Risk Watch #May 4-11 : Labor unrest, camel drug smuggling, derailed plane and more

Welcome to the first edition of our Weekly Risk Watch!

Morocco is a dynamic country, brimming with opportunity but also facing challenges. This weekly watch will be your compass, providing a clear-eyed view of the economic indicators, political currents, and security developments that could impact your business or daily life, all wrapped up in a convenient weekly package.

Economy and Markets

Casablanca Stock Exchange plans a November launch of financial derivatives for potentially higher liquidity but with market volatility risks.

A World Bank report with Morocco’s central bank said annual flood costs of 4.5 billion dirhams, indicating the financial sector’s vulnerability to climate risks and financial strain.
Morocco’s anti-corruption group flagged 50 billion dirhams annual cost of corruption, raising financial risk concerns for corruption and state burden.

The Moroccan loan program for small businesses (“Intilaaqah”) is being investigated for fraud after forged contracts and missing equipment were discovered, raising concerns about operational and market risks.
The IMF released the first 3.3 billion dirham tranche of its $1.3 billion loan to Morocco for climate resilience, raising concerns about debt and financial strain.
Morocco’s government debt to businesses reached 11 billion dirhams in March 2024 (down from 18 billion in 2018), raising regulatory, debt, and market risks.
Moroccan tax authorities have offered reduced tax assessments for pollution and street vendors on property sales to settle outstanding tax debts, raising the burden on the state.
Morocco’s planned income tax cuts for low—and middle-earners will cost 5.4 billion dirhams but risk burdening the state.

Political Stability

Security forces restricted Moroccan medical students who marched in Rabat on May 6, demanding better conditions and raising concerns for labor, civil unrest, and violence.
Morocco’s National Union of Engineers staged protests on May 9 and planned another on May 21 to demand a new law and address engineering sector issues, raising concerns about labor unrest.
Thousands protested across Morocco on May 10 against attacks in Rafah and condemned normalization with Israel,
raising concerns for social unrest.
The National Union of Justice organized a nationwide strike on May 7-9 to protest a weak ministry report and a scrapped agreement, raising concerns for labor unrest.

Moroccan families of human trafficking victims in Myanmar planned a protest on May 16 against “government inaction,” adding risk of social unrest.
Moroccan Labor Union team in Parliament warned that wage increases planned by the government risk losing value due to broker market manipulation, adding risk to policy change uncertainty and labor unrest.
The Public Prosecutor in Inezgane, south of Agadir, was imprisoned for bribery and other charges following investigations revealing his involvement in accepting a bribe exceeding 100,000 dirhams, an indicator of corruption and illegal capital flows.
Vice president of the Tetouan commune and a university professor, was arrested in connection with a bribery scandal involving promises of employment at the Ministry of Justice in exchange for money, in a risk to corruption and illegal capital flows.
Police opened investigations into the former president of Al-Fqih Ben Saleh municipality for misusing public funds due to questionable contracts awarded to two companies linked to him, totaling approximately 289 million dirhams, raisin corruption and illegal capital flows risks.
Government spokesperson Mustapha Baitas denies dodging Parliament on AstraZeneca vaccine but delays discussions, citing unfinished committees, risking public trust.

Security

The Royal Armed Forces announced they intercepted a large drug trafficking operation near the eastern borders with Algeria, seizing 1,470 kilograms of cannabis loaded on 13 camels in the Daraa-Tafilalet region of central-eastern Morocco, in an indicator of cross-border trafficking.
Tangier Judicial opened an investigation on an attempted cocaine smuggling operation involving a container from Brazil at the Tangier port, leading to the seizure of 25 bags of cocaine, in an indicator of cross-border trafficking.

Cross-border stability
The Spanish Public Prosecution approved Morocco’s extradition request for a 44-year-old individual wanted for international drug trafficking and belonging to a criminal organization.
Authorities in Agadir blocked a meeting aimed at establishing an association called the “Moroccan Support Committee for Recognizing the Kabyle people” in Algeria.
Algeria has reportedly prevented a US military plane from using its airspace, according to information derived from ACARS messages, in a risk to regional instability.
A young child was fatally stabbed in Awsard camp, Tindouf leading to increased tensions amidst accusations of armed gangs infiltrating the camps in a risk to regional instability.