Energies Alternatives en Méditerranée

Source : CCFA n°38, Mars 2010

Les projets d’énergie alternative sur les rives de la Méditerranée se bousculent, sans que l’on puisse encore dire qui du nucléaire, solaire ou éolien va l’emporter, ou d’avouer tout simplement que tous ces projets sont finalement complémentaires pour satisfaire les besoins de demain. Le Maroc, la Tunisie et l’Algérie ont, pour l’instant, un avantage de positionnement évident, mais l’Egypte, la Jordanie ou la Syrie et d’autres pays demandent également à avoir droit à ce chapitre. Derrière les projets qui se
profilent dans ces pays, il y a certes un grand souci écologique et environnemental, une urgence pour trouver dès aujourd’hui comment satisfaire les besoins de demain, mais aussi et, peut-être, surtout des grands intérêts économiques.

Au départ, chacun des pays concernés est guidé par des besoins domestiques de plus en plus croissants, à un moment où les réserves en énergies fossiles et étrangères risquent très vite de manquer et où la conscience écologique des peuples oblige les dirigeants à trouver des solutions propres et durables. Les rives de la Méditerranée ne sont pas avares en soleil ; c’est donc bien naturellement dans cette direction que tous les esprits se tournent.

Ainsi en va-t-il, par exemple, du Maroc qui travaille sur un projet d’énergie solaire de grande envergure. Un projet de 9 milliards de dollars, qui vise à installer des unités de production d’une capacité totale de 2 000 MW d’ici 2020, et à réduire ainsi la dépendance du royaume envers les importations d’électricité, de pétrole et de gaz et protéger son environnement.

Ce «chantier grandiose », tel que le qualifie le ministre de l’Energie et des Mines Amina Benkhadra, devra concilier développement économique et social, préserver l’environnement et lutter contre les changements climatiques.

Pour le ministre, « ce projet réduira les importations énergétiques en économisant un million de tonnes équivalent pétrole par an et contribuera à la préservation de l’environnement en évitant l’émission de 3,7 millions de tonnes de dioxyde de carbone par an». Pour en assurer le succès, le Maroc a signé avec la France un partenariat institutionnel, technique et financier, dont l’accord cadre a été signé par le ministre de l'environnement français Jean-Louis Borloo et le ministre de l’Energie et des Mines marocain Mme Amina Benkhadra.

Côté projets solaires ambitieux, la Tunisie n’est pas en reste. C’est ainsi que le plan solaire tunisien (PTS) qui vise à faire de la Tunisie un centre régional de production industrielle et d’exportation dans le domaine de l’énergie solaire, compte pas moins de 40 projets devant être mis en oeuvre dans le cadre de partenariats publics-privés au cours de la période 2010-2016.

Le secteur privé en réalisera 29, tandis que 5 autres projets relèveront de la responsabilité du secteur public, notamment de la STEG (Société Tunisienne de l’Electricité et du Gaz), le reste est encore à déterminer. Cinq projets porteront notamment sur la réalisation d’études et la mise en oeuvre du plan.

Le plan est réparti en 5 chapitres selon le secteur d’activités et son coût global est estimé à 3600 MD soit 2000 M€. Les projets d’énergie alternative sur les rives de la Méditerranée se bousculent, sans que l’on puisse encore dire qui du nucléaire, solaire ou éolien va l’emporter, ou d’avouer tout simplement que tous ces projets sont finalement complémentaires pour satisfaire les besoins de demain. Le Maroc, la Tunisie et l’Algérie ont, pour l’instant, un avantage de positionnement évident, mais l’Egypte, la Jordanie ou la Syrie et d’autres pays demandent également à avoir droit à ce chapitre.

Derrière les projets qui se profilent dans ces pays, il y a certes un grand souci écologique et environnemental, une urgence pour trouver dès aujourd’hui comment satisfaire les besoins de demain, mais aussi et, peut-être, surtout des grands intérêts économiques. 15% de l'énergie consommée en Europe sera produite sur l’autre rive de la Méditerranée d'ici à quinze ans.

L’économie d’énergie attendue lorsque l’ensemble des projets sera concrétisé serait de l’ordre de 660 kTep par an et la quantité de CO2 évitée par ces projets est estimée à 1 300 000 tonnes par an permettant des revenues MDP (mécanismes de développement propre) de l’ordre de 260 MD pour 10 ans (sur la base de 10€la tonne).

Et l’Algérie? Avec son Sahara et ses riches potentialités en gaz naturel, une énergie à accoupler avec le solaire pour aller vers la technologie de l’hydrogène pour des rendements supérieurs (jusqu’à 20 Mgw), il peut répondre à la crise de croissance du secteur de l'énergie photovoltaïque en Europe. La place de l’Algérie comme plaque tournante régionale de la production et la distribution de l’énergie solaire a tendance à se préciser et commence à intéresser plus d’un acteur.

En premier les Allemands qui lorgnent de plus en plus sérieusement vers le Sahara (projet Desertec). En effet, selon le Centre aérospatial allemand qui mène des recherches pour le compte du ministère fédéral de l'environnement, les besoins mondiaux en électricité pourraient être couverts avec des centrales à paraboles installées dans le Sahara sur une surface de 65.000 km2.

Ce projet pourrait concurrencer un autre projet, français, qui tend à développer un réseau électrique haute tension en courant continu sous la Méditerranée afin d'acheminer l'électricité solaire produite en Afrique vers l'Europe.

Le projet français, baptisé Transgreen, rassemblerait des fournisseurs d'électricité, des gestionnaires de réseau électrique et des fabricants de matériel haute tension sous l'égide d'EDF. Son lancement, qui s'inscrit dans le cadre d'un "plan solaire méditerranéen", devrait être annoncé lors du prochain sommet de l'Union pour la Méditerranée (UPM) qui se tiendra le 25 mai prochain au Caire.

L'objectif de Transgreen sera de fournir un "schéma directeur pour les investisseurs", dans l'optique d'une augmentation de la production d'électricité renouvelable, en particulier solaire, sur le pourtour méditerranéen. Il entre dans le cadre du Plan solaire méditerranéen, lancé par l'UPM, qui prévoit la construction de capacités de production d'électricité "bas carbone", notamment solaire, de 20 gigawatts (GW) à horizon 2020. Une partie de cette électricité (5 GW) a vocation à être exportée vers l'Europe.

Le Français Transgreen, on le voit, est en concurrence directe avec le projet allemand Desertec qui rassemble, pour l’instant, une vingtaine de grands groupes allemands en vue de développer le plus vaste champ de panneaux photovoltaïques de la planète qui pourra approvisionner les premiers foyers allemands en électricité d'ici à dix ans. Le projet, c’est le cas de le dire, est pharaonique, aussi bien par les investissements prévus que par les objectifs fixés.

En effet, ces vingt grands groupes allemands songent ni plus ni moins à lancer le plus ambitieux programme de production d'énergie verte jamais imaginé. Il est censé faire de l'Allemagne le champion incontesté de la lutte contre le réchauffement climatique en accomplissant un vieux rêve : transformer le soleil qui inonde les sables du Sahara en électricité. Les experts estiment à 400 milliards d'euros, le prix d'une centaine de centrales nucléaires de nouvelle génération, le montant des investissements nécessaires sur une période de quarante ans.

À elles seules, les méga-installations solaires coûteraient quelque 350 milliards d'euros. Le reste serait utilisé pour construire un réseau haute tension reliant l'Afrique au continent européen, afin de transporter l'énergie produite. Les initiateurs du projet estiment qu'ils pourraient être en mesure de produire 15% de l'énergie consommée en Europe d'ici à quinze ans.

Ces projets solaires sont importants non seulement en tant que tels, mais parce qu’ils interviennent à un moment où les autres énergies alternatives, notamment l’éolien et le nucléaire, voient soit leur efficacité contestée ou mis en cause tout simplement pour des raisons de sécurité. Les éoliennes, à commencer par elles, sont, en effet, de plus en plus fragilisées.

En France, elles n'assurent pas plus de 1 % de la consommation électrique. Et pour de nombreux observateurs, la «bulle» qui prévalait dans cette filière se dégonfle. La plupart des opérateurs se sont beaucoup endettés pour développer leurs portefeuilles de projets.

Aujourd'hui, les difficultés de trouver le financement des nouvelles capacités de production conjuguées aux difficultés de remboursement des dettes, les mettent dans des situations délicates. Mais la crise économique n’explique pas tout.

Il y a aussi les opposants aux éoliennes qui mettent en avant leurs faibles marges d'amélioration technologique et qui rappellent surtout que le vent est une énergie aléatoire à laquelle il convient le plus souvent d'ajouter une source de production d'origine fossile supplémentaire. Dès lors, de nombreux industriels préfèrent miser sur le photovoltaïque.

Et le nucléaire dans tout cela ? Certes, la France mise sur la renaissance du nucléaire civil qui permettra aux Etats qui partent même du point zéro en la matière de se doter de cette source d'énergie dans les meilleures conditions de sûreté et de prix. Le savoir faire de la France en la matière est reconnu au plus haut niveau et elle tient à rester pionnière dans ce domaine en développant constamment la recherche.

À cet effet et alors que le chantier du premier réacteur nucléaire EPR dit «de troisième génération», n’est pas encore entré en service que le CEA (Commissariat à l'énergie atomique) s'active sur la génération suivante. Les raisons sont simples : selon les évaluations de l'OCDE, dans un scénario de forte relance mondiale du nucléaire, les ressources d'uranium seront épuisées autour de 2050, ou vers 2080.

Or les réacteurs de génération IV retenus par la France, des réacteurs à neutrons rapides (RNR), présentent l'avantage d'utiliser comme combustible des déchets radioactifs et de produire autant de plutonium qu'ils en consommeront.

La France a donc lancé un nouveau programme appelé Astrid (Advanced Sodium Technological Reactor for Industrial Demonstration) pour la construction d’un prototype de dimension industrielle (puissance de 600 mégawatts) qui sera construit au centre du CEA à Marcoule pour être opérationnel en 2020. Le projet a été doté de 650millions d'euros dans le cadre du grand emprunt. Mais ici, les enjeux ne sont pas simplement écologiques et économiques. Il s’y ajoute, en effet, une dimension politique importante.

Pour la France, il y a un lien entre la promotion du nucléaire civil et la consolidation du traité de non-prolifération (TNP) de 1968.

Si la France défend le principe selon lequel "Le monde ne se divise pas entre pays possesseurs de la technologie nucléaire, arc-boutés sur un privilège et des peuples réclamant un droit que les premiers leur refuseraient", elle entend aussi lutter efficacement contre la prolifération d’une arme qui s’avère dangereuse quand elle est entre les mains d’un Etat voyou. "Personne n'a intérêt à une nouvelle course aux armements.

Personne ne souhaite avoir dans son voisinage un Etat qui triche, observe le président de la République française, Nicolas Sarkozy, ajoutant que si "La France sera intraitable pour la défense du droit de chaque Etat d'accéder au nucléaire à des fins pacifiques. Elle sera tout aussi intraitable à l'encontre de ceux qui violent les normes de notre sécurité collective."

Cairo casts its net for investment

Issue No 46 13-19 November 2009 | By Will Hadfield, MEED

The country is seeking foreign funding for a $15bn programme of infrastructure projects

Cairo has, until recently, struggled to consistently deliver the level of economic growth it needs to meet the demands of its huge and rapidly expanding population.

Chronic traffic congestion clogs up many of the most important transport arteries in the country’s towns and cities, while electricity, water and wastewater networks struggle to cope with demand. But unlike many of its oil-rich counter-parts in the Gulf and North Africa, Cairo lacks the finances for the capital expenditure required to modernise its public services and infrastructure.

The Finance Ministry faces an enormous budget deficit, which stood at 6.9 per cent of gross domestic product (GDP) at the end of June, the end of Egypt’s financial year. It is a deficit Finance Minister Youssef Boutros-Ghali is committed to bringing down through economic reform.

Public spending

To make matters worse, the economic slowdown over the past 12 months has hit Cairo’s budget revenues. It must therefore find new sources of funding if it is to modernise its infrastructure while keeping on top of its budget deficit.

The predicament is nothing new. For years, Cairo has sought to attract private sector investors to pay for necessary upgrades in public services and infrastructure. And with a population of about 77 million people – one of the biggest in the region – there is, on paper at least, enough consumer potential to attract investor interest.

Yet with per capita GDP of only $2,162 a year, one of the lowest in the region, the reality is that it is difficult for private sector investors to make a business case for expensive up-front investments in infrastructure, such as roads and wastewater plants.

However, a new plan being pushed by Investment Minister Mahmoud Mohieldin, one of the leading figures behind Cairo’s economic reforms, could provide the solution to the country’s public spending problem. Mohieldin has put together a comprehensive list of much-needed projects, which he will tout to potential investors. The £E82bn ($15bn) programme of work, across 11 sectors, is designed to transform the country’s infrastructure.

The 47 projects contained in the plan have already been approved, both by the Investment Ministry and the ministry responsible for each sector involved. In addition, the Investment Ministry is promoting a further £E32bn worth of projects, which it unveiled in the first half of 2009. Mohieldin expects to add another £E6-16bn worth of infrastructure projects to the list within 12 months.

Mohieldin hopes to award a total of £E120-130bn worth of project contracts before the end of June 2011, with most of the construction work to be completed by the end of June 2012. Some are so large in scale that they will inevitably take longer. “Some of these projects are demanding in terms of time,” says Mohieldin. “The marina in Luxor, for example, could be very tight to do in two years. The railway projects will take three years and the medical cities two years.”

Announcing projects is the easy part; Mohieldin’s real challenge will be to secure the investment needed to deliver the schemes. Over the next few months, he will take his programme of projects to capital cities in the Far East in an attempt to attract investment.

“Some of these projects are demanding in terms of time. The marina in Luxor, for example, could be very tight to do in two years”

Mahmoud Mohieldin, Investment Minister

Mohieldin’s track record in attracting foreign direct investment (FDI) is impressive. Since he became investment minister in 2004, he has presided over a five-fold increase in in-bound FDI. Foreign companies invested $2.2bn in the country in 2004 and $11.6bn in 2007, according to the UN Conference on Trade & Development.

FDI has slowed since then, along with Egypt’s economy, as a result of the global economic downturn. In 2008, companies invested $9.5bn in the country. A further fall in 2009 seems likely. The International Monetary Fund forecasts that the economy will grow by 4.5-5 per cent in the year to the end of June 2010, which would be its slowest rate in almost a decade.

The main sectors that the government has identified as potential targets for FDI are tourism and ports, where the Investment Ministry is seeking to attract £E24.6bn and £E15bn respectively.

The Tourism Ministry wants to attract the bulk of the money it is seeking to two planned developments in Marsa Matruh governorate on the country’s Mediterranean coast. The larger of the two – the Ras el-Hekma project – will cover 10.5 square kilometres and include 3,000 hotel rooms at a cost of £E12bn.

The second megaproject, at a site just east of El-Alamein, is earmarked for an investment of £E10bn, although the Tourism Ministry has yet to say what it wants at the site. The other two tourism projects are a £E1.6bn redevelopment of the marina at Luxor in Upper Egypt and a 25-year concession to build and operate a £E1bn development on the shores of Lake Qarun in Faiyum governorate, about 80 kilometres southwest of Cairo.

The Transport Ministry has identified 13 port projects it wants to award over the next 18 months. One of the biggest is a £E5.2bn build- operate-transfer contract for a bulk terminal specialising in importing iron ore and exporting finished products at Adabiya Port on the Red Sea. Adabiya is one of several facilities near the southern terminus of the Suez Canal, one of the Egyptian government’s main sources of revenue.

The Transport Ministry is also planning to award build-operate-transfer contracts to six ports along the Nile at a total cost of £E5.2bn. The deadline for technical bids for the six projects, which are intended to boost Egypt’s use of the river as a means of transport, is 19 November.

The other major port project in the programme is a three-part, £E4.4bn investment in East Port Said. The ministry wants to award one build-operate-transfer contract for a ship refuelling station, a second to develop the port’s logistics, and a third to build a container terminal at the site. No deadlines have yet been set for any of the three schemes.

The Investment Ministry’s approach is an unusual one. This is the first time the government has drawn up a list of its priority projects with the intention of marketing them to foreign governments and foreign companies.

Other countries in the region have tried to entice foreign investment by promoting priority sectors, rather than individual projects. Morocco, for example, has identified tourism, infrastructure and IT services as its priority sectors and allows the private sector to invest where it wants. The state’s role has been confined to removing barriers to investment.

Investment focus

Mohieldin is concentrating on infrastructure partly because the country needs it, but also because he believes FDI will be attracted to such projects. He says there has been a change of interest on the part of investors towards investment in tangibles, such as infrastructure projects.

Since 2004, many of the big investments in the country have been in the oil and gas sector or in the privatisation of some of the state’s largest enterprises. Infrastructure projects, which only pay a fixed rate of return, will be a tougher sell, says David Cowan, Africa economist at US bank Citigroup. “The government is casting around for ways to attract FDI into Egypt,” says Cowan. “I am not a great fan of trying to dictate to the private sector where it should allocate capital. In some ways, this reflects a little bit of Egypt’s socialist past. Instead of doing this, they should remove all the other barriers to investment and move up the [World Bank’s] Doing Business index.”

Investors will probably clamour for some projects, but ignore others, according to Cowan. “The ports figure [of total investment] is the most realistic out of all of these,” he says.

The £E7.5bn the Housing Ministry is seeking for three new desalination plants and two wastewater plants will be harder to find. “The amount that people can pay for water supplies is much lower than in Europe or the Gulf,” says Cowan.

Meanwhile, the private sector is continuing to make major investments in Egypt. According to Marwan Elaraby, managing director of Citadel Capital, an Egyptian private equity firm, the consortium of companies investing in the $2bn-plus Mostorod refinery will raise enough capital for work to start on the project by the end of March next year. If the financing goes ahead, it will be the largest ever project finance deal in any North African country.

Citadel is the majority shareholder – with an 85 per cent stake – in Egyptian Refining Company, which itself holds 40 per cent of the equity in Mostorod. South Korea’s GS Engineering & Construction Corporation and Japan’s Mitsui & Company both hold 30 per cent stakes and will raise most of the money.

Infrastructure has long been neglected in Egypt, which makes Mohieldin’s focus on roads, trains, ports and hospitals most welcome. Some of these projects will succeed in raising funding in the private sector, but others, including some of those that would do most to improve the lives of ordinary Egyptians, are more likely to secure funding from the African Development Bank or the World Bank. In these cases, Mohieldin should really be seeking funding elsewhere.

Desertec Industrial Initiative signed in

The Desertec Industrial Initiative (DII) has taken a vital step with the formation of a joint venture to build a massive solar energy system in North Africa and the Middle East.

The new company, Dll GmbH, has appointed Paul van Son as its CEO. The articles of association for the DII GmbH, whose headquarters will be located in Munich, were signed by the group of founding members in Munich last week.

The DII aims to provide 15 percent of Europe's electricity by 2050 or earlier, via power lines stretching across the desert and Mediterranean sea. The objective of this initiative is to analyse and develop the technical, economic, political, social and ecological framework for carbon-free power generation in the deserts of North Africa.

The DII will primarily focus on the economic, technical and regulatory conditions that must be fulfilled for successful project implementation, said van Son.

Shareholders of the DII are ABB, ABENGOA Solar, Cevital, DESERTEC Foundation, Deutsche Bank, E.ON, HSH Nordbank, MAN Solar Millennium, Munich Re, M+W Zander, RWE, SCHOTT Solar and Siemens.

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Emerging CSP Markets: Banking on the Middle East and North Africa

2 November 2009

The world's financial powerhouses are already queuing up to back the next big concentrated solar power market.

By Oliver Balch

In Arabic, Maghreb literally translates as: 'Land of the sunset'. But a new project under consideration by the World Bank could see this expansive region of Arab-speaking North Africa become better known for sunup rather than sundown. Blessed with high direct normal irradiation (DNI) and on Europe’s doorstep, the Middle East and North Africa hold potential as a pivotal CSP market.

The Clean Technology Fund, which provides scale-up financing for low carbon technologies, is finalising a proposal to develop one gigawatt (GW) of concentrated solar power (CSP) in the region over the next six to eight years.

The Bank’s regional investment plan envisions between eight and ten commercial-scale power plants in the Maghreb and neighbouring Mashreq, the area of the Middle East between Iran and the Mediterranean.

The project’s proponents say the initiative will provide a catalyst for private sector investment, leading to 5GW of installed CSP capacity by 2025.

Under the Clean Technology Fund’s initial investment plan, the World Bank would provide around $750mn in co-financing – roughly 10 percent of the project’s US$6-8bn (€4 - 5.4bn) total funding requirement.

The Fund’s governing committee is scheduled to consider the project in early December, the World Bank’s senior environment specialist Chandrasekar Govindarajalu tells CSP Today. The proposal follows a similar investment plan for CSP in South Africa, which gained approval on 28 October.

Funding opportunities

At present, Morocco, Algeria, Tunisia, Egypt, Lebanon and Jordan are all eligible for project financing under the terms of the World Bank’s Clean Technology Fund. Syria and Libya are excluded, but they could potentially access technical assistance from the World Bank for a solar scale-up programme.

The World Bank is working closely with the African Development Bank to get the project off the ground. The list of other finance partners includes multilateral and bilateral lenders such as the Arab and Islamic Funds, the European Investment Bank and Germany’s Kreditanstalt für Wiederaufbau.

Other potential sources of financing might include public and private debt and equity, European Union neighbourhood funds, bilateral lending from within the region and tax breaks by domestic governments.

If the idea sounds far-fetched, then recent developments may persuade otherwise. Three combined-cycle pilot projects are already underway: Iberdrola’s 40MW Kuraymat facility in Egypt and its 25MW Hassi R'Mel plant in Algeria, plus Aberner’s 20MW Ain-Beni-Mathar facility in Morocco.

Domestic governments in the region are also getting in on the act. Egypt, Morocco and Tunisia all recently introduced renewable energy development plans that hold potential for advanced solar technologies.

“These countries already have experience. Now they are looking to develop CSP on a large scale”, says Govindarajalu.

The International Renewable Agency;s (IRENA) decision earlier this year to set up its headquarters in the United Arab Emirates provides further indication of the region’s emergence as a serious player in the non-conventional energy sector. IRENA will base its headquarters in Abu Dhabi’s Masdar City, a US$22bn (€15bn) construction project that is due to become the world’s first entirely renewable-powered city when completed in 2015.

Private sector buy-in

Signals from the private sector further substantiate the role the Middle Eastern and North African markets will likely play in the development of CSP.

A consortium of major European companies and banks recently launched a three-year feasibility study to assess the potential of a string of CSP projects across the region. Known as the Desertec Industrial Initiative, the group counts German energy giants RWE and E.ON as well as Spain’s CSP developer Abengoa Solar among its dozen participants.

“These are serious companies. If anyone can do this, it’s them”, argues Gerry Wolff, a representative of the non-profit organisation Desertec UK.

The international consortium, which established a formal holding company in October, anticipates investments of nearly $600mn over the next 40 years.

A number of reasons are attracting developers and policy makers to CSP’s potential in North Africa and the Middle East. The region's physical attributes are almost unparalleled for CSP: almost undisturbed sunshine, high radiation, low precipitation and plenty of uninhabited flat land.

Demand side factors are catching investors’ attention. Since the 1980’s, total energy consumption by MENA countries has grown faster than any other global region, according to a recent World Bank report. Energy intensity (per capita energy demand as a percentage of GDP) is a staggering 40 percent higher than the global average.

CSP ties therefore ties into the objective of the region’s governments to obtain long-term energy security through energy diversification, explains Govindarajalu.

The proximity of the Maghreb and Mashreq countries to continental Europe makes the market additionally attractive. Most notably, a scale-up CSP programme would have close synergies with efforts by southern European states to trade green electricity with their neighbours.

CSP developers in North Africa and the Middle East would be particularly well placed to take advantage of the so-called Mediterranean Solar Plan. If successful, this energy integration scheme would see large-scale solar power production linked to enhanced transmission networks in the Mediterranean region.

Multilateral development banks “could play a key role in financing” CSP’s development given the dependency of the Mediterranean Solar Plan on sharing costs and benefits between all partners, notes a preliminary paper by the World Bank.

Needless to say, the ambitious project faces some hurdles. Chief among them are access to finance, commitment by national governments and access to European markets, says Govindarajalu.

Other systemic barriers exist. Not least of these are fossil fuel energy subsidies. The absence of specific policies to promote the commercialisation of CSP also features highly.

Nevertheless, a ‘yes’ vote from the Clean Technology Fund’s trust fund committee in December would catapult the Maghreb and Mashreq regions onto the CSP world map. There is a famous Arabic saying that runs: “Every sun has to set”. In this case, CSP could just be the exception.

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South-Based Companies Play Increasing Role in Developing Country Growth, but Wary of Risks

WASHINGTON, DC, February 20, 2008

Foreign direct investment (FDI) originating in developing countries and destined for other developing countries is on the rise, but the growing development potential of this so-called “South-South” investment is inhibited by political risks, according to a new report by the Multilateral Investment Guarantee Agency (MIGA).

Political risks are cited by South-based investors as a principal constraint to doing business in emerging markets. The MIGA review—“South-South FDI and Political Risk Insurance: Challenges and Opportunities”—looks at perceptions of political risk by companies based in emerging markets that are seeking to invest abroad, as well as challenges in mitigating those risks.

The report is based on client and insurer surveys, regional case studies conducted and commissioned by MIGA, and existing research. It is designed to provide emerging market investors with important information needed to make decisions about investing in other developing countries. “This report aims to fill a research gap by pulling together different pieces of the puzzle and then drawing a more complete picture of the situation,” said Stephan Dreyhaupt, manager of MIGA’s Online Investor Information Services.

The review is available on MIGA’s political risk insurance portal, www.pri-center.com.

South-South FDI is on the rise, but a cautious mood prevails

Over the past few years, the growth rate of outward FDI from emerging markets has outpaced the growth from industrialized countries. South-South FDI growth has been especially fast—a trend that is expected to continue, according to the MIGA survey. Nearly 90 percent of South-based companies surveyed said they expected their overseas investments to increase over the next five years. More than four-fifths planned to invest in emerging markets over the next year.

At the same time, the investors surveyed said the world is becoming a riskier place for business. Emerging markets are perceived to be riskier than industrialized countries, and the risk is expected to increase in the next five years.

Investors take increasing precautions against political risks

Although South-based companies appear to have a higher tolerance for risk compared with their North-based counterparts, they are increasingly conscious of the need to protect their investments as they go into unfamiliar markets. For instance, MENA-based investors, evolving from small, family-owned businesses to sizeable international firms, are becoming more conscious of the need for risk management, according to the Islamic Corporation for Insurance of Investments and Export Credit, which contributed to the MIGA report.

Some 80 percent of political risk insurance (PRI) providers surveyed by MIGA said they expected demand for PRI by South-based investors to go up in the next five years. South-based PRI providers appear to be responding to this demand in different ways, although some are facing capacity constraints.

“We stand ready to meet the needs of this growing market,” says Yukiko Omura, executive vice president of MIGA. “MIGA complements the work of public PRI providers, providing technical assistance and jointly underwriting projects—thus encouraging them to venture into markets where they may not otherwise feel comfortable and leveraging their underwriting capacity.”

As a small agency, MIGA also has the flexibility to tailor its guarantee products to meet the emerging needs of South-South investors, as seen by the agency’s recent $427 million guarantee for Shariah-compliant project financing for a project in Djibouti.

For more on the report, visit www.pri-center.com. For more on MIGA, visit www.miga.org.

For information:
Angie Gentile, agentile@worldbank.org, 202.473.3509
Farah Hussain, fhussain@worldbank.org, 202.473.2540

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Iraq invites firms to second oil bid meeting

Published: 27 July 2009 12:33 GMT, Author:Perry Williams, MEED

Iraq's Oil Ministry will hold a roadshow for its second oil licensing round in Istanbul on 25 August in an attempt to reverse the disappointing results of the first bid round held in June.

The ministry's Petroleum Contracts & Licensing Directorate says it has invited 45 qualified oil companies to attend the meeting.

The directorate is offering licences covering 10 oil and gas fields which have yet to be developed.

The fields include the highly prized Majnoon field in Basra Province and West Qurna phase 2, which holds about six billion barrels of oil.

The remaining fields include Halfaya, East Baghdad, Gharraf, Qavara, Najmah, Badrah and Merjan/Kifl/West Kifl.

Iraq is also offering an Eastern Block comprising the Gilabat, Khashm al-Ahmr, Nau Doman and Qumar fields.

The government previously said it will sign contracts by the end of 2009 and that the fields are capable of producing up to 2.5 million barrels a day (b/d) of oil by 2013.

In June's licensing round, Iraq's Oil Ministry awarded just one licence to an energy major as companies baulked at Baghdad's tough terms and conditions.

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L'AFPA en mission pour l'Union pour la Méditerranée

L'association pour la formation professionnelle des adultes Provence Alpes Côte d'Azur s'est engagée dans la conduite d'un projet de formation professionnelle pour l'Union pour la Méditerranée.

Dans le cadre de l'Union pour la Méditerranée, fondée le 13 juillet 2008 dans le cadre de la présidence française de l'Union européenne et réunissant 43 membres, la formation professionnelle est un enjeu déterminant pour la modernisation, la diversification et le développement des économies des pays membres.

C'est un instrument de convergence économique et social. L'association pour la formation professionnelle des adultes (Afpa) va piloter une mission sur ce thème depuis Marseille. Le lancement de la mission s'effectuera en présence de Philippe Caïla, directeur général de l'Afpa (photo ci-dessous) et de Jean-Jacques Blanc, directeur régional de l'Afpa.

La formation professionnelle doit permettre de répondre à la demande d'emplois qualifiés pour servir l'économie, améliorer la compétitivité des entreprises et favoriser les mobilités professionnelles. Elle doit être en adéquation avec les besoins du marché. L'Afpa a compétence pour répondre en qualité d'intégrateur et ainsi assurer l'ingénierie de formation, l'assistance technique, la formation des formateurs.

La ville de Marseille, siège de l'Union pour la Méditerranée, avait naturellement vocation à devenir ce centre d'expertise en matière de formation professionnelle.

L’enjeu du projet:
Les estimations concordent sur le chiffre de 22 millions d’emplois nouveaux à créer dans les 15 prochaines années. Cela simplement pour éviter une aggravation du taux de chômage dans les pays partenaires méditerranéens. A cette fin, le renforcement du capital humain par la formation professionnelle représente un enjeu essentiel pour la modernisation, la diversification et le développement des économies des pays membres de l’UpM.

La plus-value de l’AFPA PACA dans ce projet :
- La proximité : des compétences nationales et internationales et son implantation sur le pourtour méditerranéen. Tunisie, Maroc et Egypte ont notamment engagé depuis plusieurs années d’importants processus de réforme de leur dispositif de formation dans lesquels l’AFPA a été fortement impliquée,
- ses compétences sur l’ingénierie de formation, l’assistance technique, la formation de formateurs,
- son expérience et sa capacité à répondre à la demande d’emplois qualifiés pour servir l’économie, à améliorer la compétitivité des entreprises et favoriser les mobilités professionnelles.

Perspective:
La ville de Marseille a pour vocation de devenir le centre d’expertise en matière de formation professionnelle. L’AFPA doit jouer au sein de l’UpM un rôle d’intégrateur majeur à travers la constitution d’une plateforme interinstitutionnelle dans le domaine de la formation.

Par Marseille.fr et Afpa.fr - le 22 juillet 2009

Maroc/Emerging Capital Partners : 12,4 M USD pour acquérir EMT et Somadiaz, via «Almes» Holding

Publié le 29/07/09. Emerging Capital Partners (ECP), l'un des leaders dans la gestion de fonds d'investissement dédiés au continent africain a annoncé, en début de semaine, deux prises de participation dans des entreprises nord-africaines opérant dans le secteur de la construction, Almes et Shoresal. Ces deux investissements, pour un montant de 26,2 millions USD, s'inscrivent dans la stratégie d'expansion du portefeuille nord-africain d'ECP. ECP a investi dans plusieurs entreprises africaines d'ingénierie et de construction depuis 2006, et nous étudions depuis un certain temps les opportunités d'investissement sur le marché nord-africain», déclare Thomas Gibian, président-directeur général d'ECP. «A la différence de nombreux marchés occidentaux, le marché de l'immobilier et de la construction est généralement caractérisé par un déficit d'offre face à une demande croissante de la part des entreprises étrangères et des entreprises locales.»
	Au Maroc, ECP a investi 12,4 millions USD dans Almes, une société holding mise en place pour acquérir les sociétés Entreprise Marocaine de Tavaux (EMT) et Somadiaz. EMT est une entreprise de BTP spécialisée dans les travaux publics, le génie civil et le terrassement pour des projets d'infrastructure variés. Somadiaz est une entreprise de location de matériel de BTP, leader marocain dans le domaine du levage et des transports spéciaux. Cette opération constitue une opportunité pour le groupement EMT/Somadiaz de poursuivre le développement des sociétés au Maroc et de déployer l'offre de services dans des pays voisins – comme la Libye ou la Mauritanie-où la demande en travaux publics et autres services de construction est également importante. ECP a réalisé cette opération en partenariat avec Alliances Développement Immobilier, premier opérateur immobilier et touristique intégré au Maroc. Les investissements dans EMT et Somadiaz ont été réalisés via le Moroccan Infrastructure Fund (MIF), fonds cogéré par ECP et Attijariwafa bank, l'une des institutions financières leaders en Afrique du Nord. Le fonds a été créé en décembre 2006 afin de capitaliser sur les réformes en cours qui stimulent la croissance économique du Maroc. Le MIF est dédié aux secteurs des infrastructures et cible de nombreux secteurs, dont les télécommunications, les transports, l'énergie, l'électricité et l'eau. En Algérie, ECP a acquis une participation de 13,8 millions USD dans Shoresal, une société de promotion immobilière. Cet investissement devrait permettre à Shoresal de financer, en partie, le développement d'une tour de bureaux de classe A de 14 étages dans le quartier d'affaires de Bab Ezzouar à Alger. La demande d'espaces de bureaux dans les grandes villes est huit fois plus importante que l'offre actuelle. Ce déséquilibre résulte notamment de l'augmentation significative du nombre de multinationales implantées dans le pays, qui a triplé depuis 2000. Shoresal constitue le cinquième investissement d'ECP en Algérie, après des prises de participation dans les secteurs des services financiers, des biens de consommation et des télécommunications. L'investissement a été réalisé à travers le MENA Growth Fund LLC géré par ECP, qui a été établi en septembre 2007 pour bénéficier des opportunités d'investissement à travers le Moyen-Orient et l'Afrique du Nord. Enfin, « ECP considère que le secteur de la construction dans toute la région Afrique du Nord est sur le point de connaître une croissance exceptionnelle », déclare Vincent Le Guennou, directeur général d'ECP. «Nous pensons que le fort déséquilibre entre l'offre et la demande est une très forte incitation à investir ». ---------------------------------------------------------- A propos d'ECP Emerging Capital Partners (ECP) est une société américaine de gestion de fonds d'investissement en Private Equity spécialisée sur le continent africain, avec plus de 1,6 milliard USD sous gestion. L'équipe de gestion a investi à travers toute l'Afrique pendant neuf ans. ECP vise à offrir aux investisseurs des rendements supérieurs à ceux en vigueur sur le marché, et qui ne sont pas liés à l'économie américaine ni aux autres économies dominantes.

$100 million of new British investments in Egyptian automotive sector

26 Jul 2009

In the frame of supporting the strategy planed by the Ministry of Trade and Industry to promote Egyptian exports in the field of car feeding industries and Components, the export council of the engineering industries sent a promoting trade delegation to Britain in collaboration with the Association of British car manufacturers and dealers, said Ahmed Fekri Abd-el Wahab, the head of the council.

He said that the visit aimed at completing negotiations with the British side for attracting investments valued by 100 million dollars during the next year in the Egyptian automotive sector.

He noted that many of the British companies are seeking to invest in Egypt, aiming at exporting to the countries which agreed on free trade agreement with Egypt.

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Special Report: Jordan - Closer regional trade links benefit economy

The economic slowdown in the Gulf is having a direct effect on Jordan's economy, and highlighting its dependence on remittances from the 600,000 Jordanians working in the GCC.

Such is the volume of money these workers send back that remittances accounted for almost 15 per cent of the kingdom's gross domestic product (GDP) in 2008. But remittances fell to $273m in April this year, down almost 10 per cent compared with the same month in 2008.

Jordan's economy is also vulnerable to external shocks because of its reliance on foreign direct investment and global export markets. Both of these key GDP generators have recorded lower growth rates in 2009 than the previous year.

There is one area of optimism, however. Trade with its neighbour, Iraq, is providing Jordan with a much needed fillip to its economy. Baghdad's $70bn reconstruction plan is translating into orders for cement, bricks and other materials from Jordanian companies, while the port of Aqaba receives a large proportion of the overseas goods destined for Iraq.

A surge in Iraqi reconstruction efforts could not have come at a better time for Jordan, whose future economic prosperity relies on good relations with its often troubled neighbours.

Solar Millennium AG - Company Statement

7 juillet 2009

(c)2009, Global Markets Direct.

Overview

Solar Millennium AG Company Statement

A joint statement by Mr. Christian Beltle, the Chairman and the Cheif Executive Officer, Mr. Thomas Meyer, the Chief Financial Officer and Dr. Henner Gladen, the Chief Technology Officer of Solar Millennium AG is given below. The statement has been taken from the company’s 2008 Annual Report.

We made it! In December 2008 Andasol 1, the world’s largest solar power plant, was connected to the grid. With this, we have managed to realize our vision and, together with our partners, carried out an idea that only existed in the heads of a few idealistic founding shareholders just a couple of years ago. With Andasol 1, Solar Millennium underscores its pioneering role in the field of solar-thermal power plants. This is something to be proud of.

The two sister projects Andasol 2 and 3 are under construction in the direct vicinity. While Andasol 2 will be connected to the grid towards the middle of the year, preparations have begun for Andasol 3. A major investor will soon be involved. In 2011, the power plant triad with an overall area of about 6 km2 will convert a total of more than 500 GWh of solar energy into sustainable electricity for up to 600,000 people. In doing so, up to 450,000 tons of carbon dioxide emissions will be saved over conventional coal power plants. Thus, we managed to make the vision come true that we had made our cause 10 years ago when founding the Company.

Against the background of globally rising energy demand in connection with scarcer resources, many decision-makers in politics and business have now realized that electricity from solar energy is one of the most important alternatives to the energy mix so far. The “Solar Plan” that came into being in 2008 under the French EU Council Presidency as part of the new Union for the Mediterranean is one of the best examples. Large-scale solar-thermal plants such as the hybrid power plant in Egypt, which our subsidiary Flagsol is equipping with a solar field, are the first flagship projects for a number of solar power plants that will form a line along the North African states bordering the Mediterranean and cover their own need for energy in addition to supplying Europe. Our experts are being consulted by many of the respective committees, thus making them the architects of a new transnational energy policy from the start.

However, solar energy is also experiencing a renaissance in the US, a country where parabolic trough power plants have reliably been generating electricity in the Californian desert for more than 20 years. At the end of the Bush administration, tax incentives for investment in solar energy, the so-called Investment Tax Credits, were extended for another eight years. Moreover, the state of California recently raised the benchmark for renewable energy generation that is fixed in the Renewable Portfolio Standards from 20% to 33% for 2020. Considering that president Barack Obama has announced massive investment in the establishment of renewable energy supply within the context of his stimulus plan providing for a total of nearly US$ 790 billion overall, it becomes clear why the US is believed to be the next boom market for solar-thermal power plants.

Solar Millennium has an excellent starting position in the US thanks to its involvement there for many years and its own branch in Berkeley, California. We have secured land for approximately 5,000 MW in power plant capacities within these regions, which feature the world’s best solar radiation conditions. Furthermore, Solar Millennium has been short-listed for the realization of approximately six power plants with a total capacity of 1,500 MW by American utilities. We expect to sign contracts for one to two projects with a total capacity of 250 MW to 500 MW as early as this year.

Other countries have likewise become aware of the vast economic and ecologic potential of solar-thermal power plants. In Israel, the United Arab Emirates and Morocco, tenders for solar-thermal power plants can now be made, and the Solar Millennium Group is of course involved. Italy and Greece determined their fixed feed-in tariffs last year. Australia, one of the most attractive regions in the world given its high level of direct normal radiation and its resources of free land, has also opened up to the large-scale solar-thermal power plant market despite its low energy prices.

According to a survey by the German Aerospace Center (DLR), electricity from most renewable energy sources will be cheaper than fossil fuels by 2025. Accordingly, renewable energy will have largely superseded fossil energy sources in the Mediterranean by the middle of this century. In 2050, the survey further reads, the output of solar-thermal power plants will be double the amount of wind, photovoltaics, biomass and geothermal power plants put together.

Consequently, the prospects are outstanding and, with a well-filled project pipeline in Spain and the US as well as the possibility of acquiring additional projects through tenders, our Company is excellently positioned in the expanding market for solar-thermal power plants. Solar Millennium also enjoys a distinguished reputation among suppliers as well as partners and customers as an expert in the planning and realization of top-quality solar-thermal power plants. As a mark of recognition for its contribution to sustainable energy supply, Solar Millennium AG was awarded the internationally-renowned Energy Globe Award in May 2008 in Brussels.

We are looking forward to the next few steps in this exciting growth sector and would like to thank our employees for their enormous commitment as well as our shareholders and investors for the confidence you have bestowed in us along this path.

Eolien : La Compagnie du Vent compte créer 180 emplois

2 juillet 2009

Les Echos

Désormais filiale du groupe GDF Suez, La Compagnie du Vent table sur 1,5 milliard d'euros d'investissements d'ici à 2012 dans le secteur éolien et fait ses premiers pas dans le photovoltaïque.

Grâce à la croissance de notre puissance éolienne installée, à notre diversification à l'international et dans le solaire photovoltaïque, nous devrions créer environ 180 nouveaux emplois d'ici à 2012 », explique Jean-Michel Germa, fondateur et président de La Compagnie du Vent. Basée à Montpellier, la société (16,8 millions d'euros de chiffre d'affaires en 2008, 59.000 euros de résultat net) est désormais dans le giron du groupe GDF Suez, qui en détient 58,6 % du capital. Avec un effectif 115 salariés et une puissance éolienne installée de 175 mégawatts (MW) dans l'Hexagone, elle maintient sa position d'acteur majeur de la filière éolienne.

Malgré une conjoncture difficile, l'entreprise a mis en service 5 nouveaux parcs entre juillet 2008 et juin 2009, un investissement de 103 millions d'euros. Dans le cadre du Grenelle de l'environnement, La Compagnie du Vent veut disposer en France de plus de 750 MW d'ici à fin 2012, ce qui demande un investissement de l'ordre de 1,49 milliard d'euros. A cette date, l'effectif avoisinera les 300 personnes. Les parcs en service sont installés en Bretagne, en Languedoc-Roussillon, en Nord-Pas-de-Calais, en Picardie et en Pays de la Loire. La Compagnie du Vent a déjà obtenu les permis de construire de plusieurs parcs pour une puissance de 163 MW. Huit d'entre eux (86 MW) seront construits d'ici à 2010. Elle a également déposé les demandes de permis de construire de 11 parcs représentant 160 MW.

Diversification

L'entreprise développe également des projets éoliens de grande envergure. Les études sont en cours pour le projet en mer des Deux Côtes. Composé de 141 éoliennes (705 MW), il se situera à plus de 14 kilomètres, au large de la Somme et de la Seine-Maritime. La première tranche de ce parc pourrait voir le jour en 2012. Il mobilisera plus de 2.000 emplois pour la construction pendant trois ans, puis environ 250 emplois locaux directs et indirects pour l'exploitation. En outre, La Compagnie du Vent a répondu à un appel d'offres de l'Office national d'électricité du Maroc (ONE) pour un projet éolien de 300 MW à Tarfaya, représentant un investissement d'environ 500 millions d'euros.

Enfin, La Compagnie du Vent diversifie son activité vers d'autres moyens de production d'énergie renouvelable. Elle installe désormais des centrales photovoltaïques, intégrées aux bâtiments ou au sol. Objectif : 55 MW en crête installés d'ici à 2015

UAE-based Sahara Group, expands into Moroccan Market

Sahara Management and Marketing Consultancies, subsidiary of UAE-based Sahara Group, has signed a joint venture agreement with the Morocco based 'Arab Gulf Agency for Media and Communications for reciprocal representation rights, according to which Sahara will represent the Morocco-based agency in the UAE, and the latter will represent Sahara in Morocco.

The signing ceremony was attended by Mr Fahad Ahmed Al Deeb, Vice President of Sahara Group, who signed the agreement with Mr Mohammed Ayat Bou Silham, Executive Manager of Arab Gulf Agency for Media and Communication”.

Both parties agreed that Sahara will commence a promotional campaign for the second edition of the Gulf Investments Forum, scheduled to be held in Rabat on 19-20 November 2009. Participants in the forum will come together to discuss existing opportunities in Morocco's industrial, technology, real estate, tourism and energy sectors.

The forum aims to encourage GCC firms and businessmen to enter the Moroccan market, which presents untapped opportunities in various economic sectors, particularly in light of the special incentives offered by Moroccan government to Arab investors. This has enhanced the country's appeal to Arab investment, particularly GCC capital, which has been injected into Morocco's vibrant market over the last few years. But the value of the relatively modest Arab investment in Morocco accounts for only ten percent of total foreign investment, and is restricted to the tourism and real estate sectors.

The amount of foreign direct investment (FDI) pumped into Morocco in 2006 was estimated at $25bn, according to official statistics issued by the Office Des Changes, with French investors leading the way, followed by their Spanish counterparts. The industrial sector attracted 36% of total foreign investment, followed by the tourism and real estate sectors with 32 percent and 16%, respectively.

Commenting on the agreement, Mr Al Deeb said: “Morocco enjoys one of the region's largest markets in terms of its appeal to foreign investors. Today, we are witnessing competition among businessmen and firms looking to enter this market and capture a slice of its diverse investment opportunities. This urged us as a leading management and marketing consultancy firm to be present in this market and offer our media, marketing and management services to potential clients."

“Arab Gulf Agency for Media and Communication is an ideal partner that is well positioned to represent us in the Moroccan market, due to their broad experience in the market, and their quality customer service. Sahara, in return, will extend all possible support to make this agreement a success”.

Mr Silham said: “We are delighted to join hands with one of the largest management and marketing consultancies firms in the UAE and the region. We are confident that this will open new vistas for our company in the GCC region, in a way that will serve the interests of both firms.”

“We are currently focusing our efforts on the 2nd Gulf Investments Forum, and we are confident that Sahara will offer the most reliable services to reach the largest segment of interested investors. The forum is supported by the Moroccan government and has drawn the attention of public and private sector firms, which we look forward to seeing in this forum,” he added.

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North Africa's Regional and Global Integration Seen as Solution to External Shocks

IHS Global Insight Perspective  

-A deeper integration among Maghreb nations will yield great benefits, in the form of higher growth and lower unemployment; in addition, an FTA with both the EU and the United States could sharply increase foreign direct investment (FDI).

-The Maghreb nations thus stand to gain tremendously by forging closer economic relations with the European Union and the United States.

-Political reforms are expected to be slow in the next few years due to differences between Algeria and Morocco over the Western Sahara, but economic reforms could accelerate over the short and medium terms.

Economic Growth: Performance in 2008 and Impact of Global Recession

The Maghreb nations performed relatively well in 2008, despite a slowdown in the world economy. Among the region’s oil exporters, Algeria experienced a boost to growth in 2008, to 3.6% from 3.4% a year earlier, driven by robust non-oil-sector growth due to strongly expansionary government policy. Both the construction sector and services linked to infrastructure projects grew robustly. The Algerian economy is expected to post a slower growth rate in 2009, a reflection of tough conditions in the world economy, sharp corrections in the price of oil during the year, and tighter rules governing foreign investment. Nevertheless, the Algerian government can continue to expand spending in the short term to support non-oil sectors, thanks to its large stock of international reserves.

Reserves stood at US$140 billion at end-March 2009, more than doubling the amount posted 36 months earlier. Among the more-diversified economies in the region, Tunisia's economic growth eased slightly to 4.6% in 2008, from 6.3% in 2007, as the Eurozone economies slowed during the year. Eurozone nations sunk into a severe recession in 2009, hurting Tunisian export and growth. Despite difficult domestic and external conditions the government continued to implement structural reforms, albeit at a slow pace to minimise social discontent.

Meanwhile, healthy expansion in non-agriculture sectors in Morocco, especially in telecommunications, financial services, and construction, led to a sharp acceleration in growth to 5.4% during 2008. Growth was modest in the previous year because of a strong contraction in agriculture. The Moroccan economy is expected to weather the global recession given exceptional performance in the farming sector in 2009. Yet growth should moderate given slowdown in non-oil sectors, lower merchandise exports, remittances from abroad, tourism receipts, and FDI.

Overall, the Maghreb region expanded 4.9% in real terms during 2008. The ongoing global financial crisis has reduced short-term growth prospects for Maghreb nations, and IHS Global Insight expects the region to grow 2.2% in 2009. This is still a remarkable performance given the severe deteriorations in world economic conditions which have led to the failure of a few major companies and the collapse in the housing market in industrialised nations. Economic conditions in the Maghreb could be improved if integration among countries could be deepened. Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF) recently stressed the importance of deeper integration among Maghreb economies, which he believed was the best protection against the effects of external crisis.

Regional and Global Integration Could Boost Growth and FDI Inflows

Political tensions between Maghreb countries remain high, with Algeria and Morocco taking a different stance on the Western Sahara territory. In the past the region has focused mainly on anti-terrorism measures, sometimes to the detriment of economic reforms. Maghreb nations could benefit greatly from enhanced economic integration within the region and with the international economy.

Regional trade exchanges are currently very low: For example trade between Morocco and Algeria represent only 2% of the total trade exchanges of the two countries. According to data published by Algeria's National Data Processing and Statistics Centre, the country's trade surplus with the other four nations of the Arab Maghreb Union (UMA) has almost doubled in 2008 compared to 2007.

Yet Algerian exports to the UMA stood at US$1.3 billion, compared with total merchandise exports of US$78.6 billion, while imports from the other Maghreb countries amounted to US$387.5 million (as opposed to an overall import bill of US$37.4 billion). By creating a larger market, a regional integration would yield great benefits, in a form of higher growth and lower unemployment. The overall unemployment rate for the region is estimated at 15—25%, with very high unemployment among urban women and young college graduates. A regional integration could create the market dynamics for a better absorption of the total labour force. Meanwhile, per-capita real GDP in the Maghreb could increase by an additional 50% by 2015 through deeper integration and reform, according to a recent study by the World Bank.

Markets in the Maghreb remain fragmented and will require integration and openness to achieve development. In turn, the large market of more than 75 million consumers which could be created by deeper integration could make these countries more attractive to foreign investment. Some reports suggest that total Maghreb inward FDI stock would rise moderately if only a deeper integration among Maghreb nations was pursued.

If in addition to regional integration, a full fledged U.S.-EU free-trade agreement could be reached, the stock of FDI could increase by an additional 70—80%. Thus Maghreb nations also stand to gain tremendously by forging closer economic relations with the European Union and the United States. In such a scenario GDP in the region could grow by an additional 2—4%.

Outlook and Implications

The immediate effect of the ongoing global financial crisis on Maghreb nations such as Algeria and Morocco has been modest. Nevertheless the resulting global recession has had a bigger impact on the Maghreb economies: Export revenues, FDI inflows, remittances from expatriates, and tourism are expected to feel the impact of the worldwide recession. With North African nations facing a sharp slowdown in 2009, the future of the Maghreb region resides in economic reforms and integration. Political reforms are expected to be slow, with differences between Algeria and Morocco impeding on these reforms.

On the other hand, economic reforms are expected to pick up in the next 12—36 months. Like Tunisia, we expect other North African nations to sign economic agreements within and outside the Maghreb block, boosting trade exchanges and FDI inflows. A deeper regional integration will be a first step toward cushioning the Maghreb economy from adverse external shocks. In the longer term we hope to see the existence of an EU/U.S./Maghreb FTA.

La fiscalité du Maroc favorable pour les retraités français

On compterait, selon le gouvernement marocain, plus de 40.000 retraités étrangers installés au Maroc, la plupart étant français. Cet intérêt s'explique d'abord par une fiscalité locale très attractive. Les contribuables ayant transféré au Maroc leur domicile fiscal bénéficient en effet d'un abattement de 40 %, puis de 80 % de l'impôt dû au titre de leur pension. Soit, au final, un taux d'imposition avoisinant 4 % du montant total de la pension de retraite.

Rabat très courtisé par les Américains et les Européens

L'Union européenne et les États-Unis se livrent une bataille d'influence au Maroc. Depuis la signature d'un accord de libre-échange en juin 2004 avec Rabat (entré en vigueur en 2006), les émissaires de Washington multiplient les visites dans le royaume. De son côté l'UE, qui a fait du Maroc un partenaire privilégié, ne mégote pas son aide. La Banque européenne d'investissement a indiqué début juillet qu'elle allait prêter 200 millions d'euros au Maroc pour moderniser les écoles.

La France, premier partenaire du Maroc

Bouygues à Tanger Med II, Nexans Maroc qui étend son usine de Casablanca, Faurecia inaugurant un site de production à Kenitra : les investisseurs français continuent de venir au Maroc, assurant un effet d'entraînement sur les autres pays. En dix ans, les entreprises tricolores ont investi 10 milliards d'euros dans le royaume, s'octroyant une part de marché fluctuant au fil des années entre 35 % et 55 % des investissements étrangers. Premier client et premier fournisseur du Maroc, la France est aussi un partenaire privilégié du royaume, avec 7 milliards d'euros d'échanges commerciaux en 2008. Seule ombre au tableau, les Marocains avaient préféré en 2007 le F16 américain au Rafale, suscitant un coup de froid entre Paris et Rabat.

Lebanon : Attractive investments in the Middle East

Many options

Although an economic slowdown in the region is expected in the wake of the global financial crisis, the region is expected to recover relatively quickly. It should present many investment opportunities this year. Let us look at some of the most attractive sectors.

SLOWED DOWN, BUT NOT OUT

The consensus of most experts is that the region will witness slower growth as a result of the financial crisis. JP Morgan has forecast that the MENA region will experience growth of 3.3 percent in 2009, as compared to 6.4 percent in 2008. Edward Gardner of the IMF said: The fundamental challenge will be in the extent of the depth of the economic slowdown, which we hope will be less burdensome in comparison with industrialized countries as well as other emerging markets." The crisis has shaken the confidence of investors and it has made it necessary to postpone many huge construction projects. Despite the negative effects, it appears that the region has fared relatively better than others in weathering the storm. The region has been able to transcend the crisis in comparison with the rest of the emerging markets," JP Morgan said. The region is still full of many investment opportunities, despite the repercussions of the international economic crisis," Gardner said.

INSURANCE SECTOR IS VERY PROMISING

The insurance sector is one of the most promising sectors. There is a high demand for insurance services in the region, driven by population growth on the one hand and the increasing awareness of the importance of insurance on the other hand. The sector is expected to grow by an annual rate of 25 percent to 30 percent in the next five years. The average of insurance premiums in the region per individual is not more than $25 per year, and this amount is low as compared to the levels that are found in advanced countries, which is more than $200 on the average. Samir Haja, the person in charge of the department of insurance expertise at PricewaterhouseCoopers, said: The financial crisis has only affected the insurance sector in the region in a slight and passing manner." The insurance sector, in particular life insurance, is expected to continue its growth in the region this year. Saudi Arabia, Qatar, and Bahrain are considered to be promising markets. For example, the health insurance sector in Saudi Arabia grew by 33 percent between 2006 and 2007, while life insurance grew by 50 percent. All of the Gulf countries are liberalizing their markets and granting new licenses, and they are promulgating more laws for compulsory insurance on vehicles and compulsory health insurance for workers. Standard & Poor's has estimated the rate of growth of the insurance sector in the region at 40 percent per year.

ISLAMIC BANKS ARE SAFE

Islamic banks have proved to be more resilient than traditional banks with respect to weathering the financial crisis. Saleh Al-Suheibani, director of the department of research and investment consultancy at Al-Rajihi Bank, said: Islamic banks are safe from any negative repercussions such as bankruptcy and liquidationÉbecause of good management, the increase in the volume of their assets, compliance with the Shariah, and the avoidance of toxic products." The region constitutes a fertile ground for the growth of this kind of bank, since 40 percent of Islamic banks are based in the Arab world, which is an indication of the demand for them. The assets of these banks are close to $520 billion, and the volume of their assets is expected to increase to $2 trillion by 2012. Islamic banks are growing by a rate that varies between 15 percent and 20 percent per year. The demand for Islamic services is no longer restricted to Muslims only. One of the positive effects of the crisis is that it has shed light on Islamic banking, especially since Islamic financing is based on a system of sharing profit and risk and it is linked to real investment in developmental projects," Al-Suheibani said.

BUY STOCKS, BUT WITH CARE

There are various investment opportunities in Arab stock exchanges, as share prices of companies in different sectors have reached tempting levels. However, caution is necessary. Abdul-Aziz Al-Dakhil, chairman of the board of directors of the Dakhil Financial Group, said: The year 2009 is a year of investment opportunities on Arab stock exchanges." The investor must of course always take oil prices into consideration: The investor must be prudent and keep his eyes on oil prices, because they are the fundamental pillar of the region's economies," Al-Dakhil said.

PRIVATE EQUITY IS A GROWTH SECTOR

The private equity sector is expected to grow, as it is one of the emerging sectors in the region. The sector's contribution to GDP does not exceed 0.3 percent, as compared to 3.5 percent in the United States and 1.7 percent in the United Kingdom. Private equity companies can invest in various sectors. According to Yorg Crisle, an independent consultant who specializes in the direct investment sector, the industrial, real estate, retail, IT, and education sectors are good targets for investment. In light of the presence of more than 100 million Arab students, the demand for quality private education, both academic and vocational, is growing in different countries of the region, especially in light of the inability of the official sector to meet competitive scientific criteria," he said.

TOURISM SECTOR IS A GOOD CHOICE

The tourism sector holds many opportunities for investment. With respect to hotel investment, the region lacks a sufficient number of businessmen's hotels and three-star and four-star hotels that offer quality service at competitive prices. The hotel apartment business should grow in the coming period. Maroun Al-Hashem, director of analysis at R Holding, said: The increase in foreign demand in the UAE on the one hand, and the continuing influx of pilgrims to Saudi Arabia, on the other hand, are among the principal incentives for increasing investments in these types of apartments." It has been estimated that the value of touristic investments in the region will reach around $4 trillion by 2020, while around 70 million tourists are expected to visit the region. Saudi Arabia is considered to be a prime candidate for growth in tourism. Returns from the tourism sector in Saudi Arabia are expected to increase from $34 billion in 2006 to more than $66 billion in 2016. Saudi spending on the tourism sector is expected to reach $16 billion in 2016. Rami Al-Thaqafi, first investment manager in private banking at National Emirates Dubai Bank, says: Riyadh for example is thirsting for five-star hotels, as a result of the shortage of supply." The sector of internal tourism and bilateral Arab tourism is expected to experience a noticeable boom, since it constitutes only 42 percent of the volume of Arab tourism. Bilateral tourism is expected to increase in the coming period, especially for five consecutive years, since Ramadan comes in the middle of the summer season and most of the Arabs, in particular those from the Gulf, prefer to spend the holiday period in an Arab country instead of in Europe," al-Thaqafi said.

BIG DEMAND FOR HEALTH SERVICES

The gap between supply and demand in the region is expanding constantly with respect to hospitals and luxury health resorts. Demand for health care services in the region will increase by 240 percent until 2025, according to a report by McKinsey and Company. The UAE and Saudi Arabia are registering the highest rates of demand. It is estimated that the region will need 162,000 beds in the above-mentioned period, while the volume of spending on the health care sector is estimated at around $20 billion in Saudi Arabia alone by 2016. In Jordan for example, 350,000 people visit the country annually for treatment purposes.

REAL ESTATE STILL BECKONS

The real estate sector is slowing down, but investment opportunities are still likely to grow. Hussein Sijwani, CEO of Damak Holding Company, said: The region is still full of rewarding real estate investment opportunities, especially since the population in the markets is relatively young." Among the promising markets are the UAE, Saudi Arabia, and Qatar. According to Sijwani, despite the slowdown in the UAE, it remains a booming market and it has much to give to investors from the Middle East and from outside of the Middle East. The demand for prime locations in Dubai will remain high, and it is likely that its real estate sector will continue to provide excellent investment opportunities over the long term," he said. Hani BaUthman, CEO of Ayyan Arabian Holding Company, said: The real estate sector in the Kingdom does not bear any debt. In addition, it has big investment opportunities in the residential sector, especially since the Kingdom has one of the lowest rates of citizen ownership of residences in the Gulf, as it varies between only 20 percent and 30 percent." The Saudi residential sector is expected to witness much growth. Saudi Arabia is the most promising country with respect to growth of the real estate sector in the next five years because of the development of the housing sector there, ÒBa Uthman said. For his part, the Qatari economic expert Saleh Al-Nabet, said: Qatar is first with respect to real estate investment in the next five years. Qatar's superiority is attributable to the existence of favorable economic conditions and big opportunities for expansion in the real estate sector, in addition to the fact that most of the projects are big and related to gas and petroleum and other governmental sectors that have credibility, which makes the Qatari real estate sector able to serve these sectors."

INFRASTRUCTURE IS A SOLID INVESTMENT

The region is continuing to develop infrastructure projects. There is no fear for these projects, because they constitute long-term investments, and the government realize their importance as a boost for the local economies," Al-Nabet said. Even if the rates of government spending in the region decreased, this spending would affect spending on non-vital projects, and not those projects that are related to infrastructure projects," he said. The transportation sector needs investments of tens of billions of dollars in all of the countries of the region, in the absence of railroad networks in particular. Studies estimate that the air and land and maritime transport sectors need more investments. Among the attractive sectors are public transportation, maritime taxis, and air taxis for businessmen.

TELECOMMUNICATIONS SPUR DEVELOPMENT

Whereas the market for cellular services is witnessing saturation with rates of 188 percent in some markets, there is a big demand for broadband services on the part of both companies and individuals especially since rates of saturation are less than 40 percent. The recent downward trend in prices will increase demand in the future. Experts estimate the opportunities for growth in the cellular telephone sector at around ten percent per year. However opportunities for growth vary between 30 percent and 40 percent with respect to broadband services. The cooperation between cellular telephone companies and media companies is growing constantly. Big telecommunications companies are seeking to establish a successful reciprocal relationship with media content companies as a means of increasing their revenues. The size of the market is still modest, and it does not exceed some tens of millions of dollars. However, it is expected to grow rapidly so that its size will reach billions of dollars in a few years, especially after the recent expansions in providing broadband services to individual consumers. The telecommunications sector is considered to be a fundamental pillar for developing the economies in the region, and there is a pressing need to develop it in the coming period," Gardner said.

THINK ABOUT INVESTING IN THE ARAB REGION

The global financial crisis has made people think about investing in the region. Mirvat Talawi from the League of Arab States, who is general coordinator of the Arab economic summit that is expected to be held in Kuwait on January 20, 2009, said: The lesson of the crisis lies in the fact that it might make people think again about investing in the Arab world, and this is a strength for the region and a guarantee of its future for coming generations." According to her, governments in the region have a role to play in encouraging investments. She said: Countries must provide stable incentives and establish a court for settling disputes among businessmen on the one hand, and between businessmen and governments on the other hand, so that the owner of capital will be reassured that there exists an official agency that will examine his rights in the event that any unexpected dispute arises. It is also necessary to provide a suitable legislative environment as well as a good investment climate in order to attract this money."

Jody Jaffe, and Leila Rahbani.