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The Report: Tunisia 2019

Tunisia has successfully navigated the difficulties of the post-revolutionary period by capably establishing robust democratic institutions. However, the country faces macroeconomic challenges since the 2011 revolution. Budgetary pressures, combined with a devaluation of the dinar and a rise in the level of business informality, have made the current environment a complex one.

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Sections

  • Country Profile
  • Economy
  • Banking
  • Capital Markets
  • Insurance
  • Industry & Retail
  • ICT & Innovation
  • Tourism
  • Agriculture
  • Energy
  • Transport
  • Construction & Real Estate
  • Health & Education
  • Tax
  • Legal Framework
  • The Guide
  • Table of Contents

Country Profile

Long viewed as an open economy with a unique geographic position at the centre of the Mediterranean, Tunisia has faced macroeconomic challenges since the 2011 revolution. The country has successfully navigated the difficulties of the post-revolutionary period by capably establishing robust democratic institutions. Furthermore, while issues of corruption and security remain a problem the current administration has displayed determination to address these challenges. The upcoming parliamentary and presidential elections – which are scheduled for late 2019 – are likely to shed new light on the current balance of power. Nevertheless, to ensure stability over the longer term more consistent efforts at economic reform, infrastructure upgrade and the provision of public services is needed. If Tunisia succeeds in ensuring sustainable development it may yet become not only a leader of the democratic process in the region, but also of prosperity as well. This chapter contains interviews with Ferid Belhaj, Vice-President for Middle East and North Africa, World Bank; and Chileshe Kapwepwe, Secretary-General, COMESA.

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Economy

While Tunisia remains a country with a number of strong assets on which to base future development, challenges of the last few years have slowed policymakers’ drive to adequately plan and execute necessary reforms to make the economy more competitive. However, several measures implemented by the government in 2018 and 2019 are helping to clear a path for Tunisian entrepreneurs, which is hoped to help reduce informality. Still, to successfully implement a new growth dynamic over the medium term, Tunisia will need to establish a clear consensus about economic reforms. For instance, public sector reform, although unpopular under the current environment, is also still seen as critical to reverse Tunisia’s unfavourable budgetary position. This chapter contains interviews with Zied Ladhari, Minister of Development, Investment and International Cooperation; Abdelbasset Ghanmi, General Manager, Foreign Investment Promotion Agency; and Samir Majoul, President, Tunisian Union of Industry, Trade and Handicrafts.

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Banking

In a context of significant macroeconomic challenges, Tunisia’s banking sector has demonstrated solid performance over 2017 and 2018. However, the banking sector will continue to grapple with a number of pressing challenges in the coming years, stemming in large part from weaknesses in the broader economy, which raises banks’ portfolio risk. Although the central bank is likely to continue to push for sector consolidation, in order to strengthen the sector’s players and boost overall stability, it is uncertain when a clear move towards consolidation will begin to take place. For the moment, having a large number of inadequately financed banks will continue to prevent the sector from making a more complete contribution to the economy. This chapter contains interviews with Mohamed Agrebi, General Manager, Banque Internationale Arabe de Tunisie; and Essma Ben Hamida, Co-Founder, Enda Tamweel.

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Capital Markets

Although Tunisia’s financial market has maintained a pattern of significant growth in recent years, progress has taken place in the context of economic uncertainty and a need for structural reform. The stock market’s role in financing the economy is mod¬est when compared to that of the banking system, and the depreciation of the dinar has introduced a number of additional challenges. Despite its potential to be a reliable source of financing for small and medium-sized enterprises, Tunisia’s alternative market has so far fallen short of expectations. Efforts to attract new companies can be hindered by high returns on bank deposits, which discourages higher-risk investment alternatives like the stock exchange. However, as the economic recovery continues its upwards trend and various regulatory changes make their desired impact, the Tunis Stock Exchange is positioning itself to benefit over the medium term. This chapter contains interviews with Bilel Sahnoun, CEO, Tunis Stock Exchange; and Walid Saibi, General Manager, Tunisie Valeurs.

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Insurance

Although Tunisia’s insurance market has grown steadily in recent years, it continues to be characterised by low penetration. As such, measures that are expected to promote expansion of the sector are being put in place. A new insurance code will strengthen the financial position of insurers and likely encourage a greater degree of sector consolidation. Furthermore, several segments, including life insurance and takaful (Islamic insurance), continue to show growth potential. In line with this dynamic, Tunisian insurers are increasingly considering new product development and ways to take advantage of the country’s high IT usage, focusing on digital mechanisms that can improve the provision of services and be able to reach new customers. This chapter contains an interview with Habib Ben Hassine, President, Tunisian Federation of Insurance Companies.

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Industry & Retail

Traditionally dominated by textiles, the industrial sector is increasingly attracting investment in higher-value segments such as pharmaceuticals, electronics, automotive and aeronautics as a result of a skilled and competitively salaried workforce. Despite the sector’s strengths, however, progress stagnated following the 2011 revolution. In view of revitalising the broader economy, the 2019-20 economic recovery plan, seeks to boost the competitiveness of the country’s key industries. Tunisia’s retail market remains, however, underdeveloped relative to North African peers, in particular to Morocco and Egypt. This results in a number of significant opportunities that are available for both domestic and international operators, particularly in areas such as e-commerce, among others. Nonetheless, distribution networks continue to improve and expand, while the presence of global brands and franchises is on the rise. This chapter contains interviews with Hichem Elloumi, CEO, COFICAB; and Vice-President, Tunisian Union of Industry, Trade and Handicrafts; and Hosni Boufaden, President, Tunisian Federation of Textiles and Clothing.

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ICT & Innovation

With rising mobile usage rates and ongoing improvements to telecoms infrastructure, the expansion of digital services is opening up new opportunities for Tunisia’s economic growth. In order for the sector to transition from an underserved market to a central driver of socio-economic development, the government has a vital role to play. As the largest customer for e-services, the public sector is responsible for supporting the implementation of new technology on a local level as well as promoting foreign investment. Nonetheless, with promising mobile and internet penetration rates, and steady growth for the three major telecoms providers, the outlook for Tunisia’s ICT sector remains strong over the medium term. This chapter contains interviews with Anouar Maârouf, Minister of Communication Technologies and Digital Economy; Hichem Turki, General Director, Sousse Technology Park; and Anis Sahbani, Founder and CEO, Enova Robotics.

 

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Tourism

With heightened security measures raising tourist confidence and a weak dinar making holidays in Tunisia increasingly attractive, the tourism sector is seeing a renaissance. However, in order for this growth to be sustainable, investment is needed to modernise and improve supporting infrastructure. Furthermore, most historic or cultural sites require a significant influx of restoration funds and better general management in order to attract greater numbers of international tourists. Nevertheless, as Tunisia continues to build on its quickly diversifying tourist base, and with Europeans returning in droves to take advantage of the country’s sunshine and beaches, the outlook for the sector is bright. Government commitment is strong, and with better organisation and investment, the tourism sector has ample potential to become a significant driver of sustainable development in the region. This chapter contains an interview with Amel Hachani, General Manager, Tunisian National Tourism Office.

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Agriculture

As advancements in irrigation and mechanisation are boosting efficiency and profitability, considerable improvements in infrastructure are still required, as is the organisation of farms and supply chains to ensure long-term development. Boosting competitiveness so that producers and exporters are able to take advantage of the opportunities provided by the Deep and Comprehensive Free Trade Area is particularly important. The government has a vital role to play in achieving these objectives in terms of investing in infrastructure and logistics, pro¬viding a robust legal framework and improving access to financing to stimulate further private investment. This chapter contains an interview with Abdellatif Ghedira, Executive Director, International Olive Council; and Mohsen Boujbel, General Manager, VACPA Boudjebel.

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Energy

Efforts to overhaul the country’s hydrocarbons regulations, however, have been stymied by political instability, while the development of energy projects has been slowed by social unrest across the country. A revised hydrocarbons code has yet to be passed by Parliament and the question of whether to tap into non-traditional oil and gas reservoirs has increasingly become a key issue of debate. Despite the challenges, progress in diversifying the energy mix has seen the state issue a host of international tenders aimed at attracting contractors into a new renewable energy programme. This is expected to help the country achieve its goal of having renewable sources account for 30% of the energy mix by 2030. This chapter contains interviews with Slim Feriani, Minister of Industry and Small and Medium-Sized Enterprises; and Moncef Harrabi, CEO, Tunisian Company for Electricity and Gas.

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Transport

Given Tunisia’s location in the centre of North Africa and its proximity to Europe, the country’s transport sector plays a vital role in its economy, and improving the efficiency of the transport network will continue to present new opportunities. The country’s well-connected port and air infrastructure have historically formed the basis of its competitiveness in global markets as well as its ability to leverage labour cost advantages. At home, government-directed, trans¬port-focused construction projects account for a large chunk of public spending as part of a drive to mitigate regional disparities, encourage urban mobility and increase international connectivity. Growing its internal and regional trade links with its African neighbours and trading partners across the Mediterranean will build momentum, and, in the long term, the transport sector will be poised to deliver significant opportunities for future growth. This chapter contains an interview with Sana Skhiri, President, Tunisian National Federation of Airfreight Forwarders.

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Construction & Real Estate

Despite major economic headwinds in 2018, Tunisia’s construction sector looks to be on the upswing. Over the past few years increasing global oil prices coupled with the depreciation of the Tunisian dinar have seen demand for projects decrease and the cost of materials rise. Additionally, upcoming parliamentary and presidential elections in late 2019 are likely to temporarily stoke uncertainty. However, through a number of infrastructure tenders, the state is helping to underpin industry demand. Driven by a growing middle class, rising urbanisation and some of the most attractive prices in the Mediterranean region, Tunisia’s real estate sector offers some of the best potential in North Africa. However, other long-standing structural challenges also continue to weigh on the market. These include administrative and infrastructural blockages, tightening liquidity, political uncertainty and increasing land scarcity. As such, investors will need to look beyond the short term for returns. Jamel Ksibi, President, National Federation of Construction and Public Works Entrepreneurs.

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Health & Education

With a growing demand for services from both nationals and foreigners, the health sector remains a crucial pillar of Tunisia’s economy. The country’s low health care costs are a key competitive advantage, attracting patients from Africa and Europe. However, many challenges need to be addressed before the sector can realise its full potential. To this end, the raft of investments is expected to improve the quality and provision of care. As enrolment rates decline due to social and demographic changes, the education sector must shift its focus to raising the standard of teaching, ensuring young people remain in education and improving student performance. The demographic transition may also help to ease graduate unemployment rates, acting as a catalyst for changes to education policy. This will prove essential to matching graduate qualifications to the needs of the job market. This chapter contains interviews with Sara Masmoudi, President, National Chamber of Pharmaceutical Industries; and Houbeb Ajmi, Regional CEO, Honoris Group.

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Tax

In conjunction with KPMG, this chapter explores the taxation system and Tunisia’s efforts to build an investor-friendly environment. It also contains an interview with Moncef Boussannouga Zammouri, Managing Partner, KPMG.

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Legal Framework

This chapter introduces the reader to the different aspects of the legal system in Tunisia, in partnership with Meziou Knani & Khlif. It also contains a viewpoint with Ghazi Meziou, Associate Lawyer, Meziou Knani & Khlif.

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The Guide

This section includes information on hotels, government offices and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress code, business hours and electricity.

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Table of Contents

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