Morocco becomes Africa’s largest car exporter after investment in railway

Business incentives and investment in railway infrastructure have allowed Morocco to grow its automotive industry from almost zero to Africa’s largest car exporter in less than two decades.

The Northern African nation’s auto industry can produce 700,000 vehicles yearly and is now rated as a car exporter that supplies more cars to Europe than China, India or Japan, according to AP reports.

Morocco’s auto industry now accounts for 22 percent of the country’s gross domestic product and $14 billion in exports.

Presently, over 250 car and components manufacturing companies operate in Morocco.

One such is Renault, a French automaker and the country’s largest private employer. Renault exports finished cars from its factory outside Tangiers using three times daily freight train services to move the cars to vessels that transport them to European dealerships.

Morocco’s political climate and proximity to Europe have helped the industry as the government tells companies looking to outsource production to cheaper locales that they can get approval for new factories and complete construction in as little as five months.

“We didn’t export one car 15 years ago. Now it’s the first exporting sector in the country,” said Ryad Mezzour, minister of Industry and Trade in an interview with The Associated Press.

Mezzour said Morocco has distinguished itself from other outsourcing destinations by expanding its ports, free trade zones and highways.

The government offered subsidies of up to 35 percent for manufacturers to put factories in locations outside of Tangiers, where Renault now produces Clios as well as Dacia Sanderos, Europe’s most popular passenger vehicle, and soon plans to start manufacturing hybrid Dacia Joggers.

Chinese, Japanese, American and Korean factories make seats, engines, shock absorbers and wheels at the Tangiers Automotive City, a large campus of car parts manufacturers.

Read also: Here are the 5 world’s biggest automobile-producing countries in 2023

Others such as Stellantis produce Peugeots, Opels and Fiats at its plant in Kenitra.

Devoting immense resources to developing and maintaining an automotive sector that could employ a growing workforce was part of a 2014 industrialisation plan.

To create jobs, Mezzour said, the government focused on offering more than cheap labour to foreign automakers looking for new places to build cars and produce parts.

Major automakers pay unionised factory workers less in Morocco than they do in Europe. But even with salaries one-fourth the size of France’s 1,766.92-euro ($1, 911.97) monthly minimum wage, the jobs pay more than the median income in Morocco.

The industry employs 220,000 — a small but sizable chunk of the more than 200,000 agricultural jobs the country is losing annually amid a six-year drought.

Like in many African countries, Morocco’s domestic market for new cars is small as less than 162,000 vehicles were sold last year. The government’s success in building an automotive industry nevertheless has made cars the tip of the spear as Morocco works to transform its largely agrarian economy.

“I have one simple priority — not exports or being competitive. My job is to create jobs,” Mezzour said.

Abdelmonim Amachraa, a Moroccan supply chain expert, said the spending on infrastructure and training skilled workers puts the industry in a good position to lure investment from automakers looking to build electric vehicle supply chains.

The Moroccan government is seeking investment from both East and West, trying to lure investors from China, Europe and the United States as they now race to produce affordable electric vehicles at scale.

As Europe works to phase out combustion engines over the next decade, automakers like Renault are preparing to adapt in Morocco.

Mohamed Bachiri, the director of the Renault Group’s operations in the country, said the company’s record of success in Morocco makes it an attractive destination for others to invest, particularly in EVs.

He said the industry is likely to continue growing because Morocco’s integration rate — the percentage of parts that carmakers can source domestically — has steadily risen to more than 65 percent.

“We’re predisposed to manufacturing cars for customers in our sphere. And the day they decide they need electric vehicles, we will,” he said.

The government has bankrolled public-private partnerships like a Renault-managed academy to train technicians and managers.

Compared to comparable markets, Morocco’s political climate and proximity to Europe made it a safe investment, Bachiri said.

Having recorded this success, the Moroccan government is determined to maintain the country’s role as a car-making juggernaut by competing for electric vehicle projects amid the protectionist policies put in place by the West to boost EV production.