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The World Bank Group's Engagement in Morocco 2011-21

Chapter 6 | Conclusions and Lessons

During the evaluation period (2011–21), Morocco has started to fundamentally rethink its approach to development, culminating in its NDM. This period was a time of transition for Morocco. The country responded to the Arab Spring by adopting a new, more inclusive constitution. It engaged in ambitious reforms to its pension system, education policy, and agricultural policy, among others, which led to reduced poverty, expanded schooling, and greater access to water and electricity. The Bank Group actively supported these reforms through policy dialogues that led to budget support and analytical contributions to the government. However, about midway through the evaluation period, it became clear to the World Bank and its government counterparts that Morocco’s development progress had stalled—the country was unable to sustain its economic convergence with southern Europe and consolidate its development momentum. As a result, the authorities began experimenting with a new development trajectory that included more multisectoral work, results-based budgeting, decentralized governance, modernized social protection systems, and a reduced state presence in the economy. The Bank Group played a central role in helping Morocco test these new implementation modalities and learn from other countries’ innovations. It also proposed a new development approach that helped the government question the relevance of its previous one, and eventually, the authorities decided to establish an entirely new model. The NDM starts with the recognition that key systemic obstacles have hindered Morocco’s path toward upper-middle-income status. These systemic obstacles, which this evaluation covers in chapters 2 through 5, include incoherent public policies, an uneven economic playing field that favors large corporations and SOEs, weak public implementation capacity, low participation of citizens in civic and economic life, and low involvement of subnational actors in the country’s development.

The Bank Group’s strategy became more relevant and selective during the evaluation period. The Bank Group committed $11.2 billion in operational, policy, and analytical contributions over this time, particularly in private sector–led growth, human capital development, inclusive and sustainable development, and improved governance. During the FY10–13 strategy period, the Bank Group met Moroccan authorities’ fast-growing demand for budget support across sectors. This led to the proliferation of development objectives in the country strategy—44 across 12 outcome areas—and an overreliance on single-sector DPF. The two subsequent strategy periods, covering FY14–21, were more selective—only 12 objectives across 3 outcome areas. The Bank Group applied lessons from the 2017 CEM and 2018 SCD by increasing its focus on governance, citizen voice, and institutional strengthening. It shifted its focus away from passing single-sector reforms in the first half of the evaluation period toward enabling reform implementation and multisectoral solutions in the second half. The Bank Group rebalanced its use of instruments to support this shift, scaling down its reliance on DPF and increasing its use of PforR, which was more adept at supporting the government’s enhanced results orientation. Over this period, IFC ramped up its advisory services to help both the government and private sector clients make progress in implementing reforms.

The Bank Group found ways to maximize its impact in a politically sensitive country context and crowded aid environment. The Bank Group achieved this goal through several approaches. First, it capitalized on its management of global benchmarking data to initiate dialogues on key policy reforms to improve business competitiveness, access to finance, and ECD. IFC, for its part, was able to use its advisory work to help reform Morocco’s business environment and financial architecture, which led to sectorwide impacts. Second, the World Bank took a less prominent role in supporting reforms when its up-front presence could have complicated those efforts. This was the case during the first phase of Morocco’s pension reforms and the government’s reshaping of its development model. Third, the World Bank used a flexible approach to maintain a long-term engagement with the government in certain thematic areas, such as agriculture policy. The World Bank’s flexible and adaptive approach, informed by learning, also contributed to successful education and irrigation reforms. In policy areas where the Bank Group was perceived as less flexible, such as industrial policy, it lost direct influence with government officials but maintained relevance through its analytical work, which ultimately gained traction. Fourth, the World Bank tailored its services to Morocco’s development context and political economy to impact development policy. For example, the World Bank used the CEM as a platform to engage in dialogue on sensitive reforms; the report spoke hard truths about development needs without crossing politically sensitive red lines. As a result, the CEM substantively informed the country’s new development trajectory. By contrast, when the Bank Group failed to adjust to the country’s development context or learn from past mistakes, reform efforts failed, such as with justice sector reforms and water and sanitation operations. Fifth, more recently, the Bank Group has made efforts to overcome coordination and uptake issues and engage subnational partners in development. Recognizing that uneven policy implementation was linked to the weak financial and institutional capacity of subnational authorities, the FY19–24 CPF made addressing territorial inequity a priority. Since then, the Bank Group has been experimenting with various ways of engaging subnationally. Some notable efforts include IFC’s investments without sovereign guarantees in Casablanca and Fès-Meknès; the World Bank’s Casablanca Municipal Development PforR for which funds go to municipal budgets; the Municipal Development PforR, cofinanced by the French Development Agency, in about 100 urban municipalities; and the World Bank’s youth inclusion IPF in Marrakech-Safi. However, it is too soon to gauge the outcomes from these approaches.

Based on these findings, this evaluation identified the following lessons to guide future Bank Group engagement in Morocco and other countries facing similar development challenges:

  • At times, the World Bank traded recognition for influence to gain traction in Morocco’s policy reforms. The World Bank engaged the government with different approaches in different policy areas, adequately sequencing and combining analytical and lending instruments. The World Bank’s impact hinged on its ability to frame policies on sensitive topics in ways that were palatable to government decision makers. This was the case with the CEM, which conveyed important points, informing Morocco’s NDM without crossing politically sensitive lines. As a result, the CEM’s diagnostics and recommendations substantively informed the country’s national development strategy. In other areas, such as the politically sensitive subsidy and pension reforms, the World Bank was willing to limit its role to providing just-in-time analytics when a more prominent role might have jeopardized reforms. This approach allowed the World Bank to stay engaged with national institutions and policy makers over an extended period, thereby further building the government’s trust in and appreciation for the World Bank’s expertise.
  • The Bank Group effectively used global benchmarking data to motivate reforms. In Morocco, the Bank Group used the Changing Wealth of Nations indicators, the Human Capital Index, and the DB rankings to initiate discussion on policy reforms in key areas. The country’s low or middling performance in global benchmarking indicators motivated government officials to improve Morocco’s standing in those areas. The Bank Group built on this motivation to enter into wide-ranging dialogue on reforms. For example, drawing on the findings of the Enterprise Surveys for Morocco, the Bank Group identified and provided support to the authorities to address important constraints to private sector development and empower small enterprises, helping to level the economic playing field.
  • IFC effectively deployed its advisory work to support major Moroccan companies, including SOEs, in making organizational changes. It achieved these effects through a range of advisory and investment support services and collaborations with key national institutions and business associations over many years. The advisory work also helped raise environmental and social standards and improve corporate governance.
  • The first World Bank–wide PforR operation was introduced in Morocco in 2012, and since then, the instrument has gained traction in the country, especially in the second part of the evaluation period. There are two main lessons that emerge from the World Bank’s experience with PforR operations in Morocco. First, the lack of resources to provide technical assistance to ministries in charge of implementing reforms and reporting on DLIs limited the effectiveness of health and education PforR operations. As such, the World Bank needs to proactively mobilize resources to fill this technical assistance gap. Second, the World Bank needs to more proactively engage the key stakeholders during the preparation of PforR operations to facilitate dialogues between the Ministry of Economy and Finance and line ministries to define ambitious but achievable DLIs and maintain a predictable disbursement schedule.
  • To engage directly at the subnational level in Morocco, the Bank Group took new risks and was willing to experiment with new approaches. Although it is too early to assess outcomes, the Bank Group’s successful subnational engagements have depended on its ability to take more risks to engage with higher-need territories, adapt its instruments to subnational needs and clients, and coordinate with other development partners (especially to avoid local government indebtedness).