Middle-Eastern giants Qatar Airways and Emirates have both started operations in Tunisia, and the opening of several new routes connecting Tunis with Europe and West Africa is scheduled in 2007. Karthago and Nouvelair, the two national private companies, are in talks to prepare an alliance which might take the form of a full-fledged merger. Both companies are anticipating local and foreign competition to heat up, as the authorities are pushing the open-skies policy forward.

The construction of the Enfidha airport will change the landscape even more.The call for tender procedure is due to end soon, with many foreign companies competing for the contract. The government has entered a Build-Operate-Transfer deal, with foreign partners footing the bill on construction and maintenance expense in exchange for commercial exploitation of the site for an agreed period. This new airport, which should be completed in 2009, will initially handle 5-7 million passengers per year, with a potential for much more. The necessity for a new airport in the region is clear. The Monastir airport carried over 4 million passengers in 2006, while the Tunis airport, although it has not yet reached its peak capacity, should see much more activity in the coming years. Tunis-Carthage is ideally located to become a regional hub connecting Europe, Africa and the Middle East. In the future, Tunis-Carthage will handle regular traffic routes, while the Enfidha airport will mostly be used for charter flights.

Land challenges

Meanwhile, land transportation is facing serious challenges. At a recent parliamentary debate, a member of parliament characterized inter-urban passenger transport as “chaotic”, despite the ongoing overhaul of the road infrastructure, and called for an upgrading program in the sector. The recent liberalization of several inter-urban bus routes should add more flexibility to the current system. However, “louages,” fast intercity minibuses emblematic of Tunisian road travel, should continue to represent a large share of the business.

The railroad network, which has long suffered from neglect and remains relatively undeveloped, is also slated for an overhaul. Indeed, the 11th development plan labels railroad transport as a “strategic option” and spending on railroad infrastructure is set to boom in the 2007-11 period. Indeed, $1.3 billion is earmarked for railroad infrastructure, more than twice the amount spent during the previous five-year plan. No new lines are planned, but existing railroads will be upgraded, and some of them doubled, allowing for two-way simultaneous traffic. Work on the Tunis-Ghardimaou and Tunis-Kalâa Khasba lines is already under way. Additionally, a series of feasibility studies will be launched to determine whether closed-down lines should be reopened, or new ones built. The acquisition of more carriages is also planned.

Public urban transportation capacities are also being reinforced.  The 11th development plan provides for the extension of the network covering the greater Tunis area. Feasibility studies are also underway for the Sfax and Sousse areas, and the construction of the first urban rail networks outside Tunis could start soon. The greater Tunis area is clearly prioritized as the ever-increasing number of cars, a growing population and an increasingly stretched-out city have combined to create an intractable traffic problem. Work to extend the city’s existing tramway system to the Mourouj and Manouba suburban areas has begun, and other lines are slated for extension or rehabilitation. Private operators will be running 22 bus lines and the city is in the process of renewing and modernizing its bus fleet.

The Rapid Rail Network

Work has yet to begin on the plan’s crown jewel, the Rapid Rail Network (RFR) which, when completed in 2021, will boast an impressive 85 km of railroad and as many as 55 trains. At a projected cost of $2.29 billion, out of which $700 million has already been earmarked for the 2007-2011 period, the RFR project is one of the country’s most expensive projects. While part of the project will be directly financed by the state, authorities hope to cover most of the expense by issuing state-guaranteed bonds.

Finally, details are emerging on the construction of a deepwater commercial port, also to be located in Enfidha. An estimated 97% of Tunisia’s trade travels by sea, and as a result, Tunisia’s seven existing harbors are facing saturation. In addition, those aging ports, located in urban areas, are impeding easy expansion. For all these reasons, it has become necessary to build a new-generation port able to handle most of the container and bulk cargo traffic. Technical studies are still underway, with the construction slated to begin in 2009 and spread over three phases. When completed in 2023, the Enfidha port will boast a 3,600m container dock, a 1,300m bulk freight dock, and will be 18 meters deep, accommodating much larger ships than current ports allow.

Figures released this week by the national center for information and statistics show that Algeria registered a record trade surplus of $31.82 billion in 2006, an increase of some 24% over 2005.

This impressive back-to-back performance is mainly due to the strong increase in the value of hydrocarbon exports, alongside a very slight increase in imports.

This growth has been accompanied by ever-increasing demand from the global market, and Algeria is reaping the benefit. In fact, hydrocarbon exports increased in value by 14.77%, reaching a total of $51.75 billion. Hydrocarbons once again accounted for 97.98% of the country’s total exports. Non-hydrocarbon exports made up the remaining 2.02% of the total export volume, with a value of $1.07 billion, despite significant public spending and state efforts to boost its share.

Algeria’s principal exports markets were the US ($14.04 billion), Italy ($8.98 billion), Spain ($5.52 billion), and France ($4.33 billion), while its principal suppliers were France ($4.32 billion), Italy ($1.85 billion), China ($1.7 billion), Germany ($1.46 billion) and the US ($1.41 billion).

Despite its rapidly growing economy, Russia has not yet evolved as a major purchaser or supplier of Algerian goods, although the country has taken some important steps of late to enter the local market. Indeed, after Gazprom, Russia’s biggest company, and Lukoil, who signed a memorandum of understanding during the summer with Sonatrach, it is now the turn of Rosneft and Stroytransgaz to join the fray. Lukoil has even declared that Algeria is to become one of its “priority countries” in its plans for international business development and expansion.

Civilian nuclear program in the works

In fact, last week, Russian Minister for Energy Viktor Khristenko, accompanied by top-level staff from Gazprom, Lukoil and Rosneft, met with his Algerian counterpart Chakib Khelil in Algiers to sign a memorandum of cooperation and understanding in the energy sector. This agreement will extend to the fields of nuclear energy and electricity.

Last November, during the annual Energy Week, Khelil took the opportunity to announce Algeria’s intention to develop a civilian nuclear energy program to generate electricity. He confirmed that Algeria possessed considerable uranium deposits which the country plans to make use of to increase electricity production in the long term. To dispel any fears over Algeria’s proposed nuclear plans, he added that foreign firms would be directly involved in the process through strategic partnerships.

However, the EU is concerned by the Algerian-Russian relationship getting closer and has pledged to monitor the situation closely. The two countries are the EU’s biggest suppliers of natural gas.

No new OPEC alliance

The Algerian and Russian ministers of energy were quick to comment on concerns over a possible Organization of Petroleum Exporting Countries (OPEC)-like alliance developing between the two countries. As Khelil explained, “There cannot be an OPEC of gas, because there is no global gas market but a segmented market divided between Asia, Europe and America.” Finally, he said, “There is no daily trading open to speculation, like the oil market, because gas is sold on long term contracts, of at least 25 years.” Khristenko added, “This agreement will contribute greatly to the stability of the international energy market and reinforce global energy security.”

Russian energy companies Rosneft and Stroytransgaz plan to invest significant amounts in Algeria, said Rosneft’s Vice President Nikolai Borisenko. Khelil confirmed the companies’ plans, referring to a current field of operations, the Block 245 South exploration project in Illizi, a natural gas field in eastern Algeria, which could cost as much as $4 billion to develop.

Algeria, Russia and Norway are the main suppliers of natural gas for the EU. Algeria and Russia supply 62 billion cubic meters (to be increased to 85 billion cubic meters by 2010) and 160 billion cubic meters per annum, respectively. Last year, Algeria backtracked on plans to allow foreign firms to produce oil independent of Sonatrach. Algeria seems intent on maintaining its influence in global natural gas markets for years to come and is willing to forge strategic agreements with major global players to do so. Conversely, as these new deals move ahead, Russia looks set to swiftly advance up the list of Algeria’s major trading partners.

Morocco has moved to deepen integration with West Africa, participating in the first conference with the West-African Economic and Monetary Union (WAEMU).

The meeting in late January highlighted the growing regional influence of the North African kingdom, which has been aggressively pursuing investments in Senegal as well as other sub-Saharan economies. It also paved the way for a flurry of investment interest on the part of Moroccan businessmen in its aftermath.

Organized by the Moroccan business association CGEM (Confédération Générale des Entreprises du Maroc) and the Senegalese association CNP (Conseil National du Patronat), the two-day meeting analyzed means of increasing the level of trade driven by the private sector in fields as diverse as financial services and infrastructure development. The WAEMU zone represents an attractive market of close to 74 million potential consumers in Benin, Burkina-Faso, Guinée-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo, all united by a single currency, the franc CFA.

As a new outlet for business networking, the Dakar forum is set to become a permanent feature in Morocco’s relations with the region, intensifying the growing rate of south-south trade.

“I am convinced that this movement must be amplified in the most diverse fields,” Moroccan Prime Minister Driss Jettou told the Dakar forum, “including banking and insurance, transport, tourism, manufacturing, fishing, agriculture, urbanism and infrastructure.”

Since the accession to the throne of King Mohammed VI, trade between Morocco and Senegal has accelerated to over $55 million in 2006, making Senegal the largest trading partner of Morocco within the WAEMU region.

Trade between the two countries is, however, slanted in favor of Morocco, with Senegal revealing a 30% deficit in 2006. Moroccan companies have indeed taken a strategic position in Senegal in recent years. The Moroccan public electricity agency, the Office National de l’Electricité, has taken a stake in the Senegalese electricity company SENELEC, while Royal Air Maroc is a substantial shareholder in Air Senegal.

Meanwhile Attijariwafa bank, a poster child for Moroccan investments in West Africa, has set up a branch in Dakar, as well as taking a 67% controlling stake in the Senegalo-Tunisian Bank which already has 6% market share in Senegal.

Its aim is to become one of the “model banks of West Africa” according to its President, Boubker Jaï. Through its wave of acquisitions, the bank is set to become the third-largest network in Senegal this year, once it integrates the 19 branches of the network.

Similarly, BMCE bank has been present in Senegal since 2004. “BMCE’s strategy is to use our subsidiary in Senegal as a platform for our regional expansion,” Kamal Bouayad, director delegate of BMCE, said. “In fact, the opening of one of our satellites in Yaoundé, Cameroon, and the upcoming opening of one in Libreville in Gabon, is a perfect example of this.”

Alongside this, the construction consortium formed by the two Moroccan companies Sintram and Houar is in the process of building a 225 kilometer road between the Senegalese towns of Linguère and Matam. The Moroccan-Emirati Development Company also has ambitions of entering Senegal in its search of new markets further south.

Morocco’s interest in Senegalese opportunities are so diverse that West Africa Pharma, a subsidiary of the Moroccan pharmaceutical company Sothema, is finalizing its new factory in Dakar, which should be operational by March this year. The international utilities group Veolia is also involved in an environmental clean-up project in the outskirts of Dakar.

Wishing to position Dakar as the point of entry for Moroccan goods flowing into West Africa, Senegalese President Abdoulaye Wade has sought to attract Moroccan investments for the construction of a container terminal in the port of Dakar. Already chronically lacking space, the existing Dakar port has witnessed a doubling of traffic between 1995 and 2005, growing from 5 million tons a year to 10 million.

Meanwhile, members of the CGEM also signalled their interest in managing the 40 kilometer highway being constructed between the Senegalese towns of Dakar and Diamniadio, which is being partly funded by the African Development Bank. Given that such large infrastructure projects have not brought a return on investment for at least 15 years, Jettou emphasized that Morocco was positioning itself as a long-term partner for Senegal and the broader region.

Transport was also high on the agenda, as the project of a road from Rabat to Dakar via Nouakchott is being studied. At the level of maritime transport, the two lines Tanger-Dakar and Tanger-Nouakchott-Dakar have been deemed so successful that the idea of an extension to the port of Cotonou in Benin was floated at the forum. Not waiting for this, Moroccan transport companies such as CET and COMANAV have already launched operations in Senegal, with the former creating a subsidiary CET Dakar.

On January 24, Egypt took a major stride towards revitalizing the country’s long dormant gold mining industry. In a memorandum of understanding signed by Petroleum Minister Sameh Fahmy on behalf of the Egyptian government and the International Finance Corporation (IFC), the private arm of the World Bank Group (WBG), Cairo committed itself to radically overhaul legislation governing gold mining.

The existing legislation had made it almost impossible for foreign interests to play a part in the mining industry, limiting gold mining activities for holdings. The laws as they presently stand require profit sharing by those involved, and were tailored more to limited private operations rather than large-scale excavation, in the modern sense.

Egypt is considered to have major untapped reserves of gold but lacks the expertise to extract the ore. Moreover, modern mining techniques require massive investment, something local miners are not in a position to provide.

This is expected to change when the new legislation is in place, bringing with it foreign investment that could see up to $10 billion worth of ore make its way into the international market annually, a figure that would represent 10% to 12% of Egypt’s present GDP.

Need to reinvent the industry

According to Fahmy, the decision to rewrite the existing laws was essential if Egypt was to reinvent its age-old gold mining industry.

This is a very important step in restructuring the sector, which has huge potential, he said following the signing ceremony. The current legislation could not sustain the restructuring efforts.

Under the terms of the agreement, the IFC will provide technical assistance to Cairo to jointly undertake a review and reform of Egypt’s mining laws, regulations, and taxation regime for the sector.

Records show that gold was extracted in Egypt at least 6,000 years ago, and the country is still littered with the debris of ancient mines, for long more of interest to archaeologists than miners. Most of the known mines were played out as much as 2,000 years ago. However, with Cairo planning to have its new laws in place before the end of the year, Egypt is looking to pave the way for a new golden era.

There are two foreign firms active in the sector at the moment, both of them Australian. Centamin Mining, founded by an Australian-Egyptian family, has reported proven finds in excess of 7.7 million ounces of gold. Exploration work being carried out is expected to further extend this. Currently, Centamin, which was granted licenses to excavate in 2002 through its wholly owned subsidiary Pharaoh Gold Mines NL, is active at three sites, Sukari, Barramiya and Abu Marawat/Hamama in the Eastern Desert, though it is mainly concentrating its efforts at Sukari.

The IFC is playing a lead role in re-establishing the Egyptian mining industry, having agreed in May 2006 to invest $2 million into the Australian mining firm Gippsland Limited, which has the rights to explore eight areas with potential gold deposits located in the Wadi Allaqi region of south-eastern Egypt.

The investment was in line with the WBG’s Country Assistance Strategy for Egypt covering the period 2006 to 2009 to support the twin objectives of the Egyptian government to achieve high and sustainable growth and alleviating poverty and income disparity. The government’s strategy to achieve these goals is through facilitating private sector development, boosting the provision of public services and promoting equity.

The IFC’s regional manager, Gulrez Hoda, said that Egypt’s opening up of its mining industry could have a major impact on the economy.

Egypt’s mining sector has outstanding potential, Hoda said. An improved policy framework, which clearly defines procedures for private investors, will help attract new investments and improve the country’s economy.