Poverty

Poverty profile. Only two decades ago, Morocco had a per capita GNP of US$500, and there were estimated to be 6.5 million poor people in the country. By 1991, the per capita GNP had doubled and the number of poor had halved. Most of this poverty reduction occurred during the late 1980s; a comparison between a 1984-85 household consumption survey and the 1990-91 Living Standards Measurement Survey (LSMS) indicates that the percentage of the population with an average consumption below the poverty line fell from 21 percent to 13 percent during that period. Nonetheless, this is a fragile improvement; there are about 3.3 million poor in Morocco as well as 1.7 million people mainly located in rural areas with expenditure levels that are just above the poverty line. Poverty is primarily a rural phenomenon; in 1991, 72 percent of all poor (2.5 million, of whom more than half were extremely poor) lived in rural areas, compared to 70 percent in 1985. Income sources differ between the rural and the urban poor. The rural poor are represented by wage earners who work less than five months per year and by small-scale farmers who own less than an acre of land. The urban poor are mostly engaged in self-employed activities (such as street vending) or earn their living as wage earners. The typical wage earner among the poor earns one third of the average wage and about half the legislated minimum wage. Unemployment affects almost 30 percent of the labor force among the poor, compared to an overall urban unemployment rate of 20 percent. Women in the poorest households experience the highest rates of unemployment in urban areas. In spite of the progress made in reducing income poverty, social indicators in Morocco are well below those of comparable countries and, within the country, there are enormous disparities in access to social services between urban and rural areas. Thus, infant mortality is still 25 percent higher than in the average lower middle-income country, the fertility rate is 22 percent higher, and total and female primary school enrollments are 38 percent and 44 percent lower respectively. In rural areas, amongst the poorest 10 percent, only about one in six girls are enrolled in school. Only 14 percent and 12.7 percent of households in rural areas have access to potable water and electricity respectively, while more than 90 percent do so in urban areas.

Incentive and regulatory framework. The government's success in reducing poverty during the 1980s is largely attributable to its ability to stabilize the economy, undertake comprehensive structural reforms, and maintain high economic growth. There were three key elements of the government program that contributed to reducing poverty: (i) structural reforms in the incentive framework promoted growth in labor-demanding sectors, especially those oriented to the export markets, and in the urban-based informal sector, thus reducing poverty by increasing the number of temporary and unskilled jobs, which in the manufacturing sector grew at 17 percent per year at lower wages; (ii) liberalization policies and good rainfall raised agricultural output and the incomes of farmers, while the increase in the agricultural minimum wage protected the incomes of rural wage earners; and (iii) despite a reduction in the budget deficit from double digit levels at the beginning of the 1980s to less than 2 percent of GDP in 1991, spending in the social sectors fell relatively less than total public expenditure. Real social expenditure per capita per capita fell only by less than 2 percent a year during the 1980s.

Public expenditure. Although no comprehensive analysis of public expenditures was available, the poverty assessment carried out a broad overview of selected expenditures in health, education, and literacy. By international standards, Morocco's public health expenditure appears to be very low (0.9 percent of GDP during the 1980s). Moreover, the structure and orientation of public health services is still geared towards curative rather than preventive health care, and the majority of both curative and preventive centers are located in urban areas, while most of the poor live in rural areas. In spite of recent reallocation efforts, health care in rural areas has not significantly improved and there are insufficient medical personnel; there are 38,600 inhabitants per doctor in rural areas, as opposed to 1,750 in urban areas. The Ministry of Education budget represents about 5 percent of GDP, a percentage that remained roughly constant during the late 1980s and early 1990s. The large majority of education expenditures (86 percent) are incurred by the state, and about 95 percent of all enrolled students are in public schools. Compared to other countries with similar per capita GNP, Morocco spends a lower share on primary education and a much higher share on secondary schooling. Results are poor; in 1991, the primary net enrollment rate was 69.9 percent for boys and 52.8 percent for girls. This gender gap is much lower in urban than in rural areas and much wider among the poor. Although the government has been active in literacy campaigns since independence, over half the adult population is still illiterate. Illiteracy is greater among rural populations (72 percent versus 37 percent in urban areas), women (68 percent versus 40 percent for men), and the poor.

Safety net. The Moroccan welfare system includes a formal social security system and a variety of social assistance programs. Formal social security coverage is nonexistent among the poor and rare among the middle classes. Social assistance programs, managed and financed by both the state and private charities, include food support and nutrition programs and employment and training programs. Most of these programs seem to reach the poor. Spending on food subsidies now represents only 0.5 percent of GDP (down from 4.5 percent of GDP in the early 1980s). These subsidies have been replaced by compensatory feeding programs, mostly donor-financed, that reach about 2.5 million vulnerable Moroccans (pregnant and lactating mothers, infants, school children, and rural workers).

Poverty strategy. The major challenge faced by Morocco in the medium term is to achieve a rate of economic growth sufficiently high to improve the living standards of the poor while maintaining macroeconomic stability. In this context, efforts to consolidate internal and external balances, promote low and stable inflation, and improve the incentive framework need to be continued. Policy interventions to reduce poverty should aim to: (i) enhance the competitiveness of the agricultural sector by liberalizing internal prices and marketing regulations; (ii) improve land tenure policies; and (iii) target public investments and agricultural support services to areas where most of the poor live. In urban areas, the strategy calls for measures to increase the flexibility of the labor market (for example, a revision of the Labor Code) and labor productivity (such as training and access to credit). To improve the social conditions of the poor, the poverty assessment recommends: (i) reallocating public expenditures towards the poor, while providing incentives to the better off to use privately provided services and (ii) changing pricing policies for public services to charge less for services used by the poor and more for those used by the better off (for example, urban public hospitals and universities).

Statistical system. How effective policy interventions to reduce poverty can be depend upon the quality and timeliness of the information available for tracking changes in poverty over time and for monitoring progress in the social well-being of the poor. The LSMS carried out in 1991 represented an adequate data base. This type of survey should be repeated every five years or so. To monitor changes in the welfare of the poor on a shorter basis than the five year interval typical of a full LSMS, the assessment recommends that household-level core consumption data should be collected annually to allow the construction of intermediate welfare indicators for monitoring purposes, that sector specific modules on specific topics should also be collected but in alternate years rather than annually, and that the data collection efforts and the analytical capacity of all relevant line-ministries should be streamlined.

PovertyNet Library