Supporting the implementation of SOE Reform in Morocco

Reforms implemented in Morocco since the turn of the century paved the way for 20 years of economic expansion and social progress. Starting in 2009, social and economic progress in Morocco experienced a slowdown, caused by structural limitations in the development model and external shocks, including the COVID-19 pandemic. Challenges include low efficiency in public investment and slow private sector transformation, leading to modest growth compared with countries with similar levels of investment. Morocco attracted foreign direct investment (FDI), but domestic investment remained limited, hindering inclusive growth. The government responded with the New Development Model (NDM), which aims to spur inclusive growth, improve public services, and reduce disparities by 2035. The NDM, which is being operationalized in the 2021–26 agenda of the Government of Morocco (GoM) prioritizes public sector efficiency, private sector promotion, and human capital development. To boost long-term growth and foster a more sustainable and inclusive future, Morocco must enhance the effectiveness of the state’s role as an economic enabler. Doing so involves (i) improving the efficient management of public assets, (ii) enhancing the quality of the enabling environment for private investment and (iii) setting clear and predictable boundaries for the state’s involvement in commercial markets. Better managing the size, performance, and governance frameworks of Morocco’s state-owned enterprise (SOE) sector is at the core of the Kingdom’s transition toward a reduced and more effective role of the state in the economy and more private sector–driven investment, as highlighted in the NDM.