Rethinking urbanization as a key factor for business development in Morocco and entrepreneurs mission in it.

Why are entrepreneurs and the destruction economy such important aspects in Morocco’s urbanization planning?

Introduction

Morocco, a member of the African Union as of January 2017, is in the North of Africa and has a land area of 446,550 square kilometers, with water covering about half of it (Elmdari, Youssef 2018). Up to date, only about 19% of its land remains rural and is designated for farming. (AFRICAW 2022) This might be a problem for part of the thirty-nine million people living in Morocco (99% Arab-Berbers), with a rapid growth rate ongoing. From this, more than a half of Morocco’s total population lives in urban areas, being the main popular cities: Casablanca, Rabat, Fes, Marrakech, and Tangier (AFRICAW 2022).

Urbanization problem

Morocco, although having a GDP of $3345 per capita, is on the verge of being classified as a “low-income” country. Because of the substantial number of people in the country and the development process, it is undergoing, fast urbanization has occurred in recent years, and as a result, environmental issues have arisen desertification, deforestation, and soil erosion are just a few instances (AFRICAW 2022). 

For instance, Casablanca’s urbanization (30%GDP) has lacked integrative urban strategies, despite an obvious environmental issue. For city planning, a good allocation of resources needs to be considered by implementing spatial information. Rapid growth in population, in the case of Casablanca and eventually spacing most of the Morocco led to a demand for infrastructure and basic services, housing in new urban areas and the provision of education, health, transportation, water and sanitation services.

Innovation needed – The role of entrepreneurs

Being an entrepreneur is not just a business status, but a way of life: always innovating, challenging reality, and daring to start new projects with potential fuel, ideas, time, and creativity invested. Thinking big and thinking smart are not the same thing but they can be complementary. This is the kind of challenge every entrepreneur faces when trying to figure out how to differ from its competitors in a market segment. But is it just enough just to be different? Some would suggest that thinking smart is not enough if the environment in which a business develops itself is an obstacle to it. We need to focus on land planning: where are businesses going to grow? What would that environment be like? Is it nourishing and friendly for start-ups? What could be done so that they are? These are key questions entrepreneurs need to be making and considering while engaging in policymaking by respectfully raising their voices through different institutions.

As basic economics laws establish, there are few resources that need to be allocated; yet, for a business’ objectives to be accomplished with success, the environment must be considered strategically as well. A proper environment is not only made up of geographical considerations, climate factors, political circumstances, social needs and demands, but also a crucial factor that should be considered is how urbanization was thought and conducted, and how it could be urbanized soon for local businesses improvement and opportunities to take place. A good, urbanized city should consider this process as an opportunity for inclusion, for integrity within its citizens, for opportunity jobs to be arriving and, of course, an attraction for entrepreneurs and foreign investors. For this, a proper legal framework is needed. Rural migrations should be considered, as once a city is urbanized, it may become a people’s magnet.

Socio economic inclusion & diversification

Sustainable and inclusive (all business sizes) urbanization may be the promise of development, as population rapid growth takes place, Moroccan  governments should focus on the need of diversifying the national economy, combat disparities, improve living conditions, and create more jobs due to Morocco young people high rate of unemployment according to Lall, S and its co-authors´ book “Leveraging Urbanization to Promote a New Growth Model While Reducing Territorial Disparities in Morocco: Urban and Regional Development Policy Note”.

Truth is, every urbanization process has the rapid effect of transforming the economy from an agricultural-based one to a manufacturing-based, so here is where the role of thinking as an entrepreneur comes in. What is being an entrepreneur if not thinking like the model of the “economy of destruction” created by Schumpeter, which is the interactive and dynamic process of always destroying and creating new things: introducing new ideas, new products, new changes in the market. Innovation, creativity, and resilience need to be indeed explored when an economic transformation is taking place or about to.

The opportunity of good Moroccan urbanization means proximity with business’ suppliers, customers, market opportunities, lower costs, economies of scale. Assemblage and centralization of citizens with higher incomes due to job creation may be a promise. Diversification is an entrepreneurs’-creativity mission, meaning new services and products into the market. Higher productivity then becomes possible in an industrialized city where investment is seen with good prospects. Spillover of knowledge is a fact that can happen, and technology may be the key source and trigger of transforming a start-up capital and expanding its production possibility frontier.

Rethinking the economy in this new context of urbanization should be looked like an opportunity for businesses development start-ups, medium-size enterprises or multinationals, rather than a problem. For that, we need creativity and people who are willing to take risks.

Current market opportunities

According to research (Fay 2021), these are the following promising businesses in Morocco that should be considered:

1. Restaurant or cafe
2. Clothing
3. E-Commerce distribution center for small businesses.
4. Student housing
5. Hotel
6. Daycares (accessible)
7. Exportation of local products
8. Private schools
9. Transport
10. Intracities connectivity

All these service businesses may be an option in Morocco and in a country where its economy is expanding. With a rapidly growing population and a market segment in which low and middle-income families (who have arrived because of rural migration) require more accessible services for their children to receive a good education, the market segment could be attractive; also the effects of globalization such as more tourism is evident. Furthermore, demand for restaurants and hotels comes with it.

Recommendations and Conclusion

Sustainable urbanization should be accompanied by policymaking and legislation. Local thinking is essential, the same model cannot be applied in every city, creating decentralized institutions, and giving more authority to municipalities could be a potential choice. Social characteristics and circumstances can be looked at as limitations or opportunities. Public opinion is also vital for positive transformation support and inclusion. An improved municipal finance framework would allow municipalities to bridge the investment gap without the need of depending on the central government.

Finally, the following challenges are destinated at current entrepreneurs who want to change their business opportunities by addressing the root of the problem, which is a legal issue marked by resource misallocation, lack of diversification, socio-economic exclusion, and financial incentives, both national and foreign. As the 2009 World Development Bank detected, there are three main drivers for integrated territorial development in Morocco needed: density, distance, and division.

1. building a population and economic density to create economies of scale for firms
2. reducing distances through better connectivity (road and highway infrastructure and information and communication technologies) to improve access to the labor market.
3. reducing territorial divisions by improving sociospatial and socioeconomic divisions and local opportunities.

These are the areas where entrepreneurs may contribute by bringing in new creative ideas, innovative change, and new business culture for inclusiveness, as well as a supportive legal environment for start-ups, allowing for positive diversity.

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