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Morocco: Strait Development

In contrast to the recent tension between Spain and Morocco at the former's North African enclaves, the two neighbours have been co-operating well elsewhere together, particularly when it comes to the new Tanger Med port.

With the facility attracting great international interest and investment of late, the Spanish port of Algeciras moved recently to sign a co-operation agreement with its Moroccan opposite number, further underscoring Tanger Med's potentially important new role in Mediterranean trade.

The co-operation agreement includes arrangements over port and customs operations, and joint efforts on key issues such as environmental protection and maritime security. This teamwork is expected to make the Strait of Gibraltar a global logistics platform. With Algeciras is only a half-hour ferry ride from the Tanger Med site, such integration is not only feasible but likely to be highly beneficial.

The Algeciras agreement was not the first deal with a foreign country that the port has benefited from this summer, either. The US Trade and Development Agency (USDTA) had earlier announced that it would grant $374,000 to the private Tangier Mediterranean Special Agency (TMSA) for technical assistance.

While the USDTA said that its wider objective in aiding the development of the port was to orient the country towards free trade, the money is to also have some specific purposes. It is to be aimed at ensuring the port complies with the International Ship and Port Facility Security (ISPS) Code, the Customs-Trade Partnership Against Terrorism (CTPAT) and Container Security Initiative (CSI).

The TMSA will also receive technical assistance in developing tender documents for the procurement of safety and security equipment and services, and a strategy for their acquisition and payment. The TMSA must now select a US contractor to provide the requisite security services.

The TMSA is reportedly committed to transparency in administering the development of the project and in the tendering process, and is encouraging private investment.

The port's raison d'etre is to make use of Tangier's strategic location near the Strait of Gibraltar, which makes it a natural platform for trade between the Mediterranean and the rest of the world in general, and in particular for trade between Europe and North Africa.

The port's new docking facilities, larger than Morocco's existing ones, will also reduce transport costs to the country by allowing the docking of higher tonnage vessels. Situated only 14 km from Europe, the availability and low cost of labour also makes the site a prime strategic location for European companies. Tanger Med will also be a prime storage facility, as investors will finance the construction of warehousing to suit customer needs. It is hoped the facility will become a leading logistics hub for the region.

The ongoing development of the new port began with the establishment of the TMSA in 2002, and construction was begun on the site, 35 km east of the northern city of Tangier, in 2003.

The facility will consist of three duty free zones, including a 200-ha commercial zone, a 600-ha industrial zone and a 90-ha logistics zone. It will cover more than 500 sq km of land and will eventually employ around 145,000 people. The port will consist of nine births for handing freight and passenger traffic across the Strait of Gibraltar. When the port is fully onstream, the current port of Tangier will be developed as a tourist port with cruise terminals and a marina.

Tanger Med itself and the free zones are scheduled to open for business in September 2007.

Meanwhile, Dubai's Jebel Ali Free Zone Authority (JAFZA) International is to manage the logistics free zone, after winning a 10-year management concession in June.

JAFSA International will incorporate state-of-the-art communications and serviced plots of land, and will offer pre-built warehousing and offices. The authority already manages free zones in Dubai, where it manages the fastest growing free zone operation in the world, Malaysia and Djibouti. Neither JAFZA nor the TMSA have so far disclosed the value of the concession.

Based on past experience, the ambitious Tanger Med project is expected to bring far more trade and jobs to the impoverished northern region of the country than the smaller Tangier Free Zone did back in 1999. To date, that site has created 16,000 jobs and around 115 domestic and foreign companies have located there, while another 77 are expected to set up shop soon, bringing the total number of jobs up to 22,000.

The eventual total cost of the Tanger Med project is estimated to reach up to $1.37bn. While the bulk of the financing is expected to come from private investors, the Hassan II Fund for Development will provide $228m and the Abu Dhabi Fund for Development will provide $342m.

The Tanger Med port is also the centrepiece of a 1bn euro initiative envisioning improved infrastructure and standard of living in the Moroccan hinterland, and is also part of the country's efforts to open up its economy to free trade in line with its US Free Trade Agreement and EU Association Agreement.

With links over to Spain and the wider European continent already falling into place, hopes are high that the port will prove a highly worthwhile investment.

© Oxford Business Group 2005