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Migration, remittances and Covid-19 in Morocco

Morocco is a vibrant country on the northwestern edge of Africa. A considerable proportion of the Moroccan populace lives abroad. More Moroccans migrate overseas every year. As a result, the quantum of remittances flowing into Morocco is substantial. Inward remittances are important in boosting Morocco's economic output. More recently the ongoing Covid-19 crisis has altered this status quo. Here is a look at what might be in store for the Moroccan economy with regards to migration and remittances.
Image credit: Photo by Max Brown on Unsplash
Image credit: Photo by Max Brown on Unsplash

Historic trends

Morocco has long placed an emphasis on emigration for employment. The Migration Policy Organisation conducted a study on migration from African nations. It found that the number of Moroccan emigrants increased from 635,000 in 1990 to an estimated 4.5 million in 2018. The Moroccan Ministry of Foreign Affairs stated that Moroccan expats live in 100 different countries. Quoting World Bank figures, the Prime Minister of Morocco Saadeddine Othmani recently lamented on the magnitude of brain drain. At least 17% of overseas Moroccan workers hold qualifications equivalent to a master’s degree. The number may not seem like much. However, in a growing economy such as Morocco it certainly matters.

Contributing factors

Morocco’s High Commission for Planning conducted an extensive survey on migration between 2018 and 2019. They found that 23.3% of Moroccans intended to migrate overseas. At least 70% of these wanted to travel overseas for better economic prospects. Only 24.4% wanted to leave for social reasons. An imperfect social security system, inadequate security and instances of systemic corruption were among the most cited motivations to emigrate. Morocco's Minister of Justice recently revealed that the Justice Department was hard at work on 61 projects to address some of these challenges.

Migration and remittances

Along with outbound migration, inbound remittances have been on the rise. The World Bank's statistics for 2019 reveal that Morocco received $6.7bn in remittances. These accounted for 5.67% of the country's GDP. The US leads the list of countries from where Moroccans transfer money back home. US remittances (14%) are followed by Saudi Arabia (12%) and France (10%). Morocco's High Commission for Planning discovered that 42.3% of Moroccans living overseas transfer money to their families as remittances. The commission estimated that 40.76% of the remittances go into real estate investments. Remittances utilised toward investments in economic projects stand at a meager 17%. Prime Minister Othmani stressed the need to create incentives for the Moroccan diaspora to invest more in their home country.

Since Covid-19

The Covid-19 crisis spared the economy of no nation. Large scale shutdowns of industry, diminished employment, and declining investments had an unavoidable impact on the Moroccan economy. Migrant workers took a substantial toll. According to the Migration Policy Organisation, France has the most Moroccan expats (1.5 million), followed by Spain (850,000). Outside of Europe, the US is home to the largest number of Moroccans (300,000). All these countries were ravaged by the crisis this year. France recently went into another nationwide lockdown, making things still more difficult for migrant workers.

Reverse migration

With so many economies facing a decline, many migrant Moroccans are weighing their options. Returning home to weather the crisis seems like a good choice. Morocco implemented one of the harshest lockdowns earlier this year. Initially, the country did not even allow returning migrant Moroccans to enter. Under public pressure the government eventually reopened the borders to a stream of returning migrants. Most of them were returning from Gulf countries. Some returned from Europe and the US too. This reverse migration comes at a cost. Optimists hope that this reversal will be short-lived. Yet, its impact on remittances is already being felt.

Remittance trends

In June 2020, the World Bank published their bi-annual Morocco Economic Monitor (MEM). The report observed a sharp decline in remittances in the months of April and May. April 2020 remittances stood at $298m, down from $625m in April 2019. There was a similar decline in May. Remittances and capital inflows help protect the Moroccan economy against trade deficits. The MEM expects the deficit to widen from 4.1% of GDP in 2019 to 8.4% in 2020. This is a testament to the importance of remittances for developing economies such as Morocco.

Course correction

Economists at the World Bank and analysts at Moody’s see this as a temporary setback. The global economy is gradually recovering. So will remittances to Morocco. Remittance flows are expected to rationalise by the end of 2020. The current account deficit will shrink from 8.4% to 6.1% in 2020, and to less than 5% by 2022. The numbers of emigrating Moroccans, which stagnated earlier this year, will be restored. Moroccan emigration levels are expected to resume to the 10% annual growth rate by the end of 2021. This would further improve remittance inflows.

About the author:

Hemant G is a contributing writer at Sparkwebs LLC, a Digital and Content Marketing Agency. When he’s not writing, he loves to travel, scuba dive and watch documentaries.

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