The North Africa Journal – June 8, 2018: For several weeks now, a call to boycott three major brands in the Moroccan market is beginning to hurt the targeted businesses and has made its first collateral damage in government. Morocco’s social networks have been used since April 20 to call the population to avoid buying the milk of Centrale Danone, the mineral water of Sidi Ali and the products sold in the Afriquia gas stations. And the population followed through in what appears to be an unprecedented use of social media to punish companies. It all started when a number of companies decided to raise their prices, in some cases by as much as 60% just before Moroccans began Ramadan.
Despite a series of interviews by its CEO and a PR campaign aimed at countering the boycott, Central Danone, a unit of French Danone has just issued a profit warning to prepare its shareholders for the bad news to come. Already the company warned of a significant decrease in its revenue for the first half of 2018, likely to negatively weigh on the entire fiscal results. The decrease in sales amounts to 50% year-over-year contraction for April and half of May, which could translate into a 20% decrease for 1H18, versus 1H17.
Central Danone is part of a global corporation and may be required to release such warnings, but the two other companies targeted by the boycott have not been so transparent about its impact on their financial performance. But there is no doubt that they are facing a major challenge, just as the Danone’s Moroccan unit shows.
The first manifestation of the boycott came from Facebook, then it rapidly expanded to Twitter, with its organizers asking Moroccans to not buy products from the three targeted companies, unless the companies dropped their prices. The Sidi Ali brand of mineral water is owned by a company called Eaux Minérales d’Oulmès, a firm headed by Miriem Bensalah, the outgoing head of the powerful Moroccan employer confederation CGEM. The gas filling station network Afriquia is owned by Groupe Akwa, whose controlling shareholder is Aziz Akhannouch, who also happens to be Minister of Agriculture in past and current governments.
The call for a boycott, which was argued on the basis of high-cost of products and to counter the “greed of businesses,” led several politicians and government figures to react negatively, calling for a reversal. The counter-argument included the fact that such boycott would scare investors and will have adverse effect on employment and economic growth. Among those who attacked the call for boycott was naturally the Agriculture Minister, Aziz Akhannouch, considering his own interests.
But the call for boycott has been much more effective than the counter-arguments and PR efforts from the targeted firms and politicians/businessmen. Afriquia gas stations have seen a substantial drop in car traffic, with many stations completely deserted. The Danone warning is also a clear indication that the Moroccans have responded to the call and are simply avoiding to spend their money with Danone. The newspaper L’Economiste released a poll from Sunergia showing that 57% of the more than 3,700 people contacted by phone joined the boycott movement.
But beside the high-price argument, the social media blitz against corporate Morocco looks very political indeed. One of its targets, Aziz Akhannouch, no only owns a controlling stake in the Group Akwa and is Agriculture Minister, but he is also the head of the RNI party (Rassemblement National des Indépendants), a party created in 1978 to provide backing to the monarchy. The message from the boycotters is one that rejects the concentrate of wealth and power among a small group of people.
Although there are several personalities who not only control or own major businesses but are also in government, including Industry, Trade & New Technologies Minister Moulay Hafid Elalamy. And companies like Afriquia have seen a major spike in their margins since the country liberalized the price of petroleum products in 2015, in what appears to be policy changes under the influence of money. The price liberalization led Afriquia and virtually all other importers of refined petroleum to drastically increase their prices, raising furry among the consumers and prompting the government to promise new measures aimed at limiting the margins of importers.
The blurred line between business and government continues to weaken transparency in public affairs and suggests that concentration of power continues to strengthen. Former Foreign Affairs Minister and head of the RNI party, Salaheddine Mezouar, has just replaced Miriem Bensalah, as the head of the CGEM employer confederation, adding more fuel to the boycotters’ argument about the concentration of power among a few.
Even the pure politicians are beginning to feel unease. General Affairs and Governance Minister Lahcen Daoudi was forced to resign on June 6, after he officially sided against the boycott, prompting a fury within his own party, the moderate Islamist PJD. The PJD has been seeking to take advantage of the movement to reposition itself as the voice of the people. Daoudi took part to a sit in organized by Central Danone’s workers, who have been badly affected by the boycott. The anger against the Minister apparently came from non-other than Prime Minister Saadeddine El Othmani, also the leader of PJD. Eventually Daoudi’s resignation must be approved by the King, who could also reject it.
The origins of call for a boycott remain a mystery. Some suggest that the whole affair has been orchestrated by competing business interests. Others say they see the hands of some members of the PJD party, which heads the cabinet with its Prime Minister, but has no real power. Some credit the organizers as being militants who launched their protest as a continuation of the social unrest in the Rif, Zagora and Jerada.
As the movement continues to gain grounds, the King remains distant. He may be forced to intervene in the last minute, with the monarchy likely siding with the population. The chances that the monarchy will force the companies to adjust their prices are now higher than ever. Regardless, this latest boycott movement is evidence that Morocco needs to overhaul its political system, that would include establishing rules that would ban conflicts of interest in governance. Not an easy task to achieve, but a necessary one to avoid unrest and ensure continuity.
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