Ceuta and Melilla are two Spanish cities in North Africa. Recently, the illegal entry of thousands of people from Morocco to Ceuta in the face of passivity in the best case or incentive in the worst of the Moroccan authorities, has caused these cities to be in the limelight again and we remember them. When one sees two small cities surrounded by borders, one cannot but wonder What is the economy of Ceuta and Melilla about?
In other words, what do two small cities in North Africa live on with hardly any territory to expand into? Are they two places that should simply be dedicated to living off what government-appointed public employees consume?
Both Ceuta and Melilla suffer from high unemployment, and are at the bottom of the GDP per capita of Spain, only surpassing the poorest autonomous communities.
Both cities have a service-based economy, the primary sector is testimonial (mainly due to fishing activities), the secondary sector is also (mainly energy and construction) and almost all its GDP is based on services. Many of these services are directly public. Of the slightly more than 84,000 inhabitants that have Ceuta, 3,000 are military destined in the different barracks that the city has.
You only have to see the units in the army on the website. Ceuta and in Melilla. Few provinces They have more Units, Centers and Organizations, and in the case of Ceuta and Melilla all are concentrated in a smaller city than some dormitory cities of Madrid or Barcelona. Ceuta Y Melilla They have several museums with which to show their rich history, but they are still other types of jobs that depend on the public sector.
From cross-border trade to e-commerce?
In the case of Ceuta, 25% of its GDP depends on cross-border trade. In other words, a good part of Ceuta’s GDP depends on thousands of people crossing the border every day to buy goods that they will resell in Morocco. The case of Melilla is similar. Since 1418 when Pope Martin V granted a bull to the inhabitants of these cities to tradeAccording to the secret archives of the Vatican, these cities have been trading with the population on the other side of the border.
It is estimated that some 400,000 Moroccans make their living from cross-border trade, from porters. In addition, it has been closed by Morocco on several occasions, as it shows that it is capable of strangling the economy of Ceuta and Melilla whenever it wants. Obviously the pandemic and its border closures they have complicated things a lot. On the other hand, a closure of the Moroccan border means that many people are left without a livelihood. A domestic worker triples her salary working in Ceuta or Melilla regarding what he would earn in Morocco.
The commitment to Ceuta and Melilla to become shopping cities it takes time. Ceuta and Melilla have a consumption tax much lower than the one we pay in the rest of the peninsula. They also have quite a few others tax credits. Ceuta and Melilla are not tax havens, but their inhabitants and companies pay less taxes than we pay on the peninsula.
The Melilla authorities have chosen to consider electronic commerce as an economical alternative for the city. Move from cross-border trade based on porters to sell online to the world. Personally, I think that although if we want to have an economy that does not depend on the public sector exclusively in these cities, taxation and telecommunications are fundamental, saying things that sound modern like “electronic commerce” with such little specificity does not do much good.
Online game in North Africa
The big online gambling companies from Spain and some Europeans are moving to Ceuta and Melilla. Why? Mainly by the low taxes offered by these cities. If in the rest of the autonomous communities they must pay a rate of 20% (even if they operate from jurisdictions such as Gibraltar or Malta), in Ceuta and Melilla they only have to pay 10%.
That is making many Online gambling companies are moving to the cities of Ceuta and Melilla, especially the former. In addition, it is not enough to have an address, it is necessary to have at least the 50% of human resources located in Ceuta or Melilla. Despite this requirement, these conditions are attracting to many large companies in the sector: Codere, 888Sports, Luckia, Wanabet, Betway, Rfranco Digital (Recreativos Franco’s online division) and others are quietly turning Ceuta and to a lesser extent Melilla into a kind of digital Las Vegas.
The local government of Ceuta intends to create 4,000 jobs with these types of companies. The Asociation Bet On Ceuta begins to bring together companies in the sector and defend interests, as well as holding events. On the other hand, the lack of certain infrastructure in Ceuta I don’t think it helps.
Is it a good idea to bet on online gambling? Personally, I think that betting on niches whose activity is freer from a geographical location together with attracting tourists (for example from cruise ships) and industrial services to the freight traffic that crosses that point of the Mediterranean is one of the few outlets that it will have Ceuta and Melilla if they want their economy not to be that of a military base. In a way it would be similar to what Andorra has been doing with its objective of attracting youtubers, attracting specific niches with advantages that are specifically tailored to said niche. No other options can be expected if the islands are to have an economy not dependent on cross-border trade.
Ask readers What economic alternatives do you see for Ceuta and Melilla?
Image | Yassine Abbad
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