Annonces

lundi 14 février 2011

Foreign Direct Investment and partnership in the Mediterranean


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By David Morgan   

Mediterranean_neighbours
A marked growth in partnerships between companies in the Mediterranean region in recent years is underlined by a new report from ANIMA.

More than 1,000 partnerships between Med companies over a seven year period are highlighted in the report which says that the Maghreb region is the most attractive destination for investment in particular for large corporations and development agreements.

The majority of the 1,000 partnerships involve large corporations with three quarters involving multinationals and large companies.

The countries of the Maghreb, which are better integrated industrially with Europe than its other Mediterranean neighbours, play host to slightly more partnerships with SMEs, says the report.

In terms of region of origin, Europe is associated with more than half the partnerships (52% to be precise), against 23% for North America, 11% for other emerging countries, 8% for the Gulf states and 6% for inter-Med projects.

Europe is over-represented in areas such as wholesale, retail and personal services (furnishing, textiles and agribusiness, North America in the electronics sub-sector of components, software and hardware and biotechnologies, the Gulf in building and public works, chemicals and banking, other emerging countries in intermediate goods (automobile, general public electronics industries) and energy.

The report makes a comparison with the origin of FDI, stating that Europe increasingly tends towards a partnership approach, with more modest amounts of FDI, a greater presence of SMEs and industrial links created with local companies.

The relative integration is particularly evident in the Maghreb, which is an important area for European economic cooperation. In contrast, the Gulf rarely become involved in partnerships, says the report, while the US is situated midway with cooperation concentrated in a few strong areas like the high tech sectors.

2009 was a good year for the Maghreb, the report says; it resisted the global economic crisis rather well and as a sub-region it performed better than the Med average in a number of projects.

Foreign investments from Europe were significant: 45% for the period 2003-2009. Investment started to rise in 2009 (+24%), with a very strong increase in French projects, the gross announced amounts of which rose from less than €2 billion in 2008 to more than €5bn in 2009, notably thanks to oil related projects of Total and GDF Suez in Algeria, the Renault-Nissan prestige plant project in Tangiers and several projects in the telecoms domain.

These latter consisted of the modernisation of the infrastructure of Maroc Telecom, a subsidiary of Vivendi, or Orange which won the third landline and mobile telephone licence with the local Divona in Tunisia.

Algeria
In Algeria, the adoption in 2008 of new measures on foreign investment might have foreshadowed a slowdown in FDI into the country, the report states.
Notably the measures provided for a generalisation of partnerships with an obligation for a foreign investor to associate with an Algerian partner holding a minimum of 51% of the capital, the creation of new administrative procedures, declaration to the National Investment Development Agency (ANDI) and an obligation to be involved in the local market. 

Despite the measures, the progress of FDI into Algeria was one of the highest in the region in 2009m, the report acknowledges. The level was maintained and the net announced amounts rose from €1.5bn to nearly €2.5bn, according to the ANIMA-MIPO Observatory, while Algerian agency ANDI recorded a rise of 40% during the first nine months of 2009.

The figures are almost exclusively attributable to the energy sector, which alone represents 9 out of the 10 largest projects of the year, with specifically the projects of the groupings Total and Partex for the gas seams of Ahnet, Rosneft and Stroytransgaz in the Gara Tisselit perimeter, Anadarko and ConocoPhillips for the El Merk oil and gas complex and GDF Suez in the Touat field.

In contrast, other sectors of the Algerian economy attracted far less foreign capital, other than that of the banking sector which was boosted by the ruling adopted in 2008 which required that the minimum capital of banks and their branches be multiplied by four, from 2.5bn to 10bn dinars.

This measure led to an increase in the capital of subsidiaries of Fransabank, Trust Bank Algeria, Citigroup, BNP Paribas, Societe Generale and Gulf Bank Algerie.

The situation for investment in 2009 with regards to Algeria is therefore somewhat mixed, the report says. While there is encouragement to be gained from the lack of any obvious negative reaction to measures adopted in 2008, the industrial diversification which Algeria is preparing for a post-oil future is needs to make more progress.

Morocco
Turning to Morocco, the Kingdom stood up very well in terms of the net flows of investment since the amounts rose from €2bn in 2008 to €3.3bn in 2009.

These good results were achieved through the determined efforts of the Kingdom which did not hesitate to mobilise the Caisse de Depots et de Gestion (CDG) in joint ventures to implement some important strategic projects such as the Renault hub at Tanger Med, the Spanish logistics company Edonia World’s tax-free zone at Kenitra or even the future tourist complexes at Chibka, alongside Egyptian Orascom and Ifrane with the Kuwait Investment Authority.

Through its subsidiary MedZ, CDG is very active in the creation of industrial estates, clusters and science parks which are now flourishing in Morocco.

The largest projects unveiled in 2009 consist of a diversified portfolio of sectors: in metallurgy, there is the plant for the production of billets at Sidi el Aidi from UK’s Liberty in a joint venture with local group MIS; in energy there is a concession contract won by UAE’s Taqa for power stations at Jorf Lasfar; in automobile, there is the Renault plant at Tanger Med already mentioned; in telecoms, there is Vivendi and its subsidiary Maroc Telecoms at Rabat, the stake of Zain and Al Ajial Investment Fund in Wana; in banking, there is the ongoing participation of Credit Mutuel – CIC in the capital of BMCE; meanwhile, in tourism, there is the construction of tourist complexes in the major cities by Pierre et Vacances, to name just some.

As regards investors, Europeans widened the gap on the Gulf in 2009 by supplying two thirds of the FDI flow against one quarter for the Gulf.

The Med countries scored better than in previous years, thanks to investments from Libya in the real estate sector (hotels in Marrakesh and Casablanca) and chemicals (phosphoric acid production unit at Jorf Lasfar).

Tunisia
In Tunisia, although there were fewer large projects recorded in 2009, diversification proved its effectiveness, the report says.

The FDI trend reached its national objective with €1.3bn of foreign capital inputs, according to the Tunisian investment promotion agency, FIPA.
A drop in the flow of FDI was attributed to the absence of large projects with the exception of the marina project in the Gulf of Hammamet from Emaar and the acquisition of a telephone licence by the French operator Orange.

In previous years the country had attracted more real estate projects linked to capital from the Gulf as well as some sizeable energy projects. The energy and tourism sectors nevertheless remain predominant, whereas FIPA cites the rise in FDI in the mechanical, electrical and electronics industries, which doubled compared to 2008.

The construction of an aerospace cluster around Airbus sub-contractors is one development worthy of mention.

Libya
Unsurprisingly, the report finds that the largest sectors for investment in Libya over the year were energy, building and public works and infrastructure.

In addition, chemicals also helped to attract some large projects; the Moroccan OCP in cooperation with Libya Oil Holding was to build a plant to produce 800,000 tons of ammonia p.a. providing a mixed interest project since Libya Oil Holding had invested in the production of phosphoric acid at Jorf Lasfar; while the Norwegian Yara has taken 50% of the complex for the production of urea and ammonia at Marsa El Brega, which is being developed in a joint venture with the Libyan state players.

The ANIMA Investment Network, which produced the report on which this article is based, is an agency of the European Union. It supports the economic development of the Mediterranean by contributing to a better investment and business climate in the region.

Global Arab Network


This article appears in Arab-British Business, the fortnightly bulletin of the ABCC