World Bank’s USD 202 Million Loan to Casablanca: Another Staggering Burden for Morocco?

Rabat – On Wednesday, the World Bank’s executive directors approved a USD 202 million loan intended for the Municipality of Casablanca. The sub-national loan is the first of its kind in Morocco in two decades.
The staggering amount will not be invested in the city’s infrastructure, but will rather be used to attract private investments in services and infrastructure, in the form of “public-private partnerships.”
The communiqué issued by the World Bank mentions a plan to increase the city’s investment capacity “by improving the municipality’s revenue management systems” and “attracting private investment in Municipal infrastructure and services.” Either Casablanca is about to get the most expensive governance app, or Morocco’s flexible legal framework isn’t that attractive to investors.
Casablanca’s public affairs are already between the hands of private companies: Mdina Bus manages the buses, while RATP Dev, the state-owned parisian public transport operators, manages the tramway network. The highly controversial Lydec, subsidiary of the French company Suez, has managed water, electricity, and sanitation since 1997.
The 29-year loan, branded the Casablanca Municipal Support Program, will bear interest at 1.2 percent. The repayment will only take place after seven years following the contract.
The negotiations for the loan started with Casablanca’s back in 2014, and made it through despite the change of the city’s council in 2015.

The loan and its aim

For the World Bank, the key to increasing Casablanca’s investment capacity is to strengthen the city’s revenue management system and get private investors involved in public-private partnerships.
On a second level, Casablanca Municipal Support Program aims to improve the access to basic services such as electricity, water, and sanitation as well as an upgrade of “selected” streets and rebuilding of roads, sidewalks, and public lighting.
Green spaces are a scarce resource in Morocco’s economic lung; there is less than one square meter of green space per capita. According to the World Bank’s website, the issue is on the program’s list.
The program also aims to involve citizens more in public affairs and decision making, through “transparent grievance redress mechanisms and an e-government platform for administrative services.” A good thing to be involved in would have been the loan itself.
Another main goal is to “dematerialize the administrative procedures for business licenses and building permits.” In aiming to do so, the World Bank assumes that the main inhibitors to investment and building are the procedures.

By Means of Measure

The World Bank uses the Program for Results (PforR) lending instrument. In layman’s terms, it uses several indicators to grade its borrowers in terms of fulfillment of the goals it has set.
The first two indicators measure the growth of city’s revenues and the modernization of the city council’s revenue management system.
The third indicator measures the investments mobilized through public-private partnerships
The fourth indicator accounts for “households in disadvantaged neighborhoods provided with improved access to basic services under the Program in the Program Area,” without mentioning the said basic services or the area concerned. The fifth, exclusively numbers the kilometers of streets upgraded.
The sixth and final indicator addresses the simplification and digitalization of administrative authorizations related to urban planning and business licenses.
The Casablanca loan follows previous attempts by the World Bank to stimulate Morocco’s economy through business. On June 2012 , World Bank approved another USD 350 million to Morocco. The loan intended to improve the public services and the economic opportunities, as well as improving micro, small and medium enterprises’ access to funding. USD 300 million supported the second phase of Morocco’s National Initiative for Human Development, titled INDH2.
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