No one knows how many mines were buried beneath South Sudan’s soil during 50 years of north-south civil war. However, at least one private company has hired deminers to clear land in the South since 2005’s peace deal. Today the largest portion of this work is called ‘humanitarian mine action’, largely funded by the United Nations.

Contracts are open to both non-governmental organizations (NGOs) and the private sector, with at least four companies — Amour Group, Mecham, Ronco and The Development Initiative (TDI) — making money by freeing communities from fear.

Together with the three-year-old government, humanitarian agencies have struggled to meet vast education and health needs, but the demining coordinated by the United Nations Mine Action Office (UNMAO) is held as a success. Some 10,000 km of roads — including key routes between towns — have been opened. More than 2,300 dangerous areas have been identified and 1,101 cleared. Almost 11,500 anti-personnel mines and 2,522 anti-tank mines have been destroyed, together with hundreds of thousands of unexploded ordinances.

Experts believe mine contamination in the South is far less than in Cambodia or the Balkans. Leonie Barnes from TDI’s South Sudan program has cleared battlefields and infested areas close to towns with giant machines like the British Armtrack with its flailing wheel and a Swiss digger with rotating chains and hammers. He thinks the bulk of the work may be finished by 2010, leaving only harder “fiddly” areas to clear.

At least two towns were strangled by rings of mines in the war and key roads were also mined, or rumored to be mined to the extent that much-needed travel was deterred. Many areas have still not been re-inhabited by returning refugees for fear of the explosives that have maimed or killed more than 2,600 people in the South.

More than just controlled explosions

In 2007, the UN spent more than $62 million on demining in Sudan, with 70% going to the South. Christina Greene of UNMAO pointed out that this money was spent on much more than just digging out mines and detonating them. “[This] includes demining, mine risk education (MRE), victim assistance and the coordination of all these activities,” she said.

Contracts are given out for a nine-month season that avoids the worst of the rains. They are awarded according to cost and technical capabilities. Contracts vary from surveying to route clearance, to mechanical and manual clearance, as different machines and expertise are needed for different jobs.

“Landmine and explosive remnants of war contamination varies across southern Sudan,” Greene explained. “Some minefields have high concentrations of both anti-tank and anti-personnel mines. Other suspected minefields may only have one or two mines.”

Costs vary dramatically as well. “A manual detector costs $3,000 on average, while a large machine can cost $1.5 million. Manual clearance is a lot cheaper, but much more time consuming,” Greene said.

Some machines are better than others for certain jobs. Ronco’s MV-4 machine, for example, is designed to clear only anti-personnel mines from various types of terrain, explained the company’s chief of party, William Endley. Mines are detonated as the small, maneuverable and remote-controlled flail and roller mounted machine moves through the mined area.

“Mines and other explosive items are therefore detonated or destroyed by the impact of the chains and flails. These impact hammers are made from very high resistance steel which gives them a reasonable lifetime before they have to be replaced,” he said. Bigger machines would not be able to work on some terrains an MV-4 can access.

There are also environmental factors. Fast-working, heavy machinery that can tackle a large area quickly may not be easily brought to areas that lack roads or bridges.

A tough environment

Demining companies face many of the same challenges. The South is at least twice the size of Germany and the transport infrastructure is massively underdeveloped. “The logistics chain is huge — road, air and river. If you haven’t got contact in each place it can be very difficult,” Barnes said. Many places lack roads entirely. “Sometimes you’re making the road as you demine it,” she added.

In the region’s tiny private sector, the demining companies and NGOs are an important source of jobs. Private companies employed more than 400 national staff for the 2007-2008 demining season on UN contracts in South Sudan. NGOs employed more than 500 national staff.

However, many employees are ex-combatants who have spent most of their lives fighting and a “war-traumatized” workforce brings with it a whole host challenges, Barnes notes.

The peace deal is also fragile. International concern, already high, ratcheted up in mid-May when northern and southern Sudanese forces clashed in the oil-rich Abyei area. The possibility that war could break out again is very real, rendering demining useless as new mines are laid and unexploded ordinances litter the ground. 

Ronco’s Sudan operation is its smallest — dwarfed by Afghanistan and Iraq projects — but the company is keen to settle down and grow. They have set up a camp in the South’s capital Juba. “We are also planning to develop a Sudanese demining capacity in the South for future projects. [But] given the current security situation, it is difficult for us to gauge the amount of work in the South or in Sudan as a whole.” Endley said.

Are NGOs better at humanitarian demining?

At Mile-38, a famous 3km-long battle ground in the North-South war where Khartoum’s forces stopped the southern rebels’ attack on Juba, keeping them at bay 38 miles from the town, there is a 25-strong woman demining team working for Norwegian People’s Aid (NPA), one of the two biggest NGO demining projects.

This all-female team is the only one in the South and to many they are better than their male counterparts. Mile-38 project leader Lado Victor said that although women learn at the same speed as male deminers, in the end they are more consistent.

Opayi Mary, the team leader, is proud to be working on a project that she hopes will eventually benefit other children, if not her own. “My work is like that of a soldier,” she explained, “full of discipline.” According to her, the work is safe if you follow the rules.

Charles Frisby, head of NPA’s demining work, said work like developing the women’s team is the product of something NGOs have that commercial partners do not: extra time.

“Capacity-building is where NGOs can really stand out. Because donors are not applying intense pressure on the NGOs to achieve certain levels of productivity, the extra time can be given to national staff within a program,” Frisby said. He added that time and energy can also result in the host nation getting a sense of “ownership” over the clearance.

There may also be a shift as the work is changing. Between 2004 and 2007 there was much reliance on the commercial sector to clear and open primary roads. Now the emphasis is changing to the clearance of land for agriculture, return and resettlement and infrastructure projects. “NGOs that have built up sustainable programs are now well placed to take the lead in this work,” Frisby said.

“A private company works on a specific task with limited time duration. NGOs tend to have a longer term outlook and bilateral funds, in addition to grants from the UN,” added Greene. “Many NGOs also have a long term strategy for capacity development and nationalization so that they will not be dependent on international staff.”

Barnes noted communities benefit whether the deminers are profit or non-profit. “Wherever there is a demining team the health and hygiene in the village will improve. Medics usually do nothing during the whole contract, so they end up treating malaria and delivering babies,” she said.

Before joining TDI, she worked with the UN for 10 years and has a deep understanding of mine risk education and victim assistance, as well as ballistics from her time in the Australian army. She thinks there is no significant difference between in the capacities of the commercial companies and the non-profit outfits, saying “Both commercial and NGOs doing humanitarian mine action have to be multi-faceted if they want to succeed.”

Barnes estimated modest profit margins at 10-15%. This is partly because the South is such a hard place to work. But there is another important aspect to the work for both kinds of deminers — an enormous sense of satisfaction at having cleared land, opening up access and possibilities.

Competition for contracts may also arise locally soon. This year, Sudan Integrated Mine Action Service (SIMAS) was the first national NGO to be accredited in southern Sudan. SIMAS has already cleared a site for a brick factory and school in Rokon, as well as portions of Rejaf East and Mongolla. This is an important step for the UN, who by 2011 will shift coordination work to the government.

“When the UN passes the job over to the government they will be the people demining the roads,” Leonie said.

Endley noted that: “as development of roads and other infrastructure in Sudan progresses, we expect there to be an increase in activity for private contractors, much like in Afghanistan over the past four years,” he said.

Private contractors also hope other businesses will develop into new opportunities if peace holds.

Greene noted that private companies’ market outlook is changing in the South. “As new commercial ventures enter southern Sudan, especially those investing in mineral and natural resources, there will be an increasing need for mine action support.”

As interest groups lobby for greater control over Morocco’s thriving black-market trade, officials are showing new interest in understanding the informal sector —  both in order to better fight it, and in order to learn from its remarkable success. Earlier this year, the prominent Moroccan business federation CGEM (Confédération Générale des Entreprises du Maroc) commissioned a series of studies of informal markets in Morocco, beginning with a close examination of Casablanca’s infamous joutiya (flea market). The market, Derb Ghallef, is both a center of distribution for black market goods and services in Morocco, and also a microcosm for how informal markets function in developing economies.

Well-known throughout Morocco and highly popular among consumers, Derb Ghallef is Morocco’s most prominent commercial center. But one could not possibly call it a mall. In appearance, it is more like a shantytown. Approximately 2,000 outlets open onto narrow alleyways, run-through by long ditches only sometimes covered with planks or cardboard. Most stores occupy a space of just 12 square meters, and are made of tin, zinc and wood scraps. There is even a ramshackle mosque amidst the hawkers, its minaret made from green-painted cardboard and stray materials.

Politicians, businessmen, and researchers want to know: how does a market that is not even on the electrical grid generate sales figures of over $140 million? How can the value of an electronics shack made from zinc scraps with no plumbing exceed, by double, the value of Casablanca’s most expensive commercial real estate, like the so-called ‘Golden Triangle’?

Market’s evolution

Derb Ghallef began in the 1920s as a shantytown near the center of Casablanca, hastily thrown together for a population swelling with rural migration and a rising birth rate. After an absent-minded welder accidentally burned down the area in the 1950s, the community resettled at a nearby site, where they created a flea-market and auction house for used goods.

At no point in its history had the market or community any legal right to this land. As an official from the Agence Urbaine de Casablanca told the local press, “from a purely urbanist point of view, Derb Ghallef is an illegal space, since there is no authorization for it.” For decades, the terrain has served as a cash cow for corrupt officials who contracted it out, even though any proceeds from its use should have belonged to a group of inheritors. In 1982, communal officials united with the land’s inheritors to force the market out and develop the land. When talks failed to achieve the desired goal, a second fire destroyed the community under quite suspicious circumstances. The merchants were given another provisional authorization to set up nearby, and have remained at that site ever since.

Elements of each earlier phase — the shantytown aesthetic, the noise and bustle of the auction block, the bargain prices of the flea market — are defining features of today’s Derb Ghallef. More recently, however, globalization and Moroccan immigration have revolutionized the supply side. TV satellite dishes and European contraband hit the market in the 1980s, entering through the Spanish enclaves of Ceuta and Melilla and the porous Algerian border. Moroccan migrants to Italy smuggled in suits, shoes, and textiles, which they sold in bulk to the merchants of Derb Ghallef. Now, in the 21st century, immigrants in Germany, the Netherlands, and Belgium furnish the market with PCs, cell phones, and PlayStations, right as Chinese imports were penetrating its furniture, electronics, and clothing stores. In recognition of the market’s high potential for distribution, even the formal sector has moved in. Appliance companies opened retail outlets in the Derb, where consumers can buy a Sony TV or Sierra refrigerator with receipt and warranty. The formal sector currently accounts for about 20% of the market’s trade.

Derb Ghallef has earned a reputation as Morocco’s “Silicon Valley,” on account of its latest-generation technology and its savvy technicians who can unlock the latest iPhone for use with Moroccan telecom operators, and who repair all sorts of electronics. Numerous vendors sell pirated software for under $2. From medical instruction to three-dimensional design for architects, to the latest in gaming, Derb Ghallef makes these programs —  prohibitively expensive to all but the richest Moroccans — accessible to the mass market. “I can’t afford to spend $100 on educational software for my children,” one vendor of electronics said, in defense of pirating. “But does that mean they don’t deserve to learn?”

A Moroccan business model?

There are several advantages to shopping at Derb Ghallef. First, the market is a one-stop shopping destination like Wal-Mart or Carrefour, a place where one goes to find anything and everything at once. The market also rapidly adapts to changes in demand. Resourceful sellers use word-of-mouth as well as their international contacts to quickly respond to shifts in buying trends, which more structured commerce circuits are much slower to achieve (often due to legal constraints). Sometimes, its ability to swiftly adapt supply to demand can have political consequences. Sociologist Jamal Khalil, who conducted the recent study on the market, noticed spikes in the market’s distribution of inflammatory Islamist DVDs during the first and second Gulf wars.

However, Derb Ghallef’s chief commercial asset undoubtedly is unbeatable prices. “In the Joutia, one finds brand-name products with more choices and for 15% less than at Marjane [Morocco’s leading hypermarket],” one merchant reported. Ambulant sellers, unburdened by rent, put pressure on shopkeepers to keep prices low. Cheap Chinese imports also drive down prices. Buyers can also negotiate prices, place orders, or pay installments on pricey items. Personal contacts are key to buying and selling in Derb Ghallef, and personal connections also enhance the market’s adaptability. Customers may request a new phone or computer part, leaving their phone number with the vendor, who will rapidly locate the item and then call back. They may buy on a credit negotiated with the vendor, based entirely on a system of trust.

In some ways, the market’s commercial success is grounded in the grand traditions of Moroccan trade. Its narrow, packed alleys, where  kitchen-ware supplies are clustered together in one area and electronics in another, recall the layout of classic medinas in Fes and Marrakech. Furthermore, trust is still valid currency in this informal market — human warmth may earn you a lower price or an easy payment arrangement.

On the other hand, the market has highly modern features and reflects a spirit of individualism that Khalil believes is characteristic of the new Morocco. With only themselves to rely on, the merchants and repairmen of Derb Ghallef have proven remarkably resourceful and efficient. They have also had expanded opportunities and quicker upward mobility than their colleagues in the formal sector. As Khalil explained, “At the official Apple store, they have salaried technicians who come from 8:30am to 12pm and from 2:00pm to 7:00pm. Whether they achieve results, or don’t achieve results, they’re paid at the end of the month. [For] the technician at Derb Ghallef it is necessary that he achieves results. He is directly concerned; you bring him your Mac, he has to fix it. This spirit that we find in Derb Ghallef, if we could develop it elsewhere, would generate better entrepreneurs, better technicians. The interesting concept is that here are people in a difficult position: maybe they have a high school diploma or not, maybe they didn’t finish their schooling, and they had odd jobs… But they wound up in a market where they could advance quite rapidly. It’s too bad in a way, because those who have university diplomas, maybe even an engineering degree, are not as efficient.”

Beat it or join it

The merchants of Derb Ghallef have created a nexus of commercial and technological innovation and a paradise of smuggled, pirated, and counterfeit goods. The market is more efficient and more personable than the formal market, a promising alternative model of commerce and distribution. Moroccan authorities are torn between shutting it down and reproducing its success. But in securing important trade deals with European and American enterprises, Morocco faces new pressures to minimize the flourishing informal trade that takes place within its borders.

On March 29, 2008, local authorities from the prefecture of Casablanca seized and destroyed 80,000 pirated discs, including music, computer-programming software, and DVDs. The sting operation’s principal target was Derb Ghallef. The Moroccan Copyright Office (Bureau Marocain du Droit d’Auteur, or BMDA), one of the driving forces behind the raid, aims to eliminate the sale of illicit CDs in the metropolis. The BMDA’s CEO, Abdellah Ouadghiri, said in a statement, “certainly, a single raid or even several cannot thwart the pirating phenomenon, but the essential thing for us is to establish a sense of responsibility among citizens and raise their consciousness of copyrights.”

However, the local population still enjoys its access to the latest in Western media and entertainment, and raids are ineffective in getting to the source of the problem. One disc seller remarked, “As long as there exist huge pirating factories and sellers of machines that make 50 copies at the same time, we will never defeat this kind of commerce.”

Microsoft and others are pressuring Moroccan authorities to suppress the informal sector, but the kingdom must be careful not to throw the baby out with the bathwater. If the informal sector features greater innovation and a more efficient distribution model than imports like American-style shopping malls and supermarkets, authorities should take their cues from this Moroccan business model as they develop formal commerce in the country.

Franchising is, without a doubt, transforming the landscape of goods and services distribution in North Africa. Morocco has been profoundly affected by the arrival of foreign franchises since it opened its borders to the industry over 10 years ago. Algeria and Tunisia, both working to lower trade barriers and encourage better business practices, are reforming legislation to create favorable conditions for the large-scale entry of foreign franchises. The countries’ consensus is that franchising is a proven means for ameliorating commercial practices, importing tested know-how and stimulating growth of small-and-medium-sized businesses.

Algeria

Once wary of the security situation and political instability that marked Algeria in the 1990s, French and some European franchises are now looking at the Algerian market with fresh interest in the new millennium. Brands seeking expansion, especially in the clothes, services, agro-business and high-volume distribution sectors, are hungry for the opportunity to sell to Algeria’s 33 million consumers. French companies like Yves Rocher, Jacques Dessange, Celio and Carrefour have recently appeared on the scene.

Franchising made a very late entry into the world of Algerian commerce, with back-to-back international franchising forums taking place in 2006, accompanied by official declarations of the social and economic benefits of allowing the entry of foreign franchises. A representative of the Ministry of Commerce praised “the help of the experience of foreign businesses” in promoting greater professionalism in services and distribution. The state also views franchising as an important vehicle for job creation and combating informal markets and counterfeiting through improved networks of formal distribution.

But legal barriers continue to impede the progress of franchising here. Algerian law and finance do not currently distinguish between franchising and importing. Franchisers are not allowed to transfer royalties, and banking transactions are not currently regulated. Franchises like the Belgian fast-food chain Quick, and the French automotive services chain Speedy, have reported long delays in receiving promised authorizations to open. The World Bank reports that real growth in total trade of goods and services in Algeria has actually decelerated from 5.1% at the beginning of the decade to 0.4% in 2005/06. Last year was even worse, with a -4.2% growth rate. As Algeria prepares for accession to the WTO, the government should push through reforms of existing financial and judiciary conditions that hinder franchise development.

Some Algerians view franchising as an overdue modernization of Algerian commerce, while others fear a neo-colonial French invasion that will hurt local business. Domestic businesses have expressed concern about competing with giants like Quick or Carrefour. However, they may stand to benefit as the competition improves the quality of products and services throughout the sector. Foreign franchisers transfer their knowledge to franchisee partners and bring the competition for local operators up to international norms and standards. Decisive measures on the part of the government to encourage the development of franchising will rely upon this population’s willingness to open up to Western markets.

Morocco’s success story

While franchising has proven slow to take off in Algeria, the sector is soaring in Morocco. Franchise distribution increased by 20% in the past five years, and the Franchise Guide 2008 reports that there are currently 409 networks of franchise distribution in Morocco, with more than 2,000 points of sale. The Guide attributes this success to changing habits of consumption, the progressive transfer of consumption from traditional markets to organized distribution, and the effects of lowered taxes after the passage of various free-trade agreements.

The Moroccan example shows that the entry of international franchising can act as a powerful stimulus for local entrepreneurship. Moroccan franchises currently account for 15% of the country’s total number of franchises. “International franchises created a forum [in Morocco],” according to Jallal Bernoussi, Director of Enseignes et Marques, a franchise consulting agency. “This had the impact of competing with traditional commerce. Traditional commerce, in admiration, pushed itself to a higher level. First, there was competition, then emulation, and then innovation. This phenomenon created a market for local franchises.”

The Saham Group, a strong presence in various poles of Moroccan economic activity, including insurance, real estate, technology, and off shoring, handles five franchises, of which three are “made in Morocco.” Abdalah Marrakchi, CEO of the group’s distribution pole, noted that “the rapid and significant development of Morocco, and especially the emergence of a middle class with purchasing power mean that franchise-related consumption should be correlated to these new market trends.” Saham Group plans on expanding its successful Via Seta brand, which specializes in headscarves and neckties, into neighboring markets in North Africa and into Middle Eastern countries as well.

According to Bernoussi, franchising requires three criteria in a business environment: locales such as shopping malls or commercial districts, financing options for franchisees, and legislation. The construction of shopping malls in various regions of Morocco will serve as a strong platform for the sector’s continued growth in the coming years. A special law was passed in 1993 to encourage the installation of foreign franchises. The legislation authorizes the Office of Exchange to allow and regulate the transfer of royalties abroad. This move opened the door for franchise investment to flourish in Morocco. The Office of Exchange ensures proportionality between royalties and sales figures, so that franchisees can keep enough of their profits from leaving the country.

Tunisia

In Tunisia, legislation still blocks royalty transfers from the franchisee to the master franchiser abroad. Commercial and contract governs franchises in Tunisia; it is theoretically possible to send royalties abroad, but only on a case-by-case basis.

Franchising consultants are lobbying for a franchise-friendly law. Some consultants, such as Tareq Yazidi, Chief Consultant and founder of Tunisie Franchise, have worked closely with the Ministry of Commerce this past year on a new law to allow Tunisian franchisees to pay royalties to master franchisers abroad. “The text of the new law for franchises will make it easier for them to obtain permission to transfer funds abroad in order to pay royalties,” Yazidi said.

In allowing small-and-medium sized businesses access to more elaborate distribution networks, Yazidi indicated that franchising will improve the efficiency of distribution and the quality of goods and services, benefiting both businesses and consumers.

Franchising generates dynamism in commerce, and involves industries meeting higher standards for quality and safety, especially of foodstuffs.

Carrefour was the first supermarket to open in Tunisia in 2001. Other franchises have since trickled in, especially clothes, leather, and shoe brands. The arrival of international brands has already had a positive impact. Carrefour, for instance, stimulated local industry by participating in an effort to export Tunisian products in the international network of its outlets. Promotion of the sector in Tunisia ultimately aims at the emergence of national brands in the domain of distribution. This is an important challenge for the creation of a new entrepreneurial culture.

Yazidi pointed out that Tunisia is obliged to unseal its borders to foreign investors and entrepreneurs under the GATT and WTO. Furthermore, he has studied the positive economic and commercial impact of franchising in Morocco, and is pushing for a similar openness in Tunisia. “Franchising enables us to reduce the risks that accompany the entry of foreign investment. The arrival of foreign brands will impose better management on local businesses as well as improving their services. It is certain that the arrival of foreign brands will create tough competition for local commerce and even, in some cases, lead to failure and bankruptcy. But let’s not forget that a franchise installed in Tunisia is an independent Tunisian business held by capital that is 100% Tunisian.”

Although there are fewer than 20 franchises in Tunisia at present, the passage of new legislation will open the door to hundreds of foreign brands. The transfer of know-how and technical assistance, in turn, will encourage local businesses to become more competitive. In the meantime, anticipation is building and franchise-consulting agencies are beginning to appear on the scene. Since six out of 10 franchise candidates require a loan to enter into a franchising contract, consultants are working with banks to develop special lending options for would-be franchisees. These indicators are signs of encouragement for international franchises interested in expanding in the region.

South Africa as a model

In European and North American countries, home-grown franchises account for, on average, 90% of the sector. In emerging market countries, the inverse is the case, with an average of only 10% of franchises home-grown. These figures, to some extent, validate concerns in Tunisia and Algeria regarding the negative impact of foreign franchise entry, in the form of lost royalties and harm to local business. But these fears are short-sighted compared to the long-term positive impact of franchising on local entrepreneurship — an impact whose success is measurable in Morocco and South Africa. Morocco, thanks to over a decade of franchise expansion, has already surpassed the 10% average for emerging market countries, with 15% of its franchises now local.

Franchising advocates in Tunisia and Algeria are inspired by the positive impact of franchising in Morocco. But that country’s franchising experts, several steps ahead, have their sights set on the South African example. South Africa has experienced significant social and economic benefits from the growth of franchising within its borders, and the country’s own homegrown franchises now account for 80% of all present in the country, employing more than 300,000 people. With Moroccan franchises growing in number and making plans to open branches in other regions, Tunisia and Algeria should make good on their promises of legislation reform and eliminating trade barriers under international agreements.