The Policy Center for the New South estimates that the deadly Sept. 8 earthquake caused a total economic loss of nearly three Bln MAD or about 0.24% of Morocco’s GDP in 2023, according to a new report entitled “Assessing the Economic Impacts of Al Haouz Earthquake: Damages and Recovery Strategy.” The report makes a number of significant recommendations for improving Morocco’s reconstruction efforts.
Damage Assessment
The study shows that the areas that were most devastated experienced significantly sharper drops in economic activity than others, with Al-Haouz province falling 10.2% and the larger Marrakech-Safi region seeing a drop of 1.3%.
Although the 6.8-magnitude earthquake took a significant human toll, overall there was minimal economic damage, particularly on a macroeconomic level. Morocco lost over 3,000 citizens, while more than 4,600 were injured, and nearly 60,000 structures were either entirely destroyed or partially damaged, primarily in the regions of Al-Haouz, Taroudant, Chichaoua, and Ouarzazate, according to the paper.
To measure the economic impact, the researchers determined that the government’s planned infrastructure investment in each affected province reflects the actual loss of capital assets.
Running simulations on an economic model, they discovered that Al-Haouz alone was responsible for 53% of the gross regional product (GRP) losses among the six most affected regions, reaching around MAD 1.2 billion. Taroudant suffered the second biggest blow, with a drop of MAD 739 million in GRP.
The provinces of Chichaoua, Marrakech, Ouarzazate and Azilal together recorded losses of around 305 million dirhams.
The earthquake impacted mostly hilly and rural regions with high poverty rates. Even before the tragedy, the multidimensional poverty rate in the impacted zone was 18.5%, more than double the national average.
The province of Azilal had the greatest vulnerability rate at 25%, indicating that many inhabitants were already in danger of sliding into poverty due to their socioeconomic status.
Morocco’s Recovery Plan
Morocco’s 120 Bln MAD recovery plan, now underway, has two primary components. The first is a three-way investment of 22 Bln MAD for short-term objectives between 2023 and 2025, eight Bln for emergency household help and residential rehabilitation, and 14 billion for infrastructure rebuilding.
The second, and larger, component is intended to stimulate economic growth in the High Atlas area over time. 98 Bln MAD will be invested in the future although the specifics are unknown.
The researchers have therefore devised three financing alternatives. The first option is to source 100% new money, such as by borrowing; the second is to divide new money and reassigned investment 50/50; and the third is to get 100% reallocated investment from the budgets of other items.
The models indicate that the entire 120 Bln MAD plan will enhance national economic growth by only 0.03% points per year on average between 2024-2028.
According to the research, the High Atlas provinces would see significant increases in GRP growth under any of the financing options.
The authors attribute the government’s fiscal measures and commitment to debt sustainability to restoring market confidence. Morocco also received a five Bln dollar Flexible Credit Line from the IMF to protect against potential balance-of-payments constraints.
Reconstruction Efforts
For the reconstruction effort, the researchers underline the significance of customizing restoration efforts to each province’s unique circumstances.
The authors suggest that when selecting how to transfer resources across impacted and unaffected regions, authorities must strike a compromise between efficiency and equality. They argue that promoting equality may be important in certain situations, even if it means sacrificing some economic efficiency.
Rebuilding after the earthquake also raises significant cultural and structural challenges. The earthquake exposed gaps in understanding of rural realities and traditional building practices, particularly in the High Atlas where many communities have resisted proposals for temporary rehousing and standardized reconstruction.
Recommendations
The Policy Center made the recommendations in three key areas:
Respect for local traditions: Incorporate traditional building methods that are not only culturally appropriate but also earthquake-resistant, contrary to certain technocratic perceptions that regard them as outdated.
Dialogue with communities: Maintain open and continuous communication with local populations to ensure that reconstruction plans meet their real needs and aspirations, rather than simply imposing top-down solutions.
Managing perceptions and expectations: Navigate the challenges posed by social networks and public expectations, which can sometimes distort priorities and complicate reconstruction efforts.
Eduardo A. Haddad, Karim El Aynaoui, Abdelaaziz Ait Ali, Mahmoud Arbouch, Hamza Saoudi, and Inacio F. Araujo collaborated on the study, which was done using an interprovince inter-industry Input-Output (IIO) table for Morocco.
The Policy Center for the New South is a Moroccan think tank dedicated to improving economic and social public policies that place Morocco and the rest of Africa as vital elements of the global South.