إدريس التمسماني

 

By Driss R. Temsamani
President of The 361 Degrees Institute

The 361 Degrees Institute is the first Moroccan American think-tank for Demographic Research & Development based in the United States. The mission of the institute is to provides high quality, independent research on a wide variety of population and social economical topics affecting United States and Morocco.

 

According to resent data from the World Bank, IMF and the International Finance Institute, the global remittances flows to emerging markets have experienced a sharp decline due to the deteriorating US economy and the historical unemployment numbers. Around 19 million migrant population from North Africa and the Middle East has been adversely affected by this crisis mostly felt in countries like Egypt and Morocco, the largest recipients with more than 60% of total transfers.

Overall the Moroccan economy weathered the global crisis with limited impact. The banking sector in Morocco has not been affected by the global financial crisis because of its limited exposure to capital markets and securities. Despite lower forecasts, The GDP grew 4.8% in 2009 as a result of a record harvest in agriculture and is expected to decelerate to 3% in 2010.

To address the impact on the various private sectors affected, the Moroccan government plans to substantially increase capital spending and reduce taxes to stimulate the economy. Remittances coming from Moroccans living abroad constitute an important flow of foreign currency to the development of the country, comprising an average of 9% of the country’s GDP.

Newly available data for 2009 shows that remittances flow to Morocco reached US$ 8 billion with US$ 550 million originating from the USA where more than 200,000 Moroccans reside. These figures represent an aggregated estimate of total currency flowing through official channels such as bank accounts and other unreported gifts and money carried back or sent with others.

And while these flows show a significant increase from the levels of the 1990, using information from the Federal Reserves and other Financial Institutions, I am estimating that remittances to Morocco will suffer a negative 12% compounded decline between 2009 and 2010.

Every day, thousands of Moroccans living abroad line up in money transfer offices to wire money to their families back home. Some of the money finds its way deep into the rural areas of the country while other funds construction projects and private investments.

To the extent that these remittances finance education and health and increase investment, they continue to have a major positive effect on economic growth. More over the remittances alleviate credit constraints and act as a substitute for financial development increasing per capita income levels and reducing poverty.

In the recent years, the Moroccan Government lunched several initiatives offering incentives to attract transfers into the local economy.

During a conference that I attended back in March 2009, Mr. Mohamed Ameur, Minister in Charge of Moroccans Living Abroad, unveiled special programs offering preferential loans and grants for business ventures using investments from Moroccans residing overseas and providing access to capital for recent returnees. This is one of they key strategies that his Majesty King Mohammed VI is pushing forward to capitalize on the large pool of citizens living abroad.

While the benefits of remittances from the USA or other countries to Morocco are clear, we can not say the same about the short term future of the economy. What is certain is that when we go back to normal financial system conditions, Morocco will be back to the remittances boom.