The Moorish Wanderer

“Regional Solidarity”: Bums and Workaholics

Posted in Dismal Economics, Moroccan Politics & Economics, Morocco, Read & Heard by Zouhair ABH on September 10, 2012

Ever wonder how much of your taxpayer’s money went to other regions? Of course, if you are from Casablanca, or Agadir, you are entitled to ask if you are from Rabat on the other hand, not so much. Unfortunately however, some budgetary constraints prevent the curious inquirer to get the raw numbers from our administration. And so, I endeavour to crunch these available numbers together to get some idea of how things are computed.

Average regional GDP per Capita in these super-regions is 21% higher than nationwide GDP per Capita.

First, I start with the standard national accounting identity: Y=C+G+I+NX. (Output = Consumption +Government Spending + Investment + Net Exports)

In fact, I can even assume that equality is simplified to Y=C+G+I since most of our exports are concentrated on two seaports at the most (Casablanca alone attracts 42% of total export/import shipping ) and use data from the MINEFI paper on regional contributions to GDP, as well as an HCP survey from 2007. It is without much surprise that 5 regions concentrate about 60% of total GDP (Casablanca, Rabat, Marrakech, Tangiers and Souss) and a little less than half of total population. We can also safely assume productivity per capita in these regions is significantly larger, paradoxically because their respective occupation level of active population would be lower.

Why would I need the national accounting identity to check which regions rely on government subsidies and transfers? Well, it is a matter of simple economics: a thriving region would not necessarily have a high regional GDP – Soussa Massa has a relatively low GDP per Capita, yet it is one of the richest regions in Morocco (4th richest not including Raba-Salé). What matters really is how their regional GDP is formed; a wealthy, productive region should produce its own consumption and pay relatively high taxes – or at least close to nationwide levels.

The following results are based on computations of aggregates per capita: there is a logical enough argument to be made that poorer regions might be over-populated; as it turned out, richer regions tend to have larger populations, they are however more productive, even more so, given the fact their active population is actually smaller, when compared to nationwide occupation rate of active population as well as those of the poorer regions. Per capita results take the demographics out of the equation, and even the odds somewhat.

The initial point made about wealthy regions stems from the standard national accounting equation: regional output is (roughly) consumed, taxes or invested. A good point can be made as to how local output matches local consumption, i.e. food and other goods consumed in one region are not necessarily made there; after all, sea-fish consumed in Marrakesh has to come from a coastal city, and Melons down South in Laayun need to come from another, cooler, watery place. Still and all, productive regions are able to produce enough output to buy them their consumption from other regions. Those too poor to afford anything will have to rely on government subsidies, or else reduce their consumption to subsistence levels. six regions emerge in this case: the Southern provinces, Tadla-Azilal and Taza-Alhuceimas. Their cumulative contribution to total GDP is less than 10%, and their average GDP per capita is roughly that of Souss-Massa.

Taxes and Government spending however are a different place; government money levied from or spent on a region stays there. Unfortunately, we do not have the exact amount of government spendings per region, though the other side of the equation is out there: there is evidence about how much each region contributes to total fiscal receipts; As it turns out, the 5 super-regions contribute about 91.5% of 2011 fiscal receipts, about 138.2Bn that is. So the initial body of evidence is there: the richest regions tend to pay more taxes than they produce output, and if Rabat-Salé is excluded from computations, the 4 super-regions account for 74% of fiscal receipts, versus a little less than half of total GDP. In simple arithmetic, every 100 dirhams these 4 regions paid 19.1 of it in taxes, and these were transferred to other regions.

What is the difference between the South and the two other poorest regions? These have less government spending with respect to their respective regional GDP

The figures at hand are not gross taxes however; these have been netted with subsidies (our Compensation Fund) which makes computations even easier; indeed, national accounting equalities tend to assume perfect funding from taxes to pay for government expenditure. Poorer regions – in this case, the bums are the Southern provinces, Taza-Alhuceimas and Tadla-Azilal would share their output between consumption and government expenditure. This is precisely the case for Taza and Tadla, where Investment per Capita (and at a smaller extent, Net Exports) make up for less than 2% of GDP per Capita. These two regions, by the way, should have received a net 1.5Bn dirhams either as tax cuts, or direct government transfers. But they did not: the local population had to make do.

On the other hand, the Southern regions are a riddle when it comes to national accounting; its taxation is a record low, and the assumption behind national accounting does not stand. And that is so because the tax aggregate used for that matter was net of subsidies. Think of it as a reversed budget balance: G – T instead of T – G. One additional step would be to propose: T - (G_0 + G_s) where G_s is government subsidies expenditure. The balance is the net government transfer the region benefits from.

So what is the score? It is always difficult in view of the numerous shortcomings of proposed methods, but it is clear the remarkably high Southern GDP per capita (30,000 dirhams) which marks these regions as the third richest is solely due to large government transfers, in this case 7.2Bn dirhams in 2011 – .89% of GDP, 17.1% of subsidies dispatched to 3.5% of total population. The bums in this case, those who benefit from government transfers, are the Southern provinces.

Regional solidarity is an admirable principle, and should be encouraged at every level of government business. But it assumes transparency in these transfers, and some kind of economic logic to it. In this case, transparency is a vain word – let us not forget the assumptions behind all these computations are very formal, and that means reality might be a lot dimmer, i.e. actual transfers are higher. And the proposed newly redrawn regional boundaries will certainly not help.

The political ramifications of unequal and unjustified (from an economic point of view, anyway) government transfers from hard-working citizens to others will exacerbate resentment, and there is no doubt unscrupulous politicians will seize upon this if and when an electoral advantage would weigh in. Another way to look at it is instead to push for larger devolution; fiscal autonomy would then show how each region actually does in terms of economic performance, and a dedicated federal fund can then be set up to support those regions with structural difficulties, on the grounds of economic support, not back-room political strategies as it is now.

Ma Petite Entreprise ne Connait pas La Crise

Posted in Dismal Economics, Moroccan Politics & Economics, Morocco by Zouhair ABH on September 6, 2012

Le protefeuille détenu par SNI-ONA, puis SNI entre Août 2009 et 2012 a réalisé une progression annuelle moyenne de 5.5%, contre -2.86% pour l’indice MASI sur la même période.

Elle ne connait pas la crise en effet. (même si elle n’est pas petite.)

L’indice synthétique SNI-ONAweX (valeurs détenues par SNI-ONA, puis SNI pondérées par leurs contributions respectives au portefeuille détenu par le conglomérat) obtient des rendements supérieurs à ceux de MASI et SNI-ONAeX (pondération uniforme)

La méthodologie pour le calcul des deux indices comparés au MASI est simple.

1/ On rapporte d’abord la composition du portefeuille SNI-ONA pour chaque année fiscale, 2009 à 2012. Cette composition de portefeuille est ensuite croisée avec les valeurs en bourse où le conglomérat SNI-ONA a une prise de participation quelconque. (exemple: Etats Financiers de 2012)

2/ Dans un premier temps, on suppose une capitalisation uniforme pour toutes les valeurs détenues par le holding. C’est l’indice SNI-ONAeX, lequel a réalisé un rendement annuel de .86% pour les trois dernières années. Ensuite, on raffine l’exercice en introduisant une pondération annuelle, dépendant du portefeuille détenu par le holding d’année en année. L’indice SNI-ONAweX représente une valorisation plus réaliste du rendement engrangé par le portefeuille du célèbre conglomérat.

3/ On utilise Août 2009 comme année de base pour les trois indices, afin de calculer le rendement annuel; par exemple, le rendement de l’indice SNI-ONAweX pour l’année 2009-2010, a été de 14.3%, contre 8.37% pour l’indice MASI. D’ailleurs, l’écart de rendement entre le MASI et ce portefeuille a commencé à s’élargir significativement dès la fin de 2011, précisément au moment où la Bourse de Casablanca commençait à baisser (je dirais même, au moment où la bulle a crevé, mais je serais mauvaise langue alors). On peut même observer une sur-performance consistante sur les 3 années, où le portefeuille SNI-ONA battait systématiquement le MASI, et même l’évolution de la capitalisation boursière CSE. (l’exercice serait beaucoup plus intéressant sur la période 2000-2012)

Je souhaiterais mettre cette constatation dans son contexte théorique. j’avais un boss qui me disait souvent: “s’il y avait un moyen infaillible de faire de l’argent en bourse sur une longue période de temps, quelqu’un l’aurait déjà trouvé”. Cette boutade illustre parfaitement l’idée généralement partagée de ce qu’on croit être l’équilibre des marchés financiers. Pourtant, si l’évolution du MASI est considérée comme étant celle du marché (potentiellement à l’équilibre) alors comment expliquer la sur-performance continuelle de l’autre indice?

C’est ce qu’appellerait Eugène Fama la forme forte d’efficience du Marché: il devient clair que l’information passée et publique incorporée dans le prix des actifs échangés en bourse ne peut expliquer à elle seule l’équilibre du marché. Il y a donc une information privilégiée, un marché oligopolistique, ou même monopolistique de l’information financière; d’un autre côté, il se peut aussi que la distribution de ces actifs financiers soit déséquilibrée (pensez à la pondération respective des actions Ittisalat Al-Maghrib et Attijari Wafabank dans le calcul des indices MASI, MADEX ou FTSE Morocco)

Bref, ce sont potentiellement 23 Milliards de dirhams en plus dans les poches du conglomérat sur les 3 dernières années, comparés à une perte de 66.9 Milliards de dhs pour la capitalisation de la Bourse. Certes, le portefeuille SNI-ONA ne représentait en moyenne que 4.58% de la capitalisation Casablanca Stock Exchange (CSE) mais ça représente malgré tout une anomalie de taille (d’ailleurs, cette performance augmentera surtout durant l’année 2010, au moment où les titres ONA sont radiés de la Bourse)

Note: Toutes les séries chronologiques utilisées ont été téléchargées du site de Casablanca Bourse.

Who Vote(d) Progressive in Morocco?

I have recently come across some detailed figures on this website, most importantly the complete set of results from the 2011 legislative elections per province, and I wonder how they got hold of these (apparently Attajdid newspaper published them in full)

the story behind those figures is damning to the left: they have lost their historical stronghold a long time ago, and I can recall one statistical evidence that provides a sad indictment to the sorry state of progressive politics in Morocco: in 2007, USFP candidates garnered 2301 votes in Aïn Chok. In 2011, they managed to pull 2304, even as turnout jumped from 22,125 to 41,195. There is a large probability the same people turned out to vote USFP, even as parties like PJD and MP doubled their respective votes from respectively 7,493 and 3,067 to 20,849 and 6,579. This is from a city where UNFP and the progressive parties before 1997 usually carried 37% of the votes, an average of 86,000 votes per election since 1963. In 2011, the total votes in Casablanca for all competing left-wing parties was around 29,500 (6.1% for the Casablanca metropolitan area) an abysmal performance matched only by the 1977 elections, when neither USFP, PPS or UNFP/UMT managed to carry a seat there.

Historically however, the total score of popular vote garnered by all progressive-affiliated political parties is very close to PJD’s feat: PJD carried 22.8% of the popular vote, some 1,080,914 votes, and all left-wing political parties carried on average 1,135,281 votes. It would be interesting to identify those areas that have voted (or still vote) progressive since 1963. Perhaps the evidence shown later would confirm the urgent need to unify all of these political parties into one big tent. The chief benefit of a broad coalition is electoral maths: one party, or at least one cohesive coalition means the perverse effect of the Moroccan ballot system would be alleviated somewhat: two competing left-wing candidates are cancelling each others out. In 2007, the vote was split evenly between USFP and the PSU-PADS-CNI alliance in Essaouira: though both got a seat each, their combined 17,540 votes (out of 66,740) could have most likely carried a third seat from the 4 slots. In 1997, the aggregate progressive vote in Marrakesh was second only to Istiqlal, leaving behind RNI (73,777) and MP (50,800) but because it was fragmented between USFP, PPS and OADP, their electoral performance didn’t amount to much.

There is one instance where electoral cooperation produced impressive results: in 1993, USFP and Istiqlal stood with joint candidates, a strategy that yielded Koutla‘s highest performance ever since it was first formed in 1970: 36.2% with scores as high as 79% in Mohammedia, Essaouira (61.26%) and Alhuceimas (58.1%) Casablanca and Rabat-Salé averaged 56% of popular votes.

Perhaps my definition of ‘progressive’ is too biased: after all, it fails to account for the extra-parliamentary opposition, all those political parties with definite views on the parliamentary system (including PSU since February 2011). But I guess the best analogy to describe the state of the Moroccan left is that of the informal sector: the activity is out there, but because it operates beyond the legal framework, the correct appraisal of the sector’s contribution to legal GDP becomes difficult, if not impossible to perform. Left-wing parties operating outside the mainstream political competition (the electoral process, so to speak) contribute to the Moroccan political life, but because they refuse to submit to the only viable performance indicator around, i.e. elections, they do not influence mainstream politics. Polling is not a thriving business in Morocco yet, so general elections since 1963 are so far the only correct indicator as to how popular progressive and liberal ideas are with the Moroccan electorate. Official figures, electoral official figures in particular are hotly gainsaid by many in the opposition, and in many instances, their accusations are founded. This is an inevitable caveat: to talk about Moroccan elections in a serious fashion is to use official figures, and these are not always accurate. Still, in the absence of an alternative, one has to make do.

the progressive vote “migrates” away from large metropolitan districts to smaller, more rural seats (even a couple in the Sahara) especially since 1993

UNFP/USFP, FFD, PPS, PSD, CNI, PT, PADS, OADP/GSU/PSU, PS, PGVM are all left-wing parties (with explicit references to values of socialism or progress in their respective denominations) with a history of electoral campaigning and for most of them, at least one gained seat since their foundation. Together, they have held between 19.6% and 22.5% of parliamentary seats and 22.8% of popular votes since 1963. Nonetheless, the geographical distribution of their parliamentary caucus has changed a lot over the years. True, the Casablanca-Rabat-Agadir formed much of the middle-class stronghold upon which parties like UNFP, then USFP built their political strength, but there are other places where support has been random: Alhuceimas is the best example of a “swing province”: in 1963, no vote were cast in favour of UNFP, even as USFP and PPS carried about 25% of the votes in 1977, and 22% of all the votes went progressive in 2007, only to swing dramatically to other allegiances in 2011, with only 11.8% of the votes going to USFP, PPS and other competing political parties.

The electoral map shows steady patterns in the progressive vote, both disturbing and hopeful: Casablanca, Mohammedia and Rabat are no longer leaning left, and Agadir itself is becoming less prone to give its votes to the USFP-PSU/PADS/CNI tandem. In fact, these traditional strongholds of middle-class, unionised public service workers have been crumbling since 1993, before the Alternance Consensuelle: the nationwide performance of left-wing Koutla (USFP, OADP, PPS, PSD) in 1997 was around 36.5% of popular vote, but the breakdown per metropolitan areas shows a steep decline, obviously offset by gains from new constituencies in the South and rural hinterlands: Abdelwahed Radi carried around 43,100 votes in his Kenitra constituency for instance. The disturbing part is that mainstream progressives (USFP, PPS and perhaps FFD before 2011) have seen their core parliamentary seats shift from Rabat (7 out of 8), Casablanca (14 out of 31) to other places (the South mainly) leaving the already ambitious MPCD-turned-PJD ample room to fill in the void (in 1997, MPCD already held 6 seats in metropolitan Casablanca). The depressing part is the seemingly delibrate strategy by all left-wing parties (including the Democratic Alliance, with a strong showing in the Ouad Dahab district in 2007) not to take the battle to their former urban stronghold: Casablanca, Rabat, even Agadir are now lost battle to the USFP as well as smaller parties, should PSU or PADS ever go back into parliamentary elections. The obvious advantages to such strategy are easy to enumerate: the required number of votes to carry a seat are much higher in Casablanca than they are in, say Beni Hssen, or Guelmim. There is a clear-cut trend for both the governmental and democratic left in shifting their core votes (and seats) from urban to peripheral-urban and rural seats: their share in parliamentary caucuses has been constant since 1993, which belies the fact that left-wingers are no longer effectively representing their cherished public, the urban middle and working classes: these have been lost around 1993 already.

In many instances, the fact that up to 5 competing left-wing candidates are fighting each other off over 3 slots makes it a pyrrhic victory to however emerges. Sidi Bennour is a great example of how a united left can prevail: in 2007, the Democratic Alliance (PSU/PADS/CNI) garnered 10,559 votes, about as much as USFP as one can see:

SIDI BENNOUR OULED FREJ (226,379 voters)
Party                                Votes   %  Seats
Constitutional Union                 7,990  10.5    -
Independence Party                   9,737  12.8    1 
National-Democrat Party - Covenant  10,006  13.1    1 
National Rally of Independents       3,305  04.3    -
Party of Progress and Socialism      4,804  06.3    -
Popular Movement                     9,700  12.7    -
Socialist Party                      4,292  05.6    -
Socialist Union of Popular Forces   10,297  13.5    1 
Union PADS–CNI–PSU                  10,559  13.9    1 
Others                               5,534  07.3    -
Total                               76,224          4

and yet if both USFP and PSU/PADS/CNI managed to stand with one common list, they would have carried the third seat away from Istiqlal. Another interesting feature of the Sidi Bennour district is the turnout, down 10,670 from 2007 (76,224) to 2011 (65,554). Boycott, in that particular case showed clearly as those  AGD voters preferred not to go to the polling stations. There are 4 seats opened for the left down there simply because they can mobilise around 20,000 voters out of a 193,000. Obviously, they do not have the Rhamna juggernaut at their disposal: in 2007, the so-called independents under Fouad Ali Himma’s leadership carried all 3 seats for the Rhamna district with a whooping majority of 41,265 to a total number of voters around 56,755, a super-majority of 35,187.

regional contribution to historical average: populous regions still contribute more

I mentioned earlier that the historical trend in voting pattern bore depressing features. There are however signs of potential comeback: first, the aggregate vote in urban rings shows as a strong second or third. There is great potential however in smaller cities: Essaouira, Sidi Bennour of course, and other districts usually concentrated in Marrakech-Tensift-Haouz and Souss-Massa. The aggregate vote shows more than often potentially an additional seat should all progressive candidates stood on coalition platforms. In parliamentary arithmetics, that translates into a dozen additional seats from marginals (including PJD’s) and around 5 more with the national ballot automatic transmission effect.

A Koutla of the left can be achieved, and from what I have seen since 1997, there are around 30 districts (meaning, around 45 seats) where at least one party does not carry enough votes to cross the legal threshold for campaign reimbursement. A rational strategy would be to strike a deal in coordinating their choice of candidates, if indeed these parties cannot agree on a ready-made coalition platform.

But then again, as long as the old rivalries persist among all components of the Moroccan left, there is little hope a strong progressive parliamentary party will emerge and present itself as a viable alternative to the Makhzen as well as the PJD.

March 23rd, 1965: A Day Of Days

Posted in Tiny bit of Politics by Zouhair ABH on March 24, 2011

46 years have passed since the infamous March 23rd, 1965. And though many forgot, or tried to, or did not know about it, the students’ and pupils’ riots have had far-reaching consequences, and it is safe to say that we are still experiencing some residual effects.

A bit of history perhaps: by the mid-1960s, the political showdown between UNFP radicals and the Monarchy got exacerbated with tale-telling signs of economic depression. Indeed, after the sudden death of King Mohamed V in 1961, Hassan II engaged into a more open political activism, and publicized by his actions the covert clashes with the National Movement (especially the UNFP) to assert the Monarchy’s power on Morocco’s politics as hegemonic player.

Things turned sourer when Hassan II announced a constitutional referendum by 1962. An established constitution was the National Bloc’s main claim after 1956, and though late King Mohamed V had repeatedly promised a hypothetical constitutional convention, such business was deemed junior to the more pressing task of carrying out day-to-day government. It seems that then Crown Prince Moulay Hassan was not at all happy with the idea, since the outcome was unpredictable, and would at best lead to a toothless monarchy an outcome he considered a hindrance to his own thrust for power) if not an outright dismissal of monarchy as a political regime. Such delays took form of governmental de-stabilization and the exacerbation of internal divisions between radical elements and pro-status quo within the Istiqlal, divisions that led to the UNFP breakaway.

The 1962 constitutional referendum was, to say the least, a travesty of democratic consultation: though the ‘Yes’ had a cleat win of more than 90%, there were numerous instances of blatant administrative meddling, either by preventing Istiqlal or UNFP activists to vote, threats made to regular citizens, and especially in rural areas, local authorities bribed and threatened peasants to vote in favour. Furthermore, the constitution itself  was the King’s brainchild, an adaptation of the very power-concentrated French 5th Republic Constitution (as it is, the Crown Prince was a great admirer of Charles De Gaulle, though admiration was not always reciprocal) Almost immediately, 1963 general elections (the first ever for parliament in Morocco, the second after the 1960 local elections) locked in the political balance into violent confrontations.

Hassan II with his own Iago (turned a failed Brutus) Mohamed Oufkir (Picture LIFE)

The Regal hegemonic agenda basically dessicated democratic institutions and drained them out of any political legitimacy. Furthermore, the youthful Moroccan population, like all the youth around the world (let us remind ourselves of the 1968 upheavals in France and other countries in Europe, campus rebellions in the US to name but a few) was eager for some fresh change, a change that was too radical to a youthful King (eager too for some fresh change, but that would rather go his way)

The immediate trigger for the March 23rd protests (that lasted 3 days: 21-22 and 23 march 1965) was a new education regulation (issued by then-minister Belabbes) that de facto prevented virtually all High-School candidates from being able to get their baccalaureate (a degree that allowed for a safe job with the civil service, and thus the most straightforward way to lift off poverty and acquire a social status. That is why not only pupils, but also their parents -and young unemployed- took to the street and express their anger. At times of bad economic forecast and aspiring masses to better standards of living, the administrative decision (though thought to have a likely small effect) had a symbolism such that the people’s cup was bare: strikes at schools, street demonstration, police repression, and ultimately, large-scale riots in urban centres like Casablanca (Mohamed V High School earned quite a reputation from then on).

Casablanca, March 23rd (Picture Liberation)

The riots were such that police soon gave up, and the Monarchy (and its then-most staunch henchman, General Mohamed Oufkir) soon called upon the army, who only too well willingly carried out methodical street fighting for wrestling back the control of the rioting cities (bullet impacts can still be witnessed on some buildings in Casablanca for instance).

Why bring back such black memories? First, because Morocco’s history cannot be summed up in dates like August 20th, or March 3rd, or indeed November 6th. Such riots, contrary to what Abdellah Laroui‘s own account, were of ground-breaking magnitude: it was the bluntest end to the post-1956 idyll of national unity, a most violent depiction of the Monarchy’s ruthlessness in defending its prerogatives and repressing its dissidence. What was before circumvented to veteran nationalists and freedom-fighters like the so-called 1963 plot quickly spread to an institutionalized terrorism justified with red scare campaign. As some nihilists like to point it out, we do not live in a Bisounours kind of universe; There is a need for A remembrance day, and March 23rd is the ideal date. The IER unfortunately missed out on the symbolism, and a date like this one would balance up the pompous national holidays singing the praises of an all-too omnipresent monarchy. Think about it:

August 20th is a purely a Palace intrigue matter;

November 18th, Independence day is Mohamed V’s return and not that of Saint Cloud’s protocol (March 2nd);

November 6th, Green March was a tactical stunt (as does its corollary of Rio De Oro attachment, August 14th);

and finally, The King’s enthronement anniversary (July 29th).

Is it too much to ask for a non-Regal national holiday?