A successful privatization effort has heralded Morocco's formal break with the dirigiste economic policies of the past in favor of the disengagement of the state from certain social and economic obligations. It remains to be seen whether the government's objectives and its overall program of financial and economic liberalization can be implemented in the face of entrenched resistance within its own rent-seeking bureaucracy.
Between the years 1988 and 1993 there were over 2,300 privatization transactions in developing countries, yielding US$96 billion in revenues.l The bulk of this activity was centered in Latin America and the Caribbean, while the Middle East and North Africa, remained relatively timid and obstinately tied to the state-centrist economic policies of the past. Certain countries in the region, however, began in the late 1980s and early 1990s, to shed this dependence on the public sector, foremost among them the Kingdom of Morocco. Spearheaded by King Hasan II, the new economic platform in Morocco called for an increased reliance on private entrepreneurship and investment as the engines of growth for the future. An integral part of these reforms was the privatization program, which aimed at ceding a large percentage of the state patrimony to local and foreign interests.
The Casablanca stock exchange was earmarked by the privatization ministry as a crucial vehicle for the transparent and equitable divestment of state enterprises to a broad group of investors within Moroccan society. In return, the "financial deepening" of the economy as a whole was expected to spur the creation of the necessary legal, regulatory, and financial infrastructure to support a new vanguard of private firms. Some sections of the Moroccan government also hoped that the privatization program would help the stock exchange become a cost-effective means of financing the emerging companies of corporate Morocco. Privatization and the development of a capital market were thus perceived as complementary and mutually reinforcing.
This article will discuss the economic, social and political implications of privatization in Morocco. It maintains that first, the political struggle within the government between different interests both opposed to and advocating privatization has had a significant effect on the pace, success and popular perception of the Moroccan divestment program; and second, that privatization has done little to empower new groups within the society or reduce the glaring disparity in wealth between various sectors of the population. It is too early to say whether privatization has complemented the larger process of economic liberalization and financial deepening of the economy.
EARLY STAGES OF PRIVATIZATION
On 11 December 1989, the political commitment to privatization was codified into law by a vote in the Moroccan parliament of 78 to 45 with three abstentions. The extent of the divestiture program, however, was, and still is, a hotly debated issue, as opinions abound on the optimal strategic mix between public and private sectors. An initial list of 75 enterprises and 37 hotels, slated for divestiture by the end of 1995, was later augmented by the addition of two more firms and an extension of the deadline to the end of 1998. Of the companies on the list, the firms in the energy and financial sectors represented the highest share of their sectors' value-added. The transport, communication and mining sectors, all dominated by the state, were conspicuously absent from that list.
As of the summer of 1996, 25 companies, among them Shell Oil and Banque Marocaine du Commerce Exterieur (BMCE), and 17 hotels had been completely sold or partially divested, earning over 10.5 billion dirhams2 ($1.3 billion) in revenues for state coffers with an additional 2.2 billion dirhams ($270 million) in investment commitments.3 A familiar divestiture structure in Morocco, especially for larger state holdings, is the sale to a noyau dur, or hard core of shareholders, by direct negotiation or tender to provide management expertise and a possible capital injection. …