NewsNorth AfricaHannibal: The Maghreb makes another stab at a regional market

Fri,24Nov2017

Posted on Monday, 15 April 2013 16:24

Hannibal: The Maghreb makes another stab at a regional market

By Hannibal

Member countries have agreed to contribute $20m each to create a $100m capital base for the UMA's new regional bankCheck the dictionary definition of 'moribund', and you may well find it illustrated by the Union du Maghreb Arabe (UMA).

 

The economic union that links Mauritania, Morocco, Algeria, Tunisia and Libya is not working.

In fact, it is the least-integrated regional market in the world, with just 3% intra-UMA trade, versus 24% in the Association of Southeast Asian Nations.

And yet the UMA has 90 million consumers, vigorous export industries and the potential for real partnerships.

Tunisia and Libya, for example, are each very complementary – Tunisia has skills but lacks finance, while Libya has the opposite problem.

The UMA leadership studied the lack of trade between member states and found that weak integration causes a loss of income of $2.1bn per year.

The UMA leadership studied the lack of trade between member states and found that weak integration causes a loss of income of $2.1bn per year

Many of these problems have politics at their heart, particularly the decades-old stand-off between Algeria and Morocco over Western Sahara's status.

But many of the problems are self-inflicted too.

Algeria's capital controls prevent local companies from investing in foreign production lines.

Tunisian exporters are limited to D3m ($2m) a year of foreign investment, pushing some of them to get around the legislation by using subsidiaries.

Non-exporting companies are even further curtailed in their foreign investment, at just D500,000.

In Morocco, national champions successfully expanding south of the Sahara are finding the Maghreb much trickier.

Though Attijariwafa Bank has a presence in Tunisia and Mauritania, the UMA zone makes up just 7 percent of its revenue.

A request to Algeria's central bank for a licence remains a dead letter.

Given these political and business obstacles, it was with great pleasure that Hannibal saw the grand jamboree held in Nouakchott, Mauritania on 8-9 January to try to relaunch an organisation that had stalled since 2008.

The five central bank governors and top finance officials held talks, with the IMF in the role of chair.

"The whole region would win if it became more open to itself and got rid of the roadblocks to trade," argued IMF managing director Christine Lagarde.

The result? Not much.

Each government agreed to contribute $20m to create a $100m capital base for the UMA's new regional bank, the Banque Maghrébine d'Investissement et du Commerce Extérieur.

It should be operational by April of this year.

But if shared prosperity is one way to avoid extremism taking root, the UMA should heed Mali's woes as a wake-up call●



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