Mediterranean Dialogue

Southern Mediterranean countries, a reliable and attractive platform for European industry

The global economic environment remains volatile. And European countries will have to deal over the next decade with recurrent disruptions, persistent uncertainties and thus navigating turbulent paths.

Indeed, Europe is leaning towards a balance between efficiency and resilience. This inclination will be increasingly reinforced by the growing need to bring the production of strategic sectors closer to the place of consumption in Europe.

In this sense, the potential of the southern Mediterranean countries as part of a triangular ecosystem is unquestionable!

A BUFFER AND AN ECONOMIC BRIDGE BETWEEN EUROPE AND AFRICA

The strategic geographical position of the southern Mediterranean countries not only makes them a buffer for Europe against extremism and illegal immigration routes, but also a vital link to the African continent. A young continent made up of 54 countries and a global GDP of 2.7 trillion dollars.

Africa's current population is around 1.2 billion, and is expected to double in the next 30 years. This would make Africa an exception in a world of slow population growth.

A continent where economic crises are deepening, inequalities are deepening, environmental challenges are multiplying and, of course, geopolitical disasters. A multitude of factors are impacting the African continent, driving people to leave for Europe in search of security and prosperity.

Being aware for years of these demographic trends, and of the importance of Africa's development for the future of European prosperity, the southern Mediterranean countries have rightly allocated considerable resources to strategic projects in order to position themselves as an economic bridge between the two continents, Europe and Africa.

The Moroccan port of Tangier-Med has positioned itself as an important intercontinental logistics platform and is considered one of the most efficient ports in the world, according to a recent study carried out by the World Bank. 

Not far from Tangier, Casablanca is ranked as Africa's leading financial centre, offering international companies a base of operations on the continent through the Casablanca Financial City (CFC).

On the other side of the southern Mediterranean, the Trans-African Highway, promoted by Egypt, will connect Cairo to Cape Town, South Africa. A 10,228 km logistical route crossing Egypt, Sudan, Ethiopia, Kenya, Tanzania, Zambia, Zimbabwe, Botswana and South Africa.

As for energy infrastructures, the continental and intercontinental gas pipelines, promoted by Algeria, are of great importance not only for countries on the other side of the Mediterranean, but also for certain countries on the African continent that wish to connect their energy resources to the European energy infrastructure.

A RELIABLE AND ATTRACTIVE PLATFORM FOR THE RELOCATION OF EUROPEAN INDUSTRY

With the exception of Libya, for obvious reasons, the other countries on the southern shore of the Mediterranean have come a long way in recent years. They have improved the productive structures of their economies and prepared for a potential wave of relocation that was already in the making years before the pandemic.

Tunisia, Egypt and Morocco have certainly navigated an industrial policy of international partnership in order to minimise risks and thus stimulated strategic business segments.

In Tunisia, for example, outsourcing companies are already present in the value chain of several sectors of activity, having significant comparative advantages in highly sophisticated sectors such as aeronautics, electronics and pharmaceuticals.

Egypt, on the other hand, has made remarkable progress in infrastructure provision in recent years. The Egyptian state has invested massively in improving productivity through transport and logistics. One such investment, which will change the country's productivity, is the investment in the railway system, which is being built by the German multinational Siemens. A modern and comprehensive system of more than 2000 kilometres linking 60 cities. Moreover, the Information and Communication Technology (ICT) sector is the fastest growing sector in Egypt this year, attracting giants such as Amazon, IBM, Uber and Microsoft.

Like other parts of the world, Morocco has learned from Asian capitalism. A pragmatic, incremental, export-oriented capitalism.

The Renault Group opted for Tangier to manufacture its new electric car, and last March the Japanese manufacturer of electrical and fibre optic cables Sumitomo announced the transfer of its production from Ukraine to Morocco, due to the war in Ukraine. What has happened in the automotive sector in Morocco over the last ten years is absolutely exceptional. Morocco has not only become Africa's leading car exporter, it has also overtaken many European countries, including Portugal, the Netherlands, Finland, Belgium, etc.

Morocco is already known for having well-established sectors such as textiles, tourism and agriculture. What is less well known is that today, the leading export sector of the Moroccan economy is the automotive sector. In fact, it is expected to account for 24% of GDP this year.

Morocco has benefited not only from the international relocation of French industry, but also from the expansion of Asian manufacturers.

A few years after the installation of the Renault Group in Tangier and the Peugeot Citroën Group (PSA) in Kenitra, Morocco is now preparing to host two of the major Asian manufacturers: Hyundai and BYD.

Of course, there is much room for improvement!

But what is certain is that the southern Mediterranean countries are part of the European ecosystem and are increasingly consolidating themselves as a reliable and attractive platform for the imminent relocation of European industry.