The African Development Bank Group in North Africa 2013 Resilient Growth and Integration For ORNA, this report was led by Nice Muhanzu (Consultant) and Vincent Castel (Principal Economist), under the overall guidance of Jacob Kolster (Director). For ORNB, this report was led by Catherine Baumont-Keita (Lead Economist during the preparation of the report) and Anne Sophie Ouedraogo (Consultant), under the overall guidance of Nono Matondo-Fundani (Director). The authors of the report would like to thank for their inputs Abdourahamane Charaf-Eddine (Chief Country Programme, Officer ORNA), Prajesh Bhakta (Chief Country Programme Officer, EGFO), Kossi Robert Eguida (CPO, DZFO), Alassane Diabate (Principal Country Economist, ORNB), Olivier Breteche (CPO, MAFO), Rad Sahar (Consultant, ORNA), Yasser Ahmad (CPO, ORNA), Gharbi Jouade Mohamed (Consultant, ORNA), Malek Bouzgarrou (Senior Courntry Economist, ORNB), Benbahmed, Tarik (Country Economist, DZFO), Bitoumbou Pascal (Consultant, ORNB), Assitan Diarra-Thioune (Resident Representative, DZFO), Sibry Tapsoba (Resident Representative, EGFO), Amani Abou-Zeid (Resident Representative, MAFO), Andrea Borgarello (Photographer), Johannes Svanback (Photographer). Project Briefs were also reviewed by their respective task managers in the sector departments. The thematic chapters are based on recent research led by ORNA/ORNB. Chapter 1 is drawn from the AfDB North Africa Policy Series publication «Promoting Resilient Growth in North Africa» authored by Gita Subrahmanyam. Chapter 2 «The Political Economy of Food Security in North Africa» by Jane Harrigan also comes from the AfDB North Africa Policy Series. Finally, chapter 3 «Maghreb Economic Integration – A time for action» is drawn from Mustapha Rouis’ s presentation at the «Regional Integration Day» seminar held in Carthage under the Tunisian Presidency. The original reports can be found together with references at the North Africa regional departments as part of the African Development Bank’s objective of sharing knowledge on the opportunities and challenges of the North Africa countries and region. The African Development Bank Group This document has been prepared by the African Development Bank (AfDB) Group. Designations employed in this publication do not imply the expression of any opinion on the part of the institution concerning the legal status of any country, or the limitation of its frontier. While efforts have been made to present reliable information, the AfDB accepts no responsibility for any errors this repport may contain or any consequences of its use. Published by: African Development Bank (AfDB) Group Temporary Relocation Agency (TRA) B.P. 323-1002 Tunis-Belvedere, Tunisia Tel.: (216) 7110-2876 Fax: (216) 7110-3779 Design and Layout African Development Bank External Relations and Communication Unit Yattien-Amiguet L. Zaza creation: Hela Chaouachi Copyright © 2012 African Development Bank Group Website: www.afdb.org The African Development Bank Group in North Africa - 2013 Table of contents 5 Foreword 7 Preface 11 Acronyms and Facts 17 CHAPTER 1 Promoting Resilient Growth in North Africa 18 Introduction 20 Framework for assessing crisis resilience and growth 23 Patterns of growth and crisis resilience in North Africa 43 Lesson-learned for successful crisis resilience measures in other regions 45 Recommendations: roadmap for promoting crisis-resilience growth in the short to medium term 51 CHAPTER 2 The Political Economy of Food Security in North Africa 52 Introduction 54 The Food Security Status of North Africa 55 The Impact of the 2007/08 Global Food Price Shock 59 Short-term Policy Responses to the Global Food price Shock 61 A Longer Term Food Security Strategy for North Africa 70 Conclusion 73 CHAPTER 3 Maghreb Economic Integration – A time for Action 74 Introduction 75 Potential Gains and Challenges of Economic Integration 77 Impact Assessment and Lessons Learned from Regional Integration Efforts 81 Performance of Trade in Goods and Services 86 Infrastructure and Cross-Border Trade Facilitation 89 Constraints to Integration 93 Conclusion and Recommendations 97 CHAPTER 4 The African Developement Bank in Brief 99 The African Development Bank Group at a Glance 105 CHAPTER 5 Bank Group Activities in North Africa 107 Regional Overview 113 Algeria 133 Egypt 161 Libya 169 Mauritania 193 Morocco 237 Tunisia 281 CHAPTER 6 Staff & Contact Details 3 The African Development Bank Group in North Africa - 2013 Foreword eographically situated at the northern rim of the domain of food security and in forging stronger integration Gcontinent and at the cross-road of the Arab, among the economies of the region. European and African worlds, North Africa is a region of unique importance. In 2011, North Africa became the Building resilience is an inherent dimension of developing epicenter of social and political movements as the Arab more inclusive societies with better safeguards for the Spring began in Tunisia and spread across and beyond poor and most vulnerable. This is at the core of our the region. ten-year strategy which is to place the Bank at the center of Africa’s transformation and to improve the quality of Producing about one-third of Africa’s total GDP and Africa’s growth. It aims to broaden and deepen the home to more than 170 million people (17% of Africa process of transformation, mainly by ensuring that population), North Africa regroups mainly Middle Income rowth is shared and enjoyed by all Africans, not only by Countries (MICs) and occupies a geopolitical position some. It also aims to bring about growth that is not just that goes significantly beyond its economic weight. North environmentally sustainable, but also economically Africa is also central to the history and the daily operations empowering. This is also our overriding focus in supporting of the African Development Bank (AfDB). Since the North African countries in forging better futures for more beginning of its operations in 1966, the Bank Group has of their people. committed nearly US$ 17 billion in loans and grants to North Africa, consistently supporting the people of the We are proud to stay firmly engaged in North Africa during region in their endeavors to develop and modernize their this period of transition. economies and improve their living conditions. It is in this spirit that we present this year’s Annual Report In recognition of the strong partnership between the Bank for North Africa. and the Region, I am pleased to present the African Development Bank’s 4th Annual Report on North Africa. In addition to providing an overview of the Bank’s portfolio of lending and non-lending activities in the six countries Zondo SAKALA of the region, the report’s first three chapters provide a Vice President thematic discussion of resilience—as highlighted in Country and Regional Programs and Policy domestic development strategies as well as in the obvious African Development Bank Group 5 The African Development Bank Group in North Africa - 2013 Preface ore than two years after the beginning of the Arab in North Africa—from the world food crisis and the global MSpring, North Africa continues to experience the financial crisis to the Arab Spring crisis. We propose inherent challenges of turning political transition into a comprehensive understanding of the countries’ decisive gains on the social and economic fronts. In vulnerabilities, both structural and nurtured, as well addition to the difficulties faced by these countries, the as adaptability factors. Combining macroeconomic development in the neighboring region has not been developments and microeconomic concerns, the chapter conducive. The south has experienced spillovers from shows, among other results, the importance of pro-poor armed insurgence and conflicts in Sahel countries. In the and inclusive social and economic policies in a medium north, Europe is still in the midst of the worst economic to long-term development strategy. recession and unemployment crisis in decades. While developments in the region differ widely, the past years In chapter 2, on “The political Economy of Food Security have demonstrated just how intertwined countries in in North Africa”, we look into the appropriateness of North Africa are with the world around them, both within macroeconomic patterns and policy responses of North their region and with neighbors in the north and the south. Africa countries in attempting to cushion the adverse impacts of the global food crisis and more recently the The political transition towards better governed and more Arab Spring. The chapter moves on to discuss the participatory societies will take its course in North Africa. un-sustainability of ongoing fiscal pressure and subsidy In the meantime, the African Development Bank continues regimes, and suggests a more holistic approach to food to respond to the demands for more inclusive social and stability including food trade governance, agricultural economic developments as its core objective in support productivity and alternative social responses. to the efforts of the countries in the region. In a setting where external and internal turbulence are commonplace, In chapter 3, on “Economic Integration: A Time for resilience becomes a core virtue in building a stronger Action”, we discuss how the shifting currents following platform for inclusive growth and better safeguards for the revolutions could provide a unique historical the vulnerable. The overriding focus of this year’s North opportunity for North African countries to readjust their