The Current and Future State of Manufacturing in Morocco: A Comprehensive Analysis

Table of Contents

  1. Introduction
  2. Historical Context of Manufacturing in Morocco
  3. Overview of the Current Manufacturing Landscape
     3.1 Key Manufacturing Industries
     3.2 Major Companies and Industrial Players
     3.3 Regional Disparities and Industrial Zones
  4. Infrastructure Supporting the Manufacturing Sector
     4.1 Transport Infrastructure
     4.2 Energy and Utilities
     4.3 Industrial Parks and Free Trade Zones
  5. Government Policies and Strategic Frameworks
     5.1 Industrial Acceleration Plan (PAI) and Successor Frameworks
     5.2 Trade Policy and Industrial Integration
     5.3 Public-Private Partnerships and Support Programmes
  6. Foreign Direct Investment (FDI) in Manufacturing
     6.1 FDI Trends and Key Investors
     6.2 Role of Multinational Corporations (MNCs)
  7. Labour Dynamics and Workforce Development
     7.1 Labour Market Overview
     7.2 Skills Development and Vocational Training
     7.3 Labour Costs, Productivity and Competitiveness
  8. Challenges Facing the Manufacturing Sector
     8.1 Structural Deficiencies and Firm Capabilities
     8.2 Global Supply Chain Dependencies and Shock Resilience
     8.3 Environmental, Carbon and Regulatory Constraints
  9. Opportunities for Growth and Transformation
     9.1 Green Manufacturing, Decarbonisation and New Energy Industries
     9.2 Automation, Industry 4.0 and Innovation Upgrading
     9.3 Regional Integration, AfCFTA and South–South Industrial Expansion
  10. Future Outlook and Projections (to 2030/2035)
  11. Conclusion: Policy and Firm-Level Implications
  12. References

1. Introduction

Manufacturing has become a central pillar of Morocco’s economic modernisation strategy, complementing long-standing reliance on agriculture, tourism, remittances and commodity-linked activities. Over roughly two decades, Morocco has built export-oriented industrial platforms integrated into European value chains, particularly in automotive, aerospace, electrical equipment, and selected electronics,while retaining sizeable traditional industries such as textiles, food processing and basic materials. This repositioning has been enabled by deliberate industrial policy, large-scale infrastructure investments, political continuity, and an outward-oriented trade and investment regime (World Bank, 2023; WTO, 2023).

The strategic significance of Moroccan manufacturing has risen further since the COVID-19 shock and subsequent disruptions to global supply chains, as European firms have reconsidered sourcing strategies and nearshoring options. Morocco’s proximity to the EU, the scale and performance of Tangier Med, and a growing ecosystem of suppliers have strengthened its proposition relative to peers in North Africa (e.g., Tunisia and Egypt) and, in some segments, as a complementary platform to Central and Eastern Europe (CEE) or Turkey (OECD, 2023; UNCTAD, 2024). At the same time, Morocco faces binding constraints: water stress, energy import dependence (despite renewables progress), skills mismatches, and the need to move up the value chain. While the EU’s evolving carbon and sustainability regulations (including the Carbon Border Adjustment Mechanism, CBAM) introduce new compliance imperatives for exporting manufacturers (European Commission, 2023; World Bank, 2023).


2. Historical Context of Manufacturing in Morocco

Manufacturing in Morocco has long reflected the country’s dual economic character: a deep tradition of artisanal craft and small-scale production alongside episodic phases of state-led industrialisation and, more recently, export-platform development.

Pre-colonial and artisanal foundations. Prior to the Protectorate, Morocco’s “manufacturing” largely comprised artisanal value chains embedded in urban guild structures, textiles, leather, metalwork, ceramics and woodcraft, often linked to domestic consumption and regional trade routes. These activities shaped human capital in craftsmanship, but they were generally characterised by limited mechanisation and low economies of scale.

Protectorate-era industrial introduction (1912–1956). Under the French Protectorate, modern industrial activities expanded primarily to serve colonial economic objectives, including agro-processing, basic construction materials and selected light manufacturing in urban centres. Industrial geography began to concentrate around port-linked nodes, notably Casablanca, foreshadowing the later dominance of Atlantic urban corridors.

Post-independence state-led industrial policy and import substitution. Following independence, Morocco pursued industrialisation through state planning, public investment and the establishment of state-owned enterprises (SOEs). Import substitution policies in the 1960s-1970s sought to develop domestic capabilities in consumer goods and basic inputs. While this created some industrial capacity, it also generated protective structures that limited competitive pressure and export dynamism—outcomes consistent with broader regional experiences (World Bank, 2023).

Structural adjustment, liberalisation and export orientation (1980s–1990s). Macroeconomic stabilisation and structural reforms supported by the IMF and the World Bank marked a turn towards openness, privatisation and investment attraction. Morocco gradually deepened integration with European markets and began laying regulatory groundwork for an export-oriented industrial model (IMF, 2023).

Industrial ecosystems and global value chain insertion (2000s–2010s). The 2000s introduced a more explicit “ecosystem” approach. The Emergence Plan (mid-2000s) and later the Industrial Acceleration Plan (PAI, launched 2014) aimed to develop targeted manufacturing clusters: automotive, aerospace, electronics and offshoring—supported by dedicated industrial zones, training institutes and investment promotion. This phase coincided with the rise of Tangier Med as a globally competitive logistics gateway and the establishment of anchor investors in automotive assembly and aerospace wiring/harnessing (Ministry of Industry and Trade, 2023; Tangier Med, 2024).

Post-COVID adaptation (2020s). The 2020s have been shaped by pandemic-era vulnerabilities, inflation and energy-price shocks, drought-driven macroeconomic stress, and intensifying EU environmental regulation. These forces are pushing Morocco towards supply chain resilience (greater local sourcing), higher productivity, and decarbonisation of export manufacturing. While also highlighting the strategic value of Morocco’s renewables pipeline for “green industrialisation” (IEA, 2023; World Bank, 2023).


3. Overview of the Current Manufacturing Landscape

Morocco’s manufacturing base is diversified but uneven in sophistication. High-performing export sectors (automotive and aerospace) coexist with labour-intensive industries (textiles) and resource-linked processing (phosphates/fertilisers). Manufacturing’s contribution to GDP is commonly reported in the mid-teens in the latest available national and international datasets, while industry (including construction and utilities) accounts for a larger share (World Bank, 2023; HCP, latest available). Employment in manufacturing remains significant, though informality persists in parts of textiles, small workshops and food processing (HCP, latest available; OECD, 2023).

A defining structural feature is Morocco’s insertion into European-led value chains where the country often performs midstream manufacturing functions—assembly, wiring, machining, trimming, packaging, supported by free-zone logistics and preferential market access. Upgrading prospects depend on increasing local value added (materials, design, tooling, engineering), strengthening domestic supplier bases, and improving innovation and quality systems (OECD, 2023; UNIDO, 2024).

3.1 Key Manufacturing Industries

Automotive: the flagship platform (including EV supply chains)

The automotive industry remains Morocco’s leading manufactured export category in recent years, supported by large assembly plants, a dense supplier ecosystem and a logistics backbone anchored at Tangier Med and the Atlantic corridor.

The sector comprises:

  • Vehicle assembly (notably passenger cars and light commercial vehicles),
  • Tier-1 and Tier-2 component manufacturing, particularly wiring harnesses, interiors, seating, metal stamping, plastics, batteries-related subcomponents (in some segments), and tyres,
  • Powertrain and drivetrain components, though deeper engine/transmission manufacturing remains more limited than in Turkey or some CEE locations.

Morocco’s value proposition—fast shipping to European plants, competitive labour costs, improving supplier density, and free-zone facilitation—aligns with European OEM strategies for just-in-time/just-in-sequence production (WTO, 2023; OECD, 2023). The EV transition is reshaping opportunities: Morocco’s established capabilities in wiring harnesses and electrical systems are increasingly relevant to EV architectures, while prospects for battery materials, precursor processing, and battery assembly depend on investment attraction, energy costs, environmental compliance and water availability. Recent public discussion and investment promotion have highlighted Morocco’s potential role in the broader Euro-Mediterranean EV supply chain, though the scale and timing of large battery gigafactory outcomes should be treated cautiously unless confirmed by official announcements (AMDIE, recent publications; OECD, 2023).

Aerospace: a maturing cluster with tiering dynamics

Morocco’s aerospace cluster, centred on Casablanca and Nouaceur (Midparc), has evolved from labour-intensive wiring and harnessing into a more diversified footprint that includes: - Aerostructures and sub-assemblies,
- Machining and sheet metal work,
- Composite components and interiors,
- Maintenance, repair and overhaul (MRO) linkages, though MRO depth varies.

A key issue is tier upgrading: moving from basic work packages (often Tier-2/3) towards higher value activities (engineering, certification, complex machining, systems integration) typically requires sustained investment in quality systems (AS9100), metrology, supplier development and advanced skills pipelines. Morocco competes here with Tunisia (strong wiring and aeronautics heritage), Turkey (larger scale and defence-industrial linkages) and, in higher-end segments, CEE locations embedded in Airbus supply chains (OECD, 2023; UNIDO, 2024).

Electronics and electrical equipment

Morocco hosts a growing base in electrical equipment, connectors, sensors, cable sets and industrial electronics, often linked to automotive and aerospace demand. Activity ranges from labour-intensive harness assembly to more complex components depending on investor profiles. The challenge remains to increase domestic capabilities in PCB assembly, testing, embedded systems, and higher-value electronics design, areas where Turkey and some CEE economies have deeper ecosystems (OECD, 2023).

Phosphates, fertilisers and chemical manufacturing (OCP-centred)

The phosphate and fertiliser value chain is a cornerstone of Morocco’s industrial economy and global export position. OCP’s integrated model: mining, beneficiation, chemical conversion and fertiliser production—anchors a wider chemical ecosystem. Recent global volatility in fertiliser markets has reinforced the strategic importance of Morocco’s fertiliser exports, while also raising scrutiny over energy intensity and environmental performance (World Bank, 2023; UNCTAD, 2024).

A major direction of travel is the pursuit of lower-carbon fertilisers, improved emissions control, and—where feasible, greater reliance on renewables and green hydrogen-derived inputs (e.g., green ammonia) in the longer term. Implementation depends on project economics, water availability and infrastructure for hydrogen/ammonia handling (IEA, 2023; IRENA, 2023).

Agro-processing and food manufacturing

Agro-processing remains structurally important due to Morocco’s agricultural base and export linkages to Europe.

Sub-sectors include:

  • Fruit and vegetable processing (including cold chain-dependent exports),
  • Seafood processing,
  • Beverage and dairy,
  • Olive oil and related agribusiness.

However, the sector’s performance is increasingly conditioned by climate volatility and water stress, which affect input stability and raise costs for water-intensive processing. The competitiveness frontier therefore includes water efficiency, cold-chain optimisation, quality assurance, traceability, and compliance with evolving EU food standards (World Bank, 2023; FAO, recent regional assessments).

Textiles and apparel: nearshoring opportunities amid structural pressure

Textiles and apparel remain major employers and a key export industry, historically exposed to intense price competition from Asia and to compliance pressures from EU buyers. Morocco’s principal advantage is proximity and speed-to-market for European brands (fast fashion, replenishment models), which has gained salience under supply chain disruption and nearshoring trends.

Yet the sector faces:

  • Pressure to decarbonise (energy use) and manage water/chemical impacts (dyeing/finishing),
  • Persistent informality and fragmented firm structures,
  • The need to move towards higher value segments (technical textiles, design-led production, circularity).

Morocco’s capacity to capture nearshoring gains will depend on reliable lead times, quality, and sustainability compliance, with Turkey and Tunisia remaining important competitors in the Euro-Med apparel space (OECD, 2023; WTO, 2023).

Pharmaceuticals and medical manufacturing

Morocco has built a relatively advanced pharmaceutical manufacturing base by regional standards, focused largely on generics, OTC products and domestic market supply, with expanding ambitions in African export markets. The pandemic reinforced the policy importance of local production capacity for medical supplies and medicines, but upgrading requires:

  • Regulatory strengthening and international certification pathways,
  • Greater investment in R&D and bioequivalence capabilities,
  • Supply security for active pharmaceutical ingredients (APIs), often imported.

Recent regional trends include the promotion of local manufacturing as part of health sovereignty agendas, though Morocco’s export scaling hinges on quality assurance, pricing competitiveness and market access in destination countries (WHO-related discussions; national policy statements; OECD, 2023).

Emerging sectors: green hydrogen, e-fuels and new materials

Morocco is frequently cited as a promising location for green hydrogen due to its solar and wind resources and proximity to Europe. Manufacturing-relevant opportunities include:

  • Electrolyser component supply chains (still nascent),
  • Ammonia handling and derivatives,
  • E-fuels (e-methanol, sustainable aviation fuel pathways) linked to maritime and aviation decarbonisation.

Nevertheless, these are capital-intensive and water-intensive industries, requiring robust desalination, grid investment, offtake agreements and regulatory clarity. Many projects remain at MoU/feasibility stage; conclusions should therefore be framed as prospective rather than assured (IEA, 2023; IRENA, 2023).


3.2 Major Companies and Industrial Players

Morocco’s industrial model relies on anchor firms that attract supplier tiers, shape standards, and support training ecosystems. Key players include:

  • Automotive OEMs and ecosystems: Renault (notably Tangier and Casablanca-area footprint) and Stellantis (Kenitra) are central to assembly and supplier clustering, with numerous Tier-1 suppliers in wiring, interiors, plastics and metal components. Supplier ecosystems include global groups specialising in harnesses and electronics, seating, stamping and injection moulding (Ministry of Industry and Trade, 2023; OECD, 2023).

  • OCP Group: A global phosphate/fertiliser leader with significant domestic industrial assets (e.g., Jorf Lasfar industrial platform) and expanding downstream production. OCP’s investment choices influence Morocco’s industrial energy and decarbonisation agenda due to the sector’s scale and emissions profile (World Bank, 2023; UNCTAD, 2024).

  • Aerospace multinationals and suppliers: Firms such as Safran and other global aerospace suppliers have contributed to cluster development and workforce training linkages, with Midparc operating as a focal point for aeronautics industrial real estate and services (OECD, 2023; UNIDO, 2024).

  • Textiles and apparel exporters: A mix of Moroccan groups and foreign-owned or joint-venture suppliers serve European brands, often concentrated in Tangier, Casablanca and other northern corridors.

  • Electronics and electrical equipment manufacturers: International component firms and harness producers operate export platforms aligned to automotive and aerospace demand, though the sector’s high-value design and R&D footprint remains comparatively limited.

Morocco’s SME base is crucial for local content and resilience but often constrained by financing, managerial capacity, certification costs and delayed payment practices. Supplier development programmes and procurement localisation are therefore central to industrial deepening (OECD, 2023; World Bank, 2023).


3.3 Regional Disparities and Industrial Zones

Manufacturing activity is geographically concentrated, reflecting logistics advantages, labour pools and historical industrialisation patterns.

  • Tangier–Tetouan–Al Hoceima: Anchored by Tangier Med, this region has become Morocco’s most visible export manufacturing platform (automotive, logistics, textiles, light engineering). The port’s connectivity and industrial-zone ecosystem reinforce agglomeration economies (Tangier Med, 2024).

  • Rabat–Salé–Kénitra: Kénitra’s automotive platform (including the Atlantic Free Zone) has attracted suppliers and created a northern Atlantic manufacturing corridor with strong road/rail links.

  • Casablanca–Settat: Morocco’s largest and most diversified industrial area, hosting chemicals, food processing, textiles, engineering and the aerospace cluster around Nouaceur/Midparc. Casablanca also concentrates corporate headquarters, finance and service inputs.

  • Fez–Meknes and the interior: More oriented towards agro-processing, traditional manufacturing and smaller industrial estates, with comparatively weaker export-platform density.

  • Oriental and southern/Atlantic initiatives: There has been policy interest in developing Atlantic-facing industrial and logistics nodes and in diversifying regional development outcomes. However, industrial scale outside the main northern/central corridors remains more limited, with constraints related to workforce pools, supplier density and connectivity.

Regional disparities matter for inclusive development: export manufacturing growth has not automatically translated into balanced regional employment, and internal migration pressures continue to shape labour markets (HCP, latest available; OECD, 2023).


4. Infrastructure Supporting the Manufacturing Sector

4.1 Transport Infrastructure

Ports and maritime logistics. Tangier Med is a critical asset underpinning Morocco’s integration into GVCs. Recent port communications indicate continued high throughput and global connectivity, positioning Tangier Med among leading Mediterranean container hubs (Tangier Med, 2024). This logistics capability supports time-sensitive exports (automotive components, fast-fashion apparel) and increases Morocco’s attractiveness relative to North African peers with less globally connected port ecosystems.

Road and rail connectivity. Morocco’s motorway and national road networks support industrial corridors linking Tangier, Kénitra, Casablanca and further south. Rail logistics, while less dominant than road for many manufacturers, benefits from the presence of ONCF freight capabilities and improved passenger mobility via high-speed rail, indirectly supporting industrial labour mobility and business travel.

Air cargo. Casablanca’s airport remains important for high-value, time-sensitive shipments (aerospace parts, urgent components), though air freight costs and capacity constraints can limit scale.

Comparatively, Morocco’s logistics advantage vis-à-vis Tunisia and Egypt is often highlighted in investor narratives, particularly due to Tangier Med’s transhipment scale and the reliability of export pipelines to Europe (OECD, 2023; UNCTAD, 2024).

4.2 Energy and Utilities

Energy system and industrial implications. Morocco has made internationally recognised progress on renewable energy deployment, with large-scale solar and wind projects contributing to generation capacity and to energy security objectives (IEA, 2023; IRENA, 2023). Nonetheless, Morocco remains structurally exposed to imported energy, and industrial competitiveness is sensitive to electricity pricing, grid reliability and industrial access to renewable power contracts.

Decarbonisation pressures. Exporters to the EU face intensifying requirements to measure and reduce embedded emissions. While CBAM initially targets sectors such as cement, iron and steel, aluminium, fertilisers, hydrogen and electricity, its indirect effects can extend through supply chains, procurement standards and customer requirements (European Commission, 2023). For Morocco, the fertiliser and basic materials segments are particularly exposed, while automotive and aerospace suppliers face growing Scope 3 reporting demands from European OEMs.

Water scarcity as a binding constraint. Water stress has become a strategic industrial issue, exacerbated by repeated drought years. Water-intensive activities: agro-processing, textiles dyeing/finishing, chemicals—face operational and social licence risks. Desalination, wastewater reuse, industrial water efficiency and basin-level governance are therefore central to sustaining industrial expansion (World Bank, 2023). Where Morocco pursues hydrogen and e-fuels, water constraints become even more material, increasing the importance of dedicated desalination infrastructure (IEA, 2023; IRENA, 2023).

4.3 Industrial Parks and Free Trade Zones

Morocco’s industrial policy has been operationalised through an expanding network of industrial parks, integrated zones and free zones that provide:

  • Ready-to-use industrial land and utilities,
  • Customs facilitation and export processing regimes,
  • Co-located training and supplier services in some clusters.

Notable platforms include: - Tangier Free Zone / Tangier Automotive City (export manufacturing and supplier clustering), - Kénitra Atlantic Free Zone (automotive ecosystem), - Midparc (Nouaceur/Casablanca) (aerospace cluster), - Additional industrial estates around Casablanca, including long-established industrial districts undergoing incremental upgrading.

The key policy challenge is ensuring that zone-based growth translates into broader domestic spillovers—supplier upgrading, technology diffusion and managerial capability building—rather than remaining enclave-like (OECD, 2023; UNIDO, 2024).


5. Government Policies and Strategic Frameworks

5.1 Industrial Acceleration Plan (PAI) and successor frameworks

The Plan d’Accélération Industrielle (PAI) introduced an “ecosystem” logic: coordinating anchor investors, supplier tiers, training institutions and public support instruments to build cluster competitiveness. While some headline targets in earlier policy documents were ambitious, many analysts credit the PAI approach with consolidating Morocco’s position in automotive and aerospace exports and with improving the investment pipeline (Ministry of Industry and Trade, 2023; OECD, 2023).

Recent policy discourse increasingly emphasises: - Industrial sovereignty and resilience (local sourcing, strategic stockpiles in certain sectors), - Export diversification and upgrading, - Decarbonisation and green competitiveness, - Digital transformation and SME support.

Where newer programmes or updates exist, they tend to build on the ecosystem approach while rebalancing towards innovation, import substitution in selected intermediates, and stronger SME integration (Ministry of Industry and Trade, recent communications).

5.2 Trade policy and industrial integration

Morocco’s trade architecture—including the EU Association framework and multiple bilateral and regional agreements, underpins its export-platform model. Participation in AfCFTA aligns with a longer-term strategy of positioning Morocco as a manufacturing and services bridge into West Africa, though practical gains depend on rules of origin, logistics costs, and non-tariff barriers across African markets (WTO, 2023; UNCTAD, 2024).

A critical forward-looking issue is the interaction between trade preferences and sustainability regulation. Even with tariff advantages, Moroccan exporters must meet EU environmental and due diligence standards, which increasingly function as de facto market access conditions.

5.3 Public-private partnerships and support programmes

Morocco has relied on PPP-like arrangements to operationalise industrial strategy, particularly through:

  • Training institutes aligned to clusters (automotive and aerospace),
  • Investment promotion and facilitation mechanisms,
  • SME finance and guarantee schemes (e.g., through public financial institutions and guarantee agencies).

The effectiveness of these instruments depends on execution quality: speed of administrative procedures, transparency of incentives, and the depth of supplier development support for domestic firms (OECD, 2023).


6. Foreign Direct Investment (FDI) in Manufacturing

6.2 Role of multinational corporations (MNCs)

MNCs in Morocco play three system-level roles:

  1. Platform builders: OEMs and large Tier-1s create predictable demand and bring global production systems.
  2. Standard setters: certification, quality, compliance and traceability requirements diffuse through supplier networks.
  3. Skills catalysts: MNC needs often trigger the creation of specialised training pipelines and engineering roles.

However, MNC-led models can also limit domestic value capture if local firms remain confined to low-margin sub-contracting. The policy question is therefore how to turn MNC presence into capability upgrading: tooling, engineering services, product development, and stronger Moroccan-owned Tier-2/Tier-3 suppliers (OECD, 2023; UNIDO, 2024).


7. Labour Dynamics and Workforce Development

7.1 Labour market overview

Morocco’s labour force is relatively young, yet the labour market faces structural challenges: unemployment (particularly youth), skills mismatch, and informality. Manufacturing provides formal employment opportunities, but job creation is uneven across regions and sub-sectors. Labour-intensive segments (textiles, certain agro-processing) absorb large numbers but face wage and compliance pressures, whereas higher-productivity segments (aerospace machining, advanced automotive components) require scarce technical skills (HCP, latest available; OECD, 2023).

7.2 Skills development and vocational training

The ecosystem strategy has been supported by vocational and technical institutes aligned to industrial clusters, notably in automotive and aerospace. Morocco’s national vocational training infrastructure (including OFPPT) is substantial, yet recurring gaps are noted in:

  • Advanced maintenance and industrial automation,
  • Quality engineering and metrology,
  • Middle management and production supervision,
  • Language and soft skills for integration into multinational environments.

Improving the “last mile” alignment between curricula and factory-floor realities remains essential, particularly as Industry 4.0 adoption grows (OECD, 2023).

7.3 Labour costs, productivity and competitiveness

Morocco’s labour cost competitiveness remains a core attraction, but the medium-term challenge is productivity-led competitiveness rather than wage-based advantage alone. Morocco competes with: - Tunisia on proximity and industrial culture (notably in wiring and components), - Egypt on labour scale and certain process industries (though logistics and policy predictability differ), - Turkey on scale, depth of supplier networks and engineering capability, - CEE on EU proximity within the single market and higher productivity in advanced manufacturing.

For Morocco, the sustainable pathway is to improve total factor productivity via better firm management practices, automation where appropriate, reliable utilities, logistics efficiency, and stronger innovation systems (OECD, 2023; World Bank, 2023).


8. Challenges Facing the Manufacturing Sector

8.1 Structural deficiencies and firm capabilities

Key structural constraints include: - Limited domestic supplier depth in high-value intermediates and capital goods, sustaining import dependence. - Financing constraints for SMEs, particularly for certification, equipment upgrades and working capital. - Low R&D intensity by international comparison, limiting movement into design, engineering services and proprietary products (OECD, 2023). - Management and governance capabilities in smaller firms, affecting quality consistency and delivery reliability.

8.2 Global supply chain dependencies and shock resilience

COVID-19, shipping disruptions, and geopolitical shocks exposed vulnerabilities in:

  • Dependence on Asian inputs for certain electronics, fabrics, and machinery parts,
  • Concentration risks in a small number of export markets (especially the EU),
  • Just-in-time fragility when logistics channels are disrupted.

Morocco’s response has included greater attention to local sourcing ecosystems and to the robustness of logistics corridors. Yet genuine resilience requires diversification of suppliers, strategic inventories for critical inputs, and domestic capability building (OECD, 2023; UNCTAD, 2024).

8.3 Environmental, carbon and regulatory constraints

Carbon compliance (CBAM and beyond). While CBAM’s initial scope focuses on specific carbon-intensive products, its broader signalling effect is significant: EU customers increasingly demand emissions data, renewable electricity sourcing, and audited sustainability practices across supply chains (European Commission, 2023). Moroccan manufacturers in fertilisers, cement-related materials, and potentially future hydrogen exports face direct exposure.

Water stress. Water scarcity is arguably Morocco’s most binding medium-term constraint for industrial expansion and social stability, necessitating major investment in desalination, reuse and efficiency—particularly for textiles finishing, agro-processing and chemicals (World Bank, 2023).

Regulatory and administrative frictions. Firms, particularly SMEs, continue to report burdens associated with permits, land access, and sometimes payment delays. Streamlining and digitalisation of public services remain critical to competitiveness (OECD, 2023).


9. Opportunities for Growth and Transformation

9.1 Green manufacturing, decarbonisation and new energy industries

Morocco’s renewables base creates a potential competitive advantage for low-carbon manufacturing, especially as EU buyers apply stricter emissions criteria. Opportunities include:

  • “Green” automotive components (electrical systems, lightweighting, recycled plastics),
  • Lower-carbon fertiliser production pathways,
  • Renewable-powered industrial zones with transparent guarantees of origin,
  • Circular economy practices in textiles and plastics.

Green hydrogen and e-fuels could become major industrial pillars if Morocco secures bankable offtake agreements, water solutions and grid/port infrastructure. However, given the early-stage nature of many projects, these should be treated as high-potential but execution-dependent opportunities (IEA, 2023; IRENA, 2023).

9.2 Automation, Industry 4.0 and innovation upgrading

Automation in Morocco is uneven: advanced lines exist in automotive assembly and selected aerospace processes, but diffusion into SMEs is limited by capital costs and skills. Priority areas include:

  • Industrial data systems (MES/ERP integration),
  • Predictive maintenance,
  • Quality inspection automation,
  • Digital traceability for EU compliance.

Innovation upgrading requires stronger linkages between firms, universities and applied research centres, alongside incentives that reward product/process innovation rather than capacity expansion alone (OECD, 2023; UNIDO, 2024).

9.3 Regional integration, AfCFTA and South–South industrial expansion

Morocco’s companies, especially in finance, telecoms, construction materials and some manufacturing-related services—have expanded in Sub-Saharan Africa. Manufacturing export expansion under AfCFTA could accelerate, but constraints include logistics costs, variable regulatory regimes and non-tariff barriers. Targeted strategies (regional distribution hubs, after-sales networks, and local assembly partnerships) are likely to be more effective than simple export pushes (UNCTAD, 2024; WTO, 2023).


10. Future Outlook and Projections (to 2030/2035)

Given uncertainty in global demand, EU regulation, climate conditions and investment cycles, a scenario-based approach is appropriate. The following scenarios are qualitative and assumption-driven; precise growth rates vary across forecasters and depend on the latest national accounts and sector statistics (IMF, 2023; World Bank, 2023).

Baseline scenario (most likely): steady upgrading with constraints

Assumptions: continued EU demand for nearshored supply, stable macroeconomic management, incremental improvements in skills and industrial services, and gradual decarbonisation driven by buyer pressure. Water stress is managed but remains costly.
Implications: automotive and aerospace continue to grow, with deeper local content in components rather than a dramatic shift into high-end R&D; textiles stabilises through nearshoring and compliance upgrades; chemicals/fertilisers remain strong but face increasing carbon and water constraints.

Upside scenario: green industrial leap and supplier deepening

Assumptions: accelerated renewables deployment and competitive industrial electricity, successful desalination scaling, major confirmed investments in EV supply chain segments (including battery-related value chains) and/or bankable green hydrogen derivatives exports, improved innovation policy execution and SME upgrading.
Implications: Morocco moves from an assembly-and-components platform to a higher value manufacturing base with stronger engineering services, higher domestic value added, and improved productivity. Export diversification into Africa improves.

Downside scenario: climate stress, regulatory costs and demand shocks

Assumptions: repeated droughts tighten water availability and raise costs; EU regulatory compliance costs rise faster than firms can adapt; external demand weakens; energy import volatility returns.
Implications: slower industrial expansion, pressure on water- and energy-intensive sub-sectors, reduced investment appetite, and risk of enclave outcomes where only the most capitalised exporters survive compliance burdens.

Across all scenarios, Morocco’s ability to maintain logistics excellence, secure competitive low-carbon power, and address water scarcity will be pivotal. The strategic contest will not be solely about cost; it will be about reliability, compliance, and capability depth in an era of geopolitical and climate volatility (OECD, 2023; World Bank, 2023; UNCTAD, 2024).


11. Conclusion: Policy and Firm-Level Implications

Morocco has built one of Africa’s most internationally integrated manufacturing platforms, underpinned by credible industrial ecosystems, anchor investors and world-class logistics through Tangier Med. The next phase, however, requires a shift from scale expansion to capability deepening and green competitiveness.

Policy priorities:

  1. Water-secure industrialisation: accelerate desalination, wastewater reuse and industrial water-efficiency standards, with transparent allocation frameworks for industrial zones (World Bank, 2023).
  2. Decarbonisation as competitiveness: expand renewable power access for industry, strengthen emissions measurement infrastructure, and support CBAM-relevant sectors (fertilisers, basic materials) with credible transition pathways (European Commission, 2023; IEA, 2023).
  3. SME supplier upgrading: finance for certification, tooling, quality systems, and management capability; enforce fair payment practices to protect SME cashflow (OECD, 2023).
  4. Skills and productivity agenda: expand advanced technical training (automation, metrology, quality engineering) and build stronger applied research-industry linkages.
  5. Balanced regional development: connect interior and southern initiatives to export corridors via logistics and skills pipelines, avoiding excessive concentration of formal industrial employment.

Firm-level strategies - Invest in traceability and sustainability compliance (carbon accounting, water stewardship, audited supply chains) to retain EU market access.
- Pursue operational excellence and automation selectively to raise productivity and reduce defect rates.
- Build resilience through dual sourcing, strategic inventories for critical inputs, and stronger supplier relationships.
- Explore Africa-facing growth via partnerships, after-sales networks and local assembly models rather than relying solely on exports from Morocco.

Overall, Morocco’s manufacturing future will be shaped by its ability to convert geographic advantage and logistics excellence into a durable, high-value, low-carbon industrial position within Euro-Mediterranean and African value chains.


12. References

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  • UNIDO (2024, latest available). Industrial development and competitiveness publications relevant to Morocco/Africa.
  • World Bank (2023). World Development Indicators; and Morocco-focused macro/sector assessments (latest available).
  • WTO (2023). Trade Policy Review: Morocco (latest available).