Risk Watch November 04-10: Corruption probes, strike law and uncertain markets

Welcome to this week’s edition of our Weekly Risk Watch, offering insights into economic indicators, political shifts, and security updates that could impact your business or daily life, all in one concise package.

Economy and Markets:

• Head of Government Aziz Akhannouch reported Morocco’s robust economic performance in Parliament, highlighting a 3.4% growth rate in 2023, strong exports totaling 331.5 billion MAD, and a reduction in inflation to 1.1%, while emphasizing the country’s resilience and strategic positioning as a regional trade hub despite global challenges.
• Judges in the 4th chamber of the Supreme Council of Accounts, tasked with investigating irregularities in the integrated program for supporting and financing businesses “Intilaqa,” have opened legal cases against those involved in serious irregularities, including manipulation of loan processes, bribery, forgery, and others.
• The Transfer Pricing and Special Operations Monitoring Department has launched an extensive audit, in coordination with the Foreign Exchange Office and Customs, of multinational subsidiaries in Morocco suspected of manipulating profit transfers and intercompany transaction costs, with the investigation set to progress into a full tax review for certain companies.
• The Moroccan Dirham (MAD) depreciated between September and October by 1.18% against the US dollar and appreciated by 0.59% against the Euro, with Bank Al-Maghrib (BAM), reporting no foreign exchange auctions since December 2021 and a 36% decline in the interbank currency exchange volume to MAD 38.4 billion.
• Moroccan banks, which have expanded their international presence, particularly in Europe, now face challenges due to a new European Union directive requiring foreign banks to establish local branches, which could increase operational costs and affect the profitability of Moroccan banks, potentially impacting remittance flows to Morocco.

Political Stability:

• The Moroccan Front for Supporting Palestine organized a protest in Sale on Tuesday evening, condemning a visit by Moroccan journalists to Israel during the ongoing military escalation in Gaza and emphasizing that the media should refrain from normalizing relations with Israel while massacres are being committed in Gaza.
• Healthcare unions in Morocco, led by the Independent Union of Public Sector Doctors, have announced a national strike to protest against government policies, citing issues such as unfulfilled agreements, inadequate working conditions, wage centralization, and the elimination of health sector staffing in the proposed 2025 Finance Bill.
• Dozens of workers in Morocco protested on November 3 outside Parliament, demanding the withdrawal of a proposed regulatory law on strikes, criticizing it as an infringement on their constitutional right to strike.
• The Ministry of Interior has taken action to curb the misuse of ambulances by some local council leaders for narrow political purposes, at the expense of citizens’ health, as complaints have emerged about certain officials denying ambulance services to opposition constituents, charging citizens for fuel, and using ambulances to transport patients to private clinics instead of public hospitals.
• A legislative proposal by the Movement party in the House of Representatives calls for including ride-sharing vehicles in the list of vehicles that cannot be driven professionally without a professional driver’s license, aiming to regulate this growing trend amidst ongoing tensions between traditional taxi drivers and ride-sharing drivers, highlighting the need for the Ministry to establish regulations for their use.
• Around 14 Residents affected by the Al Haouz earthquake in the Imkdal community are pursuing a contractor who failed to start building their homes despite receiving payments of 20,000 MAD from each individual; the residents signed agreements for the construction, which has not progressed, raising concerns about potential legal action if the situation is not resolved promptly.
• The Public Prosecution in Settat has instructed the local police to investigate allegations of threats and coercion related to checks made against a council member prior to the election of Nadia Fadmi as the new president of the Settat Council; investigations are underway as police have begun interviewing various council members about these claims of intimidation and retained checks used to secure votes.
• Local concern has grown in Tiznit as the city has become a drop-off point for homeless individuals and people with mental disorders from neighboring cities, leading to safety issues and calls for urgent intervention from authorities.
• Over a month after Morocco’s National Food Safety Office opened red meat imports to curb high prices, logistical hurdles—mainly due to insufficient storage—have stalled imports, leaving butchers and small importers hesitant to participate despite government tax suspensions aimed at stabilizing the market.
• Professionals in the livestock sector expect that meat imports, including red meat, will not ease the high prices in Morocco due to limited competition and monopolization by major importers, with some suggesting that allowing truck operators to import could increase livestock distribution and reduce prices.

Cross-border stability:

• The Spanish Foreign Minister, José Manuel Albares, stated that Morocco will not proceed with the opening of trade borders with the Spanish enclaves of Ceuta and Melilla until the EU definitively supports Morocco’s position on the Sahara.
• A Royal Moroccan Armed Forces drone bombed on November 6 two vehicles belonging to Mauritanian gold prospectors in the demilitarized zone near Fderik, 55 kilometers from the Mauritanian border, with no casualties, as the prospectors fled upon hearing the drone.
• The government of occupied Ceuta announced that over 800 minors, mostly Moroccan, entered illegally since the start of this year, marking a 260% increase from the 232 minors recorded in the first ten months of last year.

Security:

A Royal Moroccan Armed Forces drone targeted a Polisario militia vehicle near Tichla village in the Sahara after it breached the buffer zone, killing at least one member of the separatist group.