The Moroccan government’s resolve to liberalize the country’s economy has recently received a tremendous boost by the successful partial privatization of the national telecommunications operator. In late December, multimedia giant Vivendi Universal paid $2.2 billion for a 35-percent stake in Maroc Telecom, representing the largest single foreign investment in the North African state’s history.
With that one single deal in the bag, Morocco’s income from foreign direct investments is expected to jump more than five-fold in 2001 from an average of $400 million per annum over the past decade. In fact, prior to the Maroc Telecom deal, FDI inflows had been on the decline—contracting by 44 percent in the first half of 2000, compared to the corresponding period of 1999.
The importance of the Maroc Telecom deal extends way beyond the country’s telecommunications sector. Bankers believe that, with the influx of foreign capital into the country, the agreement will increase buoyancy in the local money market and provide the impetus for a reduction in short-term interest rates. The kingdom’s foreign debt is now expected to drop below $15 billion this year, compared to $15.3 billion at the end of 2000.
Furthermore, Maroc Telecom receipts will also help the 2001 state budget to reach its target and maintain the deficit at roughly three percent of GDP. This is certainly better than the deficit of six percent of GDP, which had been forecast were this deal to have fallen through. Over the long term, analysts also believe that the deal will enable Morocco to attract new foreign investors and high technologies to modernize its agricultural-based economy.
But there is a downside to the Maroc Telecom deal, and that is massive reduction in staff that will inevitably take place as Vivendi strives to enhance Maroc Telecom’s competitiveness and productivity. And it will not be long in coming. In an effort to cut the firm’s operating costs, 14,000 staff will soon be laid off.
The Maroc Telecom downsizing will add new members to Morocco’s growing community of unemployed. The official jobless rate currently stands at 14.2 percent, but the real rate is most probably considerably higher. ¯ (Albawaba-MEBG)
© 2001 Mena Report (www.menareport.com)
