BRINK‘s GEOPOLITICS article tells us How Does the Arab World Move Away From Oil Dependence? It also tells us how this part of the MENA region should leave in the ground substantial unexploited reserves of hydrocarbons together with its vast expense of stranded assets for good.
It is now common knowledge that for some time and without dramatic breakthroughs, widespread power generation from solar, photovoltaics and wind will remain more expensive than fossil fuels. And electric vehicles won’t replace gasoline-powered vehicles unless battery costs drop and oil prices go up at unrealistic rates. Analyses by researchers concluded some time back that market forces alone won’t reduce the world’s energy needs to be met by fossil fuels.Economic development and energy in the age of climate change cannot possibly wait for another opportunity. Anyhow, let us what Margareta Drzeniek, author of the article has to say.
The picture above is for illustration and of Arab News.
How Does the Arab World Move Away From Oil Dependence?
The Arab world has historically been a hotspot for global risks. Over the past decades, the risk nexus of a tense geopolitical environment, high levels of youth unemployment and governments’ inability to diversify economies has been challenging the region’s leaders.
The COVID pandemic accelerated pressures on income, and the twin transition to net zero and a more technology-driven economy will only exacerbate the region’s exposure to global risks and underlying gaps in resilience. While the region is not homogenous, three interdependent areas are key to strengthen resilience in all countries: economic diversification away from dependence on commodity or low-value exports, private sector growth to enable job creation, and future-proofing skills.
Getting Out of Oil
Many countries have undertaken major reform efforts to reduce commodity dependency. The Gulf countries’ economic development plans — usually dubbed Vision 2030 or the like — have aggressive targets and high ambitions.
For example, Saudi Arabia is implementing Vision 2030, which aims at transforming society, diversifying the economy, creating jobs and increasing the level of ambition throughout.
In the UAE, efforts are taking place at the Emirate level, notably in Abu Dhabi and Dubai, which both have 2030 strategies that aim to strengthen high-end manufacturing (e.g., in medical equipment and aerospace). The objectives are ambitious — Abu Dhabi aims to grow the non-oil sector by more than 7.5% annually.
Similar initiatives are under way in North Africa. Trade agreements with the EU entered at the turn of the millennium have had some success, notably in the automotive sector, where exports increased by a factor of 50 to 60 in Egypt and Morocco and tripled in Tunisia. Nevertheless, countries in North Africa remain dependent on a few sectors, including tourism, agriculture and apparel and on the EU market.
The African Continental Free Trade Area, which started trading in 2021, provides an important opportunity for diversification and integration at the regional level, including regional backward linkages to ensure broader participation in global value chains. Weak infrastructure and connections between countries remain to be addressed to more fully benefit from this opportunity.
Public Sector Still the Employer of Choice
Private sector growth has been a key to building a strong and vibrant domestic private sector that provides employment for the significant youth bulge currently entering the labor market in all countries of the region.
In most countries in the region, the public sector remains the employer of choice due to perceived employment stability over a lifetime, but also because many people lack the skills required in the private sector, notably soft skills such as for example team work, entrepreneurial attitudes and agility.
The transition to a more environmentally sustainable economic model appears to be risky at first glance, but investment in renewables could provide a solution to the unemployment challenge.
However, the public sector is not able to absorb all the young people coming into the market. Private sector growth is necessary for political stability, but it has been hampered by heavy regulatory environments, rent-seeking behavior and governance challenges, and political uncertainty.
Some positive developments are happening in local startup ecosystems, which have been blossoming across the region, enabled by digital business models that circumvent some of the rigidities of the traditional business environment and take advantage of the prevalence of digital technologies.
Energy Sustainability Is the Critical Pathway
The region’s elephant in the room remains environmental sustainability.
It is important in two ways. Firstly, the world’s move to net zero threatens the very economic model of hydrocarbon-exporting MENA countries, and secondly, countries experience significant environmental degradation and are major pollutants.
Qatar places 122nd in the Environmental Performance Index; Saudi Arabia is 90th and Morocco 100th (UAE, however, is a better 42nd). Challenges range from threats to biodiversity, which is low for climatic reasons, and water shortages, to an energy-vore lifestyle coupled with a lack of awareness of sustainability challenges. Gulf Cooperation Council (GCC) countries are also among the top 14 per capita emitters of carbon dioxide globally.
Albeit from a low level, efforts to improve on environmental sustainability are gaining speed. The UAE’s Energy Strategy 2050 aims to double the contribution of renewables in the country’s energy mix, and the renewable energy capacity in the Gulf countries already increased by approximately 313% between 2014 and 2018.
Strategic investments with Chinese partners are the main channel toward achieving this objective. Deteriorating air quality in the region and its potential impact on health may increase pressures on governments to tackle the issue more holistically.
The transition to a more environmentally sustainable economic model appears to be risky at first glance. Progress in diversification and private sector development has been slow, and although the region is entrepreneurial, youth unemployment remains a key issue. However, recent research shows that investment in renewables could provide a solution to the unemployment challenge.
Renewable energies are generally more labor-intensive than extractives. The International Renewable Energy Agency estimates that current commitments and project plans could create 220,000 jobs in GCC countries by 2030.
To sum up, while economic diversification is crucial, the energy transition provides resilient recovery pathways to the MENA region that could ensure future growth, a stronger intergenerational contract and higher resilience.
Margareta Drzeniek is a managing partner at Horizon Group. She previously led the economics unit of the World Economic Forum and was in charge of the main flagship reports, including The Global Competitiveness Report and the Global Risks Report.
Reportlinker.com announces the release of the report “Construction Global Market Report 2021: COVID 19 Impact and Recovery to 2030”.
Construction Global Market Report 2021: COVID 19 Impact and Recovery to 2030
Major companies in the construction market include China State Construction Engineering Co Ltd; China Railway Group Ltd; China Railway Construction Corporation Limited; China Communications Construction Group Ltd and Vinci SA.
New York, Feb. 01, 2021 (GLOBE NEWSWIRE) — The global construction market is expected to grow from $11491.42 billion in 2020 to $12526.4 billion in 2021 at a compound annual growth rate (CAGR) of 9%. The growth is mainly due to the companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges. The market is expected to reach $16614.18 billion in 2025 at a CAGR of 7%.
The construction market consists of sales of construction services and related goods by entities (organizations, sole traders and partnerships) that construct buildings or engineering projects (e.g., highways and utility systems). Establishments that prepare sites for new construction and those that subdivide land for sale as building sites are included in this market. The construction market includes new work, additions, alterations, maintenance, and repairs. The construction market is segmented into buildings construction; heavy and civil engineering construction; specialty trade contractors and land planning and development.
Asia Pacific was the largest region in the global construction market, accounting for 42% of the market in 2020. North America was the second largest region accounting for 26% of the global construction market. Africa was the smallest region in the global construction market.
Building construction companies are increasingly using green construction techniques to build energy efficient buildings and reduce construction costs. Green construction refers to the practice of using sustainable building materials and construction processes to create energy-efficient buildings with minimal environmental impact. According to World Green Building Trends Survey 2015, about 51% of construction firms in the UK were involved in green construction projects. Certifications such as Leadership in Energy and Environmental Design (LEED) help construction companies to develop high-performance, sustainable residential and commercial buildings, and also offer a variety of benefits, from tax deductions to marketing opportunities. Sustainable construction materials such as natural paints and steel beams made from recycled material are being widely used in the UK. Other green construction techniques such as cross-ventilation for more natural environment, green construction software such as Construction Suite to ensure green compliance, and Green Globes management tool are also being used in the construction industry. For instance, some, Major companies using green construction techniques include Turner Construction Co, Clark Group, AECOM, Hensel Phelps and Holder Construction.
Construction costs have increased steadily due to rising material costs in the historic period. Companies in the industry experienced subdued growth in their profits with rising prices of materials such as crude oil, a key component of asphalt increased by 49%, softwood lumber, a major component used for buildings construction, which rose by 23% during historic period. In 2018, cement prices rose 2.5% and plumbing and fixtures increased by 3% in the US. High material prices adversely affected the construction market during historic period.
The construction market growth in the historic period was mainly driven by the increase in construction activity in emerging markets. Emerging markets which registered robust construction activity included China, Brazil, India, Saudi Arabia and Indonesia. For instance, China’s construction market grew from $1,653 billion in 2016 to $2,279 billion in 2019. This rapid growth in construction activity contributed to the growth of the construction market.
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Michael Young in an interview, with David Linfield who argues that international donors are benefiting existing power structures in the Middle East. It is all about Colluding With the Corrupters.
Corruption spread deep and for some time in the MENA region with social, political, and economic implications, but with differing penetrations rates. All because the area can divide into two types of governance. The autocratic monarchies live with side by side with the so-called republics. Few of these latter countries know a higher degree of corruption than the first-mentioned countries. In any case, all have made the fight against corruption a priority by passing laws and adopting strategies to combat crime. But in vain. Colluding with the Corrupters could quickly summarise a situation where such deviant behavioural attitudes originators can be traced back out of the region.
January 29, 2021
David Linfield is a visiting scholar in Carnegie’s Middle East Program. He is on sabbatical from the U.S. Department of State, where he is a career foreign service officer. Linfield recently wrote a commentary for Carnegie, titled “International Donors Are Complicit in Middle Eastern Elites’ Game.” In mid-January, Diwan interviewed him to discuss his article, and more generally to examine the anti-elite feeling that has permeated protests throughout the Middle East in the past year, notably in Iraq, Jordan, and Lebanon. The views expressed by Linfield are his own and not necessarily those of the U.S. government.
Michael Young (MY): You’ve just written a commentary for Carnegie, titled “International Donors Are Complicit in Middle Eastern Elites’ Game.” What is your argument in the piece?
David Linfield (DL): My argument is that the United States and other international donors have put significant clout and resources behind promoting economic liberalization in the Middle East, while they have been hesitant to put similar emphasis on political reforms. By political reforms I mean boosting transparency, combating corruption, and empowering elected officials. International actors have partly justified this approach by suggesting that economic reforms are a better way of promoting stability and less risky than political changes. But I contend that recent events in the region suggest that these policies are making violent, sudden change in the region more likely, not less so.
When adopted in the context of authoritarian political systems, economic reforms such as privatization have tended to benefit existing power structures, exacerbating economic inequality and citizen-state tensions. The World Inequality Database now ranks the Middle East as the most unequal region in the world. While economic inequality has decreased worldwide since the 1990s, it has remained constant in the Middle East.
By supporting policies that have inadvertently led to such entrenched inequality, while neglecting political reforms, international donors have contributed to citizens’ frustrations with their relative economic status while leaving them without peaceful institutional means of expressing their grievances. This is all a recipe for instability, which is the opposite of what donors want.
MY: You write that “[e]merging solidarity among previously competing groups, grounded in [economic inequality]” is a feature of the growing resentment of elites in the Middle East. Are you suggesting, to borrow from Marxist jargon, that we are seeing the emergence of a sort of class consciousness in certain countries that may have revolutionary potential?
DL: Most of the protests in the Middle East since 2018 have focused on economic inequality and corruption. Whereas previous demonstrations in the region tended to consist of a homogeneous ethnic group—whether from a particular religious sect, region, or group of tribes—these recent protests have been more diverse.
Common frustrations with inequality appear to have led people from lower-income communities to demonstrate in common cause—albeit sporadically and tentatively—against what they see as a corrupt and multisectarian elite that has failed them. We have seen this happen most explicitly in Iraq, Jordan, and Lebanon.
Some of the slogans used in recent protests in these countries do indicate the emergence of class consciousness. When the Jordanian Teachers Union threatened to strike in summer 2020, they framed their plight as a class struggle against those who had “looted the country.” The 2019 Lebanese protests included slogans like “down with the rule of the thieves.” Iraqi protestors in 2019 and 2020 told media outlets that their struggle was about taking the country back from “thieves.”
MY: In light of your assessment, how have the traditional fault lines among Middle Eastern populations that regimes have manipulated to retain power—things such as sectarian, tribal, or regional divisions—fared in what you describe as a changing environment?
DL: The traditional fault lines in Middle Eastern societies are still very much present. Emerging class-based tensions have not fully supplanted preexisting divisions based on ethnicity, religion, and tribalism, but rather now coexist alongside them more than before. That said, the trendlines I described earlier suggest that class-based divisions will continue to grow in relative importance and have the potential to reshape existing political alliances and divisions.
In addition to the demonstrations I mentioned earlier, another indicator of the power of class solidarity is a 2019 experiment by researchers from the University of Pittsburgh and the Lebanese Center for Policy Studies. The study, which assigned hundreds of Lebanese people into different conversation groups having varying compositions based on sect and class, found that when Lebanese people gathered with other members of the same class, they exhibited markedly less support for sectarian politics.
It’s too early to craft a comprehensive assessment of how emerging class-based tensions will interact with longer-standing societal divisions in the Middle East. One reason that we’ll have to observe for a longer period is that Covid-19 shifted the focus dramatically from political and economic challenges to the health crisis. But given that the pandemic exacerbated economic inequality, with lower-income communities bearing the brunt of related economic disruptions, we probably won’t have to wait long before class discussions reemerge.
MY: If the problem is that economic liberalization has reinforced elites, what are you recommending as an alternative approach by Western donors? And what makes you think that such an approach would have any chance of working?
DL: The alternative approach I’m recommending is for international donors to incorporate measures to promote transparency and combat corruption into existing economic liberalization efforts. These political reforms are also good for business and economic growth—as noted by the International Monetary Fund (IMF) and World Bank reports I cite in my article. The IMF’s recent insistence that Lebanon address corruption before receiving additional loans is a positive step to putting teeth behind their analysis.
Other helpful steps would include pushing to empower the many weak legislatures across the region beyond their current rubber-stamp roles, which would provide an alternative to protests for frustrated publics. If international donors put the same clout behind good governance that they have behind economic liberalization, they’ll make peaceful and durable progress more likely in the Middle East.
MY: Are you not reading too much into anti-elite solidarity? Ultimately, states in the region have shown that they will resort to violence in order to survive and societies have often gone back to being silent. Why will this change?
DL: Ruling elites in the region have demonstrated that they are willing to go to extreme measures to maintain their benefits. I am not suggesting that elites will somehow decide that they should altruistically begin to share resources with the rest of society. Rather, as your question implies, I am arguing that the elite behavior of concentrating power and resources is an unsustainable strategy that will ultimately foment violence and harm everyone’s interests, including those of the elite.
Autocratic regimes tend to resort to violence when they feel they have run out of other options, but rely more often on nonviolent coercion and intimidation to maintain daily control. By the time regimes turn to violence, it tends to be a prelude to their loss of control—or a stage where they are nearing that.
The strategy of international donors focusing their influence and resources on economic liberalization instead of good governance has not succeeded in bolstering stability and strengthening citizen-state relations. Instead, the policy has exacerbated class-based tensions and increased the prospects of unrest.
These trends are not linear: demonstrations in the region against economic inequality and corruption have ebbed and flowed. Ruling elites remain intent on doing everything they can to outmaneuver these latest challenges to their vested interests. Longer-standing societal tensions based on sect, region, and tribe also continue to simmer and remain exploitable by elites. But the overall direction of the region is still toward economic liberalization in the midst of authoritarian entrenchment. As long as that remains the case anti-elite solidarity is likely to build. International donors are inadvertently contributing to these increasing citizen-state tensions. Instead, they could be fostering more durable change that would make the region more stable and prosperous for everyone.
The Region is wrestling with oil demand slowdown but construction recovery is predicted for 2021 and 2022, GlobalData report as per Dominic Ellis of Construction Global who elaborates on the MENA construction output growth forecast sees 4.5% drop.
18 December 2020
Region wrestling with oil demand slowdown but construction recovery predicted for 2021 and 2022, GlobalData report says
The construction output growth forecast for the Middle East and North Africa (MENA) region for 2020 predicts a contraction of 4.5 percent this year, before a recovery with growth of 1.9 percent in 2021, and 4.1 percent in 2022, according to GlobalData.
The region is wrestling with two distinct but related issues: climate change, and the slowdown in oil demand.
The data and analytics company reports that the 2020 contraction reflects the severe impact of COVID-19 lockdowns, as well as other restrictions on construction activity. Much will depend on its ability to embrace digital transformation.
Yasmine Ghozzi, economist at GlobalData, said: “The construction sector will face headwinds in 2021 with a slow recovery, but the pace of recovery will be uneven across countries in the region. Throughout 2020, and running to 2021, spending on real estate megaprojects, especially in the GCC, is likely to take a backseat as a result of budget revisions.
“However, large-scale projects in the oil, gas, power and water sectors have gained traction against the downturn in market conditions this year, and this is likely to continue. As a result, some local contractors are pursuing development in these sectors to replace the loss of real estate work.
“There is also a push towards decoupling power and water production across the region to reduce energy consumption continuing to provide the impetus for Independent Water Projects (IWP) implementation and in the future, there will be a lot of contract awards in that respect as the region pushes its renewable energy programme, particularly solar photovoltaic and wind.”
GlobalData has slightly revised up its forecast for Saudi Arabia’s construction output to -1.9 percent from -2.8 percent and expects a recovery for the sector of 3.3 percent in 2021. This revision reflects an improvement in economic performance and the Kingdom ending a nationwide curfew at the end of September, lifting restrictions on businesses after three months of stringent curbs and a notable decrease in infection rate.
Recovery is also underlined by the crown prince’s announcement in mid-November that the Public Investment Fund (PIF) is to invest £29.5 billion (5% of GDP per annum) in the economy in 2021-22.
Nearly half of the construction of the five minarets of the Grand Mosque in Makkah is now complete.
GlobalData still maintains its forecast for construction output growth in the UAE of -4.8 percent, with a rebound in 2021 of 3.1 percent and a promising medium-term outlook.
Ghozzi adds: “The recent approval of a new Dubai Building Code is a positive development for the UAE. The new code outlines a revised set of construction rules and standards and seeks to reduce construction costs by streamlining building rules.”
The UAE is proceeding with plans to expand its production capacity with Abu Dhabi National Oil Company (ADNOC) announcing its five-year investment plan worth £90.1 billion.
Qatar, Kuwait, and Oman
GlobalData has not changed its estimated growth rates for Qatar and Kuwait in 2020, at -4.5 percent and -9.5 percent, respectively. However, it has further cut the growth forecast for Oman to -10.3 percent from an earlier estimate of -8.1 percent, as the construction industry struggles with the challenges presented by the outbreak of COVID-19, low oil prices and the impact of sovereign credit rating downgrades.
Ghozzi adds: “The new fiscal plan launched by the Omani Government to wean itself off its dependence on crude revenues through a series of projects and tax reforms is a good step which will aid the construction sector recovery in the medium term”.
GlobalData expects construction in Egypt to grow at 7.7 percent in 2020, slowing from 9.5 percent in 2019 – given a short-term slow down due to the pandemic – and 8.9 percent in 2021. The industry is also expected to continue to maintain a positive trend throughout the forecast period.
Ghozzi continues: “Egypt has become the first sovereign nation in the MENA region to issue green bonds with a £553.9 million issuance. Bonds’ earnings will be used to fund projects that meet Egypt’s commitment to the UN goals for sustainable development.”
Egypt’s comprehensive development plan provides varied opportunities for construction companies, such as the national project to develop the countryside which targets 1,000 villages nationwide.
GlobalData expects Israel’s construction industry to contract by 8.9 percent in 2020, reflecting the significant fallout from the pandemic, with growth expected to resume at a modest pace in 2021.
Ghozzi said containing a second wave of the virus, while trying to revive the economy and approve budgets for 2020 and 2021, are the government’s top priorities. “However, difficult decisions will be postponed, with the deadline to pass the 2020 budget being pushed to the end of 2020,” he said.
In the Arab Maghreb, GlobalData maintained its forecasts for construction growth in 2020 for Morocco and Algeria to -5.5, and -3.4 percent, respectively.
Ghozzi adds: “Amid a second wave of COVID-19 with restrictions placed on public mobility along with increasing public sector doubt about economic prospects and social tensions continuing to cause shutdowns at oil and phosphate-manufacturing facilities, GlobalData has further cut its forecast for Tunisia to -13.3 percent from an earlier estimate of -12.5 percent.
“Recovery in the sector is expected to be very slow and expectation of an early legislative election is likely in 2021 but is unlikely to reduce political volatility.”
Conditions for boosting the privatisation process via the Algiers Stock Exchange are reviewed by University professor and international expert, Dr Abderrahmane MEBTOUL.
The aims of the privatisation, whether partial or total of the Algerian economy do not come to be questioned. The process is a must, however, it needs to be addressed as a matter of urgency. Proposals of strategies are made, notably through my experience as Chairman of the National Council of Privatizations between 1996/1999 complemented by numerous tours in the USA, helping to formulate the conditions for the success of the privatisation process via the Algiers Stock Exchange, to imply clarity in the objectives and means of implementation.
The urgency of a strategic vision
At a time of the coronavirus pandemic and the world going through new socio-economic changes in technological and organisational models including shock waves that according to the IMF, the World Bank, and the OECD, global growth will not be felt before the end of 2021. Furthermore, subject to the control of the epidemic, all domestic companies using the State’s handouts for their survival and all of the state-owned enterprises suffer from a structural deficit. Indebted to banks, some whose production techniques, are obsolete and do not meet new technologies and international standards, it is mentioned in this particular context to address the large budget deficit. The observation is the lack of dynamism of the public sector, the consolidation supported by the public treasury having far exceeded 100 billion dollars at constant prices between 2000/2020. The cost of the numerous restructurings between 1980/1999 and the ensuing remediation period of 2000/2020, resulted in more than 95% of the domestic companies returned to their inception status. Whereas with this, capital-money, it would have been more sensible to create a whole new and performing economic fabric. These are only announcements because, being an eminently political process, any decision on such a sensitive and complicated subject must first have the approval of the Council of Ministers certainly after consultation with the Security Council because it commits national security. Privatisation should not be confused with complementary de-monopolisation, both eminently political, moving towards the disengagement of the State from the economic sphere so that it devotes itself to its role as a strategic regulator in a market economy. Privatisation is a transfer of ownership from existing units to the private sector, and de-monopolisation is about fostering new private investment. The objective of de-monopolisation and privatisation must reinforce the systemic transformation of the transition from an administered economy to a competitive market economy. A legal text is not enough (this is only a means) and becomes a decoy if there are no coherent objectives clearly defined with pragmatism and a return to trust.
Privatisation can only be successful if it is part of a coherent and visible global socio-economic policy and if it is accompanied by a competitive universal and sustained dialogue between the social partners. It should be aimed at putting an end to perpetual legal instability. The renovation of the Ministry of Finance through digitisation of all systems of taxation, banks, land and customs duties would surely put an end to the central and local bureaucracy that as a significant constraint of an administered economy would be best be accompanied by the overhaul of the socio-political system. Also, the decentralisation around large four to five regional poles, not deconcentration would help.
Moreover, the impacts of all trade agreements between Algeria and the European Union, Africa and the Arab world, as well as all international ones would be of a win-win type only if Algeria has public or private companies that are competitive in terms of cost/quality. In any case, all of these agreements have domestically economic, social and political implications.
The four conditions for boosting the privatisation process
Are our managers aware that there is a global privatisation market where competition is perennial, and the determining factor is a demand for goodwill and not just supply? The success of this process to prevent certain predators from being interested only in the real estate of these companies and not in the production tool involving five conditions?
The first condition, its impact on the reduction of the budget deficit where according to the Finance Law of 2021 more than $21.75 billion in 2021, against the 2020 close of $18.60 billion and an overall projected treasury deficit of $28.26 billion, artificially, which is in principle filled by higher production and domestic productivity; to boost non-hydrocarbon exports and contribute to the establishment of a competitive market economy far from any monopoly, whether public or private.
The State, as a regulator and guarantor of social cohesion, especially at a time of budgetary and tensions domestic and at our borders should enforce the contract between employers and employees so that the logic of profit does not undermine the dignity of workers. Nevertheless, never forget that the most incredible moral devaluation in any society is being unemployed or assisted. The important thing is not to work in the national, international or state-private sector, the critical thing for our children is to find a sustainable job within the framework of social protection.
The second condition was a good preparation of a company X for privatisation, assuming transparent communication, as some executives and workers had heard the news in the press, which increased social tensions. Transparency is a fundamental condition for the acceptance of both the population and workers in the spirit of reforms linked to profound democratisation of society. The takeover of companies for executives and workers requires the creation of a risk bank to accompany them because they possess the technological, organisational and commercial know-how a hardcore of skills must constitute the basis of any reliable unit.
The third condition will be to avoid filialisations that were not operating in the past—sticking with bureaucratic power, being the basis for the success of both the partial opening of capital and total privatisation, the wealth in the accounts being often undefining. Lack of an updated land registry poses the problem of the non-existence of reliable title deeds without which no transfer of ownership can be carried out. As there is an urgent need to have transparent real-time accountings of public, private companies, that meet international standards, all measures will be ineffective especially for stock market valuation the actual sale price varies from time to time.
The fourth condition, time overlap of different institutions between selection, evaluations, tender notices, transfer to the stakeholders, then to the Government for the issuance of the final title of ownership would best be not arduous. It may discourage any takeover because mobile capital is invested only where economic and political obstacles are minimal. In this context, it is imperative that long bureaucratic circuits avoid a clearly defined synchronisation and that the current conflicting legal texts should be reviewed, which can lead to endless conflicts, hence the urgent need for their harmonisation with international law. Empowerment will need to be specified where it is necessary to determine who has it to request the undertaking of a privatisation operation. It is vital to prepare the transaction, to organise the selection of the purchaser, to authorise the conclusion of the transaction, to sign the relevant agreements and finally, to ensure that they are carried out correctly.
The four conditions for boosting the Algiers Stock Exchange
In lethargy since its inception, the ASE was built up like a stadium without players through administrative injunctions, like all the loss-making state-owned enterprises.
However, the revitalisation of the stock market implies three conditions.
First, the lifting of environmental constraints gives bureaucratic obstacles that cannot be a reliable purse without competition, avoiding legal instability referring to the rule of law.
Second, a stock exchange must be based on a renovated banking system. However, the Algerian financial system for decades has been the place par excellence for the distribution of the hydrocarbon rent and therefore a considerable challenge of power, and therefore the revitalisation of the stock market necessarily requires the overhaul of the financial system. Indeed, despite the number of private operators, we have a public economy with managed management, all activities whatever their nature feeding on budget flows, i.e. the very essence of financing is linked to the actual or supposed capacity of treasure. It can be considered that the banks in Algeria operate not from local market savings but by the recurrent advances from the Central Bank of Algeria that is refinanced by the public treasury in the form of reorganisation not only for the recent period but having to count the costs of restructuring between 1980/1990. This transformation is not in the scope of the company. However, it moves into the institutional field (distribution of the annuity hydrocarbons), and in this relationship, the Algerian financial system is passive. Bread 90% of these companies its returned to the starting box showing that it is not a question of capital money, real wealth can only assume the transformation of currency stock into capital stock, and there is the whole development problem.
Thirdly, there can be no stock exchange without the resolution of all deeds circulating shares or bonds. The urgency of the integration of the informal sphere cannot be underestimated. Issuing title deeds is vital as there can be no reliable stock exchange without clear and transparent accounting modelled on international standards by generalising audits and analytical accounting in order to determine the cost centres for shareholders. This raises the problem of adapting a socio-educational system, which does not exist as financial engineering. The balance-of-payments services item with foreign exchange outflows between 2010/2019 is between $9/11 billion per year, in addition to foreign exchange outflows from import goods. There are a few rare exceptions; it turns out that accounts Algerian public and private companies from the most important to the simplest in the State that would not pass the most basic audits due diligence. For example, SONATRACH needs new strategic management like the majority of Algerian companies, with clear accounts in order to determine costs by sections, where we are witnessing the opacity of its management which is limited to delivering consolidated global accounts covering the essentials without distinguishing whether the surplus accumulated is due to exogenous factors, international prices or good internal management. As a primer, we propose partial privatisation of a few profitable national champions to initiate the movement to enable the establishment of a stock market index consisting of volume and quality, acting as incubators of companies eligible for the stock exchange and attracting investors looking for financing and know-how.
The fourth condition is monetary stability and legal and monetary stability and the resolution of bad debts and debts, with state-owned banks crumbling under the weight of bad debts and the majority of state-owned enterprises in structural deficits, especially for the currency-denominated part involving transparent mechanisms in the event of exchange rate fluctuations. The simultaneous depreciation of the dinar against the Dollar, the main currency of exchange, does not respond to real values because their quotations are inversely proportional, has the essential aim of artificially filling the budget deficit, akin to an indirect tax. Indeed, on October 15, 2020, on the Stock Exchange, the Dollar is quoted at 1.2144 Euro, against 1.16 in June 2020, a depreciation of 5%, allowing a rise in the price of Brent by 5%. In reference to the June 2020 quote, the price of Brent quoted on December 15 at $50 would be $47.5 at constant prices, thus not having experienced a real increase in terms of purchasing power parity against the Euro and thus an increase in the import bill in euros in the same proportions. Thus, the current Government projecting for 2023 about 185 Dinar one Euro and 156 Dinars per Dollar and taking a 50% deviation from the parallel market we will have about 300 Dinars a minimum Euro in 2023 subject to the control of inflation otherwise the gap would be larger. They were compared to more than 200 Dinars in mid-December 2020 with a projection of 240/250 Euros at the end of 2021 in as to open borders and the inevitable increase in interest rates of the banks’ priorities to avoid their bankruptcies. In this case, it is illusory both to attract the savings of emigration via the banks that one wants to install with foreign exchange costs, as to capture the money capital via the informal sphere via Islamic finance. How do you want a trader with this monetary instability to appear on the stock exchange knowing that the value of the dinar will fall by at least 30% if not more in two to three years, depreciating its assets?.
The partial or total privatisation can be the process, with economic, social and political recompositions of power for a controlled liberalisation in order to avoid the squandering of public assets for the benefit of speculators interested mainly in real estate assets. It involves the transparency of specific objectives, the removal of bureaucratic obstacles, land, banks, the informal sphere, taxation, legal and monetary stability, essential criteria for any national investor.
Originally posted on After 5: Hey there, This is my very first blog post and my first attempt to analyse a dataset post learning python. I have recently joined the Kaggle community as well as Github and slowly finding my way through them! As an Egyptian working in Finance, I found the Africa Economic, Banking and…
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