Morocco must adapt to the growing climate threat, warns the finance minister

Morocco’s finance minister said the country must adapt its economy to meet the escalating threat of climate change, with more frequent droughts requiring investment in water technologies and an acceleration of the country’s push into growth sectors such as car manufacturing.

The kingdom’s vital grain harvest was cut last year due to a lack of rain, just as Russia’s war in Ukraine forced the government to pay higher prices for wheat and energy and increase subsidies. Morocco’s economy grew 1.2 percent in 2022, according to the World Bank, down from 7.9 percent a year earlier. The bank expects growth of 3.1 per cent. in 2023.

Nadia Fettah Alaoui, Morocco’s economy and finance minister, said years of below-average rainfall linked to climate change had forced a rethink, adding that there were times in 2022 when “we were really anxious to be able to (supply) drinking water for all” .

“For many years we talked about drought as an exception . . . Now we want to live as if we don’t have enough water,” she said of the North African country’s new approach. “(2022) was the year we decided that we don’t need action plans for specific years, we need a long-term vision.”

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Economic growth in Morocco has long been tied to rainfall because a third of the population works in agriculture, even though the sector accounts for only 12 percent of gross domestic product.

While agricultural enterprises producing crops such as citrus fruits for export use modern irrigation methods to conserve water, small farmers who grow staple grains for the domestic market depend on the rain.

Youssef Brouziyne, head of the Middle East and North Africa at the International Water Management Institute, said 2022 was “very difficult because it was the fourth consecutive dry year” depleting vital reservoirs. He added that climate studies indicated that Morocco and its region faced more regular droughts and more frequent, higher-intensity water shortages.

In a sign of the wider challenges facing Morocco, the IMF said this week that the kingdom had requested a credit line of 5 billion. USD to draw on if needed as it battled a “highly uncertain global environment”.

Alaoui said climate change would require an acceleration in investment in desalination plants, dams and water recycling systems. “We want to have desalination through public/private partnerships,” she said. Household water spending would be subsidized while industry and other large users paid a “correct price”, Alaoui added.

The minister also mentioned increasing investor interest in renewable energy, including wind and green hydrogen produced via electrolysis of water using renewable energy. The Kingdom already generates more than a third of its electricity from green sources.

“In Morocco it’s either windy or sunny every day,” said Zaid Belbagi, who runs political consultancy firm Hardcastle. “The trip is for greater renewable energy production: Morocco can become Europe’s electricity supplier par excellence”.

Map showing lack of rainfall reducing vegetation levels in Morocco

Another part involved diversifying Morocco’s economy into new sectors such as manufacturing vehicles for European markets, which Alaoui said included training thousands of skilled workers. Stellantis, owner of brands including Peugeot, recently said it was investing 300 million euros to double capacity at its factory near the city of Kenitra.

The kingdom’s car exports rose by more than a third to $10.6 billion in 2022, according to official figures. Alaoui said that “the value proposition in Morocco is much more sophisticated than just being close to Europe and cheaper”.

Rachid Aourraz, non-resident economic researcher at the Middle East Institute in the US, said the kingdom’s diversification efforts had delivered “good results in terms of revenue, exports and employment”, but it was still “less than what is required”. Water-intensive agriculture “no longer had the same central role” in the Moroccan economy “but it is still crucial”, he added.

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