Tunisia supports businesses through legislative reforms

On April 24, 2019 the Assembly of the People’s Representatives approved a set of legislative reforms to simplify business creation, ease access to finance, facilitate public-private partnerships (PPPs) and strengthen company governance. Of the 38 articles in the Loi Transversale (Transversal Law), 28 are specifically intended to improve the business environment. One of these measures, slated to run until the end of 2020, offers state support on interest payments for investments that are made by companies during the period. Together with the creation of a new mechanism for financing investment, this is expected to incentivise businesses to expand their operations.

The measures also include changes to company management regulations: shareholders controlling 50% of capital now have the right to convene general meetings; the publication of dividend distribution is mandatory; and the roles of CEO and board chair must be separated for all publicly listed companies. As a complement to these measures, TD600m ($208.4m) has been allocated to further digitalise bureaucratic procedures.

Aligning Standards

The new law aims to align Tunisian standards with international practices to bring about improvements in areas such as business creation, governance, access to credit, PPPs and administrative procedures. Zied Ladhari, the minister of development, investment and international cooperation, told OBG that “the reforms will help Tunisia continue its climb up the World Bank’s ease of doing business index”.

In the 2019 report the country ranked 80th out of 190 countries, up eight places over the previous year, and fifth in MENA. The World Bank cited reforms pertaining to business and property registration, minority investor rights and corporate tax contributions as major factors behind the rise. With a series of new planned measures, including the Transversal Law, Ladhari hopes the country’s ranking will improve to 50th overall over the next couple of years, consolidating Tunisia’s status as one of the top-three countries in the region.

PPPs for Growth 

The reforms could help attract investment by expanding the scope of PPPs and making it easier to launch joint public-private enterprises. Under the Transversal Law, public enterprises are now eligible to benefit from state concessions previously offered to private sector entities only. “A predictable, efficient and stable trading environment – as well as a peaceful political and social situation – are essential for attracting foreign direct investment,” Beligh Ben Soltane, chairman of the Tunisia Investment Authority, told OBG. “To this end, the Transversal Law has been a major breakthrough, and the government is working on a set of 20 additional laws to be passed by the end of 2020 that look at improving transparency, the efficiency of administrative procedure, access to financing and mitigating investment disputes.”

Bid process and access requirements have also been eased to allow smaller private companies to take part in tenders, and bureaucratic procedures for the establishment of PPPs have been streamlined. Furthermore, Ladhari noted that the PPP process will be decentralised, meaning that various regional administrations will have the right to request their own PPPs to suit their specific needs, which could help stimulate activity.

While Tunisia has had regulatory provisions enabling PPPs for some years, little progress has been made in implementing projects under the model. The government hopes the reforms could revive activity and investment in this area. “Trade unions fear that the delegation of responsibilities to private economic operators will result in redundancies, therefore they attempt to block them,” Walid Bel Hadj Amor, director-general of consultancy, construction and engineering firm Comète Engineering, told OBG. “As a result, this type of project is still underutilised in Tunisia.”

However, should they gain wider acceptance, Amor says PPPs could be a key driver of development, given that the state needs private companies – both domestic and foreign – to undertake various large-scale projects.

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The Report: Tunisia 2019

Economy chapter from The Report: Tunisia 2019

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