Morocco improving transport links for efficiency

With a vast area and distant urban centres, establishing adequate transport links to cover Morocco’s southern territories has been challenging. Great distances and relative remoteness have certainly impacted the business environment, raising business costs for local industries. This is, however, gradually changing.

Investment

Rising public investment in infrastructure has expanded the capacity for airports, roads and ports in the southern provinces. This is in large part due to high levels of state investment, but private capital – channelled into logistics areas and services – is also helping improve efficiency. “The region is far away and difficult to access, which makes it hard to attract investment,” Lamine Benaomar, the wali of Dakhla, told OBG.

Although much remains to be done to equip the southern provinces with sufficient road, sea and air infrastructure, a positive point in this regard has been the financial involvement of the Agency for the Promotion and Economic and Social Development of the Southern Provinces of the Kingdom (Agence pour la Promotion et le Développement Economique et Social des Provinces du Sud du Royaume), known as the South Agency, which has permitted cost-sharing between it and the Ministry of Equipment and Transport.

Roads

Road transport, as elsewhere in Morocco, is the chief means of shipping and distributing goods. However, undermaintenance and underinvestment over the past two decades have taken their toll on the quality of infrastructure. “There are logistics challenges in connecting different areas across a region as large and vast as the south. The road linking Laâyoune to Dakhla could benefit from improved maintenance, given how important it is in terms of transporting goods between the two cities,” Safa Bahiri, director of Sarma Fish, told OBG. To counter this, transport authorities have been focusing resources on road maintenance and construction, including high-speed motorways – construction is set to begin soon on a highway linking the cities of Agadir and Guelmim. Initial studies for the link were launched in 2014 by the Ministry of Equipment and Transport in Souss-Massa-Drâa. The need for the project is clear: the existing highway network along Morocco’s Atlantic coast connects the northern cities of Tangiers and Agadir, but from that point traffic follows on the smaller National Route 1, which runs all the way to Laâyoune, Dakhla and further south.

Road works are taking place in other parts of the southern provinces, too. In the Guelmim-Es Semara region alone, road projects valued at Dh348m (€37.9m) are planned for 2015 and 2016. These will include the widening and revamping of National Route 1, along a 58-km stretch between Guelmim and Tan-Tan. Road work is also progressing across 35 km of the road link between Guelmim and Bouizakarne, on 31 km of the link between Al Watya and Chbika, as well as along 18 km on the road between Oued Daraa and Tan-Tan.

Ports

With theeconomy of the three southern regions intrinsically linked to its long Atlantic coast and offshore resources, a network of major maritime facilities in Tan-Tan, Boujdour, Tarfaya, Laâyoune and Dakhla remains a critical backbone of region’s economy. Ensuring sufficient port capacity has been crucial to developing the region’s fishing industry, and in recent years extensive work has taken place at sites along the coast.

The largest maritime gateway to the region is actually just outside, at the Agadir Port. With traffic rising by around 7% a year according to the Ministry of Equipment and Transport, authorities will spend about Dh3.9bn (€424.3m) between 2014 and 2030. Initial work will focus on expanding the container-handling area, creating an area for tourist ships and building a hydrocarbons terminal. Several projects under way at smaller southern ports will expand local capacity and enhance industrial development. “Logistics and transport are a burden for the fishing industrials from Dakhla and Laâyoune. The companies that export need to take the containers to Agadir port by roads, increasing costs and risks of delays and accidents,” Bahiri told OBG.

Initiatives

As a result, the Ministry of Equipment and Transport’s National Port Strategy is mapping traffic flows and consequent infrastructure needs until 2030. A total of Dh1.8bn (€195.8m) was allocated for investment in 2014 alone. A number of other initiatives are under way too. A project to strengthen sea protection walls at Laâyoune Port was completed in early 2015. In November 2013, a Dh378.8m (€41.2m) extension of the Port of Boujdour was completed. The project was 80% financed by the Ministry of Equipment and Transport, with the South Agency accounting for the remaining 20%. The expansion consisted of increasing the length of the protection walls, dredging and improving access routes to the port. The work also included an expansion of the adjacent industrial and logistics areas and a new 2500-sq-metre fish sorting area. Capacity for processing the seafood catch is likewise being expanded. “The new seafood processing industrial park in Boujdour will have a positive impact on the fishing sector’s value-added production in the south, offering closer proximity to fisheries in Dakhla and Laayoune,” Saad Harkeet, general manager of Haliopolis, told OBG.

Also under way is a project to increase the capacity of the Tarfaya Port in the Laâyoune-Boujdour-Sakia Al Hamra region. The Dh505m (€54.9m) venture is focused on establishing additional handling capacity for the local artisan fishing fleet, which is made up of 300 boats and accounts for 40,000 tonnes of catch per year, and also to establish the necessary capacity to attract visitor traffic from the Canary Islands. Being the closest port to the Spanish Atlantic Isles, Tarfaya could act as an entry point for tourists visiting the southern provinces. Expected to be concluded during summer 2015, the project will extend dry dock areas, increase protection infrastructure and carry out necessary dredging work to allow larger boats access to the port.

Further south, at Dakhla Port, extension work took place between 2010 and 2013. The Dh354.6m (€38.6m) project aimed to increase capacity in the facility, which is expected to handle over 1m tonnes of cargo annually, the majority of which (760,000 tonnes) will be fresh pelagic catch from the region’s fishing industry. The project involved the construction of 650 metres of new quays, dredging work on several sections of the port, as well as 8.2 ha of new dry areas. Future plans for the existing facility, under the government’s longterm port strategy, might involve the addition of tourismrelated port activities to attract visitors.

New Dakhla Port

Despite recent work, the natural setting of the Dakhla Port leaves little room for expansion. In a bid to ensure the region has ample capacity for future activities, a plan to build a new Atlantic port to serve the city and surrounding areas is currently under discussion. Without much detail, the project was mentioned in the government’s National Port Strategy, which discussed the establishment of a new large-scale port outside the Dakhla Bay area to serve both the local fishing industry’s larger vessels and also contribute to the region’s economic development by easing trade exchanges, and import and export procedures. Furthermore, the new port infrastructure would be built to coordinate closely with a nearby free trade zone planned for the region.

A key advantage for a new port would be to establish a direct export link for several of the regions’ sectors, such as fishing and agriculture, which sometimes depend on transporting products by road to Agadir Port further north to access export routes. Authorities argue that the southern provinces’ location on the central Atlantic coast would be leveraged through a new, large-scale port facility. “A port on the Western African Atlantic coast would be profitable because we have many common interests with most of those countries, going all the way down to the Côte d’Ivoire. A new port here would have an international focus because we are on the route to South America, as well as between Europe and Africa,” Benaomar told OBG.

In September 2014, the Ministry of Equipment and Transport launched a tender for an initial feasibility study for the facility. Although the final location for the port is yet to be determined, transport authorities have noted that Ntirift, 70 km north of Dakhla, is a likely spot. The project will also include a 2000-ha area to provide room for industrial and logistical activities.

The initial estimate for the global project is a total of Dh354m (€38.5). Besides its transport and logistics benefits, the new port would also allow local industries to take further advantage of sea resources.

Airport Expansion

Improving air links to the southern provinces will also have an impact on local economic development. In 2010, the Ministry of Equipment and Transport completed the construction of a new 2300-sq-metre terminal in the city of Dakhla. The project cost Dh140m (€15.2m) and allowed for the extension of the airport’s annual capacity from 55,000 passengers to 300,000. Increased passenger capacity will come in handy if plans to develop Dakhla as an important beach and desert tourism spot are to be realised.

Betting on Logistics

A report by Morocco’s Economic, Social and Environmental Council, which has been charged with the establishment of a new development strategy for the southern provinces, noted that “the lack of modern infrastructure and logistics are all factors that hinder the development of modern trade activities”. However, a number of investors are looking to take advantage of the relatively greenfield territory, both with an eye to the domestic distribution market as well as for connections to West Africa.

The development of new logistics areas in the south is also being led by the Agency for the Development of Logistics. Under the National Logistics Strategy, six regional logistics plans will establish about 690 ha of new logistics zones. One of these will be located in Laâyoune, with the other five targeting the cities of Al Hoceima, Oujda, Settat, Safi, and Béni Mellal. Earlier regional logistics plans had already focused on the southern provinces, with a finalised plan to set up 75 ha of new logistics areas in Oued Ed-Dahab-Lagouira.

Private Investment

The private sector is also launching a number of projects. Logistics firm Mhiriz du Grand Sud has announced it will invest Dh70m (€7.6m) in a 120-vehicle fleet based in Dakhla for the transportation of goods, aiming to establish a logistics service to connect to Europe as well as sub-Saharan Africa. Also in Dakhla, investment company Sahara Ibhar Invest will establish a Dh70m (€7.6m) multi-service logistics platform. Amongst other facilities, the new zone will include a cold storage unit with a 10,000-tonne capacity catering to the region’s fishing industries.

Groupe Zine is developing a Dh22m (€2.4m) stoking area to export agro-industrial products to Mali, Senegal and Mauritania. The company is also establishing another logistics area to ship fertiliser and livestock fodder, both for the surrounding areas of Boujdour-Sakia-El Hamra and Oued Ed-Dahab-Lagouira, as well as for African markets further south.

Also targeting nearby foreign markets will be mineral bottled water producer Oulmes. The company has announced plans to invest Dh60m (€6.5m) to set up a new bottling line in Bir Guendouz, which is expected to eventually have an annual capacity of 20m litres, as well as a 5000-sq-metre logistics platform in Dakhla, which will be used to export the new unit’s output into neighbouring Mauritania and Senegal. Construction material manufacturer and distributor Sorexi is also targeting the southern provinces and African markets through a Dh15m (€1.6m) investment. The money will be used to establish a road emulsions production unit, as well as a construction materials distribution centre.

Prospects

A combination of private sector investment and public investment by the state is helping to modernise existing infrastructure. This will help secure a more competitive economic environment for businesses. Private initiatives are also a sign that, with the necessary planning and development of local industries, the southern provinces could become a strong springboard into neighbouring African markets.

Over recent years, work on the region’s port facilities has improved capacity. This will be pivotal in reducing the dependence of local production industries on faraway port infrastructure. The project to establish a new Atlantic port on the Oued Ed-Dahab-Lagouira coast may be the critical stepping stone needed for the southern provinces to achieve faster economic growth.

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The Report: Morocco 2015

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