Global Investors Reassessing their MENA Posture: Investments in the Region Likely to Drop Considerably
[By Arezki Daoud | email@example.com | 508-981-6937 | Twitter: @northafrica] Ever since former President Ben Ali was toppled by the Tunisian people, risk management and assessment executives in global corporations have been working around the clock to figure out what posture to take. The subsequent events that followed in form of a domino effect, starting with the deterioration of the Egyptian market, then the acceleration of risk in Libya as that country exploded forced corporations to halt operations, evacuate foreign staffs out of the danger zones, and reevaluate where they stood.
As we discuss the various scenarios with many international firms, the good options are increasingly rare and the worst case scenarios keep expanding. The turmoil in North Africa has accelerated with Muamar Gaddafi chosing destabilization in oil-rich Libya instead of a speedy resolution of the crisis. The best outcome so far has been Tunisia, which in itself is facing a protracted political crisis that risks prolonging much longer than anticipated. The interim government there remains weak and unable to control the growing popular discontent over personality choices. The new Interim Prime Minister, Beji Caid Essebsi is showing promising signs of leadership and is somewhat managing to control the UGTT trade union whose actions risk torpedoing economic recovery.
Meanwhile, several foreign companies associated to the former Ben Ali clan have been going through contingency plans in case they are dragged into legal procedures. France Telecom, as discussed in this issue, is one of the first firms to go on damage control mode after its Orange unit was accused of corruption during the acquisition of Tunisia’s third mobile operator license. Auto distributor Ennakl is also the focus of investigators in Tunisia. Largely controlled by Ben Ali's son in law, Sakhr El Materi, Ennakl markets leading European brands in Tunisia such as Volkswagen, Porsche, Audi and SEAT, who also fear a backlash as investigations and retaliatory actions against the former regime's operatives increase. Needless to say, the dealerships were primary targets of popular fury. As foreign companies count their losses, they also have to check every contract they signed with the ousted regime to insure that they have not acted against international law and remained compliant with their own countries anti-corruption regulations. Today, Tunisia is looking at a 0 to 1% GDP growth at best, and there is the possibility of economic contraction. Now refocus on other nations in MENA and one can see how the Tunisian bug affecting them even more drastically. Continue here | Not a subscriber? follow this link | Join our mailing list.