Morocco's Experience in Fight Against Poverty: Strengths and Limitations

IMGXYZ2741IMGZYXMorocco has made notable progress in fighting poverty over the last decade. In a seminar hosted by the Carnegie Middle East Center and the Moroccan Institute for International Affairs (IMRI) in Casablanca, Carnegie’s Lahcen Achy compared Moroccan efforts to reduce poverty with the experiences of Egypt and Syria. He highlighted the main factors contributing to Morocco’s success, assessed the limits of this achievement, and offered policy recommendations on how to build a sustainable strategy for poverty reduction.

Explaining the Decline of Poverty in Morocco

Morocco, like Egypt and Syria, has seen higher gross domestic product (GDP) growth in the last decade compared to the previous one. Unlike Egypt and Syria, however, its poverty rate has fallen significantly. Achy cited several factors critical to reducing Morocco’s poverty levels:

• Demographic Behavior: The number of children per adult woman has decreased over the past decades, dropping from an average of 5.4 children per woman in 1980-1985 to 2.4 in 2005-2010. This rapid demographic transition has reduced the pressure on household budgets and public investments, as well as on labor markets. As a result, Morocco has been able to invest more money in infrastructure, such as roads for rural areas, improved electricity, and clean water, while Egypt and Syria had to focus their spending on keeping up with the needs of their growing populations.


• Fiscal Resources: Without a large public deficit, Morocco has more fiscal space and more ability to invest in public projects than Egypt and Syria. Its stable fiscal resources and higher tax revenues give it the ability to engage in wide- reaching fiscal policies.


• Credit Extensions: Morocco has emphasized strong support for the private sector. One way it has done this is through credit extensions. Morocco allocated 80 percent of its total credit to the private sector in 2009, while Syria offered only 18 percent and Egypt 49 percent.


• Microcredit Associations: Microcredit associations have played a large role in lifting the liquidity constraints on poor households and small firms in Morocco. Achy pointed out that Morocco receives 59 percent of total microcredit loans granted in the Middle East and North Africa, whereas Syria holds just 1 percent of total loans and Egypt 14 percent.


• Remittances: Remittances play a key role in income redistribution, as Moroccans living abroad feel responsible for sending funds back to support their families and provide financial resources for social projects.


• Role of NGOs: NGOs have played an increasing role in Morocco, in partnership with state and local governments. Since 2002, when a law was passed to allow domestic NGOs to receive foreign funds, they have been able to expand their activities at the local and national level. Foreign NGOs have also played a larger role, as a result of Morocco’s higher governance indicators, which give foreign NGOs confidence in its leadership. 

The Ongoing Problems and Key Economic Policy Recommendations

According to Achy, while Morocco has made great strides toward reducing poverty, its successes have not been enough to sustainably reduce national poverty levels. He pointed out five main obstacles that prevent Morocco from reaching a sustainable low level of poverty:

• Poor Human Capital: The decline in poverty thus far has not been matched by an improvement in human capital. Morocco still lags behind Egypt and Syria in illiteracy rates, which were at 45.4 percent in Morocco, compared to 33.6 percent in Egypt and 16.9 percent in Syria, in 2007. Morocco also lags in government efforts to fight illiteracy. Achy argued there is an urgent need to fight illiteracy by allocating more resources to education and creating incentives for poor families to send their children to school.  


• Economic Inequality: The gap between rich and poor has increased in the past decade, despite efforts to reduce poverty. Achy recommended developing more adequate public redistribution policies that better target the poor and most vulnerable members of Moroccan society.


• Lack of Investment in Alternative Industries: The Moroccan economy relies largely on the agricultural sector, which is highly vulnerable to climate conditions. This exposes poor and vulnerable households to severe economic shocks with no formal protection mechanisms; governmental support is restricted to large farmers instead of small ones who need it most.


• Poor Job Quality: Job quality in Morocco is dangerously low, with too many jobs calling only for unskilled labor and offering low pay. Furthermore, many workers are employed in the informal sector. This makes employment precarious and increases worker vulnerability to economic shocks. Achy argued that policy makers should create incentives for informal entrepreneurs to formally establish themselves in the private sector. 


• Growing Government Control Over NGOs: The contribution of NGOs to local development has lost momentum over the last few years in the wake of increased government supervision. In spite of greater access to foreign funds, the government maintains a close, if implicit, control over NGO activities, which limits the scope of their work. Achy recommended allowing civil society and particularly NGOs to participate more openly and independently in shaping and implementing social policies.

The conference video is available on the event's French page.