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PANORAMA Agrofood in North Africa: a strategic sector at nature’s mercy

PANORAMA Agrofood in North Africa: a strategic sector at nature’s mercy

The agrofood sector remains one of the most important sectors for North African economies. Although its contribution varies across the region, in 2014 it accounted for 9.5% of total gross added value in Tunisia, 12.7% in Algeria, 13% in Egypt and 15.6% in Morocco. In 2015, the sector provided employment to 21.7% of the total labour force in Egypt, 15% in Tunisia and approximately 40% in Morocco.
In general, some of the favourable factors boosting the sector include rising populations, increasing demand for processed food, higher per capita incomes and improved production capacities.
Nevertheless, local conditions and government strategies are major influencers on the specific challenges faced by each By Seltem IYIGUN, Coface MENA economist country. In Morocco, the government has been making the development of the agricultural sector a priority since 2008,
ensuring continued levels of investments. In Algeria, the government has recently begun promoting the importance of food self-sufficiency. Rising disposable incomes and changing consumer habits in Egypt have boosted domestic consumption for the agrofood sector.


In general, governmental strategies to support agriculture and the agrofood sector are mainly concerned with ensuring that food supplies meet demand a serious challenge, compounded by the region’s rapidly growing population and per capita income.


While progress has already been achieved, some challenges remain. The greatest of these difficulties is the relatively poor infrastructure, which drives up transport costs and thus narrows profit margins. In some areas, challenging topographies and difficult climatic conditions make the cultivation of many types of agricultural goods almost impossible. Depressed food prices in the region could also dissuade new investments in the sector. In the case of Algeria, the persistence of low oil prices is a further factor contributing to risks, as the country is highly dependent on hydrocarbon revenues for providing subsidies and incentives to agrofood industries. This, in turn, is negatively impacting the sector’s ability o attract the investments it needs for development.





The importance of the Agrobusiness sector varies between the different North African economies. While on a regional level, the sector leads exports, on a country basis it differs. In Morroco, agribusiness benefits from government subsidies, as it contributes nearly 16% of GDP and provides employment for 40% of the population. Overall, across the main north African countries, the lowest level of risk is in Morocco. Algeria is not a major producer of agricultural goods and thus depends on food imports to meet domestic demand. Faced with the erosion of its foreign exchange reserves, due to the drop in oil prices, the Algerian government is multiplying measures to try to rebalance its trade balance. These measures include reducing imports of food and agricultural products. In Egypt, the return to stability, following the political turmoil experienced between 2011 and 2013, has meant that the agrobusiness has started to recover – especially as the government has made the development of the agrobusiness sector a priority. The sector currently contributes to around 15% of Egypt's GDP. For Tunisia, the agrobusiness is of lower importance than for other countries in the region, as tourism is the main engine of its economy.


Despite positive developments over the last decade, challenges remain for Morocco’s agribusiness sector


In Morocco, agriculture has long been both the strength and weakness of its economy. The strength is that it has been a real lever for growth, while the weakness is due to its high volatility. The sector’s average growth rate fell from 10.6% between 1985 and 1991, to 0.27% between 1991 and 2004. During this period, the volatility of the agricultural sector (deviations of output relative to its average) grew to become eight times higher than that observed in the Middle East and North Africa region (


Morocco has two key agricultural segments. The first is mainly concentrated on the irrigated areas that occupy 20% of the agricultural land used. The second is livestock, which employs the majority of the agricultural workforce and occupies 80% of farming land used.

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