click here for a full listing of the geography
and statistics for the region.
of the Region
The ancient Egyptians were one of the earliest civilizations in the world (estimated to have been established around 3100 B.C.), and as their empire was near the other cradle of early civilization, Mesopotamia, trade between the two regions was constant, mainly agricultural products. Egypt remained the main force in this area for thousands of years, incorporating the Nubian empire to the south, making Egypt even stronger. Egypt was on the decline by the time the Greeks conquered it in 310 B.C., bringing in trade from the Mediterranean nations, and shifting the center of trade to Greece. The Romans took over the upper part of Egypt from the Greeks, and expanded their empire even further, bringing in trade from part of distant Europe and the Far East. Under Roman rule, Egypt became an important center for grain production and a trading center with the competing Carthaginian Empire that occupied the western half of North Africa. Rome conquered Carthage in 146 B.C., however, bringing the total area under one central power and solidifying trade throughout the region. With the decline and fall of Rome in the early centuries A.D., trade became split among the new nations that divided up Roman territory, and thus became more disjointed and decentralized. Rome had introduced the camel to Africa, and during the time known in Europe as the ¡°dark ages¡± trade between the eastern regions of North Africa and West Africa grew. By 641 A.D., the Muslims had conquered Egypt and most of North Africa, although there were several different factions of Muslims that controlled different areas and traded among themselves. Control of the region traded hands several times until the reign of the Ottoman Empire in the 1500¡¯s centralized trade in the region and expended it to Europe and parts of the Far East. The slave trade was growing rapidly at this time, and the ports along the Mediterranean were centers for shipping African slaves to Europe and the Americas. The slave trade would remain important to the area for decades, until the mid 1800¡¯s when most nations declared slavery illegal.
The Ottoman empire remained the governing authority in the region for hundreds of years, and finally fell after siding with the Central Powers in World War One (See the Middle East Section for more details). European powers, which had already begun to take over most of Africa, capitalized on the Ottoman¡¯s fall by taking control of North Africa. With the onset of industrialization and the rapidly growing importance of petroleum as a result of the World Wars, Egypt and the surrounding countries experienced economic growth through the exports of petroleum and petroleum products all over the world, depending on which colonial nation held power. In 1922 the Egyptians gained nominal independence from Britain, and this motivated other nations in the area to strive for self-government. During World War Two, the Italians invaded Ethiopia, and the Germans and Allied powers fought a number of great battles in the deserts of Tunisia and Libya. WWII lead the nations of North Africa to fight for independence and the Europeans powers were too economically drained by the war to resist so that by 1956 North Africa was free of foreign rule. Thus, those nations with strong oil reserves were able to expand their economy by exporting large amounts of petroleum, although to this day oil remains by far the greatest export from the region, and all other exports take very little percentage. Imports are kept to a minimum so as to grow the economy even further, and these nations are only semi-industrialized and globalized, focusing again on the oil industry.
Most of the countries based in the northern part of Africa mainly have two types of political systems set up: a kind of informal junta or a republic. Most of these countries have a relatively small Gross Domestic Profit (GDP) and are considered to be the developing nations of the world.
Libya¡¯s economy, however, has one of the highest per capita GDP¡¯s in Africa. More than one quarter of its earnings comes from oil. Libya is also a Jamahiriya (a state of the masses) in theory, governed by the populace through local councils; in fact, a military dictatorship. Because of the structure of the government, much of the money does not funnel down to the poorer classes of people and thus the country remains impoverished. One of the other big problems is that Libya also imports about 75% of its own food. Unlike Libya, Egypt has a more modern economy. In terms of international involvement, they have actually received much advice from the International Monetary Fund on fiscal policies; these reforms have lead to directly lead to a stronger Egyptian economy. More recently, the Egyptian economy was hurt by September 11 (referring to the American incident of terrorism) where their tourist industry declined severely.
As a developing, republic nation, Sudan has also followed the advice of the International Monetary Fund in macroeconomic policies. Since then, it has seen its first trade surplus and witnessed stabilization of its own currency. Sudan¡¯s Gross Domestic Profit comes mainly from farming and agriculture. Since the government does not regulate local controls, the farmers are susceptible to draught and disease without help or aide. Currently, Chad is in about the same position, where 80% of the population lives off of subsistence farming. The government in Chad, however, has made a strong move by building an oil pipeline to be completed soon. Many economists predict a giant change in the economy there once they start exporting oil.
Niger, as a republic, also relies heavily on subsistence farming to date. The International Monetary Fund, over the last few years, has given Niger $105 million to help build the economy and create reforms. This investment came after a coup in recent years that cut off funding from multilateral organizations. In 1994, the country had seen a 50% devaluation in the African Franc which caused a huge export surplus¡ªalthough it also hurt the North African economy.
The devaluation of the Franc by 50% has also helped cause a growth rate in Mali at an average of about 5% per annum. Nonetheless, Mali is one of the poorest countries in the world with much of its land mass being desert and most people (80%) being involved in fishing and farming. The International Monetary Fund has been involved in Mali, helping them restructure their government and country (lending itself to the 5% annual growth increase). One of the big problems Mali has had to deal with lately is political instability and military unrest in neighboring countries that blocks trade.
Ethiopia's poverty-stricken economy is based on agriculture, which accounts for half of GDP, 85% of exports, and 80% of total employment. Recent wars in neighboring nations have also caused the downfall of the coffee industry (which makes up a significant majority of the agricultural sector), causing Ethiopia to be eligible for the Highly Indebted Poor Countries (HIPC) initiative.
Located near Ethiopia, is the Eritrea. Currently they are in the state of having a transitional government and a very sluggish economy. The biggest problems faced by this country are the illiteracy, unemployment, and low growth potential. The main sector in Eritrea is agriculture and farming. It is also a war-torn nation (there was a war between Ethiopia and Eritrea, leaving both damaged severely). Many economists believe that since the war has ended, however, Eritrea is taking the necessary steps to secure a stable economy. Morocco would almost be considered an agricultural based economy too, but in recent years, it has seen huge growth in the financial sectors, mainly led by support from the IMF, World Bank, and the Paris Club.
Although its neighbor is Morocco, Western Sahara has a completely different economy. It has no real government or political standing. On top of that, the industries in the area constitute only nomadic farming and fishing. Mauritania, near Western Sahara, has also been dependent on nomadic farming and fishing (although its coast is said to have some of the richest fisheries). In February 2000, Mauritania qualified for debt relief under the Heavily Indebted Poor Countries (HIPC) initiative. They also have a strong ore based industrial market (although the demand for ore has recently gone down, causing production to slow). One of the major issues that Mauritania is dealing with is the overexploitation of its rich fisheries, threaten the future of the country.
Algeria, as a republic, makes most of its money off of hydrocarbon export (95% of all export profits come from hydrocarbons; 30% of the Gross Domestic Product comes from hydrocarbons). Due to the policy reforms of the International Monetary Fund and the rescheduling of payments for the Paris Club plus the governments efforts to strengthen and diversify Algiers economy, Algiers outlook looks good. Tunisia, as a republic, already has a diversified economy based in industry, consumer product making, tourism, and other sectors. They have also seen steady growth throughout the 1990¡¯s in their Gross Domestic Profit of nearly 5% (although recently it has slowed down). The governments current platform is to create a more liberal state with broader privatization to influence outsiders to directly invest into the country. Despite these efforts, the Iraqi ¡°war on terrorism¡± by the United States has caused some shortcomings because of violence in the region.
Future and Beyond
Much of the North African region is unfortunately in a state of stalemate or decline, but several are showing signs of slight progress. Chad, although highly dependent on agriculture and services, is aiming to liberalizing their energy services, telecommunication and cotton industry. The IMF predicts that Chad is to experience a high rate of growth within the next three or four years due to the recent engagement of the Doha Basin Oil project. It is developing a tapping of the oil resources of Chad and should be at full export potential within the next several years. Algeria has recently evidenced slow but steady growth of about 4% in their economy for the past five years. As Algeria specializes in producing hydrocarbons (natural gas), the government is currently geared to diversify the economy by attracting more foreign and domestic investors and expanding other areas of their economy besides the energy field. As highest of priorities, they strive to reform their banking and judiciary system, as well as increasing privatization.
Countries such as Egypt, Niger, Mali, Mauritania and Sudan are experiencing a form of economic standstill as they search to stabilize their economy. Egypt and its government have had a strong grip over the management of investment and trade; the transition from public to private control has been sluggish after 2000. Egypt¡¯s reliance on tourism, the Suez Canal and the oil business is very precarious because they are all subject to outside factors that they cannot control. Niger, although it is categorized as one of the poorest countries in the world (living off of subsistence farming), they are trying to liberalize state-owned companies. Niger also wants to attract more foreign private investment, so they have revised codes for investment of petroleum. Mali is one of the poorest, but the potential of wealth from mining, livestock and agriculture commodities is unsure at this point. Mauritania¡¯s foundation of agriculture and iron ores is delicate as they also are based on the world commodity pricing. Iron¡¯s demand has been low recently, but solid oil production and exportation could be an option for increased revenue in 2005. The alternative source of revenue lies in their rich coastal waters, but tends to be overly used by foreigners. Sudan¡¯s limited infrastructure (irrigation, transportation) hinders the potential of growth of the nation. They have once practiced agriculture as their primary form of economy, but recently they have practiced oil production as a vital industry. Unfortunately, other exports outside of oil have not been growing. Tunisia¡¯s economy has been under tight surveillance by the government and has been historically dependent on the oil industry, but now they are currently in the process of privatization and economic reform. The greatest challenge of Tunisia is the increasing unemployment rate and the expansion of industry besides oil, agriculture and tourism. At this point, these countries are considerably stable, but lack a definitive source of income for the future and/or are paving ways to improve their economic appearance.
Some countries have not been so fortunate as Chad or Algeria and are enduring a degree of decline in their economy. Libya is possessed by the government in terms of economy and is very dependent on the oil business (namely 95% in export earnings). Most of the income earned is directed toward corruption, the research and development of arms, and contributions to other countries in efforts to increase their influence in Africa, instead of stabilizing their domestic economy. The growth of Libya is restricted by regulations in prices and modes of exchange and trade, but they want to expand their economy and introduce more private sectors. Their reliance on oil must eventually end and unless they find other sources of income, they are in a dangerous situation. Ethiopia is also highly reliant on agriculture and the adverse weather and infrastructure create a very poor foundation for an economy. Despite their recent engagement in an economic reform plan of privatizing state enterprises, their characteristically weak foundation must depend on foreign aid. Regarding Eritrea, the government claims to have increased privatization and facilitate a market economy, but the reality is that the complex regulations in place are discouraging any forms of investment. In the midst of this confusion, they are striving to revive and expand the port industry. Morocco¡¯s dependency on the success of agriculture makes it a very volatile economy. The Western Sahara is in a delicate situation as the US, French and Australian companies are vying for ownership. Although fishing and phosphate production are other sources of income, recent discoveries of oil could provide a momentary boost in the economy. Although they are determined to liberalize and modernize, to ensure their survival in the future they must diversify their ways of producing income. Countries such as these must truly think of the direction of their economy and make pivotal decisions to prepare for the future. The characteristic dependency on a single source that can be shocked by the global economy gives rise to concern.
As the region faces tumultuous times in economics, the MENA (Middle East and North Africa) Development Report of 2003 addresses the current challenges of the North African region, as well as possible alternatives for modes of income. As they assess the current state of North Africa, the oil industry, foreign aid and remittances are not sound sources of preserving an economy, nor the growth of it. Exports besides oil and manufacturing imports are inefficient. North Africa¡¯s lack of completely engaging into the world economy, the lack of commitment by the leadership to explore new policies, and intrinsic pessimism of the potential of trade and the will to preserve the status quo are all factors that are hindering the potential of the region. As competition rises with trade agreements with Europe and Central Asia (ECA) and Latin America and the Caribbean (LAC), North Africa must venture forth to improve the impression of the region for foreign and domestic investment (better infrastructure, stabilize economy, etc.), improve the efficiency of non-oil industries and improve the education and skills of the working body. Most importantly, they must be willing to open trade relations with others. These are the fundamental sources of growth for North Africa for the coming years.
Did you know?
Cairo, captial of Egypt, has over 15 million people in its metro area
Libya is one-sixth larger than Alaska
70% of Sudan is Islamic, and 20% are indegenous religions
Casablanca is the largest city in Morocco, with over three million citizens
Most of Libya lies within the Sahara desert
Egypt is nealy one and a half times larger than Texas
Tunisia has one of Africa's best economies
Sudan is the largest nation in Africa, about one-fourth the size of the U.S.