Morocco : 2021 Economic Freedom Index: Morocco Best in North Africa, 9th in MENA

  • 09 March 2021 / News / 113 / Africa-BI

Morocco : 2021 Economic Freedom Index: Morocco Best in North Africa, 9th in MENA

Despite facing its usual issues of low trust in government and rigid labor laws, Morocco’s performance on the Economic Freedom Index remained above regional and global averages, the latest index has found.

With an “unchanged” overall score (63.3), a sizable decline in trade freedom, and some improvement in areas such as monetary freedom, the North African kingdom ranked 81st in the world and 9th in the MENA region.

“Morocco’s economy remained moderately free this year,” the report found. While the overall performance is somewhat heartening – Morocco is the only country in North Africa to feature in the “moderately free” category – the report added a noted caveat. 

“Three Index areas, in particular, are holding back greater economic freedom” in Morocco, it said. In the first position comes corruption, “which undermines government integrity.” 

The second is the weakness of the judicial system. According to the report, improvement in this area should essentially entail making the Moroccan judiciary “more reliable,” transparent, and effective in the fight against government corruption and other institutional malfeasance.

All the same, and regardless of the COVID-19 crisis, Morocco performed relatively well on the regulatory efficiency and market openness fronts. The country’s overall performance appears to be one of lingering obstacles, a slightly unchanging institutional environment, and occasional bursts of investment energy and regulatory changes.

While performance in most areas (labor freedom, government integrity, judicial effectiveness) remains either despairingly low or encouragingly lukewarm, the business and trade figures are moderately high and enlivening. 

Particularly encouraging are the country’s scores on business freedom and monetary freedom. 

As the report put it, “foreign and domestic investors are generally treated equally under the law. The competitive financial sector continues to grow and offers a range of financing options. The stock exchange does not restrict foreign participation.”

In the MENA region, the UAE ranked first with an overall score of 76.9. Following were Israel (73.8), Qatar (72), Bahrain (69.9), and Saudi Arabia (66).

Performance was lowest in North Africa, where only Morocco performed above global and MENA averages.

Tunisia, which ranked 10th in the MENA or 2nd in North Africa, had an overall score of 56.6. The country ranked 119th globally, with challenges including low trust in government and the judiciary, as well as worsening levels of financial and investment freedoms.

“This year,” the report found, “Tunisia’s economy remained in the ranks of the mostly unfree where it has been for more than a decade, despite the hopes for significant liberalization that were raised by the 2011 Arab Spring.”

Next in line is Egypt. The country has an overall score of 55.7, while ranking 11th in the MENA and 130th in the world. Despite steady improvements in 9 of the 12 categories computed by the Economic Freedom Index, the country’s overall scores still remained below global and regional averages. 

“Although the Egyptian economy has been in the mostly unfree category since the inception of the Index in 1995, the country improved its economic freedom score this year for the third year in a row,” the report noted. 

Judicial ineffectiveness, extremely low trust in government integrity, and a large public debt are some of the lingering obstacles standing in the country’s route to greater economic freedom.

In an even lower, or more troubling, position than Egypt’s and Tunisia’s “mostly unfree” economies is Algeria’s “repressed” economy. With an overall score of 49.7, the country ranked 13th in the MENA and 162nd globally. 

Like Egypt, Algeria’s index shows slight improvements in various areas. However, the report added, “to put the country on the path to greater economic freedom, the government needs to strengthen the judicial system and other rule-of-law institutions.”

While the country’s ongoing anti-establishment protests may have played a role in keeping anxious investors at bay, even more concerning is the pointed deterioration in government integrity and the country’s low performance on the “Rule of Law” index.

“The judiciary is generally weak, slow, and subject to political pressure. Cronyism and corruption plague the business and public sectors, especially in energy,” the report found.

Sitting at the bottom of the regional rankings is Iran: 14th in the MENA, 168th in the world, and an overall score of 47.2. 

“The Iranian economy remains in the ranks of the repressed where it has been for all but four years since 1996 when it was first included in the Index,” said the report. 

“The government and powerful interest groups that dominate the economy and are mostly linked to the security and religious establishments are largely opposed to economic liberalization and reengagement with international businesses.”

Libya, meanwhile, was not ranked in this year’s index, principally “because of the lack of reliable data.” 

The country’s main political and economic stakeholders are vigorously grappling with the far-reaching consequences of the post-Qadhafi crisis, with a mix of high hopes and undimmed anxiety in the wake of the recent, UN-assisted ceasefire

In many regards, however, the report warned, enthusiasm for the UN-led political  process is mostly dwarfed by “ongoing political instability, security threats and military conflict, capital flight, oil production problems, and low global oil prices.”