Economic View

On increasing the international presence of Tunisian firms

What are the main challenges Tunisian companies face when trying to internationalise?

TARAK CHERIF: Tunisia is in need of more private sector companies that add value to the economy and help develop the country in an inclusive manner. Therefore, we need to encourage the creation, growth and success of domestic companies on an international scale. Since the local market is limited, more companies need to be strategically export focused. The country has an advantageous location between Africa and Europe, and economic activity with both continents could be further increased.

For Tunisian companies to succeed, the investment code must be revised to better respond to the needs of economic operators, providing more flexibility than it does now. Stipulations in the current code make it difficult for companies to export by requiring an excess of administrative steps. Delays at port also cost export-oriented companies significant amounts of money, decreasing their competitiveness. A priority should be to improve logistics to ensure companies are not being subject to unnecessary transportation costs. To promote Tunisian exports, two new government positions were recently created: secretary of state for external trade and secretary of state for economic diplomacy. These posts should facilitate companies entering new global markets and help increase their exports.

Beyond boosting exports, local companies should also expand their presence globally. Tunisia has various success stories of start-ups or small and medium-sized enterprises (SMEs) that have internationalised. Many have expanded to Europe, but there are opportunities in various other markets as well. In particular, a multiplicity of Tunisian products and services meet the demand of markets in francophone Africa and sub-Saharan Africa. In addition to exporting to the region, Tunisian companies could set up shops and branches in those countries. 

How can local companies increase their competitiveness on the international stage?

CHERIF: For Tunisian companies to succeed globally, their competitiveness needs to be enhanced through better financing. For example, Tunisian industrial companies must be able to access financing for new technologies to increase productivity. However, obtaining financing is a key issue for local firms. The country’s 23 banks are all commercial and limited in the credit they give, and they ask for relatively demanding guarantees. Banks need to finance start-ups and SMEs to allow these businesses to grow and play a central role in the development of the economy. Until the mindset changes, international development banks, equity funds and regional investment funds could play a larger part in financing local companies. 
Skilled human resources are also central to competitiveness, and this depends on both education and professional training. Professional training currently does not correspond with the demands of the labour market, and the education system requires reforms to better respond to the needs of companies.  This will allow the system to produce graduates that can effectively contribute to the economy. 

In which sectors do you see the greatest scope for further investment?

CHERIF: Tunisia needs to mobilise investment in three primary sectors of the economy: industry, agriculture and tourism. These areas have historically been growth drivers for Tunisia, and more investment is necessary for companies in these sectors to continue to succeed. The country needs a cultural shift towards public-private partnerships (PPPs) to increase investment, yet the new PPP law has not had an effect in practice as it still needs to be applied. Through PPPs, more investment could flow to the industry, agriculture and tourism sectors.

Tourism, in particular, must go through many reforms to encourage investment. For instance, Tunisair currently has a quasi-monopoly over air transport in the country, thus the implementation of the Open Skies Agreement is crucial to raise investment in this segment. Tourism contributes 6-7% to GDP, but by liberalising air travel, tourism could easily represent 10% of GDP. Industry and agriculture also have the potential to increase their contribution to the economy, but investment needs to be secured for this to take place.

I also wish to stress the importance of the services sector, particularly ICT and renewable energies. At this stage, Tunisia needs to focus on technology transfer to make sweeping changes to regulations and support start-ups and SMEs that wish to invest and operate in these high value-added industries.