Egypt and Morocco retain top positions

As elsewhere in Africa, the value of North Africa's top companies has risen over the past 12 months. While market capitalisation of $313m was sufficient to gain a place in the region's top 50 firms last year, that figure has now increased by more than a third to $439m.

The region continues to experience relatively high levels of economic growth, particularly because of economic liberalisation and higher oil and gas revenues, but also because of increasingly important and more varied economic ties with the European Union (EU) on the opposite side of the Mediterranean Sea.

One factor that has changed relatively little over the past year is the continued domination of our regional table by Egyptian and Moroccan firms. While Algeria and Libya are both major economic powers in their own right, their wealth is heavily concentrated in the oil and gas sector, which is dominated by foreign investors and their own state owned companies, and so does not feature significantly in the results of our survey.

Nevertheless, the governments of both countries are embarking upon some level of economic liberalisation and so diversification is likely over the coming years, although it is difficult to erode Algeria's socialist and Libya's Arab socialist traditions, which have resulted in a limited role for market economics.

Tunisia's absence from our table last year was altogether more surprising. The top 50 North African companies in 2006 comprised 34 from Egypt and 16 from Morocco, with no Tunisian companies making the grade. However, economic reforms over the past decade are producing a more dynamic Tunisian economy based on export orientated industries. Foreign companies have accounted for a large proportion of the new investment but Tunisian enterprises are now beginning to benefit from the economic reforms.

As a result, three Tunisian firms have now entered the lower reaches of our top 50. Two banks - Banque de Tunisie and Banque Internationale Arabe de Tunisie (BIAT) - are ranked in 42nd and 45th positions respectively, while Société Frigorifique et Brasseries de Tunisie has achieved 48th place. The progress made by such companies is underlined by the far higher qualifying mark in this year's table. It would not be surprising if other Tunisian firms made progress up our table over the next few years.

Tilting balance of power

Although the duopoly of Egyptian and Moroccan companies in our survey remains intact, the balance of power has tilted a little over the past 12 months. Egypt remains the predominant force in the region but the number of Egyptian firms in the top 50 has fallen from 34 to 30, while at the top end of the scale the Egyptian presence in the top 20 has also dropped, from 14 firms to 12. Nonetheless, the range of industries represented by Egyptian companies is impressive and includes construction, oil and gas, financial services, leisure and pharmaceuticals.

However, as last year, the dominant industry in the top 10 is telecoms, with Egypt's Orascom Telecom, Telecom Egypt, Vodafone Egypt and Egyptian Mobile Service all securing a ranking. The four are joined by Morocco's Itissalat Al Maghrib, which has recorded a large rise in market capitalisation over the past year, from $9.3bn to $13.3bn, closing the gap considerably on top ranked Orascom Telecom. It is possible that the Moroccan company could overhaul its Egyptian counterpart in next year's survey.

Noteworthy Moroccan risers in the survey are Douja Prom Addoha and Attijariwafa Bank. The latter has moved up to fourth place, with a steep increase in market capitalisation from $2.5bn to $5.2bn.

The relative decline of the Egyptian position is not the result of any real deterioration in Egyptian economic performance but rather the result of a minor correction after several years of impressive growth.

Cairo's enthusiasm for privatisation has fluctuated over the past decade and more, but the overall result of government policy has been to gradually promote private enterprise, while allowing the role of the state in the economy to recede. As a result, more large private companies have prospered and some formerly state owned corporations have been allowed to grow.

Despite the role of foreign-led consortia in developing the country's new liquefied natural gas (LNG) sector, there are indications that Egyptian government policy will enable more domestic firms to prosper. National infrastructure is being improved, not least through improvements in the power sector, while new combined port and industrial projects should raise the bar in terms of modern economic developments.

Biggest port development in Med

The new Suez Canal Container Terminal (SCCT) at Port Said East will be one of the biggest port developments in the entire Mediterranean. Located at the northern end of the Suez Canal, it will encourage trade with the rest of the Mediterranean and the Atlantic. At the other end of the Suez Canal, the Suez Special Economic Zone (SSEZ) and port of Sokhna will enable Egyptian exporters to target markets in the rest of the Middle East and Asia.