The following is adapted from our third-quarter report for the Frontier Emerging Markets Equity strategy. Click here to read the full report.
You can see Morocco from Europe, nine miles away from southernmost Spain across the Strait of Gibraltar, yet the African nation flies under the radar for many global investors. Nevertheless, Morocco’s US$150 billion economy is one of the most developed in Africa, featuring advanced infrastructure that has improved the quality of life for its 38 million inhabitants, facilitated trade, and encouraged private investment. Now the country is embarking on an ambitious program to boost growth even more over the next decade.
The government is focused on a “new development model” agenda that aims for a cumulative annual growth rate in income-per-capita of 6% through 2035. It plans to spend about US$100 billion between now and 2030 on infrastructure, covering everything from improving irrigation to reducing carbon emissions to rebuilding housing after last year’s earthquake.
Over the past two decades, Morocco has achieved remarkable macroeconomic stability compared to other frontier markets, a result of prudent monetary and fiscal policies. The country has more than 1,100 miles of highways, one of the largest container ports in Africa, Tanger Med, and the first high-speed trains in Africa. The kingdom spends 5.5% of GDP on education, and is turning out 24,000 engineers annually from its nearly 200 technology-focused universities and institutes. The country also offers investment incentives to industries such as autos and pharmaceuticals, and has established free-trade agreements with more than 50 partners.
Morocco has been consciously trying to shift its economy away from more volatile sectors such as agriculture via a deliberate industrialization strategy that’s resulted in a more diversified economy. Sectors such as automotive and aeronautics have been growing at a faster rate than traditional sectors. As a result, the contribution of those traditional sectors to total exports has fallen from 44% in 2010 to 25% in 2023.
By the time the soccer World Cup arrives in 2030—the country is co-hosting alongside Spain and Portugal—Morocco expects to show off a vibrant, growing country that will attract both tourists and foreign investors and can be a lasting bridge between Africa and Europe. ∎