Investing in Institutional, Human and Social Capital to Build Morocco’s Future

STORY HIGHLIGHTS Moroccan flag over Djemaa El Fna Square in Marrakech, Morocco
  • The Morocco Economic Memorandum 2017 builds on the Kingdom’s assets to propose an ambitious albeit realistic pathway to achieving upper middle-income status in the next 25 years.
  • Promoting a more open and inclusive society is one of the key pathways Morocco must take to achieve stronger economic growth, enhance job creation, and gradually close the development gap with more advanced countries.
  • The Memorandum also seeks to address the issue raised by His Majesty, King Mohammed VI, in his 2014 Throne Speech on how intangible capital could become the “fundamental criterion in the development of public policies so that all Moroccans may benefit from their country’s wealth”.

It all started in 2014 when, prompted by His Majesty the King Mohammed VI in his Throne speech of July, the World Bank seized upon the subject of “intangible capital” to reflect on the less visible but critical aspects of development such as the quality of institutions, the quality of learning, and the quality of interpersonal relations in society. Today’s World Bank Morocco Economic Memorandum (CEM), titled Morocco 2040 – Emerging by Investing in Intangible Capital”, is a result of this royal call to think ahead and imagine what Morocco can look like in the next 25 years.

The report commends what the Kingdom has achieved over the past fifteen years in terms of fighting extreme poverty, improving Moroccans’ living conditions and enhancing economic diversification, and analyses the root causes of Morocco’s current development constraints. The Memorandum then proposes to tackle these key constraints through a three-pronged approach:

  • Advancing a social contract aimed at promoting an open society;
  • Strengthening institutions for the proper functioning of both the State and markets, and making them more inclusive;
  • Developing the human and social capital needed to flourish in the XXI century.

Advancing a social contract aimed at promoting an open society

The existing social contract established between the reigning Monarchy and the country’s citizens is strong and deeply rooted in the Kingdom’s social and cultural fabric. Over the various instances of constitutional reforms, the Moroccan citizen went gradually from subject to citizen with full rights to participate, have a voice and live in dignity and respect. This shift, further stressed by the 2011 constitution, is an undeniable move to a more open and responsible society.

Yet to walk the talk, more is needed to increase individual opportunities and reduce social inequality, improve gender equality, and shift mentalities toward greater interpersonal trust, civic engagement and respect for the commons.

The report emphasizes the need to effectively bring about the spirit and principles of the new constitution to help shape the features of a more open and productive society in the medium to long term. It also conjectures based on precedent in Eastern and Central Europe that the prospects of a Deep and Comprehensive Free Trade Agreement with the European Union could irrevocably change the rules of the game and accelerate the transition toward a more modern and open society.

Strengthening inclusive institutions for the proper functioning of both the State and markets

Governance is the backbone of every successful development story. In 2011, thousands of protesters in Morocco took to the streets and called for better governance and more accountability. Translated into a series of transversal constitutional principles, these eventually aimed to strengthening institutions while putting in place the building blocks for better service delivery to citizens. At the same time, Morocco has starting to engage in a comprehensive decentralization agenda devolving greater powers and prerogatives to the regions and local authorities, exposing them to citizens’ feedback, and giving them greater responsibility and accountability.

What the Memorandum calls for is a thorough review of the governance model, with an eye to relieving the central government from a burdening service delivery. If the central government takes on responsibility for all services, the final result is eventually the weakening of the quality of its services in key sectors such as administration, health, and education. This responsibility needs to be share out with local governments that have a closer relationship with the citizens they serve.

Along with that, it recommends more investment in public institutions and services with a view to strengthening the rule of law and justice, putting the user at the center of the system as beneficiary and regulator, modernizing and adapting the public administration to the XXI century, and strengthening the management of public services.

These principles also apply to the functioning of markets and improvement of the business environment. Opening up markets, promoting freer and fairer competition, and better leveraging the world economy are essential steps to achieve greater economic competitiveness, both inside and outside the territory. While the Kingdom has already initiated an ambitious economic expansion toward Sub-Saharan Africa, it would gain more generally at correcting the “anti-export bias” that continues to be endemic to the institutions and policies governing Morocco’s exchange system, including a more flexible exchange rate regime, the liberalization of capital controls, lower tariff and non-tariff barriers to trade, better trade facilitation and an improved investment regime.

Developing the human and social capital needed to flourish in the XXI century

Morocco has the necessary geographical, political and cultural capital to be among the top economic performers in the Middle East and North Africa region. To transform this potential into reality, the Kingdom has no choice but to prioritize the development of its human and social capital. And education reform is commonly referred to as a top priority.

The Memorandum therefore calls for a “shock therapy” approach designed to trigger an “educational miracle,” that is, a massive improvement in the Moroccan students’ level of education as measured by international tests. This would require a complete overhaul of the education system, improved teacher recruitment and training, the adoption of a new brand of public school governance, the development of alternative educational options, and the promotion of 21st century skills.

It also recommends the development of early childhood care and education, which, whether from the point of view of human rights, equal opportunities or economic efficiency, is the smartest investment that a country can make.


Morocco is able to unleash its development potential by making a firm step forward and resolutely marching towards a more prosperous and promising future. It takes a concerted and determined effort of every citizen and institution, but eventually, the tangible gains of enhancing intangible capital will be even more rewarding.