Strengthen the economic attractive position of the Mediterranean

Published : Friday 06 November 2015
Amal Chevreau, Directrice des études et projets
The increasingly attractive economic position of the Mediterranean

Several recent reports and events confirm that the Mediterranean boasts an attractive economic position. The EY’s attractiveness survey, dedicated to 2014 Africa, underlines that with growth prospects of 4.5%, countries like Morocco and Egypt as well as several Sub-Saharan countries attract international investors. And this trend is expected to continue.

The attractiveness of Morocco and Egypt lies on their capacity to attract FDI in a hub logic. They operate as attraction platforms in favour of FDI and as transit hubs for investments towards Sub-Saharan Africa. In Morocco, which is the 2nd receiver of FDI in Africa, Casablanca Finance City is trying to become the first reference financial centre in Africa. To do so, it has developed a strategy to attract the African headquarters of many global companies. Likewise, Egypt, which is working on the adoption of a free-trade agreement gathering 26 African countries, wishes to strengthen its position of regional leader. Still according to EY, 71 international projects were announced in Egypt, totalling a $12 billion investment.

Another study carried out by PWC Group on the ranking of African cities shows that North African cities hold key positions: Cairo, Tunis and Casablanca rank first, in spite of many weaknesses. Besides, Casablanca hosts the highest number of multinational companies in Africa, more than Johannesburg in South Africa.

In April 2015, EY organised its first Strategic World Forum, entirely dedicated to the Mediterranean, on the topic “Unlocking the potential of the Mediterranean region”. It is the fist time a global group uses the expression Mediterranean region, which confirms IPEMED’s analyses showing that it is a region in the making. This event, which will be organised on a regular basis, is willing to attract investors and institutions to discuss future-oriented topics and high-potential sectors.

IPEMED, the only partner think tank of the Forum, mentioned that it was necessary to assert the attractiveness of the Mediterranean as a central territory between Europe and Africa, via a shared common vision and actions encouraging more convergence between the two shores. As recommended by IPEMED in its Mediterranean 2030 analysis, both shores must collaborate on convergence which, is already operating in several sectors such as pharmaceuticals, ICT, agriculture, energy, etc. and in clusters, as shown in an IPEMED study published in 2014. Convergence must also benefit the region’s men and women and grant them more mobility. Such is the idea defended by IPEMED in its various reports dedicated to this topic.

Attractiveness must be strengthened via structural reforms

Even though attractiveness develops in a context of extreme social and political upheavals, it remains fragile and must be strengthened via structural reforms, especially in terms of investment security, clarification of PPP opportunities, more favourable taxation for local and international SMBs, exchange rate policy, trade justice and transparency. The political stability, implying the shift from political alternation towards elective democracy, is also necessary to secure attractiveness for good.

Innovative propositions regarding investment security for companies

Several initiatives aim to secure investments in the Mediterranean. At this point, we must underline the works of “ISMED” OECD work group, of which IPEMED is a partner. It is necessary to upgrade infrastructures in SEMC to create the conditions of an inclusive and sustainable development and attract productive FDI. It is estimated that the region will have to invest $100 billion a year over the next 20 years to modernise infrastructures. A budget gap of $30 to 40 billion remains to be filled. In order to increase the investment level in the region and in a sustainable way, it is necessary to mobilise the private sector via PPP, handle risks better and combine the increasing resources of Islamic finance with that of conventional finance.

Investment security implies exchanges with all the stakeholders of investment projects, among which companies. In this regard, IPEMED initiated a workshop between the ISMED group and a few founding companies. This workshop was a good opportunity to exchange and inform companies of the current initiatives to improve investment security in the Mediterranean, to collect their observations, ideas and suggestions, based on their experience on the field and on current works.
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