Marrakesh – Economists look at Morocco with optimism after the International Federation of Association Football (FIFA) announced that the Kingdom will organize the 2030 World Cup in partnership with Spain and Portugal, amid expectations that the tournament will open new horizons for the Moroccan economy.
However, the large investments required by this organization raise questions about the feasibility of these expenditures in the long term, the expected economic returns sufficient to cover the costs, and the possible side effects of the investments.
Infrastructure development
Economic analyst Youssef Saud confirmed to Al Jazeera Net that the World Cup is a great opportunity to develop infrastructure, which contributes between 1% and 3% to growth rates, and he expects this to raise Morocco to the top 50 countries in the world compared to the current level of below 80, according to the Davos Index.
It is believed that organizing the World Cup will help achieve Morocco’s goal of reaching $16,000 per capita gross product in 2035, with the expectation of adding between $1.5 and two billion dollars to the Moroccan economy.
For his part, the economic expert and head of the Economic and Social Foresight Center, Ali Al-Ghanbouri, told Al Jazeera Net that preparing for the World Cup is an opportunity to enable Morocco to have the elements for the success of its development plan, which aims to double the domestic product by strengthening the manufacturing sector and attracting foreign investments.
The regulation is expected to have a positive impact on the labor market by creating between 50 and 80 thousand direct and indirect jobs in construction, tourism, transportation and services, which will help achieve the goal of reaching 6% growth and reducing unemployment rates.
Morocco has set a program to invest 87 billion dirhams ($8.7 billion) in the railway sector in the coming years.
Tourism sector recovery
Saud, a data analysis specialist, says that Morocco’s ambition to expand the high-speed train network will lead to raising productivity levels, with easy movement of individuals between the axis that constitutes more than 70% of the country’s economy (Tangier-Kenitra-Rabat-Casablanca-Marrakesh).
He talked about the role of the World Cup in increasing the supply of hotel rooms and improving services, which means a greater influx of foreign tourists, and will allow providing greater opportunities for investors and raising the country’s foreign exchange revenues, which last year reached $10 billion in Morocco, compared to, for example, $115 billion in Morocco. Spanish partner.
Saud adds that tourism is the field that most enables countries to increase the volume of small foreign investments, such as restaurants and services, as the higher the number of tourists, the greater the chances of creating wealth through foreign investment.
It is believed that organizing the World Cup will help achieve the goal of attracting 26 million tourists, and increasing passenger traffic through the Kingdom’s airports and the resulting economic boom.
Last Monday, Moroccan Prime Minister Aziz Akhannouch said that Morocco intends to raise the capacity of the country’s airports to 80 million passengers annually by 2030 from 38 million currently.
Funding sources
To complete all these ambitious projects, the question arises of funding sources, returns and potential risks. Here, academic Youssef Saud confirms that – according to what is available either through the FIFA website or the Moroccan budget – it appears that investment in stadiums does not exceed $1.5 billion, which is a modest number compared to Qatar or Russia or Brazil organized the previous editions of the World Cup, and this is normal because Morocco is part of a joint file, the same speaker explains.
He adds that the investment budget in Morocco is approximately $30 billion annually, and that a large portion of this budget will be transferred to developing transportation systems, facilities, and services in the cities concerned with the World Cup and their surroundings.
Saud pointed out that Morocco could adopt naming rights and push large Moroccan banks and companies to finance part of the development of the stadiums, instead of resorting to the Deposit and Management Fund (a government financial institution).
He said, “In addition to public investment, Morocco is looking for alternative financing solutions through the private sector and partners, especially the Gulf countries, or some donor institutions such as the African Development Bank.”
Fears
Economics professor Yassin Alia expresses “fears based on a digital approach to economic reality,” asking: How can Morocco constitute an exception to basic rules observed during past experiences?
He told Al Jazeera Net that the investment rate in Morocco is about 30% of the gross domestic product, and yet the country only gains one percentage point in economic growth for every 10 percentage points of public investment, while the growth rate in a number of emerging countries reaches 7%, Although the percentage of public investment in it ranges between 20% and 22%.
Alia pointed out that 70% of investments come from the public sector compared to 30% from the private sector, and that there is a trend towards correcting this inverted pyramid, but he pointed out that increasing investment levels seems difficult.
He said that despite the increased levels of tourism activity, confidence in the economy, and the good reputation created by organizing the World Cup, job opportunities will only increase by 0.7%, which is not sustainable, in exchange for high inflation (as happened in the World Cup in Brazil in 2014) and an increase in public and private debt. (As happened in Germany in 2006), and the rise in real estate prices (as happened with the 1996 Olympic Games in Atlanta, USA).
Risks
For his part, economic analyst Najib Aksabi told Al Jazeera Net that the experience of Greece, which entered into an economic crisis after organizing the Olympics in 2004 and whose repercussions are still present, leads us to say that Morocco may be taking a big risk by organizing the 2030 World Cup.
He adds that a number of digital data related to organizing the World Cup are still absent, especially the volume of expenses for building and equipping stadiums, infrastructure, security, health care, and the rest of the conditions imposed by FIFA, in addition to the revenues allocated to cover these expenses.
Aksabi points out that Morocco has been experiencing financial difficulties since the Corona pandemic, coinciding with successive years of drought, adding that the country still depends for its investments on internal and external public debt.
It is believed that increasing the volume of investments will mortgage Morocco with new debts, and that the impact on the labor market will be temporary and linked to the phase of building stadiums and modernizing infrastructure, and not due to raising the level of agricultural production and other sectors, in addition to that the increase in the number of tourists will not continue after the World Cup.
Reassurance
Academic Al-Ghanbouri says that these fears can be dispelled given that the costs of regulation are not immediate, but rather are long-term investments that contribute to transforming Morocco into an emerging country by the year 2035.
He adds that every dirham spent can create economic activity that returns returns equivalent to 2 to 3 times its value, but Al-Ghanbouri urged the need for this to coincide with the establishment of mechanisms to ensure that the financial deficit or external debt does not increase.
Al-Ghanbouri points out that the World Cup bill may exceed $10 billion, which forces Morocco to think about innovative means of financing, such as strengthening partnership between the public and private sectors.
He believes that in previous experiences, there were problems related to poor planning and corruption, which must be avoided by focusing on institutional reforms, ensuring the transparency of contracts related to regulation, and improving the legal framework for investment. Digital infrastructure should be developed and economic activities parallel to the World Cup should be organized.
For his part, Academic Saud confirms that Morocco has pumped large allocations into infrastructure to attract investors, but the challenge lies in this infrastructure generating revenues to avoid any bad consequences.
As for the economic expert, Yassin Aalia, he called for resorting to self-financing to reduce risks, and seriously discussing bearing the burden of regulation with Morocco’s neighbors.
