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Morocco: Gateway to the Med

Morocco's prestigious new Tangier Med port has been grabbing headlines in the kingdom recently, as a major US agency offered a healthy grant for port security and a 10-year management contract was awarded. While Rabat hopes the new port facility will boost jobs and act as a regional trade magnet, Washington sees the project's success as enhancing its Free Trade Agreement (FTA) with Morocco - and providing a further step forward in the liberalisation of the economy.

On July 22, US Ambassador to Morocco Thomas T. Riley and the president of the Tangier Mediterranean Special Agency (TMSA) directory, S?id Elhadi, signed a grant agreement under which the US Trade and Development Agency (USTDA) awarded $374,000 to fund technical assistance to the port. The grant will be to help the TMSA meet the requirements of the International Ship and Port Facility Security (ISPS) code, Customs-Trade Partnership Against Terrorism (C-TPAT), and the Container Security Initiative (CSI).

The TMSA will now select a US contractor to provide these security services for the port.

This represents one of the latest stages in Tangier Med's development, a process that has been underway since 2002, when the TMSA was founded and placed in charge. Construction at the present site began back in 2003.

The port is currently being constructed on a site 35-km east of Tangier. When completed, it will cover an area of over 500 sq km and employ some 145,000 people.

Within the facility, three duty free zones will also be built, with these including an industrial zone covering 600 ha, a commercial duty free zone of 200 ha and a logistics free zone of 90 ha.

On these there was further news recently, when back in June it was announced that Dubai's Jebel Ali Free Zone Authority (JAFZA) International had been awarded the 10-year logistics free zone management concession at the port. This was an important achievement for the company, which already has free zone management experience outside Dubai, in both Djibouti and at Malaysia's Port Klang Free Zone.

The management contract follows the completion of a four-month feasibility study by JAFZA International into Tangier's suitability for a logistics free zone, the results of which were encouraging enough for both JAFZA and the TMSA to proceed, officials said on June 22. However, neither JAFZA nor TMSA officials would reveal the contract's value.

Both the port and the free zones at Tangier Med are due to open for business in September 2007.

The idea behind the whole facility is a simple and straightforward one. Tangier's strategic location near the Strait of Gibraltar makes it a natural not only for trade between the Mediterranean and the rest of the world, but also between Europe and North Africa. The larger docking facilities available will also bring down transport costs to Morocco by bringing in higher tonnage vessels.

The existing Tangier free zone also recently demonstrated the potential value of Tangier Med. The July 25 edition of pan-Arab daily al-Sharq al-Awsat reported that since this zone had been established back in 1999, it had created some 16,000 jobs. The paper also reported that approximately 115 Moroccan and foreign companies were located in the area, with another 77 companies expected to come soon. As a result, the total number of jobs provided by the free zone was expected to reach 22,000 by the year's end.

Given this, the much larger Tanger Med port facility is expected to also give a major boost to local employment.

Yet it is also aimed at a more far-reaching structural goal. Since the TMSA took charge of the port's development, it has pursued a transparent approach to tendering and a positive attitude towards private-sector involvement. This follows the government's objective of opening up the economy, which is also one of the targets of the US-Moroccan FTA and the European Union-Moroccan Association Agreement.

The port project supports the broadened commercial relationship envisioned under the US-Morocco Free Trade Agreement, as a statement from the US embassy on the awarding of the security grant put it.

The eventual cost of the project is a matter of some conjecture, but official estimates put a price tag of $1.37bn to Tangier Med. This is being partly financed by the Hassan II Fund for Development ($228m) and the Abu Dhabi Fund for Development ($342m), but the rest will all have to come from private investors.

So far, this is working out well, with the TMSA also clearly leaning on its Emirati connections in bringing in JAFZA, which brings great experience with it. The hope is that Tangier Med will act as a good example for change, and of the benefits of a much-debated move towards more free trade.

© Oxford Business Group 2005