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'Silicon Ribbon' pops up across the Maghreb

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  • 'Silicon Ribbon' pops up across the Maghreb

    PARIS, September 29, 2007 (IPS) - Poised attractively near to the European market and with an abundance of skilled labour, North Africa may be poised to become an electronics manufacturing hub.

    An assessment released this month by the California-based consulting firm Frost & Sullivan is based on a survey of companies operating in North Africa and trade organisations governing the areas in which they operate. It found that "strategic initiatives including ensuring the effective flow of goods and services, and the building of a reliable supplier base are having a positive impact on electronics manufacturing services (EMS) providers in the region."

    It is a market, observers say, that began to grow organically but now is making rapid advances into the international realm, focused on the trio of North Africa's former French colonies, Algeria, Morocco and Tunisia, often referred to as the Maghreb countries.

    "The growing local market in North Africa ignited the demand," says Ganesh Muthiah, a research analyst with Frost & Sullivan in Chennai, India, who authored the report. "North Africa has an extensive pool of engineers and information technology designers, and now the proximity to the European market is a key factor. The North African governments have also come to a conclusion that to improve their economic status they will promote a conducive manufacturing environment."

    Though currently less than 4 percent of Africa's population is connected to the web, the majority of those subscribers are located in North African countries and in South Africa.

    "We see the top players in the manufacturing market moving to this region," says Muthiah, citing the expansion of operations of foreign electronics firms throughout the Maghreb in recent years.

    Algeria, Morocco and Tunisia are all signatories to the Euro-Mediterranean Association Agreements with the European Union (EU), which guarantee free access to European markets and are exempt from customs duties.

    In late 2006, Fuba Tunisia, a printed circuits company specialising in electronics and telecommunications, emerged in Tunis as an outgrowth of the German digital giant Fuba Printed Circuits GMBH, which currently maintains sizable operations in the German cities of Hanover and Dresden.

    The company recently completed a nearly 10 million-dollar modernisation and expansion of its plant in Bizerta, Tunsia and began the process of hiring over 100 additional employees. Its export revenues currently hover around 30 million euros. Fuba Tunisia currently supplies such companies as Alcatel, Bosch, Delphi, Siemens, and Schneider.

    Elsewhere in Tunisia, at the end of March, the French company Lacroix Electronics opened the doors of a new production location in the city of Zibra, an undertaking that will provide the area with nearly 200 new jobs.

    According to the numbers assessed by London's Oxford Business Group consultancy, in Tunisia, for example, the electronics sector accounted for some 20 percent of all Tunisian exports in 2006, worth 11.6 billion dollars. Sales of electronics abroad increased at a pace greater than that of the 12.6 percent in average domestic market growth.

    The electronics sector currently provides almost 45,000 direct jobs in Tunisia.

    In Morocco, separated from Tunisia by politically tense Algeria, Geneva-based ST Microelectronics has been aggressively increasing its presence over the last four years.

    Last summer, STM announced the further expansion if its integrated circuit design and development centre in Morocco's capital city of Rabat, that was first of its kind in the country when it was inaugurated in 2003. Though initially only the site of STM's testing operations, Morocco has become a nexus for ever-more complex work including the design of silicon chips known as System-on-Chip (SoC) devices.

    Algeria, which had been seen to be pulling itself out of a civil war that lasted over a decade, has had the misfortune to be beset by a slew of attacks apparently carried out by al-Qaeda inspired terrorists, which have killed dozens of people in the last year. The electronics situation, though, nevertheless appears busy and resilient.

    This month ENIE, an Algerian firm which specialises in the manufacturing of electronic components as well as audio and video products, announced that it would cooperate with the Spanish renewable energies companies Isofoton and Alsolar to work on a 50 million dollar contract to construct Algeria's first thermal energy plant in the country's south, with 2 megawatts capacity.

    "The near-shore appeal (of North Africa) doesn't quite have the issues of China, with concerns about intellectual property laws or taking 3-5 weeks for the boat to get there, but it gives you something nearby with low costs, with good technicians and good manufactures and government incentives," says Alfonso Velosa, a research director with Gartner, a United States-based information technology research and advisory company.

    Gartner's own numbers show a compound annual growth rate of 20 percent for near-shore (as opposed to offshore) outsource manufacturing taking place in countries like those in North Africa.