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Morocco Compact

In 2006 the Millennium Challenge Corporation and the Government of Morocco began development of their first partnership to reduce poverty. The Moroccan economy had seen 30 years of relative macroeconomic stability but slow growth, which led to consistently high unemployment. The Moroccans sought to stimulate economic growth by investing sectors with high potential, where they had competitive advantages, and could increase employment.

MCC and Morocco signed a five-year, $697.5 million compact in August 2007 that invested in five project areas based on Morocco’s own national growth strategy. This strategy was designed to modernize industrial sectors and target areas where the country had competitive advantages, such as textiles, agribusiness, fishing and handicrafts. The compact ultimately focused on:

  • fruit tree productivity;
  • small-scale fisheries;
  • artisan training and urban market rehabilitation;
  • financial services; and
  • enterprise support and training services.
The Government of Morocco and MCC spent 93 percent of the available funds to increase productivity and improve employment in these high-potential sectors by the end of the compact in September 2013, and nearly 1.7 million people were expected to benefit. Additional details of the compact results and impacts are shared in independent evaluations.
  • Original Amount at Compact Signing:
    $697500000
  • Amount spent:
    $650052711
  • Signed:
    August 31, 2007
  • Entry Into Force:
    September 15, 2008
  • Closed:
    September 15, 2013

Project Results

Artisan and Fez Medina Project

  • $111,873,858
    Original Compact Project Amount
  • $84,019,665.71
    Total Disbursed

Estimated Benefits

Estimated Benefits for the Artisan and Fez Medina Project
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
At compact closure 152,818 $75,600,000

Project Description

The Government of Morocco proposed a project to boost artisanal household incomes after discovering that tourist spending on local artisan products was substantially lower than in comparable foreign markets despite the country’s rich offerings. Many artisans lacked the training and skills necessary to modernize production and capitalize on the growing tourist industry and export market. Drafted in line with national and regional strategies for developing the artisan sector, the Artisan and Fez Medina Project was designed to stimulate growth by leveraging links between the craft sector, tourism, and the Fez Medina’s cultural, historic and architectural assets.

The project sought to assist potters in upgrading their equipment and techniques, strengthen the national system for literacy and vocational education to benefit artisans and the general population (especially women and girls), and support the design and reconstruction of historic sites in the medina. At the close of the compact, construction of the potter workshops (fondouks) at Ain Nokbi in Fez was complete, more than 300 artisans benefitted from promotion and marketing activities, and a new national label for handmade crafts was developed for Moroccan artisans. Construction of the foundouks is complete; however the sites are not yet fully functional. The government  agreed to accept responsibility for works not completed by the compact end-date, and continues to finance restoration of Place Lalla Yeddouna.

Enterprise Support Project

  • $33,850,000
    Original Compact Project Amount
  • $15,126,517.98
    Total Disbursed

Estimated Benefits

Estimated Benefits for the Enterprise Support Project
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
At compact closure 13,520 $-7,090,000

Project Description

The Government of Morocco proposed the Enterprise Support Project to address two of its critical economic priorities: reduce high unemployment among young graduates and encourage a more entrepreneurial culture. High levels of unemployment in Morocco result from low levels of formal sector employment growth and an expanding labor supply. The overall unemployment rate in Morocco is around 10 percent, but youth unemployment has risen to approximately double that in recent years.

The objective of the Enterprise Support Project was to improve the outcomes of two existing high-priority Government of Morocco initiatives:

  • Moukawalati, which translates as “My Small Business,” a national program intended to address high youth unemployment rates and drive Morocco’s businesses to be more entrepreneurial and competitive in the face of globalization; and
  • The National Initiative for Human Development, a multi-year initiative aimed at creating opportunities for the poor, vulnerable and socially excluded.
The project was designed to be carried out in two phases, with continuation of the second phase subject to positive results from an impact evaluation of the first phase. The pilot phase was completed in March 2012; although it met its implementation targets and showed promising trends, the impact evaluation did not show statistically significant impacts. The revised economic rate of return did not justify scaling up the project for a second phase. MCC did not continue with a second phase and the project was closed in May 2012.

Financial Services Project

  • $46,200,000
    Original Compact Project Amount
  • $42,817,019.7
    Total Disbursed

Estimated Benefits

Estimated Benefits for the Financial Services Project
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
At compact closure 825,240 $6,421,000

Project Description

The Financial Services Project sought to provide low-income populations with access to microfinance services (particularly micro-entrepreneurs or small individual borrowers) by developing a network of mobile micro-credit associations. These networks are the main providers of financial services to those lacking access to the traditional banking system. MCC funding supported Jaida, a financial institution launched in late 2006 that makes loans in the Moroccan microcredit sector. Funds were also used to support reforms allowing the transformation of microcredit associations into formal financial institutions, authorized not only to provide credit but also savings, insurance and other non-credit financial services. Finally, funding was provided for technical assistance to financial institutions to improve both efficiency and transparency in the financial sector and to lower borrowing costs for micro-enterprises. At the end of the project, MCC had provided $25 million in loans via the Jaida Microfinance Investment Fund, which supported thousands of Moroccan micro and small enterprises. Regulatory changes and technical assistance allowed microfinance institutions to seek new sources of funding and provide new services to clients.

Fruit Tree Productivity Project

  • $300,898,447
    Original Compact Project Amount
  • $323,369,991.24
    Total Disbursed

Estimated Benefits

Estimated Benefits for the Fruit Tree Productivity Project
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
At compact closure 574,111 $449,095,000

Project Description

Morocco is a country where labor is abundant and inexpensive while water is scarce and costly. Many Moroccan farmers grow wheat and other grains that are subject to uncertain water availability, with the consequence of highly variable production. The Government of Morocco has encouraged the planting of more productive perennial tree crops, such as olives, almonds and dates, that are better suited for Morocco’s climate and resources. Moroccan farmers have been traditionally unable to mobilize the resources necessary to modernize and move toward higher-value perennial crops due to factors like a lack of financing, information or access to markets. Aligned with the government’s agricultural policy and developed in conjunction with the Ministry of Agriculture, the Fruit Tree Productivity Project was designed to:

  • stimulate growth in the agricultural sector by moving from high water-use, low-value cereal grains to low water-use, high-value commercial fruit tree species;
  • reduce volatility of agricultural production and farm revenues by expanding the area of commercial tree species better positioned to handle moisture stress;
  • protect the natural resource base by replacing hillside wheat production with trees that reduce erosion and conserve soil; and
  • organize and link extremely poor, small-holder farmers to high-value markets.
By the end of the compact, more than 40,000 farmers were trained, 60,084 hectares of olive and almond trees were planted, 114 olive and date value-chain processors were assisted, and $18.6 million was disbursed under the Catalyst Fund to stimulate private sector investment in the olive oil value chain.

Small Scale Fisheries Project

  • $116,168,028
    Original Compact Project Amount
  • $111,281,203.76
    Total Disbursed

Estimated Benefits

Estimated Benefits for the Small Scale Fisheries Project
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
At compact closure 128,960 $84,781,000

Project Description

Morocco has 3,500 kilometers of coastline and is the largest fish producer in Africa and the Middle East. Total annual value-at-landing of Morocco’s catch is about $832 million, making fishing one of the most important industries in the country. In addition, demand for fish is expected to continue to increase nationally, driven by an expanding tourism sector and anticipated growth in domestic fish consumption. Small-scale fisheries are one of the most underdeveloped segments of Morocco’s fishing sector due to inadequate coastal landing sites and port infrastructure, lack of a reliable temperature-controlled supply chain (cold chain) from the sea to consumer, limited access to open markets, and insufficient training for fishers and their cooperatives. The Small-Scale Fisheries Project was designed, therefore, to transform the sector by

  • constructing landing sites, wholesale markets and facilities;
  • providing technical assistance;
  • par­tially funding fresh-fish transportation equipment for mobile fish vendors;
  • establishing marine protected areas; and
  • increasing efforts to ensure sustainable use of fish resources.

The Morocco Compact funded the construction and equipping of 11 fish landing sites, 11 port facilities, and three marine protected areas, five wholesale fish markets, as well as the training and equipping of 933 mobile fish vendors. The Government of Morocco is taking steps to operationalize the remaining five of the 30 infrastructure sites funded in the project. MCC had originally agreed to fund up to 39 sites including 20 improved landing sites, 13 ports and six wholesale fish markets. Budget constraints, environmental and social considerations, and an inability to secure land titles led the exclusion of 13 sites from consideration.