Tunisia’s investment in information and communication technology (ICT) has begun to pay off. A flurry of recent reports has ranked the sector among the top in the region, highlighting its potential as a destination for the offshore operations of European companies. While such reports can only provide a rough comparison and rely on subjective factors, rankings from such diverse sources as the World Economic Forum, the World Bank, AT Kearney and the Commonwealth Business Council nonetheless underscore Tunisia’s advantages, including a proximity to key markets, a multilingual population, low costs and a competitive ICT and business environment. As European companies look to reduce expenses, the North African country could become a popular site for new developments.

Tunisia has benefitted from European corporations’ increasing tendency to locate ICT operations offshore. While Southeast Asia has emerged as a popular offshore destination, European firms have looked closer to home, relocating operations to Eastern Europe, the Middle East and North Africa. With English less of a priority, Tunisia’s location, which offers travel times of less than two hours to many European capitals and sits in the same time zone, has attracted many firms. Although North American firms still account for nearly 70 percent of offshore spending, according to a recent report by US-based consulting firm AT Kearney, European companies are catching up quickly. As European demand increases, so too will the flow of business to North Africa.

The entire region will likely benefit from this shift, but Tunisia stands out among its neighbors. For the third year in a row, the World Economic Forum’s report on ICT ranked Tunisia first in North Africa. Rated 38th of the 134 countries ranked in the report, Tunisia came in well ahead of its closest competitors (Jordan, 44 and Egypt, 76), and scored well on individual criteria, including political and economic environment and degree of ICT utilization.

Tunis hardwires ICT

This acknowledgement can largely be attributed to the government’s strong support of the ICT sector. In a bid to improve Tunisia’s knowledge economy, the government has funnelled money to training and education programs, as well as into ICT infrastructure, while new legislative incentives have also been unveiled to encourage offshoring. Tunisia’s 11th development plan (2007-11) calls for an investment of $1.91 billion into the local ICT sector, with a major focus on training and increasing employment. Although Tunisia’s population is relatively small, it is well-educated and multilingual — something the government hopes to take advantage of in the coming years, with a target of an additional 10,000 ICT jobs per year. Currently, 10 percent of university students are pursuing ICT studies, which bodes well for the future of the industry.

Given the pressures of the global economic downturn, Tunisia’s competitive labor costs and developed infrastructure are also attractive. These market advantages are bolstered by an encouraging legislative framework which has, amongst other things, paved the way for a series of IT industry zones. El Gazala, the nation’s flagship technology and communications center located just outside Tunis, is an example of the policy’s success. Open since 1999 and home to about 80 companies, including Ericsson, Alcatel-Lucent and Microsoft, demand at El Gazala has been so high that it is adding 36 hectares to its existing 65 hectares. Two other parks, at Sousse and Sfax, are also expanding, adding a total of 100,000 square meters.

The government has also worked to streamline bureaucracy in the ICT sector’s regulatory agencies in an effort to attract new companies. A one-stop shop to simplify administrative and legal procedures and to facilitate import and customs procedures for ICT was established in 2008. The process consolidates the activities of a number of oversight bodies and allows companies to complete most procedures online.

“Previously, customs procedures could take a week or longer. This speeds up the process,” said Jawher Ferjaoui, the general director of the digital economy section at the Ministry of Communications and Technology.

Tunisia’s “government readiness” rank, according to the World Economic Forum, is even higher than its overall rank (27th compared to 38th), and it ranks 8th for government prioritization of ICT. The state aims to increase ICT’s contribution to the economy to 13.5 percent by 2012, up 3.5 percent from the current level, which will bolster the sector’s position in the increasingly competitive market for  offshore ICT services.

Private developers are moving to establish a permanent foothold in Algeria’s largely untapped real estate market, with a number of sizeable projects due to break ground in the coming year. 

Following nearly a decade of strict financial restrictions and political instability, the recent glut of petro-dollars has helped fuel a massive increase in the construction and real estate sectors, drawing in foreign investors and nurturing domestic developers. 

Gulf investors have flocked to Algeria to develop its 1,200 kilometer coastline. Some of the Gulf’s more prominent property investors — including Emaar, Gulf Finance House and Al Qudra — have unveiled billion-dollar plans for commercial, residential, tourist and mixed-use projects in and around Algiers.

Among the more prominent developments is the new megaproject by Emirates International Investment Company (EIIC), the $4.8 billion Dounya Parc, a nearly 7 million square meter greenbelt around Algiers. The company also has unveiled plans for the $322 million beachfront Ain Chorb tourism village, which the group is developing with the Kuwaiti Investment Group. Projects of this size represent a massive step forward for the Algerian market, although the lack of precedent means that such developments often face a lengthy land acquisition process requiring coordination with both ministries and local authorities. However Camille Nassar, CEO of EIIC Algeria, said the country’s enormous commercial potential was a crucial incentive. 

Europe and China look to the Maghreb

Gulf investors are not alone in looking to enter the Algerian market. Swiss-based Société des Centres Commerciaux d’Algérie (SCCA) is overseeing the construction of Algeria’s largest commercial center, the $73 million Bab Ezzouar complex, which will include some 31,000 square meters of retail space. The China State Construction Engineering Corporation (CSCEC) has also expressed interest in expanding its Algerian operations by developing real estate. 

Domestic investors have also joined in the headline grabbing events. Dahli Group’s $3.4 billion Alger Medina development in downtown Algiers  issued a bond that was marketed directly to the public — an audacious move and the first of its kind for the country’s fledgling capital markets. The bond raised 30 percent of the cost of the project, which will provide some 1 million square meters of office space. 

Following the completion of its ambitious low-cost housing program, the Ministry of Housing and Urban Planning will dedicate an additional $19.4 billion to building one million more homes. As one of the primary pillars of President Abdelaziz Bouteflika’s election campaign, the new residential space will be marketed through a network of more than 450 private and state-owned real estate agencies offering subsidized schemes.

With one of the highest per-unit occupancy rates in the world, according to the United Nations Development Program, Algeria has also tried to mitigate urban migration by launching a program to improve existing housing structures around the country. Nacer Djama, president of the Caisse National du Logement, said there is enormous opportunity for companies specializing in the construction of social housing in the coming years. With only 15,000 to 20,000 mortgages given out last year, Djama said the banking sector needs to catch up with demand for housing finance.

While Algeria’s real estate market offers a tantalizing target for companies that are increasingly squeezed by the global economic downturn, developers — and foreign companies in particular — still face a number of obstacles. The prime minister recently issued a decree on foreign investment, mandating that any project that benefits from government incentives must have a local majority shareholder.  

Still, Algeria is a promising place for the committed long-term investor. The trials and tribulations of the market as it adjusts to these multibillion dollar projects will also help prepare the authorities to deal with the needs of the country’s increasingly dynamic real estate sector.

Sam Inglis is Executive’s  Mediterranean correspondent, based in Istanbul 

Like many of its neighbors, Morocco has a long-term tourism development strategy and has recently highlighted its flexibility by introducing a new program to follow its current tourism plan, called “Vision 2010.” That plan, kicked off in 2001 to chart development over 10 years, has been largely successful, but is nearing its conclusion. Now, the government has launched “Cap 2009” to retool the sector’s objectives and pump cash into the market in preparation for the upcoming launch of the “Vision 2020” development program.

Taken together, the two plans aim to boost arrival numbers, upgrade infrastructure and increase the quality of human resources. While Vision 2010 may fall short of its initial target of 10 million tourists by 2010, particularly given current economic conditions, the number of tourists rose 69 percent between 2001 and 2007, and another 7 percent from 2007 to 2008, bringing the total arrivals to almost 8 million. Hotel construction has been keeping pace with the increase and total bed capacity has risen more than 47 percent since the start of the plan.

Given that tourism attracts more investment than any other sector in Morocco and contributes around 6 percent to the economy annually, the government is taking proactive measures to ensure the momentum continues, even during the downturn. With tourist receipts decreasing 3.5 percent, from $7.4 billion in 2007 to $7.1 billion in 2008, Cap 2009 will seek to use Internet marketing to expand the arrivals base beyond the traditional European markets. The program will receive a budget increase of 10 percent ($6.2 million) in 2009 to facilitate expansion into Eastern Europe, Russia, the Gulf and China, among other markets.

Building from the top down

Domestically, Cap 2009 identifies Marrakech, Fez, Casablanca and Agadir as priority regions, which is consistent with the Kingdom’s promotion of high-end cultural and beach tourism. Efforts to target these areas are already included in Vision 2010. The components — Plan Azur, Plan Biladi and Plan Madain — aim to develop resorts, bolster domestic tourism and showcase cultural destinations.

Plan Azur is expected to be the linchpin of the three, as Morocco looks to capture some of the lucrative regional resort market. The plan outlines six new integrated resorts that will require investment of $5.7 billion and will result in the creation of 110,000 beds and 400,000 direct and indirect jobs. While the sun-and-sea model is relatively low-earning and faces serious competition, the government hopes that increased numbers of visitors will compensate for smaller margins of revenue.

Adding infrastructure is the primary goal of Vision 2010, with Vision 2020 expected to focus on human resources and build upon the expanded offerings. When the government launches the program next year, it will be geared towards bringing service quality up to the standard that many international consumers expect. Vision 2020 will also take into consideration requirements for sustainable and responsible tourism, as well as the protection of natural and cultural resources.

To accommodate the continued rise in arrivals, Morocco is working to upgrade its airports. Abdelhanine Benallou, the CEO of the Moroccan National Airports Authority (ONDA) said the objective is to reach a capacity of 32 million passengers by 2012, with current capacity at 23 million. In mid-April, the African Development Bank granted the Kingdom a loan of $334 million to enhance facilities at the Casablanca, Fez, Agadir, Marrakech and Rabat airports, which handle the bulk of the country’s air traffic. The loan will cover about 75 percent of the $445 million project, with the ONDA covering the remainder of the cost. ONDA is also working with the Moroccan National Tourism Office to reduce bureaucracy and has announced adjustments to airport taxes on chartered flights.

The government’s willingness to make adjustments across the tourism sector underlines the country’s adaptability, particularly during these difficult times. Cap 2009 will expand Morocco’s presence in emerging markets, which should help make up for a decline in arrivals from Western Europe. Meanwhile, targeted Internet marketing and increased bed capacity will develop a solid foundation that will help temper the effects of the recession in the short term, and provide the necessary framework for future growth under Vision 2020.

Morocco seeks to upgrade its airport capacity to 32 million passengers per year