Marrakech Economic Over Dependency on Tourism

July 9, 2008 - PRLog -- Marrakech may have fallen victim to its own success. The tell-tale signs are all pointing towards that direction.  Inflation is at an all time high, real estate prices have sky rocketed and overnight stays has been decreasing over the past several months. The city’s over-dependence on tourism is becoming a real threat to its economy.

The king’s speech at the 2001 tourism conference in Marrakech marked a turning point in policy.  The government presented Vision 2010 as Morocco's national tourism strategy.  The main objectives were to attract five times as many visitors in 2010 as in 2002 and create 600.000 new jobs in hospitality and tourism sector. In 2002, Marrakech benefited from a 200 millions dirham (27.4 Million USD) endowment established by the King of Morocco. The red city became the jet-set capital of Africa.

Building on its momentum, Marrakech has capitalized on its competitors unfavorable  environment.  The surge in terrorism activity in Egypt in 2002, the bird flue scare in Turkey and terrorist threats against tourist sites from kurd separatists have all benefited tourism in Morocco.

Over the next few years, Marrakech would opt for tourism as a strategic development path. Tourism became the red city largest industry. Thanks to its exotic culture, its landscapes and proximity, a mere three hour flight from any main European capital, Marrakesh has attracted over two million tourists in 2007.

Huge investment from the Middle East remain a very important aspect of the foreign involvement in Marrakech tourism industry. After September 11, many Middle East investors faced with rising difficulties when investing in Europe and the US turned to Morocco as a friendly Islamic country  with great investment potential.
The city has attracted more then 161 Billion MAD.


Don't put your eggs in the same basket..

From an economic viewpoint the economic return of tourism in Marrakech is undeniable, but there is a flip of the coin very few in the Moroccan government want to look at. There is no economic activity without external diseconomies.

The upswing of prices has been remarkable in Marrakech. It has affected all sectors without expection according to the Haut Commissariat au Plan (HCP). Marrakech is considered today the most expensive city in Morocco. This label does not sit well with both tourists and locals.

Local officials have been trying to shed off this image. Abdellatif Kabbaj, “the myth of the expensive city is false, categorically false”. This statement contradicts the HCP number.  The cost of living index during the first 5 months of 2008 are higher than the national average by 2.7 points. It has reached 184.9.

A few years ago, Marrakech was sold as a tourist destination where life was simple and affordable.  Between 2003 and 2007 the price of land doubled, thanks to real estate speculators, the increase of the price of raw materials and wealthy clients looking for state of the art construction. A few weeks ago, a real estate agency was advertising in the Financial Times a 1500 square meter house for 6.8 million dollars in Marrakech. That same agency is also offering for sale a one thousand square meter villa in the outskirts of St Tropez for 4.25 Millions dollars.

This euphoria has hit all sectors of the local economy. As tourist can afford to buy items at higher prices, retailers have increased their prices of existing products and provide more expensive goods. Local residents have had to pay for more expensive goods. As retailers selling to tourist can afford to pay higher rents, these costs are passed on to the local consumer as well. Local consumers and tourists alike have been complaining about these price increases, which are sometimes a higher than prices in Europe. These inflationary tensions have spilled over into Morocco economy at large and contributed to a rise in general inflation. In some instances the locals had to scale down and the cut down on their quality of life.to accept a lower quality of life than they enjoyed without tourist.

This Marrakech euphoria has spawned a policy of “business opportunism” that will turn out to be detrimental in the long run. Some unscrupulous taxi drivers, restaurants and small shops owners, have been charging exorbitant prices.

But how can local officials prevent this excessive pricing? They adhere to the theory that in a free market economy there is little the government can do against these sort of abuses. They have implemented regulations to deter taxi drivers and restaurants from overcharging their clients. But the lack of enforcement of these regulations makes them inefficient and ineffective. It amounts to window dressing and fails to in its effort to reassure the international public opinion.


Economic over-dependency

In Marrakech there is not other major economic activities besides tourism.  There is no alternative.  The choice is not whether to pick “Manufacturing or Tourism” but rather “Tourism or unemployment”.

The numbers speak for themselves.  Between 2003 and 2007, investments in Marrakech reached over 158 Billion Dirhams, with the tourism sector claiming the lion share of 72%, 27% went to real estate and less than 1% went to commerce, agriculture, artisanat and services combined. However, labor and land used for tourism have an opportunity cost local official have chosen to overlook for years. The over-dependence on tourism is a double-edged sword.

As fewer tourists hit the road this holiday season, local officials in the tourism industry are worried. The city of Marrakech has yet to start a long overdue alternative economic development plan.


Karim Zouiyen
Morocco Newsline