RABAT, Morocco (AP) — Morocco and French automaker PSA Peugeot Citroen on Friday signed an accord to build a new factory aimed at producing up to 200,000 cars annually for the African and Middle East market.
The factory involves an investment of 557 million euros ($632 million) and is the second major agreement between Morocco and a French automaker, following Renault's 2013 building a factory in Tangiers.
Peugeot head Carlos Tavares said the deal was part of the larger plan to revive the company's fortunes and eventually sell a million vehicles in Africa within a decade.
"This region is important and dear to our hearts," said Peugeot head Carlos Tavares. "We decided that PSA is ready to make a committed offensive on the African continent and Middle East."
He credited Morocco's infrastructure and the education level of its workforce for the decision to build the factory here.
Morocco has been seeking to improve its economic ties with the rest of Africa as well as build up its industrial base to combat persistent unemployment.
"The automotive sector is an essential one for Morocco," said Minister of Industry Moulay Hafid Elalamy. "It was the most dynamic sector for export between 2012 and 2014."
Morocco exported $4 billion worth of cars and parts in 2014 and already in the first four months of 2015 there has been a 12 percent increase from the same period last year.
The sector provides some 80,000 jobs, roughly 10 percent of the industrial employment.
Elalamy said that the presence of a second major manufacturer in Morocco will boost the entire industry and make it profitable to make more parts within the country so that less needs to be imported.