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Redtape slows Gulf projects in Maghreb

Tunis, May 21, 2008

Years after Gulf Arab investors promised multi-billion dollar investments in North Africa, early optimism is now tinged with unease as headline projects struggle to get off the ground.

The Maghreb shares the Gulf's language but lacks business know-how and expertise on big projects, making it an ideal target for investing windfall cash from record-high oil prices.

Business parks, marinas, waterfront villas, aluminium smelters and power stations have been announced, a lifeline for North African countries trying to spur sluggish economies into the fast lane and cut unemployment.

Morocco has drawn Gulf-funded real estate developments worth potentially over $30 billion. But turning ink into concrete is proving painfully slow compared to the Gulf, where skyscrapers and hotels seem to mushroom out of the desert in a few months.

A Dubai Holding project announced in early 2006 to redevelop the Moroccan capital Rabat's Bou Regreg estuary is taking shape, though at nothing like the pace seen in places like Dubai.

UAE firm Emaar's plan to transform Rabat's tatty Atlantic shoreline is over two years old but the only obvious signs of progress are a patch of earthworks and a showroom.

King Mohammed launched a five-year marina project aimed at drawing high-spending tourists to Casablanca two years ago with trumpets blaring. The site looks little different today.

Emaar has also signed a $20 billion protocol accord for the biggest ever property development in Algeria, including the redevelopment of Algiers bay. An agreement is expected in coming weeks, property sources say, but nothing has come of it yet.

Red tape seems to be hampering other Gulf-led projects in Algeria's energy, banking, telecoms and property sectors.

Analysts said the reasons for delays were sometimes hard to fathom in a region where powerful elites play complex games of patronage that distort ordinary business logic.

"Generally in North Africa the level of execution of Gulf-announced real estate and tourism projects is still very much to be proven," said the Economist Intelligence Unit's Middle East business Editor David Butter.

"In Morocco things are moving a little. In Algeria there is little to show for the $25 billion of deals, as with Libya, where there are big plans but nothing is happening," he said.

Moroccan officials insist the big projects are continuing to plan but it is normal that several hurdles must be crossed before they begin taking shape on the ground.

"These projects are advancing, with the constraints linked both to big projects and to partnerships," said Mustapha Bakkoury, head of state investor Caisse de Depot de de Gestion which is involved in many Gulf-led developments in the kingdom.

Perhaps Tunisia has most to win or lose. The country of 10 million, with annual gross domestic product of $20 billion, is targeting investment of $50-60 billion from Gulf Arab projects.

Europeans are still the main investors in Tunisia with a strong presence in textiles, call centres and tourism, but the biggest single projects announced recently are from the Gulf.

A deal for Sama Dubai to develop a Tunis suburb with apartments, offices and hotels is forecast to boost economic growth by 0.34 percent per year in the next four years.

The land has been sold but work is yet to start on the $14 billion project first announced last June.

Gulf-led investments are expected to create 200,000 jobs over 15 years, said Slim Tlatli, director of Tunisia's High Commission for Large Projects. Officials put the unemployment rate at 14.3 percent.

"These projects ... will accelerate Tunisia's economic growth, help the country face the challenge of joblessness and lure further potential foreign investment," he said.

Tunisian analysts say their country -- the most business friendly in the Maghreb according to the World Bank -- has<




Tags: Maghreb | Gulf projects |

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