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The Middle East and North Africa
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Sustainable economic development
After the fall in oil prices and the dip in growth in the mid-1980s, most countries in North Africa and the Middle East introduced structural adjustment programmes and launched liberalisation and privatisation processes. Yet between 30 and 55 per cent of their gross domestic product is still generated by state-owned enterprises. The private sector plays a very minor role. Unemployment is rising, and even economic growth, which has averaged 6.3 per cent in the region over the last few years, has created practically no new jobs.
For the businesses in the region, improving competitiveness is a major challenge. If they fail to do so, though, they will fall behind their foreign competitors and jobs will be lost. To keep pace with the global economy the states in the region will need to improve the training on offer, privatise state-owned enterprises and dismantle monopolies and red tape.
Eight countries in the region have entered into Association Agreements with the European Union. The aim is to establish a Euro-Mediterranean Free Trade Area. Many states have also joined the World Trade Organization (WTO). They have launched modernisation programmes to prepare their economies to cope with open markets.
Germany is helping partner countries to develop their economies on a sustainable basis. Measures are concentrating on the fields of:
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Economic policy reforms
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Private sector development
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Labour market and employment.
Economic policy reforms
German experts are advising the governments of partner countries in the Middle East and North Africa on how best to develop market structures. Measures embrace all aspects of economic policy, from competition and business policy to financial and commercial policy and customs and fiscal policy.
The design and use of promotion strategies, for instance to improve the financing options open to small and medium-sized businesses, are fields in which German development cooperation is active.
Private sector development
German development cooperation aims to establish a competitive private sector that can act as a locomotive of growth and provide jobs.
The governments of partner countries are helped with the measures needed to improve the business climate for small and medium-sized enterprises. The aim is to cut through red tape and introduce attractive incentives for private investment and private business.
Measures to modernise and diversify the economy too are promoted, because they raise productivity and create jobs.
In comparison to other countries around the world the financial sector in the region is little developed. It provides access to loans for only about 10 per cent of small, medium-sized and micro businesses. Depending on the structure of the financial sector in the individual partner countries, existing financial institutes are strengthened or new institutions established in order to provide SMMEs with access to financial services.
Labour market and employment
For decades the public sector has been the main employer in almost every country in the region. It provides work for between 30 and 60 per cent of the workforce. As public revenues drop, the number of jobs in this sector too is being cut. At the same time, the high rates of population growth mean that the ranks of job-seekers, and thus the numbers of unemployed individuals, is swelling unchecked. Germans supports its partner countries in the field of labour market and employment policy. It also promotes standards for staff training and for the certification of skills and procedures. In this, it works closely with the education sector.
