MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE - A PRIVATE SECTOR STRATEGY FOR A MAGHREB INITIATIVE OF COMMERCE AND INVESTMENT (IMCI)

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MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE - A PRIVATE SECTOR STRATEGY FOR A MAGHREB INITIATIVE OF COMMERCE AND INVESTMENT (IMCI)
MAKING THE CASE
FOR MAGHREB BUSINESS
IN TIMES OF CHANGE
A PRIVATE SECTOR STRATEGY FOR A MAGHREB INITIATIVE
OF COMMERCE AND INVESTMENT (IMCI)

BACKGROUND REPORT AND ACTION PLAN
MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE - A PRIVATE SECTOR STRATEGY FOR A MAGHREB INITIATIVE OF COMMERCE AND INVESTMENT (IMCI)
MAKING THE CASE
                                            FOR MAGHREB BUSINESS
                                            IN TIMES OF CHANGE
                                            A PRIVATE SECTOR STRATEGY FOR A MAGHREB INITIATIVE
                                            OF COMMERCE AND INVESTMENT (IMCI)

                                            BACKGROUND REPORT AND ACTION PLAN

KONSENTIO

Enigheden
Bygmestervej 57
2400 København NV
Danmark

Avenue de Cortenbergh 168, 3fl.
1000 Bruxelles
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www.konsentio.dk
Edited by Sinne Conan and Martin Schiller
MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE - A PRIVATE SECTOR STRATEGY FOR A MAGHREB INITIATIVE OF COMMERCE AND INVESTMENT (IMCI)
LIST OF ABBREVIATIONS                                                            5

LIST OF
ABBREVIATIONS

ASEAN            Association of Southeast Asian Nations

AMU              Arab Maghreb Union

BMICE 	Banque Maghrébine de l’Investissement et du Commerce

CAP              Confédération algérienne du patronat

CEE              Central and Eastern Europe

CGEM             Confédération Générale des Entreprises du Maroc

DCFTA	Deep and Comprehensive Free Trade Area

EU               European Union

FDI              Foreign direct investment

GAFTA            Greater Arab Free Trade Area

GCC              Gulf Cooperation Council

GDP              Gross domestic product

IMCI             Initiative Maghrébine du Commerce et de l’Investissement

IMF              International Monetary Fund

UMA              Union du Maghreb Arabe

UME              Union Maghrébine des Employeurs

LBC              Libyan Businessmen Council

MCU              Maghreb Customs Union

Mercosur         Mercado Común del Sur

MFTA             Maghreb Free Trade Area

MSM              Maghreb Single Market

NTB              Non-tariff Barriers

SME              Small and Medium Enterprises

UTICA            Union tunisienne pour l’Industrie, le Commerce et l’Artisanat

UPM              Union nationale du Patronat mauritanien

WTO              World Trade Organization
MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE - A PRIVATE SECTOR STRATEGY FOR A MAGHREB INITIATIVE OF COMMERCE AND INVESTMENT (IMCI)
6                                                     MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE                    MAGHREB INITIATIVE OF COMMERCE AND INVESTMENT                                                                              7

A NEW APPROACH TO TRADE                                                                                                          REPORT’S
INTEGRATION IN THE MAGHREB                                                                                                       AIM
A few years ago a number of Maghreb1 countries surprised       These comparative advantages remain to this day largely           Departing from the standpoint that the Maghreb business      to effectively move ahead. How should a new culture of
the entire world. They embarked on a transformation            neglected. Instead major obstacles remain: Intra-Maghreb          community is an indispensable actor in the intra-Maghreb     advocacy look like?
process which has been unique in its kind and which is still   value chains are fragmented and national markets are              integration process, this report pursues three objectives:
pulsing today. At the same time imbalances, increasing         relatively closed up vis-à-vis the global level. In sum, this                                                                  In no way this report is a panacea for all the economic
disparities and rising youth unemployment rates are            leads to a lack of competitiveness and bars the road to              •	Identify and analyze the economic challenges and       difficulties the region is currently facing. However it can
keeping the region on tenterhooks.                             more sustainable and inclusive growth.                                  opportunities the region is facing within the next     lay the basis for a new platform of thought and action.
                                                                                                                                       decade;
Eventually, the region is longing for a comprehensive          The various building sites are not a secret and have been
strategy which spurs on sustainable and inclusive growth       stated and expanded by academia, international bodies                •	Advice how the Maghreb business community              Method:
and leads to shared prosperity. This is where a Maghreb        and business: Promotion of small and medium enterprises                 can provide a value added to closer economic
Initiative of Commerce and Investment (IMCI) can provide       (SME), access to finance, the need for reliable framework               integration in times of change and transformation;        1.	Review and synthesis of previous in-depth studies
a value added.                                                 conditions and low bureaucratic burdens, investment                                                                                   on the Maghreb integration process; review
                                                               in research and vocational training, modernization of                •	Highlight concrete steps to take by business                  of benchmark studies on comparable regional
Despite a significant number of common economic                infrastructure etc.                                                     representatives to make the IMCI a visible step               integration projects;
challenges Maghreb governments have sought remedy                                                                                      towards tighter economic cooperation.
in national solutions. Bilateral trade agreements with         The infinite number of possible policy options should not                                                                         2.	Review of Maghreb policy makers and employers
neighbors overseas such as the European Union (EU) are         cloud the sight: In times of change, affecting the Maghreb        Eventually, it should not be restated extensively what has          federations assessments
favored over tighter cooperation between Maghreb states.       countries as well as its neighborhood, political leaders and      been diagnosed well in the past as the main variables               (e.g. UMA and UME);
                                                               fore and foremost the business community both have to             limiting cooperation and hampering growth.
The absence of regional integration is costly. Up to 2-3       set the strategic priorities together.                                                                                            3.	Analysis of the current economic and political
percent of the consolidated regional gross domestic                                                                              Suggesting a bottom-up logic, this report is about a new            development since the “Arab Spring”;
product (GDP), roughly 530 billion Dollars, is lost each       Within a period of political transition, which is itself linked   approach to surmount –step by step- the absence of
year due to trade restrictions and legislative barriers.2      to an economic revolution set about some decades ago,             regional integration by associating those actors to the         4.	Drafting of concrete organizational and policy-
                                                               the need for courageous signals is more than urgent.              process who know best what is happening on the ground.              related proposals which may refocus intra-Maghreb
At the same time efforts to couple the “Maghreb potential”                                                                                                                                           integration in the year of the 25th anniversary of the
have not been in vain. The creation of the Arab Maghreb        They can smooth the way towards sustainable growth                The goal is to suggest in a comprehensive manner how                AMU on effective business needs.
Union (AMU-UMA) in the late 1980ies initiated a period of      and employment. Both are preconditions to global                  the business community can organize and structure itself
common institution-building.                                   competitiveness as well as guarantors for political stability
                                                               and a functioning intergenerational contract.
However, this framework, able to serve as a backbone for
a common single market, has not been effectively called
to life. Out of a total of 36 legal conventions, protocols
and agreements, only 6 have been ratified by national
parliaments within 25 years.

Political paralysis blocks the view on the crucial role the
Maghreb could play in world economy. Together, the
five countries can buddle the critical mass necessary to
exploit economies of scale and to compete on a global
level: A young dynamic population, a strategic geographic
position, a great plenty of natural resources and a
prosperous neighborhood.
MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE - A PRIVATE SECTOR STRATEGY FOR A MAGHREB INITIATIVE OF COMMERCE AND INVESTMENT (IMCI)
CONTENTS                                                            9

CONTENTS

List of abbreviations                                              05

A new approach to trade integration in the Maghreb                 06

Contents                                                           09

Résumé opérationnel et Plan d’action                               10

Executive Summary and Action Plan                                  12

1   Five stars rising? The Maghreb in times of change              14
    1.1. Profound transformations                                   16
    1.2. Competitiveness and Trade                                  18
    1.3. Markets and Opportunities                                 20

2   Entrepreneurs as indispensable partners of the project         26
    2.1. Strengthening cooperation between Employers federations   28
    2.2. Where business can step in                                29
    2.3. Three reasons to join forces                              30

3	At the crossroad: Recommendations and further action            32
    3.1. Structures for Business action                            34
    3.2. Voicing Business claims effectively                       38

4   Conclusions and perspectives                                   42

Annexes
    Recommandations et Plan d’Action (version française)           45
    Background documents                                           52
    Notes and References                                           55
MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE - A PRIVATE SECTOR STRATEGY FOR A MAGHREB INITIATIVE OF COMMERCE AND INVESTMENT (IMCI)
10                                                     MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE                  RÉSUMÉ OPÉRATIONNEL ET PLAN D’ACTION                                                                               11

                                                                                                                                           Action               À court terme                 À moyen terme                 À long terme

RÉSUMÉ OPÉRATIONNEL
                                                                                                                                          politique                 (1 an)                       (2-4 ans)                    (5 ans + )

ET PLAN D’ACTION                                                                                                                       Commerce et
                                                                                                                                         Finances
                                                                                                                                                                 Faciliter l’accès
                                                                                                                                                            transfrontalier au prêts et
                                                                                                                                                                     crédits
                                                                                                                                                                                            Faciliter l’établissement
                                                                                                                                                                                          transfrontalier des banques
                                                                                                                                                                                                                            Libéraliser tous
                                                                                                                                                                                                                           les mouvements
                                                                                                                                                                                                                           de capitaux dans
                                                                                                                                                                                                                              le Maghreb

                                                                                                                                                             Etablir un dialogue entre
                                                                                                                                                                                              Harmonisation des            Etablir des tarifs
                                                                                                                                          Douanes           le Conseil des Douanes et
PLAIDER POUR LE MAGHREB                                          régions urbaines, l’importance du taux de chômage des                                                 l’UME
                                                                                                                                                                                            procédures douanières         douaniers communs

DES ENTREPRENEURS- UNE                                           jeunes dans la région reste inquiétante. Dans la conviction
                                                                 qu’il est possible de répondre à ces problèmes au
STRATEGIE DU SECTEUR                                             niveau du Maghreb, les cinq pays signataires devraient                                     Renforcer les Partenariats    S’accorder sur un régime de
                                                                                                                                                                                                                             Investir dans
                                                                                                                                       Infrastructure
PRIVE POUR UNE INITIATIVE
                                                                                                                                                                                                                           les capacités rail
                                                                 reconsidérer les arguments en faveur d’une coopération                                       Publique-Privé (PPP)             transport commun
                                                                                                                                                                                                                             et portuaires
                                                                 plus étroite.
MAGHREBINE DU COMMERCE ET
DE L’INVESTISSEMENT (IMCI)                                                                                                                                   Rendre les procédures              Créer une Agence
                                                                                                                                                                                                                         Lancer une campagne
                                                                                                                                                                                                                           intra-Maghrébine
                                                                                                                                     Climat des Affaires      administratives plus               de Promotion de
                                                                                                                                                                                                                            et internationale
                                                                                                                                                                transparentes             l’investissement au Maghreb
Ce rapport propose une nouvelle approche constructive                                                                                                                                                                       d’investissement
afin de faire avancer l’intégration régionale en matière de      Le Maghreb traverse actuellement
commerce dans la région du Maghreb. Face aux blocages
politiques qui depuis les années 1994 ont profondément           de profondes transformations                                        Marchés et Emploi
                                                                                                                                                             Faciliter les procédures
                                                                                                                                                               relatives à l’emploi
                                                                                                                                                                                              S’accorder sur une
                                                                                                                                                                                           harmonisation renforcée
                                                                                                                                                                                                                           Créer des marchés
                                                                                                                                                                                                                          communs sectoriels
entravé la coopération économique entre les cinq                                                                                                                  transfrontalier           dans certains secteurs
signataires de l’Union du Maghreb arabe (UMA), il faut           qui affectent tous les domaines
mobiliser de nouvelles voies afin de relancer le processus
dans lequel l’Algérie, la Libye, la Maurétanie, le Maroc et la   des politiques publiques dans                                          Education et        Adapter l’ université aux
                                                                                                                                                                                              Relier la recherche          Créer un Espace
                                                                                                                                                                                              universitaire et les          de Recherche
Tunisie s’étaient embarqués en 1989.
                                                                 la région.                                                              Formation          besoins des entreprises
                                                                                                                                                                                                  entreprises                 Maghrébin

Cette nouvelle approche consiste en un engagement
plus cohérent et plus constant du secteur régional
                                                                                                                                                                À court terme                 À moyen terme                 À long terme
privé afin de surmonter progressivement l’absence                                                                                  Organisation de l’UME
                                                                                                                                                                    (1 an)                       (2-4 ans)                    (5 ans + )
d’intégration régionale. En effet, la quasi-absence de
coopération représente une perte d’environ 2-3% du               L’entrepreneuriat est un partenaire indispensable afin
produit intérieur brut (PIB) annuel dans la région. Face         de remettre le Maghreb en route. En comparaison avec
                                                                                                                                        Instituer un           Installer un groupe
à ce constat, les organisations patronales des cinq États        d’autres régions dans le monde, le taux de commerce                                                                                                    Fonctionnement régulier
                                                                                                                                   Secrétariat permanent            de travail               Nommer le personnel
                                                                                                                                                                                                                            du Secrétariat
membres de l’UMA se sont donc réunies en 2007 dans               au niveau intra-maghrébin reste chroniquement bas. Ce                    de l’UME              des 5 fédérations
l’Union Maghrébine des Employeurs (UME). Au milieu des           sont surtout la persistance de barrières non-tarifaires
défis après le « Printemps arabe », l’UME lance en 2014          et l’insuffisance des infrastructures qui freinent la
                                                                                                                                                                                                                              2-4 Séances
l’Initiative maghrébine du Commerce et de l’Investissement       compétitivité de la région. En même temps, l’abondance             Etablir des comités                                   Nommer les membres des
                                                                                                                                                           S’accorder sur les secteurs-                                     en comité par an
(IMCI), dans le but de redynamiser le processus initié par       des ressources naturelles, de capital humain éduqué                    sectoriels et          clés de coopération
                                                                                                                                                                                                  comités
                                                                                                                                                                                                                           3-6 rencontres des
                                                                                                                                   des groupes d’experts                                     Choisir les experts
l’UMA dans une perspective d’emploi et de croissance             et de marchés avec un potentiel de développement                                                                                                       groupes d’experts par an
inclusive. Dans le premier et deuxième chapitre de ce            représentent des opportunités indéniables. Des efforts
rapport, les logiques et objectifs de cette initiative seront    à la coopération en matière de régulations et à la                      Renforcer           Identifier des objectifs      Nommer un interloctueur
                                                                                                                                                                                                                              Participation
présentés. Finalement, le troisième chapitre fait l’objet        modernisation des infrastructures seraient une incitation                                                                                                 des représentants
                                                                                                                                       le partenariat      communs après le Forum de       permanent pour l’UMA au
                                                                                                                                                                                                                             de l’UMA dans
d’un plan d’action exhaustif, divisé en deux stratégies          afin d’encourager l’investissement intra-maghrébin ainsi                UME-UMA               Marrakech de 2014             Secrérariat de l’UME
                                                                                                                                                                                                                         les groupes d’experts
opérationnelles.                                                 que des Investissements Directs Étrangers (IDE).

                                                                                                                                         Organiser                                         2-3 Tables rondes par an        3-4 Tables rondes
Le Maghreb traverse actuellement de profondes                    Le plan d’action indique deux dimensions que les                                                 Table ronde
                                                                                                                                   des Tables rondes des        des PDG en 2014
                                                                                                                                                                                          proposées par des grandes       sectorielles par an
transformations qui affectent tous les domaines des              entrepreneurs du Maghreb devraient aborder dans                       entrepreneurs                                             entreprises            proposées par des PME
politiques publiques dans la région. En 2011, des                un horizon de 1 à 5 ans. D’un côté, les structures
soulèvements populaires ont entraîné des changements             organisationnelles doivent être élargis et adaptés à une
de régimes en Tunisie et en Libye, menant à une                  défense d’intérêts à l’échelle régionale. De l’autre, les         Ouvrir des Bureaux de
                                                                                                                                                                                                                              Washington
réorganisation de l’architecture politique régionale.            priorités concernant les politiques publiques devraient être             liaison à                 Bruxelles                        Riyad
                                                                                                                                                                                                                               et Pékin
Après des années de croissance du PIB, tous les pays             définies et communiquées aux acteurs politiques. In fine,            l’international
de la région sont entrés dans une période de transition          la mise en œuvre de ces deux dimensions interconnectées
démographique. En plus d’une amplification des disparités        constitue la base pour une action entrepreneuriale crédible                                Mémorandum de progrès            Rapports régulier sur      Application d’un «Index
régionales et un mouvement des populations vers les              et durable dans la région du Maghreb.                                  Rapport et                de 2014                     le climat des affairs     maghrébin des Affaires»
                                                                                                                                       Forum annuel            Compser un jury                  Attribuer le prix         Diversifier le prix
                                                                                                                                                               Lever des fonds               Attribuer une bourse         Club des Anciens
MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE - A PRIVATE SECTOR STRATEGY FOR A MAGHREB INITIATIVE OF COMMERCE AND INVESTMENT (IMCI)
12                                                  MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE                     EXECUTIVE SUMMARY AND ACTION PLAN                                                                                   13

                                                                                                                                                                 Short term                    Medium term                    Long term
                                                                                                                                       Policy action

EXECUTIVE SUMMARY
                                                                                                                                                                   (1 year)                     (2-4 years)                   (5 years +)

AND ACTION PLAN                                                                                                                     Trade and finance
                                                                                                                                                                Facilitate cross-
                                                                                                                                                                 border access
                                                                                                                                                              to credits and loans
                                                                                                                                                                                           Facilitate cross-border
                                                                                                                                                                                           establishment of banks
                                                                                                                                                                                                                           Liberalize all capital
                                                                                                                                                                                                                            movements in the
                                                                                                                                                                                                                                Maghreb

                                                                                                                                                          Establish dialogue between
This report is about a new and constructive approach to        Business is an indispensable partner in getting the                                                                           Harmonisation of
                                                                                                                                         Customs           the Customs Council and
                                                                                                                                                                                            customs procedures
                                                                                                                                                                                                                         Establish common tariffs
regional trade integration in the Maghreb.                     Maghreb back on track. Compared with other regions                                                   the UME
In the face of political deadlock, which has deeply affected   world-wide intra-Maghreb trade is chronically low and
economic cooperation between the five signatories of           especially Non-tariff barriers and insufficient infrastructure
the Arab Maghreb Union (AMU) since 1994, alternative           curb the region’s competitiveness. At the same time                                             Strengthen Public-
                                                                                                                                                                                         Agree on a common transit        Investment in port and
                                                                                                                                      Infrastructure          Private-Partnerships
channels have to be mobilized to re-launch the process         abundant natural resources, an educated human                                                         (PPP)
                                                                                                                                                                                                  regime                     railway capacities
on which Algeria, Libya, Mauretania, Morocco and Tunisia       capital and markets with potential for development
embarked in 1989.                                              are undisputable opportunities. Efforts on regulatory
                                                               cooperation and infrastructure modernization and                                                                                                          Launch intra-Maghrebine
                                                                                                                                                              Make administrative        Create Maghreb Investment
The new approach consists a more consistent and                expansion would be an incentive for encouraging intra-                Business climate     procedures more transparent             Agency
                                                                                                                                                                                                                            and international
                                                                                                                                                                                                                          investment campaign
permanent engagement of the regional private sector            Maghreb investment as well as FDI inflow.
to progressively overcome the absence of regional
integration. In fact, the virtual absence of cooperation       The action plan indicates two dimensions Maghreb
                                                                                                                                                              Ease requirements               Agree on deeper
represents a loss of roughly 2-3 percent in the annual         business should attack in a planning horizon of 1 to 5                Markets and Jobs          for cross-border               harmonisation in
                                                                                                                                                                                                                         Create common markets
                                                                                                                                                                                                                            in certain sectors
regional gross domestic product (GDP). The Employers           years. On the one hand, organizational structures need                                            work permits                  certain sectors
federations in the five AMU member states have therefore       to be expanded and adapted to regional advocacy. On
bundled their force in 2007 within the Union Maghrébine        the other hand, with regard to policy areas, priorities
des Employeurs (UME). In order to reinvigorate the AMU         have to be defined and communicated to political actors.                 Education         Adapt university to business   Interlink univserity research      Create a Maghreb
process in the midst of the challenging Post-Arab Spring       Eventually, both dimensions are interconnected and lay                  and Training                 needs                        and business                Research Area
era in the view of inclusive growth and employment, UME        the basis for credible and durable business action in the
initiates in 2014 the Maghreb Initiative for Commerce and      Maghreb.
Investment (IMCI). The rationale behind this private sector
                                                                                                                                          UME                    Short term                    Medium term                    Long term
initiative is expatiated in the first and second chapter of
                                                                                                                                       Organization                (1 year)                     (2-4 years)                   (5 years +)
this report. The third chapter contains a comprehensive
action plan, divided up in two operative strategies.

                                                                                                                                     Establish a UME                Set up                                                       Regular
The Maghreb is experiencing a number of profound
                                                                                                                                       Permanent              an inter-federation               Appoint staff                 functioning of
transformations which affect all areas of policy-making                                                                                Secretariat              working group                                              the secretarial body
in the region. Popular uprising led to regime change in
Tunisia and Libya in 2011 reordering the regional political
                                                                                                                                    Establish sectorial                                                                      2-4 Committee
architecture. After years of steady GDP growth, all                                                                               committees and expert      Agree on key sectors
                                                                                                                                                                                             Appoint Committee
                                                                                                                                                                                                                               sessions p.a.
countries have entered a period of demographic transition.                                                                                                                                       members
                                                                                                                                         groups                of cooperation
                                                                                                                                                                                               Select experts
                                                                                                                                                                                                                            3-6 expert groups
Besides growing territorial disparities and a population                                                                                                                                                                      meetings p.a.
move towards urban areas, youth unemployment has
remained alarmingly high. Convinced that these challenges                                                                                                     Identify common               Appoint a permanent             Participation of
can be addressed on a Maghreb level, the five countries                                                                                Strengthen
                                                                                                                                                                goals after the              UMA interlocutor at          UMA representatives
                                                                                                                                   UME-UMA Partnership      Marrakech Forum 2014            the UME Secretariat            in expert groups
should reconsider the reasons why tighter cooperation
makes sense.

                                                                                                                                        Establish                                               2-3 Sectorial                 3-4 Sectorial
                                                                                                                                                               CEO Roundtable
                                                                                                                                        Business                  in 2014
                                                                                                                                                                                           Roundtables p.a.hosted           Roundtables p.a.
                                                                                                                                       Roundtables                                          by large companies               hosted by SME

                                                                                                                                         Establish
                                                                                                                                                                                                                               Washington
                                                                                                                                       international               Brussels                        Riyadh
                                                                                                                                                                                                                               and Beijing
                                                                                                                                      liaison offices

                                                                                                                                                               State of progress             Regular reports on            Maghreb business
                                                                                                                                      Annual Report           memorandum 2014                 business climate                climate index
                                                                                                                                       and Forum                Compose jury                    Grant award                 Diversify award
                                                                                                                                                                 Raise funds                 Grant scholarship             Alumni community
MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE - A PRIVATE SECTOR STRATEGY FOR A MAGHREB INITIATIVE OF COMMERCE AND INVESTMENT (IMCI)
1	FIVE STARS RISING?
   THE MAGHREB IN TIMES
   OF CHANGE

 Political deadlock is not a reason to give up.
 Maghreb business remains the backbone of
 cross-border cooperation and has the potential
 to go further. In view of multiple transformations
 reshaping the region, clear and visible signals
 are more than necessary.
16                                                   MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE                                       FIVE STARS RISING? THE MAGHREB IN TIMES OF CHANGE                                                                                                                17

1.1. PROFOUND
     TRANSFORMATIONS
North Africa may be one of the least integrated regions       Figure - GDP growth rates of the AMU area                                           Demographics and the job market                                Figure - Unemployment rates in Algeria, Morocco and Tunisia
                                                                                                                                                                                                                     Figure - Unemployment rate in Algeria, Morocco and Tunisia 2000-2012 (annual % of total population)
                                                                 Figure - GDP growth rates of the AMU area 2000-2012 (annual %)
in the world3 - at the same time it is one of few regions                   2000-2012 (annual %)                                                                                                                                (annual % of total)
which has embarked on such a vibrant and intense                                                                                                   The Maghreb is a dynamic region. This fact is illustrated
transformation process.                                                                                                                            best by a rapid population growth which has considerable
                                                                         AMU                                                                                                                                                   Morocco               Algeria                 Tunisia
                                                                                                                                                   increased the potential workforce. Between the 1980 and
The 2011 uprisings which have been commonly labeled the                                                                                            2000 populations more than doubled in the majority of
“Arab Spring” can be considered as a powerful symptom                                                                                              the Maghreb countries. At the same time the region has
of long term economic and social changes. The origin of                                                                                            entered a phase of demographic transition as fertility rates
these movements lies in the 1980 and 1990 when the end                                                                                             are decreasing since 1990.
of the Cold War inaugurated a new era of opening up and
global exchanges.                                                                                                                                  Today the region counts more than 90 million inhabitants.
                                                                                                                                                   Algeria (38 millions) and Morocco (33 millions) are the
At the time Maghreb countries did not only decide to                                                                                               most populated countries. Tunisia (10 millions) and Libya
converge economically and politically within the AMU.                                                                                              (6,5 millions)range in the middle. Mauretania is currently
They also launched a number of decisive national reform                                                                                            the region’s least populous country.
packages: Privatization of state owned companies, revamp
of infrastructure, and diversification of economies.                                                                                               Within all the countries, the urban population has been
                                                                                                                                                   growing much faster than in rural areas. This has made
Very soon national interests overran the Maghreb spirit.                                                                                           cities the key economic and social epicenters. Jobs-seekers
Structural adjustments and strategic reorientation were                                                                                            would increasingly leave the countryside as the workforce
                                                                                                                                                                                                                                                                                       Source: ILO and national sources
undertaken in each country in a different way, which partly                                                                       Source: UNCTAD   in agriculture has been more and more rationalized.
explains today’s fragmented regional economic structure.
                                                                                                                                                   With the exception of Mauretania, where the majority
Legal obligations, to which AMU member states had                                                                                                  of the population lives in rural areas, between 58 to 78       economies6. Between 2000 and 2009 unemployment fell
committed themselves, remained unapplied as Heads of          In the short term, the national strategy paid off: Between                           percent of Maghrebins was living in cities in 2012. In the     from 13.4 percent to 9.1 percent in Morocco and from 30
State and Government could not agree on holding further       1999 and 2008 the majority of Maghreb countries                                      past, governments have therefore paid more attention           percent to 10 percent in Algeria. Tunisia’s unemployment
summits. At the same time the AMU Secretariat has             experienced impressive average GDP growth rates of 3-5.5                             to urban development by improving infrastructure and           rates remained relatively high, despite the country’s
continued actively to adapt legal instruments and keep        percent.4 However certain governments did not realize or                             the access to education. As a consequence, territorial         impressive economic performance.
inter-regional cooperation alive.                             simply ignored the lacking sustainability of their economic                          disparities in certain countries have further increased5.
                                                              models.                                                                                                                                             However, employment policies have been unsustainable:
Moreover external rapprochement with the EU, the major                                                                                             Juxtaposed to this movement from rural to urban areas,         In Algeria and Morocco growing employment in the
trading partner of the Maghreb, was strictly orchestrated     Despite a general improvement of living conditions,                                  labor in Maghreb countries is experiencing a considerable      informal sector has led to stagnation in labor productivity.
on a national level (Tunisia and Morocco 1996, Algeria        regional disparities have been increasing. Unemployment                              transformation.                                                Tunisia has built its growth on low-skilled sectors. The
2002).                                                        has remained high while the population is growing.                                                                                                  demand for educated labor is sluggish, explaining the high
                                                              Corruption and institutional inefficiencies were                                     At first view, there has been visible progress in the          youth unemployment rates in the country.7
                                                              increasingly denounced.                                                              reduction of unemployment in the major Maghreb

                                                              Governments generally underestimated the effect of the
                                                                                                                                                     BOX: YOUTH UNEMPLOYMENT
                                                              radical shift in the output mix from agricultural products
                                                              and raw materials to services. In the case of Tunisia for
                                                                                                                                                     During the last years youth unemployment rates in the Maghreb countries has been one of the highest in the world.
                                                              example agricultural production shrank within 20 years by
                                                                                                                                                     Whereas globally 12 percent of the young were unemployed in 2008, 24 percent of young Algerians and 18 percent
                                                              4 percent, while services expanded by almost 10 percent.
                                                                                                                                                     of young Moroccans were left without a job. In Tunisia, the rate was at alarming 31 percent.
                                                              A similar phenomenon can be observed in Morocco
                                                                                                                                                     There are multiple causes to this alarming phenomenon: The “youth bulge”, meaning a demographic increase of
                                                              Last but not least, in the aftermath of the Euro crisis 2009,                          “prime-age” working population; incompatibility between education outputs and the needs of business; a shortage of
                                                              exports to Europe as well as FDI seriously declined. First                             high-skilled jobs in the region; adjustments after the global economic crisis.
                                                              and foremost the most open Maghreb economies, Tunisia                                  Leaving the region seems to many young skilled Maghrebins the only solution. Around 16 percent of the labor force
                                                              and Morocco, were hit by this shock.                                                   in Morocco, 15 percent in Tunisia and 14 percent in Algeria emigrated in 2000. On the one hand, this “brain drain”
                                                                                                                                                     weakens regional economies as skilled human capital is lost. On the other hand, through remittances migrants
                                                                                                                                                     overseas exceed FDI and make a considerable contribution to the regional GDP.
18                                                                                   MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE                FIVE STARS RISING? THE MAGHREB IN TIMES OF CHANGE                                                                                                                             19

1.2. COMPETITIVENESS
      AND TRADE

Maghreb competitiveness and the regional trade level are                                        •	Lack of trade complementarity9                           Investments patterns
currently in a poor state. Compared with other regional                                            Intra-regional merchandise trade suffers from low
blocks worldwide, which have been further converging,                                              intra-regional trade complementarity, mirroring          Today, intra-Maghreb investment patterns as well                          Efforts to take concrete action in the Post-2011
the AMU area remains fragmented.                                                                   similarities in trade structures: Small markets; low     as international foreign direct investment (FDI) are                      period already exist. On the occasion of the 5th
                                                                                                   export diversification; little integration into global   underdeveloped. Whereas the inflow of FDI was higher in                   Regional Conference of finance ministers and
The most significant trade flows in the Maghreb in terms                                           production chains limiting the expansion of high         the Maghreb countries than in Central and Eastern Europe                  central bank governors of the Maghreb countries
of imports and exports can be observed between the                                                 value added manufacturing activities.                    (CEE) in the 1990, this trend changed around 2004. Major                  in Nouakchott in 2013 Christine Lagarde, Chief of
“central Maghreb countries” (Algeria, Tunisia and Morocco)                                                                                                  reasons are ongoing large-scale privatization programs                    the International Monetary Fund (IMF), outlined
(see Annex page 54). At the same time, in 2008, intra-                                          •	Lack of external market diversification                  and structural adjustments which attracted numerous                       the necessary steps to enhance FDI in the region:
regional trade among the central Maghreb countries was                                             Maghreb trade patterns are significantly driven by       foreign investors.13                                                      “For the level of foreign direct investment to
less than 3 percent of the region’s total trade. In contrast,                                      proximity. In fact the EU has remained the main                                                                                    increase, Maghreb countries need to improve the
intra-regional trade within the EU was 63.6 percent, within                                        source of exports and imports for Maghreb countries      Two major investment patterns characterize the current                    business environment, make customs and taxation
ASEAN 24.6 percent, and among Mercosur countries 15.2                                              which accounts on average for over 65 percent of         state of play:                                                            rules more transparent, make the judicial system
percent.8                                                                                          their total trade. This high market concentration                                                                                  more predictable and independent, and harmonize
                                                                                                   points to the vulnerability of the region to changes       •	Intra-Maghreb FDI are low compared to other                          investment rules across the region.”
Eventually, these facts have been repeatedly deplored and                                          on the European market.10                                     regional trading blocs
they highlight once more the need to take action. At the                                                                                                                                                                              By agreeing to finally launch the Arab Maghreb
same time, global benchmarking does not lead very far                                           •	Lack of product diversification                               Intra-regional FDI in Mercosur, ASEAN or the GCC                     Union Investment Bank (BMICE)17 in 2014, Maghreb
when one tries to understand why intra-Maghreb trade                                               The range of goods offered by Maghreb countries               vary from 8 to more than 30 percent of total FDI.                    governments made a promising step towards
remains low and which major barriers impede the turn                                               still remains relatively similar. Besides products            In the AMU area they represent less than 1 percent.                  facilitating investment. In fact, BMICE loans
towards more competitiveness.                                                                      related to the oil- and gas-sector which are mainly           Libya holds 55 percent of the total regional FDI,                    will provide a solid financial base for improving
                                                                                                   traded by Algeria and Libya, the main export                  followed by Tunisia (20 percent) and Morocco (15                     infrastructure, a necessary precondition for
                                                                                                   manufacturing sectors are the clothing and textiles           %).14 FDI of Maghreb countries outside the AMU area                  increasing FDI.
Figure - Intra-regional trade by regional agreement                                              industry, agri-food and building materials and, to            have rapidly shrunk in 2009 after the global financial
               (% of total
  Figure - Intra-regional          trade)
                          trade by regional agreement 2006-2008 (% of total trade)                 some extent, electrical and mechanical industries.11          crisis.
                                                                                                   The service sector is dominated by tourism.
80
                                                                                                   At the same time there are signs of export                 •	Inward FDI to the Maghreb countries have                 Figure - FDI inflows into Maghreb countries
70
                                                                                                   diversification in Tunisia and Morocco.12                     decreased after 2011                                              (in US$ millions)
                                                                                                                                                                                                                                   Figure - FDI Inflows into Maghreb countries 2002-2012 (in US$ millions)

60                                                                                                                                                               While in 2008 extra-regional FDI reached a record                     Morocco                 Algeria               Tunisia                 Libya              Mauretania

                                                                                                                                                                 level of 3 percent, this trend was reversed sharply
50                                                                                                                                                                                                                        5000
                                                                                                                                                                 after the 2011 uprisings. Even if foreign investors
40                                                                                                                                                               are hesitantly returning, their engagement is much
                                                                                                                                                                                                                          4000
                                                                                                                                                                 lower. Europe remains the principal FDI source for
30
                                                                                                                                                                 Maghreb countries, in particular regarding Morocco
                                                                                                                                                                                                                          3000

20
                                                                                                                                                                 and Tunisia (80 and 60 percent, 2005-2010). In
                                                                                                                                                                 general, Tunisia holds highest stock of FDI in the
                                                                                                                                                                                                                          2000
10                                                                                                                                                               region, followed by Morocco and Algeria.15

 0                                                                                                                                                                                                                         1000
         EU 25           ASEAN         MERCOSUR        CEDEAO           GCC          AMU                                                                         Experiences in the past have shown that FDI can
                                                                                                                                                                 act as growth boosters. Besides an inflow of foreign
                                                                          Source: UN Comtrade
                                                                                                                                                                 currency, technology transfer and job creation, FDI          0
                                                                                                                                                                                                                                     2002     2003      2004     2005      2006      2007      2008    2009      2010    2011      2012
                                                                                                                                                                 also can spur on productivity and help to further
                                                                                                                                                                 diversify economies.16                                    -1000

                                                                                                                                                                                                                                                                                                                     Source: World Bank
20                                                   MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE                   FIVE STARS RISING? THE MAGHREB IN TIMES OF CHANGE                                                                      21

1.3. MARKETS
      AND OPPORTUNITIES
At the current stage, the Maghreb countries are more           In times of change, where the need for a Maghreb                Table: Maghreb markets today and the gains of deeper regional integration
fragmented than united. The freezing of the integration        dimension is more present than ever before on national
process within the AMU framework, which was mainly             policy agendas, the status quo has to be courageously put
caused by the border closure between Morocco and               into question:
Algeria in 1994, has left its marks on the region.                                                                               MARKET                 STATUS QUO                                     TIGHTER COOPERATION
                                                                  • Where does the Maghreb stand today?
Goals, which seemed to be tangible in the 1990 have               •	Which concrete benefits would further cooperation           Agriculture            •	Rising demand for agricultural products     •	Food security up to 2030
moved into an uncertain future: The creation of a Maghreb            entail for the five AMU members?                                                      (wheat, milk, meat)                         •	Sustainable water and soil management
Free Trade Area (MFTA), the creation of a Maghreb                                                                                                       •	Water scarcity                              •	Technological innovation (breeding)
Customs Union (MCU) or the creation of a Maghreb Single        First of all, this means taking a close look at the state of                             •	Desertification
Market (MSM).                                                  play on a sectorial scale.                                                               •	Increase in global competition

Tariffs remain high between Maghreb countries. This does       Different dynamic markets are overlapping within the AMU
not only have a deteriorating impact on trade intensity, but   area, each one being more or less prominent in one or             Agriculture            •	Rising demand (households, industry)        •	Share costs for additional power plants
limits the competitiveness and quality of products18.          more member states. Over the recent years, the Maghreb                                   •	Low national electricity production         •	Lower energy prices for consumers
                                                               private sector has experienced the evolution of regional                                    capacities                                  •	Energy diversification (solar power, wind
These obstacles are coupled by NTB which can consist in        and global demand and supply.                                                            •	Need for grid extension and                    energy)
straightforward border closures, excessive delays resulting                                                                                                modernization
from lengthy clearance and inspection processes, the large     In fact, coming to decisions on how to adjust to market                                  •	Inefficient energy consumption
number of documents and signatures needed to process           forces has not been an easy task as solutions are
a trade transaction, and the frequency of problems with        hampered by a number of obstacles: The absence of
                                                                                                                                 Industry               •	Poorly diversified products                 •	Rising employment
customs and other government authorities19.                    regional integration is fragmenting regional value chains                                •	Decreasing productivity (deficient          •	Larger product range
                                                               and impedes the diversification of the product base.                                        manufacturing plants)                       •	Innovation
Besides the virtual non-existence of the free movement                                                                                                  •	Diverging industrial strategies and         •	Increase in FDI
of goods and services, the free movement of labor and          In the past, a number of in-depth scenario studies have                                     planning/protectionism
capital is also more than limited between the five AMU         repeatedly quantified the gains of “more Maghreb”20.
signatories.                                                   Business will further qualify these gains in 2014. They can
                                                               be harvested in every sector, from agriculture, to industries     Information and        •	Need for area wide IT-infrastructures       •	Cross-border research facilities
In addition, regional and international business has           up to energy and logistics.                                       Communication          •	Bureaucratic hurdles                        •	More efficient production processes
frequently highlighted the need for a comprehensive                                                                              Technologies           •	No internationalization capacities          •	Improved administration (customs, security)
cross-border infrastructure, which is a precondition for a                                                                       (ICT)
competitive logistics sector.

The responses to these claims have always been national
facilitation strategies, which have been more successful                                                                         Transport and          •	Country-specific progress (e.g. Tanger      •	Geostrategic “hub”
in some Maghreb countries than in others. However, the                                                                           Logistics                 Med, High speed train sections)             •	Increase in FDI
“Maghreb dimension” is non-existent in national policy                                                                                                  •	Time-consuming administrative               •	Increase in regional productivity
decisions.                                                                                                                                                 procedures
22                                                   MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE               FIVE STARS RISING? THE MAGHREB IN TIMES OF CHANGE                                                                         23

Connect, dismantle, invest- A recipe for a successful Maghreb business                                                     1. Connect markets
                                                                                                                           Intra-regional external trade can only be facilitated by         fostering growth through research and innovation. It is key
                                                                                                                           providing the necessary networks for exchange. This              to help minimize administrative burdens, widen consumer
                                                                                                                           includes tighter cooperation between the five AMU                choice, lower transactions costs, facilitate communication
                                                                                                                           signatories regarding customs. Beside the need to lower          and lead to new services and products. Here and now it
                                                                                                                           tariffs or abolish them in a foreseeable future, procedures      plays a key role in facilitating the cooperation of customs
                                                                                                                           should be harmonized.                                            authorities and the development of infrastructures.

                                                                                                                           Also, customs authorities should be made aware of the            The immediate objective should be to:
                                                                                                                           needs and problems business encounters when goods
                                                                                                                           and services are crossing the border. Furthermore the               •	Encourage cross-border PPP projects on crucial
                                                                                                                           common planning, extension and maintenance of physical                 infrastructure development.
                                                                                                                           infrastructure, such as roads, ports and railways is a
                                                                                                                           necessary precondition for the growth of the logistics           Further, the following measures could be envisaged
                                                                                                                           sector. Stronger partnership between the public and              inter alia:
                                                                                                                           private sectors will help respond to key challenges.
                                                                                                                                                                                               •	Link up the Council of Director-Generals of
                                                                                                                           Such partnerships generate wider choice of innovative                  the five customs authorities with business (UME)
                                                                                                                           solutions, better value for more and new sources of                 •	Agree on the computerized exchange of data
                                                                                                                           financing especially in large infrastructure projects. Public-         among customs authorities
                                                                                                                           Private-Partnerships (PPP) would be a way to integrate              •	Finalize the Trans-Maghreb-Motorway and extend
Strong and thriving commerce and industry is a              is adapting these instruments to the current legal and         the business view in further infrastructure development.               the Open Sky agreements
fundamental prerequisite for raising prosperity, creating   economic state of play, is ready to provide the necessary
jobs and ultimately improving welfare in a region which     technical assistance to bring the “acquis Maghrébin” back      Finally, the investment in and use of Information- and
has far too long suffered from disintegration and lack of   to live.                                                       Communication Technology (ICT) structures are key in
cooperation.
                                                            The push for a successful IMCI is suggested to rest
The UME strategy to launch the IMCI is a clear call for     on pragmatism and direct dialogue with national
giving commerce and industry the necessary framework to     governments and authorities. The attached Strategic
play their role in the Maghreb of the future.               Action Plan lists concrete topics to be dealt with on short,
                                                            medium and long term.
Open competition and free trade across borders are
crucial elements in a “new deal” for the Maghreb. The       These are the beginnings of a long journey for Maghreb
free movement of goods, services, capital and people        business to convince and demonstrate to politicians,
will boost growth and turnover for the many businesses      populations and even some times business that the
waiting to flourish in the Maghreb.                         way forward to growth and enhanced prosperity goes
                                                            through more cooperation thus realizing what was already
Liberalization of markets and harmonization of regulation   acknowledged 25 years ago; that the Maghreb should be
is key to achieve the goal. Concretely this means           a prosperous region and not just five countries trying to
harmonizing different national regulations and thereby      struggle through on their own.
smoothing the path for a free trade area, a common or
even a single market.                                          It is suggested to frame the necessary steps forward
                                                               under the following headings:
For a start, legal instruments of the AMU framework,
specifically those regarding intra-regional and external       Connect markets
trade, investment and cross-border employment have to          Dismantle obstacles
be ratified and implemented. The AMU Secretariat, which        Encourage investment
24                                                  MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE            FIVE STARS RISING - THE MAGHREB IN TIMES OF CHANGE                                                                   25

2. Dismantle obstacles                                                                                                 3. Encourage investment
High tariffs as well as NTB both hinder trade flows         The immediate objective should be to:                      Growth and employment cannot be achieved without a           The immediate objective should be to:
considerably. They leave markets fragmented and impede                                                                 critical mass of investment. Thus it is crucial to provide
competitiveness. Following a logic of integration through     •	Determine a limited number of “pilot sectors”         the basis for a significant increase in intra-regional and     •	Review the national university curricula with a view
trade, capital and labor, freedom of movement should             where all five countries can agree on a deeper        external investment.                                              to cross-border business needs.
become a tangible reality.                                       cooperation agenda.
                                                                                                                       A well-educated workforce contributes significantly to       Further, the following measures could be envisaged
Given the reluctance of some countries to further open      Further, the following measures could be envisaged         a nations or regions economic value creation through         inter alia:
up their borders and markets, a sectorial approach could    inter alia:                                                productivity and business innovation. The improvement
be useful. In those sectors, where deeper cooperation                                                                  of the business climate as well as a move towards              •	Improve financing conditions, especially for the
seems achievable without losing one of the five strategic     •	Enhance the harmonization of standards                better quality education and training are the necessary           growing logistics sector
partners, progress should be enhanced.                        •	Ease requirements for cross-border job contracts      strategic elements which can create an attractive business     •	Render administrative procedures more transparent
                                                              •	Facilitate the access to cross-border banking loans   environment for local and foreign investors.                   •	Encourage dual education/training systems (Link up
In these “sectors of the lowest common denominator”              and credits                                                                                                             university and business)
the free movement of goods and services, workers and                                                                   Doing business in the Maghreb is currently difficult and
capital should be then established. Other sectors may                                                                  cumbersome. This is due to insufficient infrastructure,
follow later if experience proves the value added of                                                                   time-consuming administrative procedures and limited
cooperation. Easy access to capital markets minimizes the                                                              access to finance. Skilled young and motivated employees
financial costs for businesses, contributes to increased                                                               are easily found but vocational training does in many
investment, and stimulates growth. Therefore, especially                                                               cases not meet the needs of business in 2014.
the free movement of capital has to be further developed
as the access to financing as well as money transfers are
indispensable conditions for successful and sustainable
business.
2	ENTREPRENEURS AS
   INDISPENSABLE PARTNERS
   OF THE PROJECT

 Competing globally means closing ranks. Maghreb
 countries can assert themselves together with a
 critical mass of comparative advantages. In this matter
 business is an essential partner to rely on.
28                                                     MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE                 ENTREPRENEURS AS INDISPENSABLE PARTNERS OF THE PROJECT                                                                     29

2.1. STRENGTHENING COOPERATION
      BETWEEN EMPLOYERS                                                                                                        2.2. W
                                                                                                                                     HERE BUSINESS
      FEDERATIONS                                                                                                                   CAN STEP IN
                                                                                                                               The IMCI is rooted in a spirit of cross-border exchanges.       Table - Maghreb countries’ ranking in 2013 Doing
Catalyzing expectations                                                                                                        The Maghreb private sector has been following closely the                Business Report
                                                                                                                               economic development in each of the five countries for
Since the creation of the AMU in 1989 Maghreb business          Maghreb countries are high. For many the moment has            decades.                                                          Qatar                 48      Algeria              153
has never blown out the flame of cooperation. Despite the       come to give reinforced economic cooperation a new
painful 1994 deadlock, which has been paralyzing political      chance through the AMU process.                                One simple but compelling observation has been made
                                                                                                                                                                                                 Slovak Republic       49      Burkina Faso         154
action towards closer economic integration, Maghreb                                                                            repeatedly: With more intra-Maghreb trade, every single
entrepreneurs have remained defiant.                            Like in 1989 a climate of change and renewal drives            national economy would be better off22. Nevertheless
                                                                complex transformation movements which the national            efforts to dismantle visible and invisible obstacles, such as     Kazakhstan            50      Timor Leste          172
Circumventing the diplomatic labyrinths, they have chosen       level cannot embrace alone. Action has to be taken to          lacking infrastructure or diverging legislation, have been
a pragmatic approach to balance the shortcomings of             strengthen the Maghreb as a whole- Deepening the               half-hearted or completely absent.                                Tunisia               51      Mauretania           173
national policies. After all, it is business which has to pay   cooperation between the five UME Members through
the price for the costly absence of regional integration.       permanent structures and a common communication                But the Maghreb business community has also looked                Spain                 52      Benin                174
                                                                strategy is a first step.                                      beyond the regional scope and it is disturbing to realize
Employers federations in the five AMU member states,                                                                           that the Maghreb has fallen behind compared to other
                                                                                                                                                                                                 Kosovo                86      South Sudan          186
which show a natural interest in expanding the room             On the occasion of the 25th anniversary of AMU in 2014 a       regions in the world which are growing faster and
for growth, have been one of the few “first movers”             number of serious challenges lie ahead which bear at the       performing better. Furthermore foreign investment in the
                                                                                                                                                                                                 Morocco               87      Libya                187
in renewing inter-Maghreb dialogue. In 2007 CGEM                same time unexpected opportunities:                            Maghreb countries could be intensified- if the necessary
(Morocco), UTICA (Tunisia), CAP (Algeria) LBC (Libya)                                                                          business environment was in place.
and UNPM (Mauretania) ushered in a new era by founding             •	Economic: Growth is recovering but it is still too                                                                         Uruguay               88      Central African      188
the Maghreb Union of Employers (UME) in Marrakech.                    weak to absorb the large population flows into the       Improving the conditions for business in the Maghreb is                                         Republic
                                                                      job market.                                              a major goal of the IMCI. Today, the World Bank’s 2013
By agreeing to bundle their forces in order to reinvigorate                                                                    “Doing Business Report”23 draws a fairly mixed picture            Iran                  152     Chad                 189
Maghreb cooperation, Employers federations thought                 •	Political: The 2011 uprisings have raised the level of   of the region’s economies. While some are doing already
ahead. And this has paid off: When in 2011 the great                  political participation. At the same time religious      well, others lack behind. Libya is currently rated as one of
uprisings transformed social and political structures in              extremism and security threats have increased.           the last countries on the list.
Tunisia and Libya, calls for mastering the future challenges
on a Maghreb scale were omnipresent.                               •	Social: Youth unemployment and the widening of           Creating a predictable and growth-friendly regional             sketching scenarios for different markets if closer Maghreb
                                                                      the social gap influence political action. External      business climate would result in a double benefit:              cooperation was actually put into place.
Since then, there have been more and more reasons to                  factors such as technological progress and climate       Expanding trade and investment inside the Maghreb and
conclude: A private sector initiative makes sense. Maghreb            change matter.                                           promoting stronger economic ties with its neighborhood          Employers federations do not intend to compete with
business has therefore agreed to start the Maghreb                                                                             and global markets.                                             governments and elected parliaments which will decide
Initiative of Commerce and Investment (IMCI). On the                                                                                                                                           on the future of each country. At the same time they
basis of the UMCI Maghreb business will further strengthen                                                                     Business can step in where it is in the know: Firstly in        are convinced that further action towards a better and a
its cooperation to catalyze a powerful spill-over effect.21                                                                    assessing the current situation in terms of trade within        closer Maghreb is more than urgently needed to free up
                                                                                                                               the Maghreb and competitiveness and; secondly in                growth and create employment.
This move can translate into a dual signal: For politics to
wake up and for Maghreb peoples join forces.
After the 2011 events expectations among citizens in
30                                                  MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE                  ENTREPRENEURS AS INDISPENSABLE PARTNERS OF THE PROJECT                                                                31

2.3. THREE REASONS
      TO JOIN FORCES
The different degree of the 2011 Uprisings throughout the     Tighter cooperation between the five Maghreb countries is      1. COMPARATIVE ADVANTAGES
region can at least partially be explained by the variable    more than necessary and desirable.
success of national growth and employment models in the                                                                        •	Ample natural resources: Abundance of natural gas and oil, phosphates, iron, sun hours, fishing areas
past. While regimes in Tunisia and Libya had to step down,    Positive political signals, which had been virtually absent         and fertile soils illustrates the common Maghreb wealth.
Morocco and Algeria managed to restore social peace           during a decade, came upon in 2012 and 2013. Besides             •	Critical mass of consumers and internal demand: Today the AMU area counts more than 90 million inhabitants;
without major confrontations.                                 a number of inter-ministerial meetings on an AMU scale,             in 2025 there will be almost 110 million.
                                                              a number of Heads of State and Government expressed              •	A young and skilled human capital: In the next ten years the per capita output as well as private savings
Nevertheless the whole region has been affected since         their willingness and conviction to re-launch intra-regional        and investment can be significantly raised.
by a climate of uncertainty, rising security concerns         cooperation after long years of silence and mistrust.            •	A consistent industrial base and a dynamic services sector: Even though their potential is not fully exploited
and changing international power structures. Regional                                                                             there is promising activity in a number of branches.
GDP growth has been relatively unsteady since the             On his official visit to Tunisia’s Maghreb neighbors             •	Favorable geostrategic position: Situated between Sub-Saharan Africa, Europe and the Eastern Mediterranean,
revolutionary movements and investor confidence remains       President Moncef Marzouki in spring 2012 called                     the Maghreb both accesses crucial coastlines and over-land-transport routes of global trade.
weak24.                                                       repeatedly for the revitalization of AMU. Further, King          •	Cultural heritage and biodiversity: With more than 15 million visitors per year tourism is already one
                                                              Mohamed VI of Morocco, referred to his speech from the              of the economic trumps of the region.
While Egypt has relied considerably on reconstruction aids    throne in June 2012 to Morocco has an integral part of the
by the Arab Gulf States, Maghreb countries are left behind.   Maghreb. Also an improvement in quality of Moroccan-
Some have either sought assistance of the International       Algerian relations is tangible.
Monetary Fund (IMF) or try to overcome the current                                                                           2. TANGIBLE GAINS
economic atony by national strategies.                        A number of windows of opportunities are opening.
                                                              Common strengths and assets Maghreb countries share              •	Reduction of transaction costs: Currently intra-Maghreb value chains are fragmented. Removing Non-Tariff-
The urgency of the current economic and political state of    should be mobilized now.                                            Barriers (NTB) increases efficiency and saves time.
play in 2014 highlights once more:                                                                                             •	Harvest economies of scale: Using cross-border complementarities in production and services helps to
                                                                                                                                  significantly reduce production costs.
                                                                                                                               •	Resistance to external shocks: Macroeconomic policy coordination helps to better meet external shocks,
                                                                                                                                  such as the Euro Crisis.
                                                                                                                               •	Generate innovation: Pooling competences and skilled labor facilitates the development of avant-garde products.
                                                                                                                               •	Competitive goods and services: A diversified offer extends the choice for Maghreb consumers and ensures
Figure: Three major factors of success of tighter cooperation                                                                    a competitive level of prices.
         between Maghreb countries

                                                                                                                             3. GLOBAL VISIBILITY
                                                                                                                               •	Regional value chains: The Maghreb is embedded in a dynamic neighborhood. Better intra-Maghreb cooperation
                                                    COMPARATIVE                                                                   facilitates future agreements with the EU.
                                                    ADVANTAGES                                                                 •	Global markets: The participation of international instruments helps to diversify trade relations.
                                                                                                                               •	Attraction of FDI: A common intra-Maghreb trade framework provides stability and improves the investment
                                                                                                                                  climate.
                                                                                                                               •	Trade negotiations: A common basis makes the Maghreb countries stronger when raising claims and concerns.
                                                                                                                               •	Benchmarking: International best practice can be a valuable input. At the same time Maghreb countries can
                                                                                                                                  provide useful advice to other regional cooperation agreements.

                                          TANGIBLE                  GLOBAL
                                           GAINS                   VISIBILITY
3	AT THE CROSSROAD:
   RECOMMENDATIONS AND
   FURTHER ACTION

 Shaping the UME within permanent structures gives
 trade integration in the Maghreb a new meaning.
 If business is able to lead a comprehensive strategy
 towards growth and employment by identifying the
 major fields of action, it will get other stakeholders
 on board.
34                                                   MAKING THE CASE FOR MAGHREB BUSINESS IN TIMES OF CHANGE                   AT THE CROSSROAD: RECOMMENDATIONS AND FURTHER ACTION                                                                    35

3.1. S
      TRUCTURES FOR
     BUSINESS ACTION
When the five Maghreb Employers federations decided               Still, in order to make UME a genuine stakeholder ready to   Table: The added value of tighter cooperation between Maghrebine Employers federations
to bundle their forces by founding the UME in 2007 they           successfully advocate for growth, employment and shared
were anticipating a genuine structure of opportunity.             prosperity on a Maghreb scale, its organization as well as
Today this strategic move pays off:                               its policy priorities need to be further developed.            RECOMMENDATION               VALUE ADDED

After the 2011 Uprisings it is not only a convenient forum        A comprehensive action plan which is outlined in this          Establish a permanent        Since its creation in 2007 the UME has organized successfully two business fora.
to address common challenges in a new and effective way.          chapter addresses both:                                        UME Secretariat              In fact further institutionalization would ease considerably the collaboration of the
It also bears the potential to unlock AMU structures. UME’s                                                                                                   five federations and strengthen their credibility and standing vis-à-vis national and
main strengths are:                                                   •	How to establish solid structures to                                                 international stakeholders.
                                                                         better organize                                                                      A physical structure should also be complemented by a website geared towards the
     •	Pragmatism: Focusing on the basic requirements for                                                                                                    members and the media.
        fruitful cooperation is possible outside the domain           •	Which policy priorities to voice
        of politics.                                                     in the years to come                                    Policy input                 Comprehensive expertise on economic integration in the Maghreb has been collected
                                                                                                                                                              since the creation of AMU and there is still need for more. However the challenge
     •	Diligence: Almost 90 million consumers deserve            Coordination capacity generated through continuity and         •	Sectorial                 remains to thoroughly review, update and bundle findings on the state of play in
        better products and modern services. Intra-Maghreb        competence sharing is a formula UME should embrace.               committees                different sectors.
        cooperation can help to achieve this.                     The central goal is to fill the IMCI with life as soon as      •	Expert groups
                                                                  possible.                                                                                   Sectorial Committees (business representatives)
     •	Foresight: Business can help to create jobs of the                                                                                                    Business representatives could take up this task in a pragmatic way by screening legal
        future, reduce poverty and provide a save social and                                                                                                  instruments and cooperation mechanisms on their effectiveness and applicability.
        ecological environment.
                                                                                                                                                              Within 2-4 annual sessions concise position papers should be drafted and then
                                                                                                                                                              addressed by the UME Secretariat to competent national authorities.

                                                                                                                                                              A certain number of committees limited to 5-10 members should be envisaged for
                                                                                                                                                              the following sectors:
                                                                                                                                                              •	Agriculture
Figure: Multilevel Strategy Spectrum of the IMCI
                                                                                                                                                              •	Energy
                                                                                                                                                              •	Services and tourism
                                                                                                                                                              •	Industry
                                                                                                                                                              •	ICT and telecommunications
                                                         Coordination
                                                                                                                                                              •	Infrastructure and logistics
                                                         UME Secretariat

                                                                                                                                                              Expert working groups
                                                                                                                                                              At the same time expert groups consisting of representatives from public
                                                                                                                                                              administration, the AMU Secretariat, academia and civil society should revisit the
                                                                                                                                                              regional integration process with regards to its concrete output and prospect in times
                              Visibility                                                    Advice                                                            of great changes.
                             International                                             Sectorial committees
                             liaison offices                                            and expert group                                                      Within 3-6 meetings policy-oriented position papers should be drafted being an
                                                          Growth                                                                                              integral part of the Annual progress report.
                                                       Employment
                                                        Prosperity
                                                                                                                                                              The following fields should be covered:
                              Exchange                                                   Best practice                                                        •	Customs and tariff barriers
                          Dialogue UME/UMA                                                  Business
                                                                                          Roundtables
                                                                                                                                                              •	Macroeconomic governance
                                                                                                                                                              •	Employment and social dialogue
                                                                                                                                                              •	Attraction of FDI
                                                                                                                                                              •	SME promotion, vocational training and innovation

                                                                                                                                                              It would be up to the UME Secretariat to coordinate and prepare the sessions
                                                     Annual report and forum                                                                                  of sectorial committees while expert groups are planning their meeting rhythm
                                                         Business award
                                                           Scholarship                                                                                        autonomously. However, the exchange of ideas between committees and expert
                                                          Assessment                                                                                          groups is necessary.
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