* “Morocco inspires the most confidence. They are more forward thinking –
and I say that as an Algerian!”
– Adel Hamaizia, project co-director, Transatlantic Partnership Business Initiative *
Gulf Times, by Denise Marray (London, England, September 23, 2013) — Today’s event is an opportunity for the Arab countries in transition to make their case to the investment community and to demonstrate that they are open for business in order to boost economic growth and create new jobs.” With this statement, Ahmad Mohamed Ali al-Madani, president of the Islamic Development Bank (IDB), summed up the challenge faced by the countries of Egypt, Tunisia, Libya, Jordan, Yemen and Morocco. Addressing a conference centre packed with international investors, each country made its case at the G8 Deauville Partnership Investment Conference in London.
Welcoming the delegates, Alistair Burt, parliamentary under secretary of state, Foreign and Commonwealth Office, said: “This event is an integral part of our overall theme for the UK’s G8 and Deauville Presidency, which is the ‘golden thread’ of conditions that enable open economies and open societies to create prosperity and growth for all.” Deauville regional partners are Qatar, Saudi Arabia, Kuwait, UAE and Turkey.
Prior to the respective country presentations, key note addresses were first made by Suma Chakrabarti, [resident, European Bank for Reconstruction and Development (EBRD); al-Madani of IDB; Masood Ahmed, director, Middle East and Central Asia Department, International Monetary Fund (IMF) and Gabriela Ramos, chief of staff and G20/G8 Sherpa, Organization for Economic Co-operation & Development (OECD).
Chakrabarti said: “The needs are huge and though the international community has committed a great deal it will need to scale up its help if the transitions are to be successful. Private sector investment will only come if economic stability and the infrastructure which a public sector can provide are in place. Private sector investors must also feel that they can have access to European markets which requires agreements with the European Union.”
Al-Madani noted: “Since 2011 international financial institutions have collectively committed in excess of $23bn of assistance to the Arab countries in transition, including $5.8bn from the IDB, in addition to billions of dollars of bilateral assistance from Gulf countries, Turkey and the G8. However, as important as official aid may be, it is not enough to transform the economies of Arab countries in transition. We do need the private sector which is after all the real engine of growth.”
Masood Ahmed said: “The reason people came out onto the streets was not because of macro-economic instability. Actually these countries were always quite stable macro-economically. The reason they came out onto the streets was because growth was too low and the benefits of growth were not always shared, so there was this sense of wanting to see a better future.” He called for improved access to finance, especially for SMEs, and providing young people with a skillset better matched to the needs of the private sector.
“It’s about creating safety nets that are targeted at protecting people – rather than generalized subsidies that protect commodities that are used by the rich,” Masood Ahmed said. He acknowledged that some reforms have “short term political costs” and commented that there is a need for countries to engage their populations in a shared vision towards establishing the best model and pathway to achieve inclusive growth.
Speaking directly about the aspirations of the young generation he said: “Young people are getting impatient and frustrated. More than two and a half years later, they want to see some dividends in terms of jobs and living standards, and not simply in terms of continuing subsidies but in terms of better economic prospects.”
With reference to the over $20bn pledged to the transition countries Masood Ahmed said: “Some of the money is in the form of commitment rather than delivery. I think we need to accelerate financing for immediate budgetary support to help countries balance their books because the pressures are rising.” He called for financial investment into industrial projects “that will generate a quick return,” as well as into transformation projects, for example, in infrastructure, and for sharing of experience in capacity building.
Ramos of the OECD said: “We cannot wait until political stability is achieved or the international financial crisis overcome.” She urged the transition countries to make the necessary reforms and to strengthen investor rights protection.
“Morocco has made over the last ten years many reforms in order to have a good environment for investors.”
– Abderrahim Bouazza, Bank Al-Maghrib
Having listened to the presentations from all six ‘transition’ countries, what was the view from the floor?
William Craft, deputy assistant secretary, Bureau of Economic and Business Affairs, US, was asked which country through their presentation at the conference had inspired the most confidence for potential investment. He replied: “I thought the presentation by the representative from Jordan (by Maha Ali, secretary general, Ministry of Trade and Industry) was particularly effective because she referred both to their outward looking orientation with their free trade agreements with the US, Europe and Canada and their commitments to implementing the OECD transparency commitments; I thought that was a nice mix.”
Asked to give view on Egypt’s transitional government, Craft said: “Big question – hard to say. They have made some positive steps but there’s a long way to go before I’m fully satisfied or completely optimistic. We urge them to accelerate the speed at which they make progress.”
He said: “I think there is a great interest in investing in the region. But investors need stability, predictability and transparency; they are looking to governments to provide that and what we are seeing is a great mosaic of differences in how governments are responding to those calls by investors.”
Khalid Hamza, principal banker, municipal and environmental infrastructure, EBRD was asked about the challenges involved in disbursing the over $20bn committed to the transition countries. He said: “In terms of disbursement, you can always commit whatever amount, but to actually disburse that amount and make it effective on the ground and give it to the projects that require it – there’s a lot of groundwork that needs to be done first and that is where a lot of issues are faced. For example, either the feasibility studies are not in place or certain regulations.”He said Morocco with its calm political situation offered a positive environment for investment.
Abderrahim Bouazza, head of banking supervision department, Bank Al-Maghrib, said reform was the key to Morocco’s success. “Morocco has made over the last ten years many reforms in order to have a good environment for investors,” he said.
Leonardo Simonelli Santi, president of the Italian Chamber of Commerce and Industry for the UK, said: “What is lacking now is trust. There is a lot of fear, disillusionment and contradiction. We need a common ground in ethics. We need a focus on innovation, rules and ethics.”
Mohammed El-Katiri, senior research analyst for North Africa and the Gulf Countries at the Conflict Studies Research Centre, said: “Investors see great potential in the region in many sectors, particularly energy and health, but I think the timing is not right in some countries due to lack of political stability and security.”
Adel Hamaizia, project co-director, Transatlantic Partnership Business Initiative, said: “Morocco inspires the most confidence. They are more forward thinking – and I say that as an Algerian!” He is looking at ways to integrate local suppliers into global supply chain systems and also advocates labor intensive as well as financial intensive industries in the face of the burgeoning growth in unemployment, particularly in the Maghreb.
Richard Ryan, executive director, Willis Global Analytical Brokers said: “The picture is somewhat cloudy; as soon as you get clarity the mist comes in again and you have to tread with some degree of caution. But that shouldn’t dissuade you from having a broad vision on where the next opportunities will arise.”
Samy Benosman, director, business development for Mena (Middle East and North Africa) at Hospitech, said his French medical company felt that if they were to support the transition countries they had to have a presence despite the risks. “In terms of immediate investments we have hospital projects in Libya, Tunisia and Morocco,” he said.
On an upbeat note, Muntaser Dawwas, chief executive officer, Investbank, said: “I’m from the Middle East – the Middle East always has issues – but life will go on!”