23 April 2019

North Africa: Expanding Trade Across the Maghreb

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In 1989, the five Maghreb countries - Algeria, Libya, Mauritania, Morocco and Tunisia - established the Arab Maghreb Union to promote cooperation and economic integration. Thirty years later, there is still a largely untapped potential for regional trade among Maghreb countries.

This matters more than ever as all Maghreb countries need to create jobs for their young and growing populations.

Accelerating regional integration would raise growth, create jobs, and provide opportunities for nearly 100 million people.

Room for more trade

Currently, Maghreb countries only trade a few goods between each other. These include fuels and mineral oils exported from Algeria to Tunisia and Morocco, vegetable oils, machinery, iron and steel exported by Tunisia to Algeria and Libya, and iron, steel, apparel and clothing, as well as vehicles and electric equipment exported by Morocco to Algeria, Tunisia, and Mauritania.

Our calculations, presented in a recently published paper , show that there are many opportunities for further trade. For example, additional export flows could include transport services, food, metals and chemicals from Morocco to Tunisia. Minerals from Morocco could also be exported to Algeria, and different type of fuels could be traded in reverse. Tunisia could also export vegetables to Morocco and minerals to Algeria.

During the IMF-World Bank 2019 Spring Meetings, participants discussed the potential benefits from deeper economic integration in the Maghreb. Greater openness to intra-regional trade in goods and services would create a large market that would make the region more attractive to investors. It would help build regional value-chains and insert them in global value-chains, and it would make the Maghreb more resilient to economic shocks. In short, integration would be a welcome source of additional growth and jobs. The IMF paper estimates that growth in Maghreb countries could increase by one percentage point in the long term as a result.

Learning from regional experiences in Europe and Asia, participants considered that integration could be achieved gradually, weaving together links in sectors and among countries as conditions allow. Times of economic crisis or political transition may provide opportunities for faster integration. Panelists also saw new technologies as potentially powerful accelerators of economic integration, for technology knows no borders.

IMFBlog is a forum for the views of the International Monetary Fund (IMF) staff and officials on pressing economic and policy issues of the day.

The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board.

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