Rethinking local integration, a prerequisite for a new doctrine of Moroccan industry

This inability to transform the test is particularly the lot of our industry which, although it has been the subject of successive plans since 2005 (Emergence, PNEI, PAI), only contributes up to 15% to the national GDP , against a target of 23% according to the 2014-2020 Industrial Acceleration Plan. However, history and recent events confirm this: economic resilience and the sustainable creation of value and jobs often require a local, integrated and innovative industry.

In this article we will be particularly interested in the important notion oflocal integration.

Local integration, a notion to be redefined

It should be noted that this notion is incorrectly defined by the “local integration rate” as calculated and relayed by our officials: in fact, rather than measuring the share of added value captured by the local economy overall the value chain of a given sector (from the extraction of the raw material to the finished product), this rate is calculated as the proportion of purchases made from immediate suppliers and subcontractors (known as first tier) producing at Morocco. This is how we can boast an integration rate of over 65% in the automotive sector. But this is without taking into account the fact that these suppliers, just like their suppliers and their suppliers (we can thus go up to the sixth rank), import a significant part of their inputs, so that the rigorous calculation of what is actually produced in Morocco shows a rate barely exceeding 20% ​​in the case of automobiles!

Invited by the FEP on May 9 to discuss industrial policy in light of the experience of the Renault Tangier plant, expert Mokhtar Homman indicated that a real local integration rate of over 40% in the automobile industry would coincide with the production of 2 million vehicles per year (compared to just under 600,000 currently), i.e. the critical size that would justify massive investments in the local ecosystem. For comparison, Turkey, an industrial country par excellence, produced nearly 1.4 million vehicles in 2023… that’s how far we have to go.

Should we therefore abandon our ambition to become a key player in the global automobile industry or, the same logic being at work, in the aeronautics industry? Far from there. On the other hand, we should perhaps admit that these two “global professions of Morocco”, although prestigious, are probably not the panacea in terms of value creation and that there would be lessons to be learned from the strategy of their development. Indeed, whether it is automobiles or aeronautics, Morocco has chosen to approach the value chain from its downstream, namely assembly, then to bet on the implementation progressive development of an ecosystem of more or less locally integrated equipment manufacturers. This strategy of vertical integration from downstream to upstream was dictated on the one hand by the lack of mastery of the design engineering link and, on the other hand, by unavailability of raw material necessary for manufacturing. Morocco’s contribution to the value chain therefore consisted of providing labor (work), then land and logistics infrastructure (capital).

However, maximising added value requires an optimal combination of production factors which include, in addition to labour and capital, know-how and, above all, natural resources.

The growing demand for consumer goods and the needs of the digital and ecological transitions are exerting unprecedented pressure on natural resources, so much so that the nations which hold the reserves are the “makers” of the global market. This argues in favour of a paradigm shift, which would consist of Morocco focusing on industrial sectors in which it has a comparative advantage in terms of natural resources.. And precisely, those which make our country unique are four in number: the world’s leading phosphate reserves, a maritime coastline of more than 3,500 km, more than 8 million hectares of arable land and nearly 300,000 km² of desert.

New industrial sectors to promote

Let us therefore see what new industrial opportunities could arise from the exploitation of the four identified national strategic resources:

Firstly there is the phosphate and its derivatives sector. The OCP group began its vertical integration in the late 1980s, by commissioning its first lines of phosphate fertilizers and then nutritional supplements for animals. This integration is intended to extend both upstream with the ambitious program of self-production of ammonia, an essential input in the manufacture of fertilizers, from green hydrogen.

There is also a phosphate derivative which could constitute a real growth driver in the near future: uranium. Indeed, Moroccan phosphate rock is rich in it and the national deposit is estimated at 6.9 million tonnes of uranium, the largest reserves in the world, which can be valued at more than $1,300 billion. at the current price of uranium U308. Noting the renewed global interest, including in Morocco, in the civilian uses of nuclear energy, it would be regrettable not to seek to join the ranks of the major uranium producers.

This brings us to the second sector, that of carbon-free energy. As a reminder, the National Energy Strategy has set itself the objective of increasing the share (in installed power) of renewable energies (EnR) to 52% by 2030. It is supplemented by the Long-Term Low Carbon Strategy which envisages an renewable energy rate of 70% in 2040 and 80% in 2050. In a prospective exercise, we constructed scenarios for the evolution of national electricity consumption, with or without reduction measures as provided for by the National Energy Efficiency Strategy, which allows us to put forward the following conclusion: in an intermediate (realistic) scenario, achieving the aforementioned objectives should result in an installed renewable energy power of nearly 9 GW in 2030 (compared to less than 5 GW currently), 20 GW in 2040 and 37 GW in 2050. Suffice it to say that the challenge is significant when we know that just 2 GW of renewable energy were installed between 2011 and 2021…

A major challenge, certainly, but not insurmountable if we give ourselves the means to achieve our ambitions. To do this, we could act on three levers:

• Secure the supply of photovoltaic panels. Indeed, innovation in panel technology has made it possible to lower their cost while improving their performance, but the scarcity of raw materials and growing global demand will quickly reverse the trend. To illustrate, if our country’s needs for renewable energy by 2050 were to be covered half by solar power, it would not be less than 100 million m² of photovoltaic panels which should be equipped. Knowing that glass and crystalline silicon represent 70% to 75% of the mass and 45% to 60% of the value of a photovoltaic cell and that both come from the silica abounding in the sand of our desert, it There is only one step to take to imagine that a glass industry and its applicationswould find its full meaning in Morocco.
• Introducing nuclear power into the electricity mix, supported by domestic uranium production but also by the promising development of small modular reactors (SMRs) of less than 300 MW, which are faster to produce and install and more suited to industrial uses such as desalination or the production of green hydrogen. As such, a scenario in which nuclear power would be introduced gradually from 2035 to exceed 7 GW of installed capacity in 2050 would not only reduce the pressure on renewable energies, but also achieve another objective that Morocco has set for itself: decarbonizing its electricity by 2050.
• Exploiting the energy potential offered by our coastline, in particular the energy of waves and tides, that of offshore wind with offshore wind power and, finally, through the development of marine Pumped Storage Energy Transfer Stations (STEP) which represent an ideal means of storing energy on a large scale and injecting it into the network at any time.

The low-carbon energy and glass sectors thus developed would also make it possible to make our country a net exporter of green electricity, like what is promised by the X-links interconnection project between Morocco and the United Kingdom.

In addition to offering an inexhaustible source of clean energy and water for desalination, our coasts, which are among the richest in fish in the world, should be at the heart of the agri-food sector, just like our agriculture. Indeed, the rate of coverage of national needs in basic food products (cereals and sugar) has been in continuous decline since the 1980s due to the increase in individual consumption and the export vocation of our agriculture, and if the If we add to this the priority given to foreign fleets in fishing agreements, it is not difficult to understand that “food sovereignty” will not be assured any time soon.

In order to reduce dependence on imports and create more added value locally, the new agri-food sector will have to be able to count on:

• A public health and awareness policy emphasizing “healthy eating”, in particular by making the consumption of refined cereals, sugars and meats less desirable and by replacing them with better quality calories, particularly those from proteins plants.
• Overcoming water constraints through the judicious choice of crops depending on the region and the use of desalination facilitated by the rise of carbon-free energies.
• Research and innovation in the development of new crops with high nutritional value, both for human and animal consumption, such as algae or mushrooms.

Finally, we welcome the Moroccan state’s choice to go beyond the taboo of cannabis cultivation and to exploit its “legal” potential, through the recent creation of a regulatory agency (ANRAC). While pharmaceutical uses or in construction as an insulating material are highlighted, we neglect the opportunity that represents the hemp industry in the textile industry: the major advantage of hemp is that it is eco-responsible, because for the same quantity of fiber, its cultivation requires half the planted area and four to five times less water compared to that of cotton. In addition, being very resistant, it does not require pesticides and therefore better preserves the soil. Its fiber is more durable and comes naturally in different colors, which reduces the use of dyes… These exceptional properties of hemp fiber, coupled with Moroccan know-how in weaving and manufacturing, could therefore mark the comeback in force on the global market for our textile business, which has long been battered by Asian, Tunisian and Turkish competition.

To conclude, this panorama of industrial sectors (phosphate derivatives, carbon-free energies, glass, agri-food, hemp) allows us to imagine what could look like a new doctrine of Moroccan industry in which local integration is rethought in the light of the availability of strategic natural resources, conferring a comparative advantage to our country. To the wise…

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