Most North African Rail Markets Buoyant Amidst Uncertainty

This article appeared on MENA Rail News on 6 June 2013


By Peter Feuilherade - 6 June 2013


On top of high levels of unemployment and complex political transitions in North Africa, the weaknesses of European economies have affected those countries in the region that are dependent on European markets. In the aftermath of the Arab Spring uprisings, political and social tensions also continue in Egypt, Libya and Tunisia. But infrastructure and construction projects are still of major importance, and a steady stream of new contracts in the rail sector in recent months is cause for optimism.

The African Economic Outlook 2013, published in May 2013, predicts that the economic climate in North Africa will generally improve in the near future. “Due to the resumption of oil production and exports, Libya’s GDP bounced back by 96% in 2012, boosting growth in North Africa to 9.5%, after the region’s GDP had stagnated in 2011,” the report notes. While in Egypt growth remains below pre-revolution levels, Tunisia’s economy recovered in 2012 and is forecast to grow by around 3.5% in 2013, rising to around 4.5% in 2014. Morocco and Mauritania are predicted to enjoy continued solid growth in 2013/14 at average rates of 6% and almost 5% respectively. In Algeria, growth is expected to accelerate from 2.5% in 2012 to above 3% in 2013 and 4% in 2014.





Although Egypt is plagued by a mounting economic crisis, the European Union has allocated US$ 160 million towards the development of the transport sector, onethird of which will fund construction of the third phase of the Cairo Metro. Grants totalling US$ 250 million from Kuwait and the Arab Fund for Economic and Social Development will support electronic signalling projects on the Banha-Zagazig line north of Cairo. And during a visit by Egypt’s Islamist President Mohamed Mursi to Moscow in April to drum up financial support, it was agreed that Russian companies would participate in rail and metro projects. However, Egypt’s railways remain plagued by outdated rolling stock and low safety standards, and it is difficult to see how a proposed high-speed train project, costing an estimated US$ 3.5 billion, will attract either local or foreign investors while the financial situation deteriorates.

TGV is Morocco’s most important transport project

Morocco's planned TGV routes

There is better news from the other side of North Africa, where both passenger and freight traffic in Morocco are on the increase. The construction of the 350-km high-speed rail (TGV) line between Tangier and Casablanca, in partnership with France, is regarded as the kingdom’s most important transport project. In April France’s Colas Rail and its subsidiary Colas Rail Maroc, as part of a consortium with Egis Rail, won a design-build contract for a 185-km double track highspeed line between Tangier and Kenitra. The total contract value is US$ 175 million, of which US$ 160 million are earmarked for Colas Rail and Colas Rail Maroc. A consortium comprising Ansaldo STS France and Cofely Ineo was awarded a US$ 155 million contract to design and supply signalling, train control and telecommunications systems for the line, which is scheduled to open during the first half of 2016.

Eventually the TGV network will extend over 1,500 km. According to the international business intelligence firm Oxford Business Group (OBG), “the move to set up a joint venture for TGV maintenance and establish a training institute will be a key driver in the Moroccan authorities’ bid to create a qualified local workforce with know-how for future ventures.”

New tram network in Oran

In May a new 18-km tram network opened in Oran, Algeria’s second city. The rail network in Algeria is currently concentrated in the north of the country and comprises 3,660 km of standard gauge and 1,140 of narrow gauge. The government plans to modernize the network and electrify existing rail operations, as well as develop a 1,300km highspeed east-west line that will run from Tunisia to Morocco, with branches connecting with major ports and cities. Algeria has allocated US$ 32 billion to the development of its rail infrastructure during the two five-year plans covering the decade from 2005 to 2014, Ministry of Transport spokesman Nassim Mustapha said in March 2013. Much of the expenditure will be spent linking the more developed rail networks in the north to towns in the less well-connected south. But officials admit that many rail projects have been held up owing to problems connected with “expropriation”. Political issues are also affecting the sector’s expansion, with Algerian newspaper Le Matin in March 2013 referring to “the state of tension which prevails in several towns in southern Algeria”.

In Tunisia, Colas Rail, in a consortium with Siemens and Tunisian firm Somatra-Get, won a US$ 187 million contract in February to build the first two lines of a high-speed railway network in the capital Tunis. Construction work on the project, financed by a consortium of international backers and the Tunisian government, is scheduled to start in mid-2014 and is expected to be completed in 2018.
Meanwhile, a definitive announcement is awaited from Libya about the future of stalled projects agreed before the revolution and valued at US$ 12 billion. Construction to build more than 2,000 km of new railway track would have been split between the China Railway Construction Corporation (CRCC) and Russian Railways (RZhD). The Libya Herald newspaper reports that while CRCC remains silent on its future activities in Libya, RZhD has said it was “taking all possible steps to begin negotiations with Libya in order to discuss the future prospects for the resumption of the project and to develop a joint plan of action…“.

Long-term reforms

In the words of Ernst & Young’s Africa Attractiveness Survey (2013), “countries, such as Morocco, that are making substantial improvements in transport and logistics, are the ones that have implemented long-term and comprehensive reforms and investments across the transport and logistics supply chain.”
However, analysts say that the fallout from the Arab Spring revolutions continues to impede business across North Africa, even in countries like Algeria which did not go through a radical political upheaval.

John Hamilton, London office director of the business intelligence and consultancy company Crossborder Information, told MENA Rail News: “The common denominator is uncertainty created by political change and the lack of central authority… Across the whole region, the political shifts mean that investors and contractors will have to pay close attention to their local partners.”

Revolutions Transform North Africa's Media Landscape

This article was first published in The Middle East magazine, July 2011

Arab journalists at the dawn of the 21st century, far from being defenders of the status quo, "see their mission as driving political and social change," said veteran US journalist Lawrence Pintak in his recent book, "The New Arab Journalist: Mission and Identity in a Time of Turmoil".

The rapid transformations in North African media during the Arab Spring show that they are embracing that mission with enthusiasm, replacing the formerly state-dominated media.

Fighting in Libya and political upheavals in Tunisia and Egypt have brought unprecedented changes to the media landscape, as new broadcasters, publications and websites have emerged.

Pundits differ over the role played by online media and social networking sites in fuelling the unrest, and the media revolution that has ensued.

The New York-based Committee to Protect Journalists (CPJ) described the blogging, video sharing, text messaging and live streaming from mobile phones of the demonstrations in Tahrir Square and Tunis as a "seismic shift" in how journalists rely on the Internet and other digital tools. But the CPJ warned that oppressive regimes were also showing increasing sophistication in using the tools of new technology to suppress information.

For established broadcasters, the Arab uprisings have brought a surge in viewing figures, but with no corresponding economic benefit.

Audiences for satellite TV news channels, primarily the leading pan-Arab stations Al-Jazeera and Al-Arabiya, have doubled in key markets such as Saudi Arabia, the Dubai-based Pan-Arab Research Centre (PARC) reports.

However, spending on TV advertising across the Arab world has slumped. In Egypt, it was down by 97% in February and 78% in March 2011, compared with the same months a year ago, PARC added.

"Voice of Free Libya"

Since the 17 February 2011 uprising, various opposition groups in rebel-held areas in eastern Libya, as well as abroad, launched their own affiliated newspapers, websites, radio and satellite TV stations to counter what they termed the "propaganda" of the state-controlled broadcaster.

"Voice of Free Libya" radio stations went on air in Benghazi and Al-Bayda, as well as the besieged rebel-held port of Misrata in the west. The rebel-linked stations reflect a mix of Islamist and Libyan nationalist views in their programmes. In the town of Nalut in the mountains of western Libya, journalists who had formerly broadcast pro-Gaddafi material on the local radio station switched sides, relaunching it as "Radio Free Nalut".

Of the new opposition satellite TV channels, the slickest is Libya TV, launched at the end of March. It is based for the time being in Qatar, the first Arab country to recognize the Transitional National Council, the opposition shadow government.

After more than 40 years of state control over the media, apart from a short-lived period when Gaddafi's son Saif al-Islam operated the country's first privately-owned media outlets, it is no surprise that most journalists in Libya fall short on production and technical skills.

But they make up for this in creativity and enthusiasm. The Voice of Free Libya broadcasts include revolutionary music, popular songs by Arab divas like Fairuz, poetry with rebel themes, and phone-in programmes allowing citizens to air their views and grievances.

State-run Al-Jamahiriyah TV went on the counter-offensive, launching an English-language TV channel to convey the Gaddafi regime's views to international audiences. The channel took the line that the uprising in Libya was fomented by Al-Qaeda and "foreign elements".

Libyan state TV says its external service has been deliberately jammed. Air strikes on Tripoli by NATO-led forces have also intermittently disrupted state-controlled TV broadcasts.

Mixed signals for Egyptian media

The media in Egypt were already cowed by the severe crackdown that preceded the November 2010 parliamentary elections. Now media outlets are moving cautiously, after being given mixed signals.

The Supreme Council of the Armed Forces warned in March that it would carry out prior vetting of all reporting on topics covering Egypt's military establishment. In late April it said that it would not interfere in media policy. But in May, the Council warned against websites and Facebook pages which could, in its words, "incite sectarianism and violence and spread rumours that could destabilize the country".

Many laws impeding media freedom are still to be abolished. When a military court sentenced an Egyptian blogger to three years in jail in April for defaming the army and "disseminating false information", journalists got the message that limits on free speech still apply, particularly where the armed forces are concerned.

The new heads of state newspapers, TV and radio appointed by the government after President Mubarak was ousted in February have been accused of having close links with the former regime.

On the plus side, the new government has brought in new rules making it easier for privately-owned TV channels to launch, and 16 new channels have already been approved.

A debate is under way about whether foreign models for media reform are compatible with Egypt's still-evolving political reality. But the vast majority of the tens of thousands of mainstream journalists still operate in a culture of self-censorship.

Tunisian authorities stall

Aspiring media entrepreneurs in Tunisia are already accusing the interim government of using outdated bureaucratic procedures to block private broadcasting.

More than 40 applicants have sought approval to launch new radio and TV stations, but the authorities claim that the number of "frequencies" is limited.

In mid-May, activists reported cases of resumed internet censorship. And journalists also complain that they are still not free to do their jobs because of attacks and threats by security police, party activists and demonstrators.

A long-term goal

With government institutions in North Africa accustomed to decades of state control over the media, not everyone regards Western-style media pluralism as the highest priority, so significant reform could take years to consolidate.

As happened in Iraq after the overthrow of Saddam Hussein in 2003, many new broadcasters and publications have been launched, but not all will survive.

Some will go under for financial reasons such as high printing and production costs or lack of advertising, or because they have fulfilled their short-term political objectives of spreading a particular group's message, or because the market simply cannot sustain too many competitors. Others, especially web-based media which are cheaper to operate, may enjoy a longer existence.

Paying the Price of Arab Revolt

Political unrest, growing unemployment and spiralling food prices add up to bad news for Arab economies, the IMF warns.

Article first published as Paying the Price of Arab Revolt on Technorati.

Will “revolution tourism” bring dollars to Egypt? (IMAGE – Tarek)

The continuing unrest in the Middle East and North Africa will lead to higher commodity prices and disruption to economic growth for many countries in the region, the IMF said in its April 2011 Regional Economic Outlook for the Middle East, North Africa, Afghanistan and Pakistan (MENAP), released on 27 April 2011.

While oil exporters will enjoy a windfall, a difficult economic year looms for oil-importing states, the IMF predicts.

The report comes in the wake of a joint call for urgent support for Middle East economies by the World Bank and the IMF, who warn that political upheavals in the region could throw the global economic recovery off track.

Eventual Growth After Initial Disruption?

In the short term, many Middle East and North Africa (MENA) countries face multiple pressures caused by growing unemployment, rising commodity prices and disrupted economic activity.

But in the long run, "the uprisings could give a boost to the economies in the region by setting a more inclusive growth agenda, improving governance, and providing greater and more equal opportunity for its young and growing population," Masood Ahmed, Director of the IMF’s Middle East and Central Asia Department, said at a press conference in Dubai to launch the report.

"The immediate challenge facing oil-importing countries in the Middle East is to maintain social cohesion and macroeconomic stability in the face of multiple pressures," he added.

Oil, Food Prices Major Factors Affecting Growth

"Two major factors are driving the current scenario: the unrest in the region and ensuing uncertainty, and the surge in global fuel and food prices," says the IMF.

The IMF report projects overall growth in the MENAP region at 3.9%.

The economies of the oil-exporting countries - Algeria, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, Sudan, the United Arab Emirates and Yemen - are expected to expand by 4.9%, mostly through higher oil prices and oil production, although those projections exclude Libya.

The combined external current account balance for regional oil exporters is expected to more than double to $380 billion in 2011.

But the region’s oil exporters still need to increase diversification of their economies, create jobs for their populations (in a region where youth unemployment rates are well above 20% in a number of countries), and improve the management of public resources, the IMF says.

For oil importers - Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Syria, and Tunisia - the outlook is not rosy. With political turmoil hitting both tourism and investment, their projected growth has dropped to only 2.3%.

And worsening terms of trade resulting from higher food and fuel prices are expected to inflate their import bill by about $15 billion, or nearly 3% of GDP on average, according to the IMF. "This will, in turn, translate into either higher inflation or a worsened fiscal balance, depending on the extent of subsidies."

Egypt and Tunisia Worst Hit

On 11 April, the IMF's World Economic Outlook report revised its economic growth projection for the Middle East to 4.1% for 2011, from a 4.6% forecast in January 2011, French news agency AFP reported.

In Egypt, which has the Arab world's biggest population, the IMF predicted economic growth to be only 1% in 2011, down from 5.1% in 2010. However, “disruptions to tourism, capital flows, and financial markets are expected to be temporary," it added.

In Tunisia, which enjoyed 3.7% growth in 2010, the IMF's 2011 prediction was down to 1.3%, from 4.8% in October 2010. If political and social turmoil in the North African country continues, the drop in tourism and foreign direct investment will exacerbate damage to the economy, the IMF warned.

But it raised its economic growth projection for natural gas producer Qatar to 20% in 2011, up from 16.3% in 2010.

The IMF also forecast that Saudi Arabia, the largest Arab economy, would enjoy 7.5% growth in 2011, compared with 4.5% projected in October 2010.

The IMF said that among other Arab oil exporters, the economy of Iraq would grow by 9.6% in 2011, Kuwait by 5.3%, Sudan by 4.7%, Algeria by 3.6%, and the United Arab Emirates by 3.3%.

Facebook Use Soars in Arab World

The use of Facebook soared by almost 80% across the Arab world in 2010, with younger users spearheading growth.

Article first published as Facebook Use Soars in Arab World on Technorati.

The use of social networking tools is soaring in the Arab world, with Facebook notching up more than 21 million users by January 2011.

Young people aged between 15 and 29, who comprise around one-third of the total Arab population, lead the take-up of social media.

The figures come from the inaugural edition of the Arab Social Media Report, published on 7 February by the Dubai School of Government in the UAE, a research and teaching institution focusing on public policy in the Arab world.

Using Facebook, "arguably one of the most popular social networking sites in the world", as a gauge of the popularity of social media in the region, the report analyzed data on users of the social networking giant across the Middle East, including the 22 Arab countries as well as Iran and Israel.

It found that in 2010 the total number of Facebook users in the Arab world surged ahead at a massive annual rate of 78%, from 11.9 million in January 2010 to 21.3 million by the end of the year, with 75% of users belonging to the 15- to 29-year-old demographic and driving its growth.

Breaking down Facebook users by gender, there is an average 2:1 ratio of male to female users in the Arab region, compared with almost 1:1 globally.

Egypt, with around 4.7 million Facebook users, accounts for about 22% of total Arab users. The UAE has the highest penetration rate in the Arab world, with more than 45% of the population having Facebook accounts.

In a few Arab countries, such as Iraq and Djibouti, more people use Facebook than the Internet, connecting to the former via mobile phones.

The report also compares penetration rates for the Internet and Facebook for each Arab country.

It concludes that a high internet penetration rate (such as the UAE with 75 per cent, or Bahrain with 53 per cent) does not necessarily indicate a similarly high Facebook penetration rate. Saudi Arabia has an internet penetration rate of 38 per cent and a Facebook rate of 12.24 per cent, while Oman’s figures are 51.5 and 7.55 per cent respectively.

"This may indicate social and cultural barriers to using the site, which shares personal information with others," the Dubai newspaper Gulf News noted.

The popular uprisings in Tunisia and Egypt have demonstrated the power of platforms like Facebook and Twitter in organizing social and civil movements in the Middle East and North Africa.

Fadi Salem, Fellow and Director of the Governance and Innovation Program at the Dubai School of Government, said: "It is no coincidence that Tunisia witnessed an 8% sudden surge in the number of Facebook users during the first two weeks of January 2011, coupled with a shift in the usage trend from merely social in nature into primarily political."

Tourism Crisis as Foreign Visitors Desert Egypt

Egypt counts the cost as continuing political turmoil puts millions of jobs in its tourism industry at risk.

Swimming in Hurghada  (IMAGE - Espen Birkelund)

The TV pictures of foreign nationals flocking to Cairo airport to fly out of Egypt have brought a sinking feeling to tour operators, already counting the cost of business lost in Tunisia since the December 2010 political turmoil there.

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