All Change – North Africa’s Huge Potential
After the much reported recent political turmoil in North Africa we hope that some nations are beginning to find their feet again. General Manager Neel Ratti reflects on the Arab Spring’s effect on the market and how it will create opportunities for British shippers.
The UK has a long history of trade with the North Africa. Many cultural and economic ties still exist from colonial times, and more recently local people have appreciated the support and encouragement given to them by the UK during the political upheavals. British manufacturers retain an excellent reputation throughout the region. Trade is growing steadily and is bound to develop further after the UKTI announcement in October of the African Free Trade Initiative.
For all their undoubted cruelty, the secular dictators of North Africa oversaw important investment programs in port infrastructure. As recently as January 2011, the Mubarak-led Egyptian government agreed capital expenditure of over $16 billion for new equipment and upgrades across the country’s port facilities. More investment is needed however and while democracy is good for trade, the newly elected North African governments must not be tempted to cancel the more astute decisions of their predecessors – no matter how hated their regimes were.
A key industry for UK exporters to the region in the future will be the energy sector. According to The International Energy Agency’s 2011 World Energy Outlook, global demand for oil (currently at 88 million barrels per day) is likely to increase to 99 mb/d by 2035. The report claims productivity will fall for many oil producers over the same period and more importantly, production costs will increase for almost all suppliers. The outlook for the North African fossil fuel industry however looks bright, with almost the entire shortfall in productivity (nine tenths, according to the IEA) to be taken up by the Middle East and North Africa combined.
The IEA estimates investment to the tune of $2.7 trillion is required across the North African region in the energy sector to achieve this goal. This level of commitment cannot be exclusively provided by local business, and it is likely much of this assistance will come from established oil companies with the expertise and resources to reach productivity targets. We can be sure that UK business will be at the forefront of the development and the all-important logistics services will be offered to British forwarders.
