Morocco - Agromarketing and Productive Services

Report No. PIC4949 Project Name Morocco-Agromarketing and Productive Services (+) Region Middle East and North Africa Sector Agro-industry Project ID MAPE42758 Borrower Kingdom of Morocco Implementing Agency Ministry of Agriculture 51, avenue de France Agdal/Rabat, Morocco Tel: 212.7.76.94.31 Fax: 212.7.76.94.19 Date initial PID prepared April 1994 Date this update prepared March 1997 Projected Appraisal Date March 1999 Projected Board Date August 1999 Background. 1. Morocco is entering a critical phase in the adjustment program where structural reforms need to be deepened and the basis for sustained growth established. Although the adjustment program has achieved macroeconomic balances and policy reforms that have improved sectoral efficiencies, growth must be accelerated if these reforms are to persist in the face of extensive poverty and unemployment. The basis of this growth must rest with the private sector. However, to create a favorable environment for private investment, certain economy-wide reforms are needed and sectors with particular promise must be promoted. The Government and the Bank have agreed on a Private Sector Development Program (PSDP) to assist in developing the private sector and establishing the basis for sustained growth. Several Bank-financed projects are already helping finance this program which is also supported by other financial institutions and the European Union. 2. The proposed loan would address the agro-industrial sector's high potential for private sector expansion. Substantial analytic work has identified the agro-industrial sector as having high potential for growth, export earnings and employment creation. However, this work has also discerned and catalogued several key areas in policy, institution (the delivery of support services, e.g. quality management) and public infrastructure which will need to be addressed if this sector is to expand. Furthermore, because an efficient agro-industrial sector is required to provide the market for agricultural products and to enhance value added, the development of agro-industries is critical in alleviating rural poverty and realizing gains from the massive resources invested in irrigation (16 percent of annual public investment for the last two decades). The favorable Moroccan climate, and its proximity to  important external markets portend an important future for agro- industries once catalytic reforms and infrastructure investments have been made. The purpose of the proposed operation is to assist in realizing the potential in this important sector. Project objectives. 3. The objective of the project is to promote private sector development in agromarketing and provision of support services. Project description 4. The project would focus on regulatory and institutional strengthening including technical assistance as a first phase of a longer term program to improve agromarketing. Key activities would include, inter alia: (i) wholesale markets for fruits and vegetables along the Agadir-Tangiers axis and selected slaughterhouses; and (ii) the Casablanca Grain Exchange. Since these large investments are divisible into individual services, the project would seek concessional arrangements for their operation and management by private parties or through professional/interprofessional associations. 5. The project would: (i) develop the regulatory and institutional framework for ensuring the public health, product information, environmental and consumer safety aspects of quality control; (ii) develop a system of quality management by refocussing the relative roles of the public and private sector support services; (iii) develop the exchange of technical and market information between domestic enterprises and food technologists and foreign counterparts, e.g. conferences, international food fairs; (iv) develop norms and standardized contracts for many major agricultural commodities; (v) develop training programs on risk management -- in particular, hedging techniques using forward contracts, and futures and options markets; and (vi) strengthen professional and interprofessional associations and cooperatives. 6. The project preparation team would work closely with the Ministries of Agriculture, Interior and Transport to reform the regulatory framework affecting marketing infrastructure and transport. Project cost and financing 7. The total project cost is estimated at US$100 million with an implementation period of five years. The Bank loan is expected to be US$30 million and the balance financed by the Government of Morocco (US$20 million), private sector (US$10 million) and other donors (US$40 million). Project implementation 8. Implementation would be assured by an Inter-ministerial Committee chaired by the Secretary-General of the Ministry of - 2 -  Agriculture. Project sustainability 9. Project sustainability would be ensured by maximizing private participation in financing and managing infrastructure. Contact Point: Ms. I. Tsakok, Task Manager The World Bank 1818 H Street N.W. Washington, D.C. 20433 Telephone No.: (202) 473-2822 Fax No.: (202) 522-1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending April 11, 1997. - 3 -  Annex Environmental Aspects The preparation team will assess the environmental implications of any infrastructure investment financed. The technical assistance studies to privatize public commercial enterprises (oilseeds, and wine) will also assess the environmental implications of the activities of these enterprises. If the project finances any line of credit which in turn finances agro-processing enterprises, the participating bank is responsible for the environmental assessment needed. -4-