With the exception of Mauritania, the entire region is undergoing a substantial infrastructure buildup. Morocco, Algeria, Tunisia, and Libya have all been spending vast sums of money to build roads, subway metro systems, expressways, ports, housing infrastructure, factories, and the list goes on. While oil-exporters Algeria and Libya have naturally earmarked greater amounts of money than Morocco and Tunisia, these latter have also been diligent in insuring that they stay on track. Projects from a refinery and a port in Tunisia to a future high-speed train in Morocco are underway or under planning phase. These investments are happening for a good reason. This is because most countries in the region have been working hard to improve their business environments, yet we think their reform efforts are not moving fast enough to take a meaningful dent on high unemployment. Beside, while Tunisia and Morocco have been consistent in their efforts to reform their administrations, Algeria substantially scaled back what it has achieved in ways of facilitating business creation, and in Libya, everything has to be reinvented so we are moving into an unchartered territory.

Yet, the region will indeed look different a few years from now, with a highway system linking the Mauritanian capital Nouakchott in the west to the regions bordering Egypt to the east and beyond. The region will have its high-speed trains, with the French aiding this initiative. Its electrical grids will be unified. Meanwhile, Arab investors have been busy building or planning the construction of modern housing complexes and even entire towns are in the offing. In this context, are the Europeans, more precisely the Southern Europeans keen on competing with Arab investors on influencing the region? We think that as Spain prepares to take over the leadership of the European Union next year, it will have a brief opportunity to refocus European interests on an EU-Mediterranean agenda so as to solidify economic growth and security in the Mediterranean basin. Can Spain succeed where France’s Nicolas Sarkozy failed?  Click here to read about how Spain may position itself as the champion of the region next year.

For global corporations, opportunities abound but managing business in North Africa is not an easy task.  This month (November 2009), we briefed a number of large corporations on the risks and opportunities of doing business in the region. We have posted the presentation online with audio commentary for your viewing. Click here to access the presentation. We also looked at Microsoft and how it is dealing with North Africa. Plenty of opportunities, but equally daunting challenges. Click here to read.

While there are good reasons for optimist in the economic arena, the prospect from a political and security perspectives call for a great deal of uncertainty and possible crises are looming on the horizon. Although economic growth can be attained thanks to the improved economic fundamentals, a new vision of the region on how to manage and invest money, and the expected recovery in the global economy that will help fuel growth, the political landscape has not improved at all, but has further deteriorated. Virtually all countries in the region have seen their regimes further entrenched in their power and the path to democratization has met bigger hurdles. In Libya, the Kaddafi regime has never been stronger and a dynasty is forming there. While domestic resistance and opposition have been neutralized, including the Islamists, foreign foes and Western governments no longer dare opposing Libya on any topic. Switzerland has paid the price for it. The UK folded with the Al Maghrahi release. Italy is paying compensation for its colonization of Libya, and the list goes on. In Morocco, same old politics. Democratization is being derailed under the pretext of the Islamist threat. Even more dramatic are Algeria and Tunisia, two countries that have had their presidential elections, which saw landslide victories of Bouteflika of Algeria and Ben Ali of Tunisia. I say “more dramatic” because these two presidents are over the age of 70 and so we are approaching an interesting political fog in the next 5 years. While they both may think that they will be remembered as champions of their country’s economies, their true legacy may end up being about the lack of political progress and stability in their respective nation. There is indeed fear that as they live their twilight years, these men may not have the strength to champion true and long-lasting political stability process that would guarantee smooth handing over of power when they leave, followed by pluralism, security, rights for their people and as a result, economic progress. Without that, fancy highways, nicely designed buildings, modern seaports, and nice airport terminals may mean nothing after all.

As to the Maghreb integration, the political component of it is nothing to be proud of, but there is a chance that economic integration is happening at present anyway. Here’s an interesting illustration on how economic imperatives may drive regional integration. Morocco has championed the creation of a road that links its territory to the Senegalese capital Dakar, crossing Mauritania as well. Only to realize that the road is under utilized. Officials of the three countries came to the conclusion that without a regulatory framework that would create an incentive for truckers, transport and shipping companies to use that road, nothing will actually happen and the investment would have been wasted. And so they decided to change their laws on transport essentially leading to an erosion of their borders with the expectation that trade will expand and the use of the road will be maximized. Same trend between long-time political foes Algeria and Morocco. Despite the never ending bickering over their national integrity, both are moving full steam with the integration of their national electrical grids, planning to link their highways and trains. Political disagreements may abound, but the power of free trade may end up winning at the end. I least that’s my personal hope.

North Africa Advisors was set up to provide expert knowledge on risk and the business climate in North Africa, while providing networking opportunities for everyone interested in the region.

We inform and support our customers on critical issues relevant to North Africa with their business and interests in mind. Our focus is to highlight both the risks and opportunities in doing business in the region.

While opportunities abound as the region expands as an emerging market, it is also home of critical flaws that could threaten your business. Such flaws require a good understanding of the risks to manage them appropriately. As such we provide strategic advise on what security posture to adopt in handling North African markets, in addition to guiding our customers on where the good opportunities are.

Our clients are leading companies, government entities, academia, and international institutions.

Our services include risk rating and security monitoring, market and economic analysis and corporate watch. We also offer custom research services for organizations with specific needs. Our publishing unit, The North Africa Journal has been informing our clients since 1996.

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