# **<u>Part II : Application to Morocco</u>**

We now apply the methodology developed in Part I to assess the performance of the housing subsidy system in Morocco. We have used data from a study undertaken by the Ministry of Housing in Morocco in 1998-1999, through an assistance program of the World Bank (PLURAM-ALGOE-PROMOCONSULT, 1999). The purpose of the study was to examine all the dimensions of housing financing in Morocco. In particular, it looked at all subsidies for housing, both from a qualitative and quantitative perspective. One product of the study is a booklet which summarizes expenditures on all types of housing subsidies in Morocco, explicit as well as implicit, for the year 1995. We have used this and other materials<sup>36</sup> to rate the different components of the housing subsidy system based on public finance criteria described in Part I.

# <u>1) Housing in Morocco</u>

# _Housing supply_

Morocco has a current population of about 30 million people and 5 million primary residences. In 2000, 62% of households were owners, 28 % were renters, and 10 % had another status.<sup>37</sup> Similar to its neighbors, Algeria and Tunisia, Morocco faces a high urban population growth, with an annual growth rate ranging from 3 to 4 %. Demand for new housing units is estimated at about 120,000 units per year and is expected to continue growing in future due to the demographic composition of the population, whereas annual supply of formal housing units is estimated around 90,000 units.

The housing stock can be broken down into two categories: formal and informal. Here, “formal” conforms to the law. Concretely, a formal housing unit is built on a properly titled land, in an area zoned for residential construction (see below), and has a legal construction permit. The formal housing stock is estimated at 80% of the total stock. Informal housing can be in turn broken down into two categories: illegal but in good condition (called “ _habitat non réglementaire_ ”, 15 % of the stock), and slums (barracks and shacks, 5% of the stock). _Habitat non réglementaire_ represents units which, at any given stage of the production process, did not comply with laws and regulations. The main consequence of this was a lack of basic services and utilities, since by law, illegal units install utilities.

During the past 20 years, informal housing has developed at a faster pace than formal housing in spite of government intervention (see below). Construction of _Habitat non réglementaire_ can be attributed to bottlenecks stemming from the land titling system, on the one hand, and zoning and planning procedures at all geographical levels, on the other.

- <u>Land titling: As many former colonies, Morocco faces the coexistence of many types of</u> property rights for land. Public land, i.e., land owned by the state, still represents a large portion of the country.  Most property rights for private land stem from the Ottoman (customary) system: This system recognizes both individual property rights and community rights on land parcels. At present, the bequest of land to communities results in uncertainty of property rights and immobilization of land with urban potential.

> 36 In particular, another study undertaken in the same conditions as the first, the study by EDESHAURBAPLAN-IHEM (1998), concentrated on the bottlenecks in the housing construction process.

> 37 The rental sector is entirely private, except for 38,000 public units managed by the companies CIFM and SOPHAL.

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