Informal sector represents 30% of Morocco’s GDP- Central Bank study

The scale of the informal sector in the Moroccan economy amounts to 30% of GDP said a new study conducted by the Central Bank.

The informal economy leaves workers in vulnerability without pension or health insurance and undermines the economy due to tax and anti-competitive practices.

In the MENA region the average part of the underground economy stands at 25%. Morocco outperforms however the African and Latin American average set at 39.4% and 37.5%.

The repercussions of the informal sector are more apparent in the job market. The International Labor Organization estimates that 80% of the Moroccan work force operates in the grey economy compared with 17.2% in OCED countries, 25% in the MENA region, 39.5% in Africa and 37.5 in Latin America.

In its annual 2019 report, the central bank warned that fewer job opportunities meant that many people had to seek jobs at Morocco’s large informal economy leaving many young people in vulnerable conditions.

Bank Al Maghrib report also drew attention on the impact of sluggish growth on living condition, which it said did not improve significantly over the last decade despite significant efforts to curb poverty and improve access to schools.

The coronavirus pandemic has revealed the scale of the underground economy which showed that 5 million households, representing more than half the Moroccan population, depend on informal economic activity without social protection.

Nearly 3 million jobs are threatened by the informal production units which have the advantage of low production costs, according to Morocco’s employers’ association CGEM.

In his speech on July 29 on occasion of the Throne Day, King Mohammed VI urged the government to expand social welfare protection to cover all Moroccans within five years, saying the move will help integrate informal production units.

Morocco remained in the category of medium revenue countries because the GDP per capita rose only on average by 2.3% in the last decade compared with 3.4% a decade earlier.