OREANDA-NEWS. In its 2015 annual report, the AfDB assessed the situation of regional economies. The report notes that the major transition period in the region, which started in the wake of the Arab Spring in 2011, led to democratic elections in almost all the countries of North Africa in 2014 and 2015. The report also highlights the key role of many of these countries in solving the recent crises (in Mali and Libya) by leading international mediation, to strengthen the security situation.

Economically, the report notes that the large majority of North African economies registered relatively modest growth rates in 2014. For oil importing countries lowest energy prices and more favorable external environment are positive growth-boosting factors this year. However, it is unlikely that this is enough for a significant drop in unemployment rates. In addition, security challenges continue to weigh on investors “confidence”, including in countries that have made progress in the political and democratic transition - which implies that peace and stability in the region are clearly prerequisites for long-term development. For oil producing countries, the oil price fall is an opportunity to launch reform programs required to strengthen the resilience of the macroeconomic framework and support the diversification of the economy.

The report also notes that most countries are moving towards the removal of constraints to the development of the private sector. Increasing importance is attached to transparency, to the efforts to improve the efficiency of the public sector, to reducing administrative constraints on normal economic activities and efforts to help private sector companies to comply with rules. However, three main challenges continue to hinder private sector development and public sector management in the North African countries. The first is related to recent events, notably, the political instability and security concerns in some countries that discouraged private investment and weakened the public sector administration. The second, which affected to varying degrees, all countries, is linked to a history of the state interventionism which discouraged foreign investment, reduced incentives to hire long-term employees (and pushing large segments of the economy into the informal sector) and has hindered the development of the financial sector. The third is has to do with poor governance which has increased the returns from rent-seeking compared to economically productive activities.

Structural reforms are needed to improve economic and social outcomes. This would allow, in particular, youth and women, who are the key assets of the region, to participate in the economy with all their potential, and should be a priority in addressing economic handicaps for men and women living in marginalized areas. This will improve the quality of education, access to quality health care, vocational training and the development of effective policies that promote participation in the labor market. Removing excessive trade barriers in the private sector and well-targeted interventions in the poorest and most marginalized regions will also be critical.

The annual report dedicated to North Africa also provides more detail on major projects funded by the Bank in each country of the region. It provides figures and overview of AfDB activities and summarizes the projects funded by the Bank, by specifying the expected results and their development impact. In December 2014, the active portfolio of the Bank Group in North Africa had over 114 approved and ongoing operations, with a total net commitment of US $ 5.81 billion. The region retains its position as having the Bank's largest portfolio. Notable among the flagship projects approved in the region in 2014 is the Ouarzazate Solar Complex in Morocco, being financed to the tune of US $ 100 million. The Bank also funds the Nawara pipeline project in southern Tunisia to the tune of US $ 75 million. This project is among the largest investments in southern Tunisian in 2014.