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Morocco Snapshot

Morocco has a GDP of US$118bn, which places it fifth in Africa after Nigeria, South Africa, Egypt and Algeria, and a population of 35 million people. GDP growth in 2019 was 2.7% and was expected to increase to 3.7% in 2020, but will probably decline by 2.7% due to the coronavirus pandemic. Morocco’s government has a series of economic plans and strategies in place to diversify the economy. The 2014-2020 Industrial Acceleration Strategy promotes the creation of “industrial clusters” and is expected to increase industry’s share of GDP by 9% and generate 500,000 jobs . The Rawaj Vision 2020 strategy aims to grow the retail sector’s contribution to GDP from 12% to 15% and to generate 450,000 jobs by restructuring and gradually absorbing informal trade and businesses into the formal economy. It also aims to grow the number of modern food stores from 15% to 30% by 2020. The Green Morocco Plan is an agricultural strategy launched in 2008 and designed to make agriculture the main growth area over the next 10 to 15 years. The strategy aims to double agriculture’s share of GDP which is currently 19% (15% agriculture and 4% agro-industries), create 1.15 million jobs by 2020 and more than double the income of three million rural people. Evidence of the aspirations and success of these strategies can also be found in the automotive sector, which in 2017 overtook South Africa as the continent’s largest producer of passenger cars. The largest industry and exporter in Morocco is phosphate mining and processing followed by food processing which accounts for 27% of total industrial production and 25% of industrial employment. There are a number of specific financial, tax and customs exemptions and agreements to encourage investment. Declining foreign direct investment in 2018 prompted the government to introduce a five-year corporate tax holiday for new industrial companies and it has also signed agreements with several countries to avoid double payment of income tax. Electricity costs are generally regarded as expensive in Morocco as the country imports 97% of its energy resources. Read More

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Madagascar Snapshot

Madagascar is endowed with a wealth of natural resources. These include semi-precious stones, graphite, chromite, coal, bauxite, rare earth elements, salt, quartz, tar sand and mica. The country supplies around 80% of the world’s vanilla. Other main agricultural products include coffee, sugarcane, palm oil, cloves, cocoa, rice, cassava, beans, bananas and peanuts. The island nation also derives revenue from fishing, forestry and hydropower. Renowned for its biodiversity and its unique flora and fauna, Madagascar is often described the ‘Galapagos of the African continent’. With its exceptional natural heritage, including magnificent tropical beaches, the island has been earmarked for development as a premier tourist destination. Despite its abundance of natural resources, the island nation remains one of the poorest countries in the world and is classified by the United Nations (UN) as one of the world’s least developed countries. According to the World Bank, 92% of the population lives on less than US$2 per day. The predominantly rural population suffers from chronic malnutrition, with 50% of all children under the age of five suffering from stunting. Access to education in Madagascar is poor and the level of literacy is low, particularly in the rural areas and consequently the country suffers from a dearth of skills. Madagascar is also characterised by a substantial infrastructure deficit as much of the island is not accessible by road and access to electricity is extremely limited if not non-existent in most rural communities. The country is highly exposed to natural disasters, climate shocks and extreme weather events, notably cyclones, hurricanes and drought and, on average, three major natural disasters are reported annually. More than 60% of the Malagasy population is estimated to be under the age of 25 and the country’s workforce numbers approximately 13.4 million people. According to CIA research, 36.4% of the island’s total population was urbanised in 2017 and it is estimated that the country’s rate of urbanisation will average 4.47% per annum until 2020. The official language of Madagascar is Malagasy but in the business arena French is the accepted language. Madagascar contains unexploited deposits of coal, lithium, uranium, bauxite, iron ore and vanadium, while chromite, cobalt, copper, gemstones, gold, graphite, nickel, ilmenite, rutile, zircon, granite, dolomite, limestone, marble and gypsum are produced. The Common Market for Eastern and Southern Africa (Comesa) states that Madagascar’s reserves of sapphires are the largest in the world while the UN Economic Commission for Africa (UNECA) said that about 40% of the global output of sapphires are produced in Madagascar. Most of the country’s mining companies are privately owned, while state-owned Kraomita Malagasy SA (KRAOMA) is Madagascar’s only chromite mining company. Artisanal miners produce gemstones, gold, nickel, chromite, copper, cobalt, ilmenite, rutile, graphite and zircon, with about 70% of the country’s estimated 500,000 artisanal miners believed to be involved in gold mining. Gemstones produced include aquamarine, emerald, demantoid, tsavorite, amethyst, citrine, agate, amazonite, cordierite, jasper, labradorite, ruby, sapphire and tourmaline. It is estimated that around 70% of the country’s sapphire production is smuggled to Sri Lanka, while sapphires worth an estimated US$150m leave Madagascar annually. Exact figures are not available due to the poor regulation of the mining industry. According to the United States Geological Survey (USGS), Madagascar is the second largest producer of natural graphite in Africa and the country is also the continent’s third largest chromite producer. Read More

Ethiopia Snapshot

The winds of change are sweeping through Ethiopia since Abiy Ahmed became prime minister in April. Ethiopia is sub-Saharan Africa’s fastest growing economy, with average growth of around 10% a year for over a decade. GDP was US$8.2bn in 2000, $80bn by 2017, and will reach US$129bn by 2023, according to the IMF. The IMF’s World Economic Outlook expects 8.5% GDP growth in 2019 – while the World Bank expects 8% – outstripping advanced economies and global growth, which is expected at 3.9%. Read More

Sectors To Watch Post-Covid

In the light of the president’s commitment to a social compact on July 23rd we have examined the economic strategy documents recently published by Business for SA, the ANC’s Economic Transformation Committee and re-visited the sadly neglected National Development Plan and identified (with some assumptions) the twenty one sectors targeted for growth which are common to these documents. Read more