The Moorish Wanderer

Towards a New “Corporate Morocco”

The thing one needs to know about Corporate Morocco is that there are good companies and bad companies; at first sight, there is little difference between them: all of them create output and wealth, most of them create jobs -or at least provide facilities for jobs- but ultimately, the “moral” judgement -or in a agnostic setting, “social judgement”- lies in the distribution of profit (or in accountancy terms, EBITA) the post is not going to be about the evils of crony monopolies, but rather a general description of what companies in Morocco are up to, if they can indeed perform in similar proportions in a strict environment of rule of law and impartial regulatory bodies (in contrast with the very predatory, very concentrated and quite corrupt present state of affairs)

I suspect many left-leaning people in Morocco still view corporations as the source of all evil. In fairness, the prejudice held against corporations is not entirely unjustified – history taught us that much; But then again comes back the paradox many liberals and radicals in Morocco are wading through when it comes to the whole paradigm of government action vs individual/collective rights. It seems even the most vanguard thinker does not imagine improving the lives of fellow Moroccan citizens without the constant nudge of governmental intervention, even though the record on state intervention’s part is not that glorious (and USFP people sure illustrated the case in 1997).

What, Makhzen is going to disappear when progressive people are going to be in charge? Empowering individuals and communities surely contributes to bring it down; A heavily activist state, even when pushing for left-leaning project, could be just as bad as the old one. But coming back to corporate issues: though regulations are not precisely anti-business, it is the general framework within which laws are enacted, plus large businesses have always enjoyed close relationship with the equally high circles of power. In most countries, this is true indeed; But in democratic countries with a genuinely independent judiciary and impartial executive bodies, it is inconceivable that such an incredible leverage would be at the disposal of both a financial and executive power.Breaking down the Makhzen is equally a matter of weakening central government as well as big business. My claim here is that promoting small business and growth-potential companies is actually the smart thing to move, and that our pale imitation of Korea and its Cheabol model is, so far, a failure, and benefits only a few nucleus of influential people.

Also, it is high time the fight against big business was clarified so as not to give the impression liberals and radicals are anti-business, and that the way to expand the economy, create jobs and improve standards of living is though smaller, more innovative and more engaged in involving its employees in the productive activity and creating output.

The graph compares some indexes on Moroccan businesses. Since 2008, the national economy took a hit following the shock wave of the credit crunch. Though the broad macroeconomic variables held forth, the economic resilience, as it turned out, was not that strong in face of negative shocks. The pick up trend recorded early 2009 does not make up for the losses, and it has proven to be very volatile for most large-cap indexes. By contrast, the small-cap index did better and made up 92% of an all-times high in 5 years. A shrewd investor entering early 2009 would have made, so far, a gross 37.5% profit over small cap Moroccan companies (or a net profit of at least 35%).

They would have broken even at best (or make an average loss of 14%) with other indexes encompassing larger companies (supposedly with stronger fundamentals) The index analysis provides plenty of insights on the limitations of Moroccan capitalism: here are large companies whose share value is going down for the last three years, and yet manage to squeeze out enough cash and distribute it to its wealthy shareholders. The policy of accumulating earnings and invest them in tangible assets to expand companies’ capacities so as to accelerate recovery, it seems, is not the order of business of (big) Corporate Morocco.

In addition to the  small caps out-performing the larger ones, it is worth mentioning the robust growth they have been enjoying, especially when compared to the bumpy ups-and-downs of other indexes; But let us start off with an overview of what goes up and what goes down;

Even though dividends recorded a daily average of 8.9% decrease, the 3-years net period yielded a robust 5% (BVC)

The standard indexes to gauge how well companies are doing in the Moroccan economy are those used for the Casablanca Stock Exchange BVC. The MASI (Moroccan All Shares Index) and MADEX (Moroccan Most Active Shares Index) provide a usually comprehensive picture of the whole thing. Since early September 2008, the MASI has been losing so far 18% of its value, a daily average decrease of 2%, as of late August 2011. The volatility did not help, too: a 7% relative dispersion over the last 3 years only complicates further BVC’s poor showing and compromises hopes of recovery. These observations equally apply to the MADEX as well.

And yet, distributed dividends perform extraordinarily well; When considering the MASI Gross and Net returns differential, the distributed dividends on the considered period increased 5%. 2008 was a grim year for both BVC and the distributed dividends index-although MASI did worse- but dividends recovered next year with a respectable 8.65% per annum increase, and then 33.82% in 2010 (which resulted in a total of effective distributed dividend of approximately MAD 20.63Bn from potential MAD 30Bn reserves)

Big companies prefer, even under stringent economic conjecture, distribute their dividends, even when the price of their shares are down and have difficulty picking up. The dividend strategy could very well be a gesture of appeasement towards its shareholders, but it does not, on the longer term, benefit them, nor does it benefit the domestic economy.

Other indexes tell the same story: the FTSE Morocco index, considered a more comprehensive an index (compared to MASI/MADEX) provides very similar results on how well corporations are doing;  As a matter of fact, the FTSE index is even more pessimistic starting from July 2009, as it lost a third of its value over the period September 2008 – August 2011. That discrepancy between MASI and FTSE can be explained by the more stringent set of criterion applied by the company.

FTSE Morocco lost 31.44% of its value over three years, MASI 18% (Bloomberg)

To be included in the Index, a stock must pass free float and liquidity criteria.
5.1 Free Float
        a) A security that has a free float of less than or equal to 5% will be ineligible for the Index.
        b) A security that has a free float greater than 5% but less than or equal to 15% will be eligible for the Index providing the security’s full market capitalisation (before the application of any investability weight) is greater than or equal to 1% of the full market capitalisation of universe at periodic review.
The actual free float will be rounded up to the next highest whole percentage number.” (page 7)

And this reflect the ‘desirability’ of company shares. As a matter of fact, it now safe to argue that the dividend policy is subject to no other objective but to distribute the highest possible levels of dividends, a complete contradiction with the so-called “national champions’ strategy.

What if an alternative strategy was considered instead? There is no systematic evidence large companies provide an emerging economy with the leverage needed to promote exports or bring hard currency to the domestic economic circuit; Couldn’t smaller companies do Morocco’s bidding just as well? When compared to regular indexes, the small cap index not only beats them on recovery and returns over the last three years, but it has a robust growth compared to large and mid-capitalizations: over the last three years, gross returns recorded levels varying between 22% and 29% and starting from April 2010, growth as been consistent, in contrast with the large-cap indexes.

Growth-Small caps index systematically beat down mainstream,large cap-focused indexes over short and medium term. (Bloomberg)

The point is, and contrary to the theory that smaller companies cannot stand global competition, growth industry in Morocco provided good returns, further emboldened by the flexible structure of its capital. It could be indeed just a phase, and it could well be expected that these companies would eventually slow down their growth; but over a longer period of time (the longest available being 5 years) the small caps index still beats down with a 12.25% 5-years return, while MASI performs a -4.3% returns.

A reasonable case can be raised on whether the index analogy holds: after all, the index composition tends to fluctuate, and it has its shortcomings. After all, MASI and other indexes do not represent the overall showing of the domestic economy; But this goes beyond it, or rather, goes into the specifics of private sector contribution to growth. With no excessive generalization, the ingredient of good and stable growth for Morocco are investment (both public and private) and now as it turn out large corporations actually harm growth, smaller, more innovative and high growth-led industries.The political implications for shifting away from big corporation is that the financial war chest of Makhzen will dry up, and with it, its power and hold over all aspects of political, economic and social life will fade away in favour of a more open, democratic and equitable society.

If these can be cooperatives as well, My crypto-communism would be achieved. In the mean-time, let’s buy us some MSCI Morocco Small Caps, it earns good money.

A Citizen’s Gesture

Fellow blogger @Larbi_org used to exercise his wit at my expenses: intellectuals are all talk and talk, but no walk. First off, I have to say I am honoured to be bestowed such a title (I don’t mind the negative connotation attached to it, and as a matter of fact, the title would do nicely as a badge of honour)  What I do crave, on the other hand, is the rough-and-tumble of political campaigning, the engagement with the electorate, that enticing feeling of uncertainty when the local policeman or mokhazeni is likely to bark his orders forbidding ‘political agitation on the street’… And even though I am at the moment an expatriate student, I do have now the opportunity to take the argument to field application, so to speak.

This is going to be the moment of truth: All past referendums have been muted campaigns, a constant media hammering for a ‘Yes’ Vote (Those who experienced some of them surely remember ‘صوتوا بكل حرية على نعم’) and any brazen attempt to call for a contrarian opinion, or even worse, to call for a boycott were either jailed or beaten out of the street. I would like to wager the present security officials are not that dumb, and will allow some sort of dissident expression over the matter. Whatever the outcome in June, the constitutional draft is bound to satisfy some, dissatisfy others. The former will call for a vote in favour of yet another more democratic constitution, while the latter will usually split between those who vote against (not because they were content with the earlier version, but because they had wanted a different constitutional modus operandi) and those who gainsay the whole system, maximalists eager to inflict upon the regime some sort of rebuttal by trying to get the largest amount of people to boycott what they consider to be a political farce.

This is democracy, and plurality of opinions is to be expected, whatever comes out from the June deadline. Many of my friends and acquaintances want to adopt a wait-and-see attitude before making their minds up over the referendum, and I do respect their prudence. As for me, and because I know no good can come up from ageing and conservative law scholars, my mind is already made up. (right from March10th, actually). This, however, is partisan politics. There is a higher level, upon which the argument is no longer between the Yes and No, but between Participation and Boycott. I like to think civic behaviour dictates all of us should participate to the referendum, but again, the pro-boycott are entitled to their opinion, and should be respected. But to the undecided (and there is no need for polling to know they represent a majority of likely voters) these are the ones that need to be convinced of registering; And more precisely, those of us, expatriated students.

As of today, as a Moroccan citizen, a students’ society member and as a party member -in that order- I am campaigning to sign my fellow Moroccans up for the referendum. As you may know, the authorities are renewing their electoral listings (closed on May 21st), and it is an opportunity for those of us who did not vote on earlier referendums or elections, as well as for those who moved out in between elections, to register and make their voices heard.

My little stand, my little contribution to civic nihilism.

As an expatriate student, it is quite hard to doorstep fellow students and countrymen in exile, and convince them to take a day off and head to the nearest consulate (sometimes located very far from their domiciles) it is also hard to convince people just to vote; remarks like “why bother?” or “I don’t know what to vote for, better wait till June” are all sensible objections to what is seemingly a romantic stand on democracy and civics, but there remains the crucial point to be made: we need to make our voices heard.

Many of those who read past posts know I am voting ‘No’ in any case (save the one when M. Menouni decides to grow some balls and come up with a ground-breaking, earth-shattering memorandum such as this one) so why bother in trying to sign people up? many of whom are likely to vote ‘Yes’ because, well… it’s a new constitution. Don’t I have a vested interest in trying to sway the people’s votes and get them to see my own way?

Indeed I do. But that’s the beauty of applied democracy: what matters now is not what to vote for, but why bother turning out to the polling station (in my case and in the case of those I am appealing to, a consulate) and vote for something that, in all probability, does not affect the everyday life every one of us is carrying out with.

In short, pluck up your courage, gather all your civic spirits, your ID Card, Passport and Residence Permit (if applicable) and head off to the nearest Moroccan consulate, wherever you are. You owe it to your country and fellow citizens.

Malcolm Tucker is the Man

Posted in Polfiction, Read & Heard, The International Kadetty, The Wanderer by Zouhair ABH on February 27, 2010

Ah, it’s a shame we don’t have a political soap opera. Drama or Comedy, I don’t care; I am referring to government work; not higher up…

I think we got the right persons for the job. I can easily imagine the right honourable Abbes El Fassi being told off by his aggressive PR director… Or perhaps Mezouar, being slaughtered by his spin doctors for his rebellious deeds at the RNI.

In the opposition benches, we might get a glance at Ramid cursing and shouting to a strangely placid Belkhayat, while their respective spin-doctors are plotting in their back for some dirty press campaign.

On second thoughts, we don’t need it to be nominalthe satire show, bear with me please.

It would be legally difficult, and the politicians might not accept it. But the idea of a political satire (or even thriller) is quite nice to contemplate.

Easier said than done: we have yet to build a genuine democracy before one starts thinking about putting up a satirical show on politics. Or is it? It may be that by means of satire, politics might evolve into something more open. Just like caricatures do (or do they?). Well of course, there’s always the money problem: no producer sane enough would accept to back such political dynamite, who would finance it? let alone obedient and makhzenian TV channels… Na, it’s just an idle dream.

Would Morocco be a better democracy with that kind of TV soap opera? Your call, but it would at least be good show for the viewers.

A well-made point actually; Do we really need a democracy where politicians are depicted in a satirical way? Much as I value politics and I advocate for a respectable image, a politician is, besides being a human being, is a public figure, and it is always healthy to have a little bit of steam off by mocking the politics, as long as the caricature is proportionate, harmless and non-smearing. It is argued though, that humour in politics, under some conditions, is actually an expression of a healthy democracy. (Yeah, that’s all Morocco needs, a bunch of clowns to mock politicians that didn’t do much to earn the citizens’ respect)

My hopes are quite vain of course, as we need a far superior democracy, and good TV to put up such shows. That’s what happens when one is too into listening to BBC comedy podcasts, or watching the ‘Thick Of It’ and re-running its widescreen sequel ‘In the Loop.

When I started to learn English seriously, I tried to immerge in the Anglo-Saxon world (just the British one really, Americans are so dull)

I actually came across political satire show a long time before, when I first bumped into ‘Yes Minister’ and ‘Yes Prime Minister’ 1980’s show.

That was the Right Honourable James ‘Jim’ Hacker MP, minister (Paul Eddington), then prime minister, trying to find his ways with the civil service, portrayed and voiced by Sir Humphrey Appleby (Nigel Hawthorne), in a humorous clash between political projects and administrative blocks.

In a more darker –or serious- tone, I could perhaps advise the Houses Of Cards where the Chief Whip Francis Urquhart makes his way to the PM office, or the more leftist’ one where left-leaning labour PM Harry Perkins in ‘a Very British Coup, has to put into practice his manifesto in spite of civil service, army and bankers’ opposition.

These are but few shows I had the pleasure to watch and appreciate. Really, the idea of political drama or comedy should, I think, be encouraged. There’s always some drawback, like people identifying fiction with reality, and actually thinking politicians act just like their actors counterparts. That’s not the purpose of my post. I wanted to write about something else. Or should I say someone else…

The F-word is no longer a taboo in British TV shows –the discernable audience rated of them and I think ‘The Thick of It’, and especially Malcolm Tucker (Peter Capaldi) is just taking the edge on the sweary bit.

I am not very fond of swearing but, bloody hell -sorry- the man is a maestro: “wake up and smell the cock” people, Malcolm Tucker is here ladies and gentleman, and he is there to make sure that the ministers and their staff walk the line and speak the words He defines and writes.

I first thought Malcolm Tucker was the Chief Whip, which, presumably, would explain why other party members, especially MPs and their staff, are so frightened by his presence. But then, I understood he was holding the strategic position of senior Director of communications (and strategy I would guess) an equally impressive position under the New-Labour government. The spin doctor has an impressive range of sweary bits -a Guardian article displayed a sample of what Tucker serves his unfortunate interlocutors.

Incidentally, the senior Communications boss character is a bit of a bully. BBC Magazine did feature an article about it (reference to the Gordon Brown alleged bullying behaviour at N°10), but that’s not our point.

Malcolm Tucker does not only police the ministers, he also put the pressure on journalists, the valiant seekers of the truth, as Francis Urquhart said another reference in fictional politicians-

Now, what’s so interesting about an angry Scottish spin-doctor that shouts at everyone, making his way through manipulating his peers, the journalists and even the Prime Minister? It’s modern politics. Politicians in the post-industrialized countries are more and more sucked into the almost real-time media turmoil, they have to make statements and provide their opinions on almost everything. Politicians, it seems, by using and pretending to manipulate the Medias, found themselves trapped in the very scheme they devised for their benefit. That’s why post-modern politicians need Spin doctors, like Malcolm Tucker.

Briefly, the character is loosely based on the actual Spin Doctor Alistair Campbell, special adviser to the then-prime minister Tony Blair (though he denies any common features with Tucker), and, well, I just wanted to write something about Tucker. It is quite fascinating, not in a good way I mean. I know he represents everything I resent in politics and politicians, but the character is so manipulative, so… devious that one has to admit it: ‘what if that’s how politics does work?

Nonetheless, it is always a pleasure to watch Malcolm Tucker manipulating, swearing and bullying the unfortunate ministers, colleagues and civil servant staff; Not that I like the abusive part of it, but it seems, following Bergson, because It is so human, and also because I wouldn’t identify myself with, say, Hugh Abbott or even Malcolm Tucker himself !