The 20 countries bordering the Mediterranean are home to 500 million people – as large as the internal market of the EU – with plenty of growth prospects. Yet a ‘silo’ mentality which looks at the region in fragments means that analysts and investors miss its potential.
Cleopatra Kitti, chair of Litus Advisory, Brussels’ first investor and policy advisory for the Mediterranean region, is trying to change that.
“When I saw how investment banks, multilaterals approach our region, they look at North Africa from one desk, Levant from another and south Europe from another,” Kitti told The Cyprus Weekly.
“My intent is to change that perspective and prove that, with 20 countries around the Mediterranean, we represent 10% of global GDP and 7% of the world’s population. There is scale and scope for intra-Med and crossborder trade.”
This goal prompted Kitti to launch the Mediterranean Growth Initiative (MGI) earlier this year. The MGI is “a stakeholder platform supporting institutional and private sector thinking and doing around the Mediterranean”.
Leveraging Kitti’s broad network of high-profile investors, policy-makers and diplomats built up over years spent as an advisor to corporations and governments on investment policy, market entry, and as an activist on conflict resolution, the MGI will be leading a major conference on the Mediterranean at London’s Chatham House on May 25, entitled, Economic Growth in the Mediterranean: bright spots and opportunities.
Kitti emphasises that MGI is not about making a quick buck. “An investor can go into a country and suck its energy out and get out again. But that is not the approach we are promoting,” she said.
“We have seen the rampage of conflict where the unfair share of opportunity and wealth is the root cause. Our goal is to create jobs, vocations and opportunities through investments premised on good governance in the economies in our region.”
Governance, scale and scope
This is also why the vision is long-term and strategic in nature.
“Investors come to a region where they see good governance, scale and scope,” she explained.
With a population as large as the EU, the 20 countries bordering the Mediterranean region certainly have the potential scale.
“If you think of the trade paradigm of North and South America; China and South East Asia; Europe has its vertical in the Mediterranean of North Africa and East Med”.
MGI is helping them see this scope, with the launch of the first of its kind economic indicators report for the Mediterranean region and its 20 countries that share its shores.
The report is mentored by Lord Mark Malloch Brown, former deputy UN Secretary-General and administrator of the UN Development Programme (UNDP); Dr Nasser Saidi, former Minister of Trade of Lebanon, member of OECD and IMF boards on the Middle East and North Africa (MENA); Professor Erik Berglof, former chief economist of the European Bank for Reconstruction and Development (EBRD) and currently Director of the Institute of Global Affairs at the London School of Economics (LSE). It is commissioned to London-based Alma Economics.
The 200-page report looks at the region from a growth lens, with reams of data on regional macro and country-specific indicators, including, among others, governance, trade, education and technology.
Each country is ranked according to its growth potential as well as its overall prospects. Providing data to get investor interest is important.
“If we are to turn the Mediterranean into an economic space in global trade, where is the data to prove that we can be that? Because decision making and risk valuation are data-driven,” Kitti explains.
“It can only happen if there is good governance, to ensure the long term.”
Getting the governance right will take much longer and collaboration among a large array of actors. It also means building on the capacity of EU Mediterranean countries.
“The strength of the Mediterranean lies in its diversity. The EU side of the Mediterranean has the experience, the governance,” said Kitti. “North Africa has the growth potential with expected growth by 2020 of 4%, while the EU side of the Med will struggle to reach 2%.”
The MGI is working to promote access to capital for the private sector, joining its voice with the European Investment Bank (EIB), the European Commission and the ‘Juncker’ growth package, the EBRD and the Union for the Mediterranean – an EU initiative to enhance regional cooperation and dialogue.
Plenty of scalable projects
“The one challenge we have is there are not enough private sector-led scalable, bankable projects,” says Kitti.
And yet there are plenty of opportunities that have the scale and scope if the governance can be put in place.
Kitti lists a range of sectors – natural gas pipelines, gas processing, transport networks renewable energy, food production and-processing, maritime and shipping, technology, tourism, education and healthcare.
The opportunity for Cyprus
With EU solidarity facing an uncertain future, Cyprus stands to benefit from this initiative too.
“Cyprus is small in scale but large in scope. The only way to have scale and benefit from its scope is to create crossborder value: with Egypt, Israel, Lebanon, Italy, France, Turkey. Cyprus’ future and destiny is to be this hub of crossborder trade,” she said.
“We can choose to make it a top of class, well-governed crossborder hub that has unmatched qualities.
“The more of us engage, to collaborate, the closer we are to restoring the glory of the Mediterranean as a trading region to the benefit of all its citizens,” says Kitti.
“Unless we create jobs we won’t resolve the crises: the wars, the insurgencies and the migration.”