A ghost is roaming Moroccan social media these days – the ghost of Wa-Sal marketplace. Flamboyantly advertised as the new local challenge to international e-commerce business, this new Moroccan “Amazon” is designed to turn North-West African online shopping upside down. Its official launch may be expected soon. In the meantime, the powers of business and government seem to have entered into an alliance to roll out the red carpet. Steering right through a rising storm of public outcry, Moroccan big business appears determined to conquer e-commerce in its tried and tested manner: market distortion through cozy government relations. An analysis.
Every third Moroccan has bought at least one item online last year. On comparative terms, especially with regards to Western Europe, these figures are hardly impressive. European countries surpass at least 65% online penetration each year. Yet it’s the global growth trajectories in e-commerce where emerging economies like Morocco manage to cause a stir. Surfing the wave of emerging economies’ rapidly increasing access to fast internet and improved road infrastructure, online shopping in Morocco increased by a stunning 21% in 2021, thereby surpassing the global average of 15% considerably [1]. A phenomenon that is in part owed to Morocco’s strict Covid-measures, but is nevertheless bound to stay, as economic forecasts for the e-commerce sector project Morocco to continue outperform the global average for the years to come.
Unlike Western Europe, however, where online shopping is dominated by giants such as Amazon or Zalando, Moroccan ecommerce is considerably more diversified. The top three ecommerce businesses account for no more than 5% of total sales in Morocco, whereas in Germany, they do for five times this amount. Global players such as Amazon and Alibaba are less prominent and still in a developing stage. These figures indicate that tendencies of e-commerce oligopolisation we observe in the Western world have not yet been mirrored in Africa in general, and in Morocco in particular. A fact that is bound to change, if we consider the latest expansion strategies of Amazon and Alibaba on the African continent. While the world leader Amazon is largely absent in Morocco, its announced entrance into South African and Nigerian markets sent competitors’ share prices nosediving [2]. But even if Amazon and others have their eyes on Moroccan e-commerce, right now there’s still much room for a comprehensive e-commerce approach in a fast-growing and promising market. A window of opportunity national players are rushing to close now – both economically and politically.
A New Moroccan Amazon, A New Moroccan Tariff System
Wa-Sal is the keyword roaming Moroccan social media these days. Since late 2021, news outlets in Morocco and beyond have announced the launch of a new domestic online marketplace headed by esteemed Moroccan businesswoman and première dame Salwa Akhannouch. Repeatedly crowned most influential woman in Arab and African business, she heads with Aksal Holding one of the biggest companies in Morocco and is invested in almost all economic sectors, most notably retail of luxury goods. Over the course of the last decade, Aksal pursued a range of ambitious customer experience projects such as the Morocco Mall in Casablanca, Africa’s biggest shopping centre, that profoundly altered Morocco’s urban retail landscape. This gigantistic approach shall now be elevated to the digital sphere, where Aksal is striving to capitalize on the favourable business conditions introduced above.
While the much-awaited Wa-Sal marketplace is now already behind schedule, the political altering of the regulative landscape nevertheless seems to prepare the stage for its launch. An adaption of tariff customs was looming since spring, but the governments evasive and confusing communication sparked considerable controversy in the build-up to the decree. Effective since 1st of July, the Moroccan government now amended custom tariffs taxation decree 2.77.862 of 1977 to end existing import tariff exemptions for private consumer goods up until 1250 MAD in value. Officially, this is justified in the name of consumer protection and fraud prevention laws [3]. Yet with an average online purchase value of just 400 MAD in 2021, it seems evident that such legislation primarily affects Moroccan private consumer goods. And it comes amidst economic forecasts projecting e-commerce private goods importation to double this year as opposed to 2021. The main disadvantaged players are Chinese giants Shein and Alibaba, wo have a history of strained relations with Moroccan custom duty, and whose prices – according to Moroccan consumers’ rage on social media – have already spiked in the wake of the new legislation.
Tangible Effects of the New Tariff System?
But what exactly does that entail for Moroccan consumers? Let’s submerge into the nitty-gritty of Moroccan importation tariffs and try to illuminate consumer consequences. The importation of, for example, one standard battery-powered flashlight from any international e-commerce platform will cost about 25 EUR, or 258 MAD. The alkaline batteries required to operate it are sold for about 8 EUR a pack, equalling 82 MAD. Together, Moroccan consumers pay about 340 MAD excluding shipping. Up until last week, this would be the price Moroccans pay, since private consumption goods not exceeding 1250 MAD were exempt from import tariffs. With the amended legislation, however, Moroccans now pay 2.5% import tariffs on the flashlight and 17.5% on the batteries, according to figures of the Moroccan Administration des Douanes et Impôts Indirects. Hence, the same purchase stands now at 361 MAD, a price increase of about 6%. From a consumer perspective, these figures seem – despite current levels of inflation – only moderately enraging. Supply-wise, however, they nevertheless offer domestic e-commerce – exempt from such tariffs – a considerable comparative advantage. A windfall for emerging domestic e-commerce businesses like Wa-Sal, and one that critical Moroccan economist Hicham El Moussaoui suggestively termed “perhaps just a coincidence” [4].
Yet in a world where politics and business are (quite literally) in bed together, there’s no such thing as coincidence. And despite their government claiming otherwise, Moroccans are well aware of the highly distortive nature of the new import legislation. Their judgements, however, appear to be surprisingly mixed. Alongside liberal-minded commentators highlighting the corrupt and market-distorting nature of such legislation, there are also significant nationalist voices with a radically different message. While acknowledging the distortive ramifications of the new legislation, they praise the latter’s protectionist nature for redistributing wealth away from foreign giants such as Amazon and Alibaba, and towards genuine Moroccan business. Regardless of the controversial political economy of trade protectionism in late developing countries, such nationalist arguments can and must be criticized on a more fundamental nature: their utter ignorance of history. Post-independence Moroccan economic history has witnessed a veritable cascade of highly distorting crony-business legislation, and not once did it lead to more favourable macroeconomic environments.
Everything Must Change, So That Everything Can Stay the Same
In many ways, the ascension of Aziz Akhannouch, the country’s second richest man after the king, to Prime Minister was the culmination of roughly 30 years of crony-capitalist networking. Cozy business-politics relations are a ubiquitous feature of Moroccan post-independence power politics. Up until the late 1980s, the Moroccan state extensively rewarded loyal businessmen with preferential access to state rents, usually in the form of mining, fishing and transportations licenses. It is in this very context that Afriquia Petrol, headed by current prime minister Aziz Akhannouch’s father, led the foundation for Aksal Holding’s current position [5]. It goes without saying that these rents accelerated oligopolisation, impaled true competition at the expense of consumers and prevented the emergence of strong national SMEs. In the 1990s, with the onset of neoliberal reformism in the region, state-business dependency increasingly morphed away from direct rent distribution and towards forms of preferential access to government regulation and arbitration. Yet crony networks retained and even sustained their grip on the economy. Vast so-called liberalization campaigns in the early 2000s rapidly liberalized the domestic gas sector without concomitant state control, which led to an unprecedented centralization of the market. Aziz Akhannouch’s Afriquia Petrol emerged with 30% market share as the main beneficiary [6]. Again, consumers – especially lower income-strata – were hit hardest. In addition to arbitrarily high consumer prices due to a lack of real competition, scholars have shown crony business relations to – directly and indirectly – prevent the emergence of a competitive formal private sector without government connections. This, in turn, is one of the key drivers of the country’s burgeoning informal economy, and a major grievance behind the Arab Spring protests of 2011 as well as the Afriquia-boycotts of 2018.
In the realm of trade policy, crony networks are known to play an important, yet less direct role to date. Recent evidence suggests, for instance, that sectors with strong crony presence receive substantially higher levels of non-tariff protection (e.g. non-tariff labelling and ingredient requirements) in bilateral trade agreements with the EU [7]. The transgression of crony-tailored trade amendments into the realm of direct tariffs is thus – while a continuity by result – a remarkable rarity by method. Another sign that Moroccan cronyism has retained its troublesome torque and is leaving the Covid-19 crisis with a remarkable self-confidence, eager to capitalize on the country’s accelerating digitalization. Wa-Sal Marketplace, a catchy inflection of its founder’s name syllables, reveals its true colours in its arabic translation. The Arabic verb wasala can be translated as “arriving”. With Salwa and Aziz Akhannouch meddling in Moroccan trade policy to lubricate their e-commerce market entry, Moroccan cronyism has finally arrived in the digital age.
Damian Berger is Managing Partner of Ishtar MENA Analytics and our Senior Analyst for the Maghrib Region. He studied in Zürich, Rabat and London and his current research focuses on urban space and authoritarian rule in Morocco. Damian Berger is blogging from Rabat.
[1] See https://ecommercedb.com/en/markets/ma/all [2] See https://www.businessinsider.com/amazon-to-expand-into-5-countries-by-early-next-year-2022-6?r=US&IR=T [3] E.g.: https://www.moroccoworldnews.com/2022/06/349788/starting-july-1-morocco-will-impose-new-import-tariffs-on-all-online-purchases [4] Hicham El Moussaoui on Twitter (@Hirchman), 17.06.2022. [5] E.g. see Ani Apresyan (2018): Neoliberal policies and evolution of crony capitalism in Morocco and Tunisia. [6] See Merouan Makouar (2018): Beyond the Model Reform Image: Morocco's Politics of Elite Co-Optation. [7] See Ruckteschler, Malik and Eibl (2022): Politics of trade protection in an autocracy: Evidence from an EU tariff liberalization in Morocco.
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