services. So far, 13 local and national firms have signed on to establish projects in the zone, in sectors ranging from agro-industry and chemicals to laboratories and construction materials.

BERKANE AGROPOLE: Finally, an agro-industrial site is being developed on a 100-ha plot in the province of Berkane, the region’s main centre for agricultural production. The agro-industrial sector already represents an important segment of the regional economy, accounting for 30% of all industrial workers in the Oriental. Development of the site is projected to involve a total investment of Dh361m (€32.1m), and it will include three distinct zones dedicated to agro-industrial processing; logistics and conditioning centres; and research and development.

The first 50-ha tranche is now being commercialised, and MEDZ has listed 20 existing investment projects in the zone, including dairy production, herbs and medicinal plants, and cross-cutting activities such as packaging, conditioning, water pumping and irrigation. The zone is ultimately expected to create 5000 jobs and attract Dh1bn (€88.8m) in investment.

In addition to boosting export revenue from agricultural production, local authorities hope that the agropole will establish Berkane as a centre for research and development. Three laboratories are being developed in the zone, managed by the National Office for Food Safety and the National Institute for Agricultural Research, which are meant to encourage the development of more value-added products, apply strict quality standards and thereby raise the profile of local products in export markets.

SMALL BUSINESS: In their initial stage, all three industrial zones will be oriented towards businesses in the region, as well as other areas of Morocco. The three new industrial platforms match up well with the region’s economic capabilities and potential. However, current land prices are still out of reach for many SMEs, which make up over 90% of local businesses.

Imad Mrani Alaoui, director-general of local IT firm and call centre Quality Shore, told OBG, “Moving to one of the Oriental’s dedicated offshoring zones would represent a gain in terms of the security of the power supply and access to support services. However, the rental price remains inaccessible for some SMEs in the context of the global economic downturn and the domestic liquidity crisis, particularly if they have to invest again to move their activity to this new zone.”

MEDZ has partially scaled back plans to commercialise the parks in response to the country’s broader muted economic performance, but the revisions reflect a more pragmatic approach to development. Each zone will begin by commercialising a small first tranche, and subsequent sections will be developed as demand evolves. Yet the zones have already drawn in companies from a number of areas; thus far, investment in all three zones has been evenly split between local and national companies. Firms with operations in other economic hubs such as Casablanca, Rabat and Agadir have shown increasing interest in the Oriental region, a positive sign for regional development.

Ultimately, the project developers and local authorities hope that the zones will attract an influx of foreign investment. Administrative procedures in the region have been streamlined, and professional and higher education institutions are establishing training centres close to each of the three zones, which should help to pave the way for future investment there.

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The Report: Morocco 2014

Oriental chapter from The Report: Morocco 2014

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