Tunisia's construction sector eyes improvements after years of little growth


The construction sector in Tunisia is at the beginning of what may prove to be a long-lasting recovery. In the aftermath of the 2011 revolution, contractors saw a slowdown in activity, as a result of lower public investment levels, sluggish growth in the property sector and broader macroeconomic instability. Turnover declined from TD8bn (€3.4bn) in 2010 to TD5bn (€2.1bn) by 2016, while the sector’s contribution to GDP contracted from 7% to 4.5% over the same period. However, an increase in donor-backed transport infrastructure projects and the recent announcement of Tunisia 2020 – a $60bn all-encompassing capital development programme – is painting a more optimistic picture.


The sector is composed of 3300 construction companies, the vast majority of which are small to medium-sized enterprises, with an estimated 550 firms boasting annual turnovers of €10m or more. In contrast to many other emerging markets on the continent, the presence of foreign construction firms in the Tunisian market remains limited. According to the National Federation of Construction and Public Works Entrepreneurs (Fédération Nationale des Entrepreneurs de Bâtiment et des Travaux Publics, FNEBTP), the share of foreign contractors in public works projects has yet to reach 5%, in part a reflection of the limited size of procurement tenders.

Growth Trends

In the period from 2011 to 2015, the construction sector’s output value rose at a compound annual growth rate of 0.3%, as a result of low levels of public investment in infrastructure and subdued activity in the private real estate market, according to London-based consultancy Timetric. As is the case elsewhere in the Maghreb, two-thirds of the construction sector hinges on public purchasing, which in recent years has been increasingly reliant on donor financing. Indeed, between 2010 and 2015 public investment as a percentage of the government’s budget declined from 24% to 14%. According to Chokri Driss, president of the FNEBTP, this led to a sharp drop in public works activity by as much as 40% in the three years following the revolution. However, this is likely to change in the short term. In mid-2016 authorities announced the launch of the Tunisia 2020 strategy, a five-year development programme aimed at increasing competitiveness and reducing regional disparities. The strategy outlines 50 different investment projects across the transport, energy, agriculture, industry, housing, education and health care sectors, and is expected to lead to a new boom in construction activity.


The construction sector employs just under 500,000 people, the equivalent of 13.5% of the workforce. However, it has grappled with a lingering shortage of skilled and unskilled labour over the past decade, which – along with difficult collective bargaining negotiations – has pushed wages up by as much as 30% for skilled professions each year. It is estimated that Tunisia’s vocational training system prepares between 5000 and 8000 apprentices on an annual basis, while labour needs average roughly 25,000 workers.

In a bid to improve the sector’s training capacity, authorities set up a new training centre in Ibn Sina in 2014, in partnership with France’s Development Agency (Agence Française de Développement, AFD). “The new excellence centre was implemented in an attempt to meet the needs for a highly qualified workforce, induced by the development of mega-projects,” Driss told OBG. “These projects, based on the construction of high-rises, required the acquisition of know-how for a series of new processes and materials such as work with aluminium, metal structures or stained glass.”

At a cost of TD23.5m (€10m), the 1200-student facility aims to provide training on new materials and production processes. Nonetheless, attendance remains well below capacity, with only 200 students trained each year. “The construction sector suffers from a poor public image, in terms of employment,” Driss said.

Doing Business

Tunisian authorities grant around 45,000 building permits each year. The application process requires 17 separate administrative procedures, lasting 93 days on average, with the costs involved representing 2.5% of the value of a real estate project. As part of the government’s strategy to improve Tunisia’s business climate, the Ministry of Civil Service, Governance and the Fight Against Corruption is currently reviewing the application process for building permits in an effort to reduce the number of procedures to 12 and speed up processing times to 60 days. Tunisia ranked 59th out of 190 countries in the dealing with construction permits category of the World Bank’s “Doing Business 2017” report, ahead of neighbouring Algeria (77th), but behind Morocco (18th).

Public Procurement Reforms

In an attempt to improve the public procurement process, new legislation was passed in March 2014, as part of a broader set of measures aimed at improving governance and transparency. Among the changes introduced was the requirement to publish all public tender notices online; the elimination of clauses related to minimum local content rates; and the separation of regulating, audit, control and consulting functions. The new law also fosters increased participation of the private sector in the drafting of public purchasing policies and procedures.

Despite the new legislation, Driss believes tender processes could be further improved through the introduction of more compelling quality measures. “Thus far, the vast majority of tenders have been awarded to firms offering the lowest bids. However, we have noted that an important number of the preliminary or technical studies carried out on the ground have been substandard, which has led to falling quality standards, with authorities having had to launch bids for infrastructure rehabilitation within shorter delays than usually applicable,” Driss explained.

Building Material

Tunisia is home to an extensive building materials segment, from clinker to brickwork, plaster and ceramics. Roughly 700 companies operate in the building materials sector, employing some 30,000 people. Cement is the largest sub-segment, with the country boasting one white-cement plant – owned by private firm SOTACIB, a subsidiary of Spain’s Cementos Molins – and eight grey cement plants, three of which are state-owned. Total installed grey cement capacity stands at 12m tonnes currently, with 5m tonnes produced by state-owned plants (see Industry chapter).

In recent years Tunisia has achieved self-sufficiency in clinker, with an annual average increase in output of 3.5% since 2008 (except for 2011), according to local media reports. Driven by public works and informal property-sector activity, annual domestic demand for clinker outpaced production slightly, growing by 3.8% annually between 2008 and 2014, from 6.27m tonnes to 7.85m tonnes. Prior to 2015, cement prices were fixed by the government and the sector was granted energy subsidies. However, since then the sector was liberalised and the subsidies removed, contributing to the sharp rise in building material prices.


In line with government efforts to boost the country’s economic competitiveness and improve physical infrastructure, a number of public projects in the pipeline are expected to serve as a catalyst for growth in the construction sector. One of the most dynamic areas in this regard is transport, with roadways seeing an influx of new capital, particularly from donor institutions, to rehabilitate or lay new pavement. Recent years have seen project implementation for public road works slow, due in part to difficulties linked to land expropriation issues. However, new legislation to accelerate expropriation procedures is pending and, with authorities looking to reinforce Tunisia’s road infrastructure under the aegis of the Tunisia 2020 strategy, the sector is expected to see an increase in activity.

In late 2015 Tunisia was granted a $210m loan by the African Development Bank to support the implementation of the Road Infrastructure Modernisation Project 2016-20. The plan aims to rehabilitate 719 km of roads – mainly in the country’s west and north-west regions – and undertake periodic maintenance of 2500 km of classified roads. In addition, in February 2016 the European Investment Bank (EIB) announced it had granted Tunisia a €150m loan for road upgrades. The funds will prioritise stretches of existing roadways south of the Greater Tunis area and will be used to construct new motorways in remote regions such as Sfax or Nabeul. Since the revolution, the EIB has granted Tunisia a total of €556m in loans for road infrastructure.

In addition to roads, Tunisian authorities are looking to develop new air, port and railway infrastructure (see Transport chapter). The extension of the Tunis-Carthage International Airport is currently in the planning phases and authorities have announced plans for the construction of a new airport in Bouhnach. The construction of a deepwater port in Enfidha is also under way, as are new container terminals in Tunis’ Radès Port. There are also proposals to refurbish the railway system, including the construction of new high-speed corridors, and connect it to Morocco by 2025.

Social Sectors

A number of other sectors have been prioritised under the Tunisia 2020 strategy, including health care with a TD1.1bn (€471.7m) infrastructure package. Among the upcoming projects for the sector are a new university hospital in Kairouan, two multi-disciplinary hospitals in Beja and Gabès, as well as eight new regional hospitals in Jelma, El Jem, Makthar, Dahmani, Haffouz, Thala, Sbiba and Manouba. These projects stand in addition to the construction of a separate university hospital in Sfax, announced in August 2015, which is expected to cost an estimated TD120m (€51.5m), according to local press.

Urban Infrastructure

Urban infrastructure is also slated for an update. The government has announced plans to invest TD600m (€257m) in sanitation works, including the extension of the water sewage network in 11 governorates, the rehabilitation of four major water treatment stations and the construction of 80 small water treatment units. In addition, TD1.3bn (€557.5m) has been allocated to the Communal Investment Programme, aimed at rehabilitating and modernising rural municipal facilities. The project will be co-financed by the World Bank, the AFD and the EIB.


Under the Tunisia 2020 strategy a number of projects will expand public housing. With the country currently facing a housing deficit, particularly in lower-income segments, the government has announced plans to build 50,000 new social housing units by 2020, at a rate of 10,000 units per year (see Real Estate chapter). The Real Estate Housing Agency has been tasked with tendering the projects and delivering ready-to-use allotments to encourage private constructors.

The push by the government to encourage an increase in residential construction will help offset what has been a slowdown in terms of private property development. In recent years, licensed housing production by private property developers has averaged 8000 housing units annually, compared to 14,000 units in 2010, as developers grapple with land scarcity, mounting construction costs and cumbersome administrative procedures. As a result of higher overhead costs, and in a bid to maintain margins, property developers have directed 70% of their housing production to the mid- to higher segments at a time demand is strongest among lower-income groups. The resulting supply-demand mismatch has led to a growing stock of unsold homes, as well as increased informal construction, which currently accounts for one-third of total sector activity.


Tunisian firms have increasingly turned to public works segments in French-speaking sub-Saharan markets, such as Côte d’Ivoire and Burkina Faso. “Most Tunisian companies operating in sub-Saharan Africa have partnered with local firms on medium-sized construction projects,” Driss told OBG. “They are generally cheaper than their European counterparts and the partnerships involve transfers of know-how and capabilities.” Domestic private firm Soroubat Group, for example, was awarded a CFA38.2bn (€57.3m) project in Cameroon for the construction and paving of a road connecting Ekondo and Tiki-Kumba, and has also worked on projects in Côte d’Ivoire.

The push into higher-growth markets comes as contractors look to offset a slowdown in international business, as a result of the unrest in Libya. Prior to the 2011 Libyan revolution, 30 Tunisian construction firms generated TD2.5bn (€1.07bn) in annual turnover, but contracts have since dried up. Yet the Libyan market does offer potential opportunities. Radhi Meddeb, CEO of Comete Engineering, told OBG, “As Libya stabilises, Tunisian companies – especially those in the construction sector – must begin planning how they will participate in the reconstruction of this neighbouring country.” Despite a large pipeline of both infrastructure and housing projects, neighbouring Algeria has also proved difficult for Tunisian contractors to operate in.


Although activity has been subdued in recent years, Tunisia’s construction sector is poised to revive growth, with Timetric forecasting growth of 1.54% in real terms in the 2016-20 period. With several tenders under way as part of the Tunisia 2020 strategy, larger Tunisian construction firms should have an opportunity to regain traction after years of flat growth.

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The Report: Tunisia 2017

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