Morocco - Private sector participation in infrastructure : synthesis and summary

Document of The World Bank Report No. 15059-MOR KINGDOM OF MOROCCO PRIVATE SECTOR PARTICIPATION IN INFRASTRUCTURE Synthesis and Summary February 1997 Private Sector Development, Finance and Infrastructure Division Maghreb and Iran Department Middle East and North Africa Regional Office  EXCHANGE RATE (As of June 1995) Currency unit = Moroccan dirham (DH) DH1 US dollar 0.118 US dollar 1 = Dh 8.43 GLOSSARY OF ACRONYMS ADM Soci&e des Autoroutes du Maroc BOO Build-Own and Operate BOT Build-Operate and Transfer (form of concession) CGEM Confeddration Gen6rale des Entreprises du Maroc CIPEP Comite Interrninisteriel Permanent des Entreprises Publiques COMANAV Compagnie Marocaine de Navigation CTM-LN Compagnie des Transports au Maroc - Lignes Nationales CU Communaute Urbaine DEPP Direction des Etablissements Publics et des Participations FEC Fonds d'Equipement des Communes OCP Office Ch6rifien des Phosphates ODEP Office d'Exploitation des Ports ONCF Office National des Chemins de Fer ONDA Office National des Aeroports ONE Office National de l'Electricite ONEP Office National de l'Eau Potable ONT Office Nationale des Transports OPV Offre Publique de Vente (Public Offer of Sale) RAD Regie Autonome de Distribution dEau et d'Electricite de Casablanca RAM Royal Air Maroc SA Societe Anonyme SCIF Societe Cherifienne des Industries Ferroviaires SMD Societe Marocaine de Distribution (ELYO) Vice President Mr. Kemal Dervis Director Mr. Daniel Ritchie Division Chief Mr. Amir Al-Khafaji Task Manager Mr. Michel Loir, Transport Economist  Kingdom of Morocco PRIVATE SECTOR PARTICIPATION IN INFRASTRUCTURE VOLUME 1. SYNTHESIS AND SUMMARY INTRODUCTION ....................................................................... EXECUTIVE SUMMARY AND RECOMMENDATIONS ..............................1................................ il CHAPTER I: FIELD OF THE STUDY . ......................................................................1 CHAPTER II: WHAT IS REALLY AT STAKE .......................................................................2 CHAPTER III: PREREQUISITES FOR SUCCESS .......................................................................9 A. Designing clear and realistic sectoral policies 9 B. Reestablishing cost pricing and the sector's financial equihbrin .. 11 C. Strengthening the institutional framework 14 D. Developing regulatory capacities .14 E. Promoting competition .15 F. Amendments to the legal franework.16 G. Caling in private consultants .17 H. Developing financial markets .17 T. Limiting subsidies .18 J. Tackling the overstaffing problem up front .19 K. Reaching a consensus 20 CHAPTER IV. PRIVATE PARTICIPATION IN MUNICIPAL SERVICES ....................... 21 A. Water and electricity distribution ................................. .................................. 21 B. Solid waste management ................................................................... 22 C. Urban transport . .................................................................. 24 CHAPTER V. PRIVATE PARTICIPATION IN THE TRANSPORT SECTOR .. 27 A. Completing transport deregulation ...................................................................... ..... 27 B. Ralways ..28 C. Motorways ..30 D. Martime Sector ..32 E. Air transport 35 CHAPTER VI. CONCLUSIONS ON THE STRATEGY TO BE ADOPTED ............. .................. 39 A . O bjectives ................................................................... 39 B. Strategy ................................................................... 39 ANNEXES Annex 1.1: Water and electricity distribution and sanitation ................................................................... 42 A nnex 1.2: Urban transport ................................................................... 43 Annex 1.3: Motorways ............................................................................. 44 Annex 1.4: Ports .................................................. 45 Annex 1.5: Railways .............................................................................. 46 Annex 1.6: Airports ................ ................................... 47 Annex 1.7: Air transport .................................................................. 48 Annex 1.8: Maritime transport ............................................................................. 49 This report, based on the findings of a main mission carried out in June 1995, is a product of a team consisting of Michel Loir (Task Manager), Pierre Guislain (Principal PSD Specialist), Hans Peters (Principal Civil Aviation and Maritime Specialist), Karim-Jacques Budin (Senior Railway Engineer), Michel Kerf (PSD Consultant), Pierre Vicedo (Motorways Consultant), and Maryse Gautier (Municipal Engineer). Input for Volume III was received from Marc Juhel (Port Engineer) and Antonio Pacheco, (Urban Transport Consultant). Mohamed El Mernissi (Consultant) contributed to the analysis of legal aspects contained in Volume II.   INTRODUCTION This report on private sector participation in Moroccan infrastructure has been prepared at the request of the Private Sector Development Project Monitoring Committee on the basis of a mission carried out in June 1995. A first version of the report was sent to the Moroccan Govermment and to the Monitoring Committee in December 1995. In March 1966, it was the subject of a number of presentations and discussions held in Rabat and Casablanca with the Government, the Monitoring Commnittee, and the General Confederation of Moroccan Enterprises (CGEM). The Moroccan Government submitted written comments on certain chapters of the report in June and July 1996, and these comments were taken into account during preparation of the present and final version. The authors wish to thank all those who have contributed to the finalization of this study. This report contains only partial references to the data and statistics for 1995 and 1996 and to the important developments that have taken place in Morocco since June 1995, when the Moroccan authorities started to open up major sectors of infrastructure to private participation. A few examples are included to illustrate these recent developments. Negotiations concerning the electricity production concession at Jorf Lasfar have been concluded with the ABB/CMS consortium. In the municipal services area, elected local officials are expected shortly to approve a contract negotiated with Lyonnaise des Eaux for the transfer under concession to that company of the water and electricity distribution and sanitation services formerly handled by RAD. The private sector has also become involved in solid waste disposal, chiefly in Casablanca, thanks to the award of several concession contracts, while intemational competitive bidding is under way for the collection and processing of hospital waste in the Casablanca-Rabat region. In the transport sector, a number of measures are currently under study or at the implementation stage. Among these are elimination of ONT's monopoly and its conversion into a transport company suitable for future privatization; conversion of ONCF into a socite caonyme, privatization of its subsidiaries, and an ini;rease in private participation in the railways sector in general; opening of the ports sector to competition and launching of an ambitious project to operate a new port, Tanger-Atlantique, under concession; operation under concession of a new toll motorway between Casablanca and El Jadida, etc. In the telecommunications sector (not covered by the study), an important step was the submission to Parliament of a bill to open up the sector to competition and private sector participation. The principal aspects of this bill are the separation of posts and telecommunications, the creation of an autonomous regulatory agency, elimination of the monopoly, and the possibility of total or partial privatization of the sector. In addition, a GSM cellular license is slated to be awarded in 1997 to a second (private) operator. Lastly, a general debate on streamlining of the public enterprise sector and acceleration of the privatization process has been initiated by the Govemment. The debate, in which all the supervisory ministries are involved, is coordinated by the Ministries of Finance, Privatization, and Motivation of the Economy. The general thrust of the proposed reforms to a large extent matches the recommendations  - ii - of the present study. They emphasize refocussing the Government's role on the functions of regulator and catalyst of economic activity, which will involve its withdrawal from many aspects of goods and services production and their takeover by the private sector. The reform program stresses the importance of introducing competition into the infrastructure sectors, since it is competition that is the principal driver of productivity and of improved performance. This partial glimpse of the initiatives and reforms undertaken by the Government since June 1995 illustrates how far the situation has changed since the present study was prepared. The Government is to be congratulated on those initiatives and encouraged to continue the reforms already under way. This will depend on close collaboration among the ministries concerned, as well as on the assistance of experts in sectoral reform and privatization, including economic, financial, and legal consultants. Washington, D.C. December, 1996  - iii - EXECUTIVE SUMMARY AND RECOMMENDATIONS Increasedprivate sector participation - a necessity 1. To maintain an annual growth rate of 7-8 percent, Morocco will have to invest DH 20-30 billion in its major infrastructure sectors over the next ten years. The annual amount of public investment in those sectors between 1988 and 1992 was only on the order of DH 13 billion. Any substantial increase in public financing of infrastructure in the near future is impossible given the tightness of the Government's budget at the present time. It is estimated that the amount of public funds available for infrastructure investment will fall short of actual requirements by around DH 15 billion a year. To support its policy for improving and expanding the various infrastructures essential to its economic development, Morocco therefore has no choice but to seek other sources of financing, specifically in the private sector, a conclusion already reached by the Minister of Finance and various other authorities. 2. Budgetary and financial considerations, while extremely important, are not the only issues justifying increased private sector participation. Even more significant is the urgent need to provide Moroccan producers, whether they belong to the primary, secondary, or tertiary sector, with the infrastructure services they need to become or remain competitive at the international level. In the early eighties, the Government attempted to solve this problem through reform of the public enterprises responsible for those services. This remedy proved inadequate, and the desired objectives were not achieved. Moreover, where a large majority of infrastructure services are concerned, this last decade has seen a worldwide revolution in the way in which those services are structured, delivered, and regulated. The model of the monopolistic public enterprise as a tool for tackling economic challenges is no longer suited to Morocco's present situation. Purpose of the study 3. There is already considerable consensus in Morocco concerning the need to involve the private sector. However, for the moment there is no global strategy for translating this consensus into practice. What are the principal options? What are the obstacles in the way of greater private sector participation in these critical sectors? Which bodies or institutions would be responsible for promoting private initiative in those sectors? What is the legal basis for intervention of this kind? By which economic imperatives should the entire process be driven? Why is it that the various projects about which there has been so much discussion in recent years, concerning opening up of the electricity, gas, and water sectors to private participation, are taking so long to actually be implemented? 4. Those are some of the questions examined in this report, as they relate to two major infrastructure sectors, namely municipal services (water and electricity distribution, sanitation, solid waste disposal, urban transport) and national transport services (railways, shipping lines, airlines, and motorways). The analyses, particularly regarding the intersectoral topics developed in Volume II, to a large extent also apply to infrastructure sectors not covered by this study, such as telecommunications, electricity, gas, and water production and transport, industrial parks, etc. Morocco is in need of a large volume of private investment in the infrastructure sectors, but so far this has not been forthcoming to any great extent. The purpose of this study is to give a global analysis of the situation existing in 1995  -iv - and of the prospects where private participation is concerned, to identify the main bottlenecks, and to suggest various discussion topics and courses of action. Overall strategy 5. New sectoral strategies need to be developed that will reflect a new approach focussing on competition, openness to the private sector, and better quality of service. These sectoral strategies would also have to converge with, and be supported by, the Government's macroeconomic policy (reduction of budgetary deficits and of the public drain on the financial markets, inflation control, etc.) and other complementary policies (financial market development). 6. Promotion of competition is a key objective. The discipline imposed on enterprises operating on competitive markets is the most powerful stimulus for improving performance. The introduction of competition also facilitates the task of the regulatory bodies. Where competition cannot be introduced directly, for example in sectors where there is a natural monopoly, it is often possible and desirable to grant licenses or concession contracts through international competitive bidding among firms preselected on the basis of their experience in delivery of the services concerned. 7. The establishment of a new and efficient regulatory framework with clear-cut rules and with regulatory bodies that are truly independent of the enterprises they are supposed to regulate and of all political and administrative influence, is another priority to be developed at the start of the process of opening up those sectors to private investment. Such mechanisms are essential both to provide investors with the guarantees on which their willingness to invest depends and to protect consumers. 8. An increase in domestic and foreign private investment is one of the conditions for sustained economic growth. This demands the improvement in the public infrastructures and services that is essential if such investment is to show a good return, and hence requires contributions of private capital and expertise to develop those infrastructures and services. With the exception perhaps of a few activities that are less capital- and expertise-intensive, such as urban transport and waste collection, the presence of strategic investors with specific experience in public service management will be required almost everywhere, if the objective is to improve public services and the competitiveness of the national economy. 9. It is also essential to associate the national partners as closely as possible with the implementation of those programs, be they managers or workers in the sectors concemed, Moroccan private entrepreneurs and investors (institutional investors, industrialists, or savers), or consumers and users. 10. To the extent that the majority of the public enterprises concemed are overstaffed, reductions in force will often be necessary in the interests of enhanced efficiency. Private operators should likewise have all flexibility to hire and lay off their own staff. 11. It will also be important to review the entire financial context in which these services operate, and to develop a consistent policy for the pricing of public services, subsidization (where appropriate), the grant of govenmment guarantees (where appropriate), and the absorption by the public sector of the  - v - payment arrears that are often at the root of the problems facing those sectors today. This is particularly true in the case of municipal services, which it is difficult to entrust to private management without substantial improvement in the solvency of the local authorities. 12. The preparation and implementation of programs for private participation, whether through concessions, privatization, or other methods, demands a level of expertise that the Government does not possess. It is essential to bring in qualified and experienced experts to advise the Government on the sectoral reforms that must precede or accompany the entry of the private sector, particularly in such areas as overhaul of the sector's legislative and regulatory framework, establishment of regulatory mechanisms, preparation of bidding documents, and negotiation with the winning bidders. The United Kingdom, Argentina, and the Philippines are among the countries that have adopted this approach. 13. The institutional framework presently existing in Morocco is not conducive to the development of a dynamic partnership with the private sector. Not only are there too many supervisory agencies, but these also operate without mutual consultation or coordination, and without any common strategy or objectives. Municipal services are a case in point. The water and electricity distribution authorities [regies] are subject to dual supervision by the Ministry of the Interior and the Ministry of Finance, as well as belonging to sectors each dominated by a public enterprise, the Office National de l'Eau Potable (ONEP) and the Office National de l'Electricite (ONE), which are their sole providers and sometimes their competitors as well, and which are in tum supervised by the Ministry of Public Works and the Ministry of Energy. Furtherrnore, the pricing policy is driven by the Ministry of Motivation of the Economy and the Interministerial Standing Committee on Public Enterprises (Comite Interministeriel Permanent des Entreprises Publiques - CIPEP). The development of consistent sectoral strategies in such circumstances has proved practically impossible. Where transport is concerned, the existing institutional framework is no better suited to the development of consistent sectoral strategies. The public enterprises in the transport sectors have succeeded in turning business strategies into sectoral strategies, to their own advantage. Monopolies and monopoly rents are quite common. The absence of sound logistical management produces adverse effects on intermodal integration and sector's overall efficiency. 14. The existing institutional framework, both for municipal services and for transport services, encourages maintenance of the status quo and protects certain interests. To break this vicious circle, it is recommended that a special agency be given a clear mandate to implement those programs that are intended to open the way to competition and private participation. In effect, this would simply mean continuing and expanding the approach adopted by the country's highest authorities in 1989 to facilitate implementation of the major privatization program established by Law No. 39-89. The ministry created at that time has now acquired the necessary experience, and could be entrusted with handling implementation of the program for private participation in the infrastructure sectors. However, this is simply one option among several. 15. In addition, discussions should be held concerning the best methods and instruments of private participation and removal of the all existing obstacles. Although each of those numerous obstacles is individually surmountable, their overall accumulation makes the implementation of any project for private participation a more lengthy process than it needs to be, and also a more risky one. In many  - vi - cases, this can lead to private investors demanding certain government guarantees to cover any risks that might arise. 16. Such a review of the institutional and legislative framework governing private participation in the infrastructure sectors could perhaps lead to global legislation in this area. Pending any overhaul of the legislative and institutional framework, however, priority should be given right away to the implementation of a few pilot projects for private participation in selected infrastructure sectors. This would enable the Government to establish its credibility with potential investors, to try out the different participation mechanisms, to draw from such experiments certain lessons useful for the future, and thereby to contribute to the shaping of this new institutional and regulatory framework. Specifc recommendations - Municipal services 17. Where municipal services are concerned, the priority is to clarify responsibilities and the institutional framework itself. In this context, certain functions could either be transferred to a central body responsible for implementing a private participation program at the municipal level, or be supported by such a body while remaining the responsibility of the local authorities. The issue of the communes' insolvency, and hence of their financing, is also critical. 18. Water and electricity distribution. Of the different options for participation put forward in this study, the concession option seems to be the most appropriate, since it would considerably alleviate that sector's burden on the public finances and improve the quality of the public service it provides. Actions are suggested at two levels: (a) Launching of a pilot operation: work with the local officials to select a pilot city for irnplementation of a concession-type operation for water distribution and sanitation services, and/or electricity distribution; set up a team to steer the operation; and hire experts to assist with bid preparation, bid appraisal, and contract negotiation with the operator selected. (b) Reform of the institutional and regulatory framework: - reformn the local authorities' financing systems; - enact framework laws for water, electricity, and the environment (impact on sanitation and solid waste management); - examine and propose a new method of supervision and regulation of those services (for example, through a national regulatory agency); and - propose the necessary reforms for making the transition from pilot program to the stage of at which those sectors are officially opened up to competition and private participation.  - vii - 19. Urban transport. Morocco has acquired useful experience in the area of private urban transport, which should serve to provide it with valuable lessons. The central body suggested above could: - assess Morocco's experience with bus concessions over the past ten years; - prepare standard terms and conditions [cahiers des charges]; - assist the communes in the negotiation and monitoring of concessions; - as a result of those interventions, propose reforms with a more global impact. 20. Solid waste management. A substantial improvement is needed in the area of solid waste management, both to protect public health and to avoid jeopardizing tourism. There are two essential prerequisites for the accomplishment of any sustainable action, namely reform of the local public finances and enactment of effective environmental legislation. Steps should be taken to establish a service organization designed to promote healthy competition among private operators. Specific recommendations - Transport 21. Railways. The option suggested by this study is to entrust management of the railways sector to a private operator under a concession contract. The Government would, however, remain the owner of the basic infrastructure. A recent project supported by the World Bank is designed to convert Office National des Chemins de Fer (ONCF) into a societe anonyme and to settle the pension funding issue. Financial reorganization and management autonomy are a prerequisite for increased private sector participation. 22. Motorways. The first essential step is to examine the economic viability of the motorways program. If the result is positive and would justify continued expansion of the network, recourse to the private sector would be desirable (possibly through the grant of subsidies when the financial rate of return is not high enough). Bid proceedings could be held for the award under concession of the Casablanca-El Jadida segment, as a test of private sector interest in this type of operation. 23. Maritime sector. The study suggests demonopolizing the ports sector. A number of activities currently performed by Office d'Exploitation des Ports (ODEP) are actually competitive commercial services that should be transferred on a non-exclusive basis to private operators. Certain services have more marked monopolistic features: these could be awarded on the basis of terms and conditions clearly specifying the public service obligations incumbent on the private operator concemed. Since Morocco has such a large number of commercial ports, it is also possible to envisage some inter-port competition, which would mean that the ports would have to be owned or at least managed by competing bodies. Where maritime transport is concemed, the study suggests privatizing or liquidating Compagnie Marocaine de Navigation (COMANAV). It also underscores the danger of a return to protectionism. 24. Air transport. The situation of Royal Air Maroc (RAM) gave cause for concem in 1995. However, its new management has launched a recovery program. The privatization stage seems inevitable. RAM is in need of an intemational strategic partner. The longer the decision is postponed, the greater the risk that no buyer will be found. Nearly all profitable airlines today are private. In many  -viii - cases they have been privatized over the past ten years. With respect to Office National des Aeroports (ONDA), it has been running a bloated operation that is in need of rigorous streamlining. Here also, recourse to the private sector, specifically in the form of airport concessions, is indicated with a view to developing the airports' commercial revenue. Certain functions, such as handling, should be opened up right away to free competition. Suggested order ofpriority for actions to be taken 25. The recommended reforms are quite far-reaching, and care must be taken not to minimize the difficulties involved in implementing them. Can these reforms be carried out simultaneously in all the subsectors covered by the study? A selective approach seems better suited to the existing potential in terms of legal and regulatory capabilities at the national level and to the possibility of mobilizing Morocco's productive forces and private capital, as well as more likely to attract foreign investors, for whom the Moroccan economy still contains many unknowns. Actions should be prioritized in light of the relative importance of the stakes involved in each of the subsector reforms within the context of the country's economic policy objectives. Thus any action likely to expedite growth while strengthening the competitive capacity of the Moroccan economy, relieving the government budget of the burden of infrastructure subsidies and eliminating harmful practices [nuisances], should be undertaken without delay. In light of these considerations, the following order of priorities is suggested, to which will naturally have to be added the infrastructure sectors not covered by the present study (telecommunications and energy, in particular): (a) ports: as the obligatory points of passage for most of the country's foreign trade flows, their role is essential, and Morocco would reap considerable benefits from greater productivity and fluidity in the area of port transit; (b) rpflways: their contribution to a better balanced distribution of traffic among competing modes and to the development of multimodal transport will depend on commercialization of their management; reforms are also indicated in light of the need to reduce the heavy financial burden that the present conditions of railways management are placing upon the Government; (c) water and electricity distribution and sanitation: takeover of these services by the private sector will result in an injection of capital to modernize and develop the systems, and in better coverage of people's needs. This should have a favorable impact on labor productivity and enhance the countrys comparative advantages in the eyes of foreign investors; (d) solid waste management: in Casablanca in particular, the deficiencies in this area are such that rapid improvement is an urgent priority; (e) urban transport: the rampant transport crisis in the major cities also justifies rapid action;  - Ix - (t) the other subsectors could also benefit from increased private sector participation, but there is less urgency in those cases. Motorways certainly do not need the level of investment presently envisaged. Maritime transport is to a large extent handled by relatively efficient private shipping lines. Of all the other subsectors, air transport is the most in need of immediate attention, in light of the major financial issues represented by the various options for its restructuring.   I. FIELD OF THE STUDY 1.1 The subject of this study is private participation in Morocco's infrastructure sectors. Volume I contains a brief summary and recommendations, followed by the synthesis and sectoral tables. Volume II is devoted to the major intersectoral topics that are found in any policy for opening up infrastructure services to the private sector, such as the principal obstacles to and constraints upon private participation, institutional framework, regulatory framework, legislative provisions, measures to be taken before these sectors are opened up to private investors, principal methods for assuring private participation, procedures for bidding and the selection of private operators, and financing of the sectors concerned. The eight chapters of Volume III contain a more detailed analysis of the principal municipal services and transport subsectors:1 (a) Munric:pal services: water and electricity distribution and sanitation (Chapter 1) solid waste management (Chapter 2) mass transit (Chapter 3) (b) Transport: ports sector (Chapter 4) maritime transport (Chapter 5) civil aviation (Chapter 6) railways (Chapter 7) motorways (Chapter 8) 1.2 The report contains more numerical data and specific proposals for the transport subsectors, each of which is dominated by a major national public enterprise, than for municipal services, which are characterized by a wide diversity of situations and a large number of national, and particularly local, public enterprises. 1.3 The main purpose of the study is to initiate a dialogue, both among the pertinent institutions in Morocco and between the Moroccan authorities and the World Bank, on the advisability of and options for greater private sector participation in infrastructure financing and management. The difficulties encountered and solutions found in one sector can and should serve as an example, caution, or inspiration for others. This is the only way in which progress can be made in an area which, for many, is so far devoid of all experience. The multisectoral approach is therefore the most appropriate. 1.4 However, the objective at this s age is not to propose a definitive action plan or specific reforms that would be applicable to the different subsectors covered. That can come only from a dialogue at the highest level, followed by choices of options and priorities that only the Moroccan authorities are in a position to make. The most important thing is to identify the principal problems and possible key options. A more detailed study will need to be carried out later, on the basis of the priorities set by the Government. Other infrastructure sectors are not explicitly covered by this study, although reference will occasionally be made to them. Those sectors, which are the subject of other World Bank projects, are principally telecommunications, posts, electricity production and transmission, water production and transport, gas transmission and distribution, trucking, and industrial parks.  - 2 - II. WHAT IS REALLY AT STAKE 2.1 Good infrastructure is essential to economic development. The World Bank's Private Sector Assessment report for Morocco2 identifies infrastructure as an "important and unfortunate exception to the Government's otherwise clear and strong commitment to a private and market-based economy." Pointing to general weaknesses in infrastructure detrimental to competitiveness of local businesses, the report recommends more participation by private investors in various sectors of infrastructure, especially in electricity production, telecommunications, and motorways. Morocco is currently looking at ways of expanding the privatization program approved by Parliament in 1989 beyond the original scope restricted to commercial sectors.3 Infrastructure, still characterized by public ownership, monopolies, and stifling regulations, should thus be the main focus of a second phase of privatization. Seven of the country's ten largest enterprises would be involvecd here. 2.2 The World Development Report 1994 cites examples from around the world of poor management of infrastructure services by public operators. It calls for innovative approaches based on commercial management, competition, and user involvement. Private provision of infrastructure services is considered a promising option, both to supplement tight public budgets and to improve the quality of the services. The relevance of these concepts to the Moroccan case was first tested in a study financed by USAID in 1993,4 which made a useful contribution to identification of issues and sensitization to privatization opportunities. The present report is an attempt to deepen the analysis in fewer sectors on the right balance of responsibilities between the public and the private sectors. 2.3 Good infrastructure contributes not only to the well-being of the population but also to greater mobility of factors and products making local businesses more competitive. Table 2.1 shows key indicators placing Morocco in the middle range of the lower middle-income economies. However, these levels are much lower than those of the industrial countries and the fast-developing countries of Asia and Latin America. For Morocco's competitiveness to increase it will thus need to rise above the middle range of the lower middle-income countries. 2 IBRD: Preparingfor the 21st Century: Strengthening the Private Sector in Morocco. As per Law 39-89, the program covers 112 enterprises (banks, hotels, manufacturing and sales firms), plus their subsidiaries; two oil refineries were added to the list in January 1995, and the deadline for privatization has been extended to December 31, 1998. See Price Waterhouse: Participation du Secteur Prive dans les Prestations du Service Public, August 31, 1993.  - 3 - Table 2.1: Macroeconomic and sectoral indicators | GNP Population Electricj Telecommunications4 Waters Roads' Country US$ Millions Per cap. Network Lines per Lines per Cellular Access to safe water (%) Road Paved per 1994 consumption losses (% 100 employee per 100 density roads (