Opening up these traditionally state-dominated economies to international capital will stimulate growth, create jobs and reduce public spending.
However, significant barriers to investment remain. Algeria and Libya have made progress in attracting international participation in the energy sector. But private sector confidence in Algiers has been dented by the removal of Spain’s Gas Natural and Repsol from its Gassi Touil liquefied natural gas (LNG) project.
In Libya, meanwhile, foreign participants complain of overbearing bureaucracy and slow decision-making.
Morocco and Tunisia have made much progress on stimulating foreign investment. Tunisia’s manufacturing sector overtook agriculture in terms of exports in 2007, and in Morocco, tourism and real estate investment are on the rise.
International investors are always keen to exploit the low operating costs of emergent economies and the Maghreb states are well placed to tap into this demand. But the region’s governments must do more to remove the barriers to investment if the opportunity is not to be missed.