Since gaining independence in the 1950s, Tunisia has focused on developing and expanding its industrial base. 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 highly skilled and educated workforce.

Despite the sector’s strengths, however, progress stagnated following the 2011 revolution, the aftermath of which propelled industry, along with the broader economy, to throw its weight behind installing an effective political system and establishing a conducive business environment. Pre-Arab Spring Tunisia ranked 32nd out of 142 countries in the World Economic Forum’s global competitiveness index 2008; however, in 2018 it ranked 87th out of 140 countries. Despite these challenges, a number of niche segments have thrived in recent years, and the government is working to boost others by way of various sector-specific pacts.

Economic Contribution

As of July 2019 Tunisia’s industrial sector comprised a total of 5368 manufacturing companies with 10 or more employees, of which 2373, or 44%, were focused exclusively on export activities, according to statistics from the Agency for the Promotion of Industry and Innovation (Agence de Promotion de l’Industrie et de l’Innovation, APII). Over the same period, the sector employed a total of 522,158 people, or approximately 15% of the economically active population.

According to the National Institute of Statistics (Institut National de la Statistique, INS), in 2018 the manufacturing sector recorded annual value-added growth of 0.4%, while the industrial sector accounted for 14.8% of GDP. Meanwhile, non-manufacturing industries accounted for a further 8.4% of GDP.


According to data from the APII, industrial companies exported some TD36.9bn ($12.8bn) worth of goods in 2018, up 19% on the previous year. Imports also increased, rising by nearly 17% to TD47.2bn ($16.4bn), which led to an industrial trade deficit of TD10.3bn ($3.6bn). This trend continued into the first five months of 2019, with the value of exports increasing by 15.4% year-on-year (y-o-y) to TD17.6bn ($6.1bn) and imports rising by 12.8% y-o-y to TD21.3bn ($7.4bn). This saw the industrial trade deficit widen to TD3.7bn (S1.3bn), up 2.8% y-o-y.

The sector’s orientation towards export markets is in large part due to supportive trade policies. In 1972 Tunisia introduced an offshore regime to attract foreign direct investment (FDI). Registered offshore companies that are 100% export-oriented receive a number of advantages, including tax and duties exemptions for imported goods, a flexible foreign-exchange scheme, and the ability to retain 100% of project capital and freely repatriate dividends. Moreover, Customs clearance procedures can be performed on site to facilitate timely logistics.

Tunisia’s biggest industrial export partner is the EU, with data from the INS indicating that in 2018, 73% of total exports went to the EU and 53% of total imports were derived from the EU. According to the European Commission, in 2017 the EU imported €3.8bn worth of machinery and transport equipment, and €2.2bn in textiles and clothing from Tunisia (see analysis). Tunisia and the EU hope to consolidate this relationship through a Deep and Comprehensive Free Trade Area; however, the terms remain highly contentious in Tunisia, and there is resistance to it among political, business and civil society groups.

The fourth and latest negotiation round was held in Tunis from April 29 to May 3, 2019, with the next round scheduled for the end of the year or early 2020. In the meantime, Tunisia is continuing to diversify its trade partners, signing a number of deals in September 2018 to integrate into China’s Belt and Road Initiative. The deals include a project aimed at developing the southern port of Zarzis into a trade hub, and construction projects such as a car manufacturing plant to be operated by China’s SAIC Motor, a bridge connecting Djerba to Djorf, and a railroad to connect Gabès – a hub for petrochemicals and phosphate industries – to Zarzis.


A total of TD3.5bn ($1.2bn) was invested in the industrial sector in 2018, up 0.3% on 2017. The number of projects increased by 7.5% to reach 3748, from which stemmed 62,548 jobs, compared to 55,500 in 2017. While agro-industry, construction and textiles saw declines in investment (see analysis), electronics, chemicals and the leather industry recorded increases.

Investment in electronics rose by 18.2% to TD817.9m ($284.1m), largely due to an outlay of TD97.9m ($34m) to construct an electrical cable manufacturing unit in Bouhjar as an extension of Germany’s PSZ electronic. Meanwhile, the leather industry benefitted from a 191% rise in investment to TD34m ($11.8m) in 2018, driven by the construction TD18.8m ($6.5m) tannery. In the same period, investment in chemicals increased by 11.1% to TD343.9m ($119.4m) primarily due to the TD31m ($10.8m) allocated for the extension of a pipeline manufacturing plant, and TD20m ($6.9m) for the construction of a bitumen and asphalt production facility. While the majority of investment, or TD2.2bn ($764.1m), continued to be directed to companies focused on the local market, commitments to this segment fell by 21%. Meanwhile, investment focused on wholly exporting companies increased by 79% to TD1.3bn ($451.5m), mainly fuelled by higher levels of investment in electronic goods.

The industrial sector also continues to attract FDI, which increased by 15.9% in 2018 to TD1.1bn ($392.3m). This figure represents nearly 40% of total FDI inflows that year. The principal focus of interest among foreign investors was electronics, most notably for the aeronautic and automobile subsectors.

The year 2019 has started on a less solid footing, with total investment down 23.8% y-o-y at TD1.2bn ($416.8m) as of the end of May. The number of declared projects dropped by 6.1% to 1792, and the number of jobs created decreased by 13.5% to 23,945. Both wholly exporting companies and firms that are focused on the domestic market witnessed declines in investment over the five-month period, down 4% and 30.7%, respectively.


Given the 1.8bn tonnes of phosphate reserves in the country, phosphate fertiliser was for years a robust source of employment, exports and foreign currency, as well as being essential to the agriculture sector. In Tunisia phosphates are extracted exclusively by state-owned Compagnie des Phosphates de Gafsa (CPG), which operates eight open-cast mines and 11 phosphate rock-washing facilities. Production is transformed into four products for export and two for the domestic market by Tunisian Chemical Group, which has four production sites in Gabès, Sfax, Skhira and M’dhilla.

However, in the wake of the Arab Spring, labour protests and numerous shutdowns have severely impacted the industry. Aiming to address social unrest, CPG increased the number of employees in the phosphate industry from 8000 in 2010 to around 30,000 as of 2019. However, international media reported in March 2019 that out of the 14,000 possible production days since 2011, the company’s five mines have operated on 4500. As a result, production has fallen from a record 8.2m tonnes in 2010 to a historic low of 3.2m tonnes in 2018.

Phosphates now account for a modest 2.5% of total exports, compared to 10% in 2010. Prior to 2011 Tunisia was the world’s fifth-largest producer of phosphates, but since then it has fallen to 10th place (tied with Vietnam), lagging behind major producers such as China, Morocco, the US, Russia and Jordan. While labour pressures have been the main impediment to the sector’s expansion, the situation has not been helped by international prices for phosphates, which fell in recent years as a result of surplus global production. From a high of $430 per tonne, international prices for phosphate sunk to a low of $80 at the end of 2017, and then went on to recover to $105 in June 2019.

The government is working to rehabilitate the industry, with plans to invest TD140m ($48.6m) in 2019 in an effort to boost production to 4.5m tonnes. According to CPG, certain criteria will need to be met in order to reach this target, namely improving the transport of phosphate rock and assuring uninterrupted production. The year started out promisingly; phosphate production in the first quarter of 2019 more than doubled to 900,000 tonnes, compared to 400,000 tonnes in the same period of 2018.


The plastics segment comprises over 500 companies, provides around 15,000 jobs and contributes some 3% to GDP. Plastics operators in Tunisia work across the value chain, producing everything from plastic bags, sundry household items, pipes for irrigation and furniture, to more complex items used in the automotive and aeronautics segments. In an effort to boost the sector, 2019 saw the creation of the Tunisian Industrial Plastics Group (Groupement Tunisien des Industriels de la Plasturgie, GTIP). Mainly comprising French and European companies based in Tunisia, the group aims to give more weight to operators vis-à-vis the administration and help them improve their competitiveness, Chekib Debbabi, general director of Plastivaloire Tunisia and president of GTIP, told OBG. He highlighted that the majority of raw materials need to be imported from Europe or Asia, an undertaking made expensive by an inadequate logistics chain, limited competition between freight carriers and the need to trans-board in Malta, due to the lack of a deepwater port in Tunisia. GTIP aims to create logistics synergies and to enhance training in the sector, with the goal of evolving Tunisia from a “factory country” to a centre for research and development (R&D) and innovation in plastics, as well as developing added value in the sector.

On a similar note, Lassaad Ben Ammar, CEO of car distribution company Le Moteur, told OBG, “Tunisia needs to resolve the logistics constraints that are interfering with international trade before it can develop a vertically integrated industry and fully leverage its ideal geographic position.”


Aeronautics has been one of Tunisia’s top-performing industries since 2003, consistently posting annual growth of 10-15%, with the segment contributing 3.8% to GDP in 2018. There are 81 companies operating in the aviation segment, employing over 17,000 people, a figure that generally increases by 1000-1500 every year, Wassim Srarfi, general secretary of the Tunisian Aerospace Industries Association, told OBG. Exports increased from TD85m ($29.5m) in 2010 to TD1.5bn ($521m) in 2018, and by 2025 this is expected to reach TD2bn ($694.7m).

Tunisia’s aeronautics segment has been relatively unscathed by social unrest and remains attractive to investors, boasting an educated and skilled workforce with highly competitive labour costs. The country benefits from a number of dedicated educational institutions, such as the Centre of Excellence for Aerospace Industry Professions, as well as numerous public and private engineering schools. Approximately 6500 engineers graduate every year, providing the sector with a wide pool of new talent to recruit from. An estimated 95% of aeronautics companies are registered under Tunisia’s offshore regime. In recent years the sector has primarily focused on progressing up the value chain to develop high-value technological segments with increasingly complete and complex outputs, using Industry 4.0 production means such as virtual reality, augmented reality and robotics, software development, 3D modelling, and equipment and software test automation in the country.

“The pace of development of higher-value-added industrial activities in Tunisia will depend on the quality of cooperation among private companies and educational institutions in building appropriate training courses,” Hichem Kassis, general manager of garment company Groupe Sicovet, told OBG.


Tunisia’s automotive segment is another strong performer, leveraging its proximity to Europe to become an integral part of the value chain for many European carmakers. Home to some 275 companies that produce car components, the segment employs 86,000 people and accounts for an average 4% of GDP. Exports totalled around TD6bn ($2.1bn) in 2018, according to the Tunisian Automotive Association (TAA). During the inaugural Tunisia Automotive exhibition held in November 2018, Nabhen Bouchaala, president of the TAA, indicated that the industry could continue to grow its contribution, reaching 10% of GDP if the operating environment was strengthened and incentive measures were taken by the government to further promote Tunisia as a destination for automotive investment.

With electric and autonomous car technology expected to advance considerably over the next decade, the creation of four clusters – focused on electronic connectivity, advanced cables, glass and carbon-fibre plastic reinforcement, and special utility vehicles – should ensure that Tunisia’s automotive industry remains successful and internationally competitive in the years to come.

Elsewhere, following a number of deals to assemble light commercial vehicles, including with India’s Mahindra in 2013 and Tata Motors in 2015, and France’s Peugeot in 2016, Tunisian car assembly received a further boost in 2018 after Chinese automaker Geely produced the country’s first assembled passenger cars in October. Under the deal between Geely and Tunisia’s Zouari Group, 2000 Geely GC6 cars will be assembled within a year, and a modern automobile production base integrating Tunisian manufactured parts, assembly lines and logistics will be established within five years. In addition to job creation and lower vehicle import requirements, domestic car assembly would enable automakers to circumvent Tunisia’s vehicle import quota under which the Ministry of Commerce sets a cap on the number of vehicles that can be imported in any given year. Despite the significant opportunity in the domestic market – Tunisia’s motorisation rate is 9.1% compared to France’s 48.2% – car sales remain curtailed by these import quotas, which were cut by 20% in 2018. Further impacting sales at present is the weak dinar, limited access to finance, and a number of tax increases set out in the 2018 Finance Law concerning value-added tax, Customs and duties.

In 2018 vehicle registrations fell by 21.7% to 65,841. In order to turn this around in 2019, the government increased quotas and abolished import taxes on cars with a 1.2-litre or lower engine for people whose annual income tax is €1500 or less. However, growth is likely to be tempered by continued dinar weakness and limited access to finance. “Some 70% of car finance is through leasing companies,” Ibrahim Debache, CEO of local company Ennakl Automobiles, told OBG. “Given that the central bank increased its interest rates, the perspective for car sales in 2019 remains challenging.”

Building Materials

Tunisia boasts an extensive building materials segment, from clinker and brickwork, to plaster and ceramics. According to the APII, there are approximately 413 companies operating in this segment, employing some 26,747 people. Total exports for the segment reached TD654.1m ($227.2m) in 2018, up 33% on the previous year. Meanwhile, investment in building materials declined by 12% to TD548.5m ($190.5m). This is mainly attributable to delays in the sale of a 50.5% stake in the state-owned Carthage Cement.

Investment is expected to pick up, however, following Tunisia-based United Cement’s announcement in January 2019 that it planned to start construction on a $320m, 1.5m-tonnes-per-year cement plant at Bir Thlathin in southern Tataouine, with delivery expected in 2022. Furthermore, a report published by Market Research Hub in March 2019 forecast that the domestic construction sector will grow by a compound annual growth rate of 3.4% between 2019 and 2023. This expansion is likely to have a positive knock-on effect on the building materials segment.

Cement remains the largest building materials subsegment in Tunisia, and the country is home to one white cement plant and eight grey cement plants, with a total production capacity of 12.5m tonnes. The cement industry accounts for 3500 direct jobs and an estimated 20,000 indirect positions.

Tunisia produces a surplus of cement relative to current domestic requirements and exports the excess primarily to Libya and Algeria; total exported volumes rose by 106% in 2018 to reach 1.8m tonnes. In light of the ongoing EU Emissions Trading System drive to help industries reduce their carbon footprint, and with rising hydrocarbons prices likely to start pushing up costs for cement producers, Tunisia is well positioned to become a strategic source of clinker for the European market.


Tunisia boasts a robust agro-industry, ranking among the world’s top producers of olives, dates and tomatoes (see Agriculture chapter). Agri-business accounted for 3% of GDP in 2018 20% of value added in the industrial sector. In total 1091 companies are active in food processing – 19.5% of which are wholly export-oriented – and the sector employs some 76,000 people, or 14.6% of all industrial employment. While investment in the sector fell by 13% to just over TD1bn ($347.3m) in 2018, it remains the top recipient of industrial investment, accounting for 30% of the total, according to the APII.

Due to a robust olive oil harvest, agro-exports increased by 54% in 2018 to TD3.8bn ($1.3bn). While the EU, in particular France, Spain and Italy, remain the top destinations for Tunisian food exports, efforts are being made to diversify export markets, especially for olive oil, Tunisia’s top food export.

Data from the National Olive Oil Board of Tunisia shows that the US was the second-largest destination for Tunisian olive oil between November 2018 and March 2019, accounting for 19% of agro-export volumes, while Saudi Arabia is in fifth place with 4% of exports. While Canada only imported 2368 tonnes over this period to rank seventh, almost 90% of this was bottled olive oil that cost 37% more than olive oil sold in bulk. Indeed, with the average price per tonne of bottled olive oil significantly above bulk olive oil, the industry aims to increase exports of bottled Tunisian olive oil by 17% to 22,000 tonnes for the 2018/19 season (see Agriculture chapter).


As another pillar of Tunisia’s industrial sector, pharmaceuticals has posted average annual growth of 7.5% since 2013. employs 8800 people, with approximately 1000 in service roles. Between 2012 and 2018 exports tripled from TD60m ($20.8m) to TD192m ($66.7m); Tunisia exports to around 20 markets, predominantly in sub-Saharan Africa. Growth is largely attributable to the results of privatisation in the 1990s and the ensuing influx of foreign investment.

As part of the Economic Recovery Plan 2019-20 – which was unveiled in October 2018 – and given the growth prospects for the sector, a pharmaceuticals pact was launched in January 2019. The pact targets annual growth of at least 8% through to 2023 and the creation of 2500 new jobs, of which 2000 will be in industry and 500 in related services.

Additionally, the pact envisages a consolidation of pharmaceutical exports from 13% of local production to 26% by 2023. By that year, it is hoped that locally produced medications will meet 62% of domestic needs, while approximately 35% of African clinical trials – estimated to be worth up to TD300m ($104.2m) – will be carried out in Tunisia.

While the private sector has committed to investment in order to meet these targets, the government has announced a number of reforms. Notably, these include the creation of a single-pricing committee to set pharmaceuticals prices, the creation of a medication agency to facilitate the entry of certain products and the ongoing modernisation of authorisation procedures for new products in order to reduce overall approval waiting times.

Speaking at the global level, Sara Masmoudi, president of the National Chamber of the Pharmaceutical Industry, told OBG that the future of the pharmaceutical industry lies in biotechnology (biotech). By 2023 biotech is expected to make up 50% of the global pharmaceutical market; however, Tunisia is not yet ready for biotech, Masmoudi said. Given this, it could instead focus on specific activities in the production chain of biotech, such as contract manufacturing organisation, he added.

However, recent developments suggest that Tunisia aspires to have a more direct relationship with the technology; October 2018 saw the launch of BiotechPole Sidi Thabet, a technopark. The project expects TD80m ($27.8m) in investment through to 2021, and is committed to providing the necessary technology and infrastructure for biotech start-ups to conduct R&D and production.


A strategic geographic location, and a highly skilled and competitively salaried workforce have enabled Tunisia to build a diverse and robust industrial sector. However, recent years of political instability, a weak dinar and social unrest have impinged on previous successes.

Essential to overcoming these difficulties is a balancing act that involves keeping the currency attractive for FDI, tourism and exports, while simultaneously strengthening the dinar to rein in rising import costs, raise profit margins of non-wholly exporting companies and keep inflation in check. These critical issues are addressed in the short-term 2019-20 economic recovery plan, which seeks to boost the competitiveness of the country’s key industries, with a view to revitalising the broader economy.