The Middle East and North Africa are today in the center of our attention, but sadly not for the right reasons. Although it is good that a company is aware of the risks and developments in a region, the current news stories obscure the economic potential and changes that this regions offers to European companies. At the moment the trade between the European Union and the region is limited (only 1,6% of EU export in 2014 went to the region1), while the region is interesting and has a lot of potential for European companies.
Young and willing to work
In the Middle East and North Africa live almost 410 million people, of which more than a quarter are younger than 14 years.2 While Europe becomes grayer and older, the region becomes younger and more vibrant. The labour force in the region has increased the last few years with almost 3% per year, while the European Union and its Member States saw their labour force mostly stay flat or even decrease.3 The major problem in the region is now the lack of jobs, which means that even with a university degree it is hard to find a job. According to recent Tunisian estimates 37% of the unemployed has a university degree.4 A European company that starts to produce in the region, will find it easy to fulfill its vacancies and profits at the same time from the presence of a young growing market for its products.
A growing market
The Middle East and North Africa experience a strong economic growth. While the GNP in the region increased with 2% to 7% per year, the growth in the European Union did not exceed 3%, if there was any growth at all.5 On the level of individual states countries like the Netherlands do worse than countries like Egypt, Tunisia and Lebanon. While the Netherlands alternated between 4% growth and 3% decline, the countries achieved growth percentages of 5%, 7% or even 10%. Of course, a country like the Netherlands remains much more prosperous than these countries, but this wealth gap has decreased as result of the recent economic crises. The small state of Lebanon with 18.4 thousand dollar GNP per head is now on the same level with the much bigger Bulgaria.6 Also the combination of constant growth and a large young population makes Egypt and its 88.4 million inhabitants an attractive country for European companies.
Trade ties, trade opportunities
The trade ties between the European Union and the Middle East and North Africa are stronger than they look at first. Although the European Union trades little with the region, are European countries often among the most important trade partners of the countries in the region. Tunisia's trade is especially focused on the European Union: Germany, France, Italy and the Netherlands figure in its top 10.7 Also in Egypt and Lebanon are European countries important trading partners and these countries have still a lot to offer to European companies. European knowledge and know how could be used to solve the waste problem in Lebanon or improve the cotton production in Egypt.8 These are just two examples of situations in which European companies have the necessary know how and assets which currently lack in the region.
Doing business with ease
One of the reasons why European companies do little business with the Middle East and North Africa, is because the region is seen as regulatory complicated. But these regulatory "obstacles" are often less cumbersome in practice as a closer look at the 2015 Ease of Doing Business index of the IMF reveals.9 Although countries in the region are ranked relatively low on this list, Tunisia (rank 60) scores still better than the Netherlands (rank 27) on construction permits, electricity and protection of minority investors. Moreover, there are always important differences between industries and even within countries, which make doing business harder or easier. For example, the Egyptian city Ismailia near the Suez channel scores better than the capital Cairo with regard to ease of doing business.10 And this was before the recent economic and fiscal reforms introduced by the Egyptian government to stimulate foreign investment around the Suez channel.11
The biggest concern for European companies, which want to do business in the Middle East and North Africa, is without doubt security. Although the region has become more volatile since the Arab spring, the risks differ per country and per area. Although the number of violent and terrorist incidents in Egypt has greatly increased since the Arab spring, the majority of these incidents is limited to North Sinai and the Delta and target the police and security forces.12 Foreign visitors and companies in Egypt are not the main target of these incidents. The risk of becoming a victim of these incidents is thus minimal, although this risk cannot be fully eliminated.13 However, these and other risks can be identified and minimized, giving you the opportunity to do business in Egypt and elsewhere in the region.
Ready to do business?
In short, the Middle East and North Africa offer enough opportunities for European companies, but it is important that your companies has good overview of the risks and opportunities involved. We of Assarwa can provide this overview to you, so you seize the opportunities in this growing market without any worries. Visit for more information our pages on the individual countries (Egypt, Tunisia, Lebanon and Morocco), the different business sectors and our services or contact us at: firstname.lastname@example.org.
1. European Commission, EU-Euromed (11) "trade in goods" statistics, 2014; European trade in the world, 2005-2014
2. World Bank, Population ages (%), 2014
3. World Bank, Labor Force, total, 2005-2014
4. Institut National de Statistique – Tunisie, Note sur l'emploi, 1st trimester 2015
5. World Bank, GDP Growth (annual %), 2005-2014
6. IMF, World Economic Outlook, April 2015
7. IMF, Merchandise Trade by Country, 2014
8. The Daily Star, From overflowing dumpsters to a protest movement, 24 August 2015; Egypt Independent, Egypt's cotton U-turn highlights wider policymaking problems, 11 August 2015
9. World Bank, Doing business 2015, 2015
10. World Bank, Doing business in Egypt 2014, 2014
11. Egypt Independent, MENA: President Sisi establishes economic zone around Egypt's Suez Canal, 12 August 2015; Egypt Independent, Egypt lowers top tax rate and suspends capital gains tax, 24 August 2015
12. CCAPS, Armed conflict, Egypt, 2009-2015; Maat for Peace, Development and Human Rights, Reports on violent and terrorist incidents, 2015
13. BBC, Tomislav Salopek: Croatia fears for Egypt hostage, 13 August 2015
Photo: David Berkowitz