NO MARMITE IN TUNISIA

Many of you know me, or have already met me, during the times that I am out in Tunisia! 

You will also know of my love for my home country and immense pride when I hear of the many new developments or new achievements that are happening out there.  Some of you have already phoned or emailed me to ask my advice on investing in the country!  I will therefore, be writing a regular column for the Marmite site on business, investments and opportunities in Tunisia. 

Any comments or suggestions, I would love to hear from you.  Please email these on man.inthehat@yahoo.fr

• Housing Rights For Mothers Who Have Custody Of Their Children Remain Sacred
• An Energy Balance Trade Surplus In 2007
• The Tunisian Economy Gets The IMF's Nod Of Approval
• The Cap Bon : Oenological Tourism And Much More!
• Tunisian Tourism : The Missing Links
• Tunisia, The World's Third Most Beautiful Place To Visit
• Another 10 Billion Dollars Of Arab Investment
• Will The Tunisian Olive Oil Regain Its International Place?
• A Doubling Of EU Direct Investment Within The Next Three Years

Archives

November 2007
December 2007
January 2008
February 2008

21st June 2009

Although the Tunisian tourism industry is not showing any dramatic rise, it is certainly not showing any decline either.  In this sluggish economic environment, any increases, small that may be, offer relief and a certain degree of reassurance.

During the first five months of 2009, some 2,248,010 tourists have visited the country against 2,218,433 during the same period in 2008, an increase of 1.3%, generating additional foreign exchange earnings of + 3%.  This slight increase, however, does not hide the fact that there have been some setbacks which were sometimes slight and sometimes significant.

European markets are down 6.8% by comparison to 2008.  It could have been worse if it was not for the massive action taken in terms of prospecting, promoting and the availability of cash to fund the different campaigns.  Some 1,091,033 tourists from the old continent have converged on Tunisia in the period January to May 2009, against 1,170,269 during the first five months of 2008.

With 480,132 tourists, the French market is in regression by 1.6%.  Noting that the people responsible for the sector are aspiring to a stable French market.  “Tunisia has hosted 1,400,000 French tourists in 2008.  If we can achieve the same number in 2009, it will be a good indicator for the Tunisian tourism industry” declared the tourism minister in one of his recent media appearances.

The German market which has been capricious in recent years has also fallen by 7.3% in the first five months of 2009 (137,754 against 148,527).  UK, Scandinavian and Italian markets are also on a downward slope, with -3.6%, -10.5% and -24.6% respectively.  Eastern Europeans who visited Tunisia in great numbers last year, were more or less rare in the first five months of 2009.  -29.9% for the Serbs, Czechs – 44.4%, Slovaks – 39.3%, Hungarians -42% and Romanians -48.7%.  The Bulgarians have buckled the downward trend with an increase of 117.5%. With 1575, their number remains rather limited.

As to the Magrebian market, the Libyans remain in the lead with 810,538 tourists for the first five months of 2009 compared to 692,263 in the previous year, an increase of 17.1%.  Algerians were less numerous visiting Tunisia in 2009, 270,402 visitors for the first half of this year as compared to 280,637 for the same period in 2008 (-3.6%).  The forecasts are still promising for the high season and suggest that the popularity of Tunisia amongst Algerians remains intact.  Mauritanians who mainly visit Tunisia for health reasons, their numbers were up 9.2% while Moroccans tourist numbers have declined by 6.2%.

North American markets have remained stable with 15,986 Americans and Canadians landing in Tunisia from January to May.

Hard currency revenues grew by 3% in the first five months of 2009 as compared to the same period of 2008 (1097.7 MD against 1065.5 MD).  With 5% decrease in nights, tourism receipts per night have risen by 8.2%, (123.7 dinars in 2009 against 114.3 dinars in 2008).  Revenue per tourist has also witnessed a slight increase of 1.7% (488.3 dinars in 2009 against 480.3 dinars in 2008). 

 
Although there are no specific details yet, on what might be in store for the peak season, the people in charge of the sector do not cease of hammering away the message that 2009 is the year for “last minute…”  Times where holidays were planned in advance appear to have been swept away by the crisis and the constraints which were imposed on households against their free will.

11th June 2009

The big blue, a hill and a forest, this is the scene where the giant, and no less magical, real estate project of the Gammarth bay will be built.  The project that was first conceived in 2006 will be completed in 2012, according to forecasts. It is one of the largest high-end of the market residential complex targeting a wealthy clientele.

The project will cover an area of 20 hectares and will include shops of all kinds, restaurants, cafes…etc, as well as 374 housing units comprising 2, 3 and 4 bedrooms apartments, duplexes and villas.

The most impressive aspect of this project is probably the filling of 8 hectares of sea with earth and building material in order to build the semi-circle shaped marina which will be large enough for 400 berths, indeed, the planned residential complex will be erected along the quay and will consists of five main parts, the quay residence, residence of the forest, the port hamlet and the sea hamlet.  The villas will take front line position while the apartments will be in the heart of the forest with magnificent views over the harbour.  The luxurious villas will vary in size, from 300 to 500 square meters, while the apartments are of 180 square meters on average.

5th June 2009

Air transportation is being increasingly liberalized.  Open skies agreements have become reality almost everywhere including in Tunisia, where a ministerial council on January 28^th 2009 on maritime and air transportation has decided to liberalize air transportation activities with Arab, European and American countries as well as opening all of the airports to all Tunisian aviation companies including those operating scheduled air traffic, a move that can only strengthen the already fierce competition triggered by the charter companies.  Could Tunisair resist the opening of the skies?

Globalisation and the opening of the skies have already forced several airlines to offer short-to medium-haul flights at low prices while offering fewer services than traditional companies.  The concept of low cost air travel was first introduced in the United States of America in the late 1940’s and did not reach Europe until the 1990’s and have since spread to much of the world.  The market which is steadily expanding all around the world has vertically exploded in Europe.  Low cost transportation accounts for 20% share of the market.  Customers are increasingly making choices based on price.  Although some European companies are trying to operate some low cost flights over Monastir and Djerba, Tunisia did not develop this concept.  Obstacles to the development of low cost are many.  They are mainly related to the dominance of the national airline Tunisair and the very high airport taxes. 

With the open sky agreement in force, Tunisair must seriously start looking into this niche.  The company has no choice, especially since it is not that far from twelve low-cost airlines, currently operating in Morocco of which ten provide 57 weekly flights, this would mean that low-cost must take off in Tunisia in 2010 as acknowledged by the company’s chairman, Mr. Nabil Chattaoui at the FTAV meeting.  He said that “the year 2009 promises to be difficult.  With the collapse of 30 carriers worldwide, the crisis is shaking up the airline transportation industry.  We must overcome the various changes and learn to cope with the global evolution of air transport.  The new outlook will revolutionize our business, notably with the librilisation of air transportation and the development of low-cost.  The ultimate objective is to make of Tunisair a profitable company.  This will depend upon the travel agents who should show solidarity with their national carrier.  We have no other choice, if we want Tunisair to resist the rise of the low-cost airlines.  We must work closely with the Tunisian tour operators in each region of the country in order to address this threat of low-cost.”  He added, “it is true that Tunisair should not fear low-cost, the company has all the strength to position itself in this market, we must adapt to international conditions.  Tunisair could launch its own proper low-cost.  It is beneficial to the company.  Roughly, the low-cost price is 20 euros per flight hour, a proof to the increased popularity of this way of traveling.”

He goes on to say that “We will follow Morocco.  Tunisair our company can position itself well in this area of business as did Le Royal  Air Maroc, which dominates the landscape with more than 60% of traffic and continues to be carried by its aircrafts.  Its subsidiary, Atlas Bleu, does not hesitate to operate in markets served by several competing European airlines and is succeeding.  Sevenair could well play this role particularly with the destinations that are less frequented by other airlines such as Russia, Eastern Europe and North America.  Tunisair must prepare for open skies.  The economic impact of low cost on tourism is enormous.  We could say that an hotelier in Hammamet, will be able to free us from the grip of the tour operators who account for all: from the hotel to the bus to the aircraft.  The low-cost concept will allow us to make the number of arrivals explode and significantly reduce the cost of traveling.  The skies are crisscrossed by low cost airlines.  Tunisair could do the business and increase its turnover.”  

3rd June 2009

The Regional Director of the famous car marks, Jaguar, Land Rover and Ford, Mr. Robin Colgan, was present at the inauguration ceremony which was held on Friday May 29^th at the ultra-modern 9000 square meters showroom of the official distributor, Alpha International, in Les Berges du Lac.  Mr. Colgan was accompanied by Mr Peter Fleet, Ford’s Regional Director in Europe as well as Mr. Moncef Kelibi Director General of the Alpha Group. 

It should be mentioned that Alpha International has registered a phenomenal sales growth of 200% with the range “Range Rover Sport” coming on top of the list of the companies sales.  The exceptional efforts of the sales team, marketing and after sales services, have contributed considerably to the increased interest in the star vehicle as well as the compact SUV premium Freelander 2,  the luxurious seven seater Discovery 3 and the legendary Defender.

31st May 2009

Despite the difficult global economic conditions, the Bizerte region has managed to achieve good results in private investment during the first 2 years of the 11^th plan of development (2007-2011)

Indeed, according to the statistics of the development bureau, more than 571.5 million dinars of private investment money have been committed in the region in 2007-2008, the equivalent of twice the public investments.  The sectoral distribution of these private investments show that the housing took the lion’s share, with 45.7% against 34.7% for manufacturing, 14% for services and small businesses and 5.6% for agriculture and fishing.

Private investment has helped create 9155 jobs where 5980 were in the manufacturing sector.  Job vacancies have been strengthened with the entry into production of 88 new industrial units in the delegation of El Alia, Menzil Jemil, Menzil Bourguiba and Zarzouna.  These units cover the sectors of manufacture, housing, transportation and small businesses.

This growth in private investment was driven by the developed infrastructure such as the motorway Tunis-Bizerte, commercial and fishing ports, industrial estates and business parks in addition to the abundance of skilled labour.  This infrastructure will be strengthened further by the creation in 2009 of an industrial zone in Sejnene on 50 ha and another of 10 ha in Ghezala.  Both delegations are classified priority and benefits from grants designated for “regional development areas.”   

31st May 2009

A study which has just been published by the strategy consulting firm A.T. Kearney on the “geographic changes for company relocation” for service and industrial activities shows that the countries of the east, first integrated into the European Union (EU), are no longer the destination of choice for relocating industrial production units or service activities to.

These changes have benefited Magrebian countries (Tunisia and Morocco) as well as countries from the Middle East (Egypt and Jordan), who seem to have taken the lead. The report puts Tunisia in 17^th place in the list of countries ranked as most interesting to relocate to, improving its ranking by 9 places on 2007.

The loss of attractiveness is most evident in Poland where DFI fell by as much as 28% in 2008, slightly higher than the average of 25.3% for developed countries.  The Czech Republic and Hungary have also seen a decline in the rate of foreign inflow investment. The current difficulties have also forced companies to reorganize to further tighten their costs.  Banks in particular were the first to relocate part of their businesses such as IT services and call centres, for example.  Services that are carried out a lot cheaper in India by English-speaking staff for American firms, and for much less expensive in North Africa (Tunisia and Morocco), by French-speaking personnel for French companies.

27th May 2009

The housing sector in Tunisia is doing well.  The performances recorded in this area solicited the admiration and consideration of regional and international bodies.  With more than 2.5 million homes and an ownership rate of 88%, Tunisia is entitled to boast its achievements. Performances that reflect the will of the policy makers and provide the country attributes of dignity and welfare.

Four out five Tunisians own their own homes.   

For 40 years, programs were pursued within the plans of development in order to eradicate unhealthy housing resulting in a massive drop of substandard homes.  The share of rudimentary housing has fallen from 44% in 1966 to 0.8% in 2004.  Tunisians had wanted to become owners for several reasons. Firstly, their incomes have increased substantially, allowing them to invest in real estate seen and considered by many to be a safe refuge.  Demographics and urbanization are also factors associated with this wave of buying primary residences. 

Real estate credit for individuals

Real estate is an attractive niche for financial institutions as evidence by the evolution of mortgages by the Tunisian banks in recent years show. Mortgages issued by the banks continued to increase.  During the period 2002-2005, some 1900 million dinars of investment was spent on housing, including 655 million granted by the Habitat Bank and 940 million by other commercial banks.  The funds were primarily used to finance the acquisition of new homes and/or house extensions and improvements, according to the Habitat Bank.  A growing number of new products were made available to potential clients.

Business strategies of banks rely increasingly, as part of their diversification, on the opportunities offered by the real estate sector.

The proliferation of specialized banking subsidiaries, whose business never stopped growing year on year, is proof of this phenomenon. Sopivel, Essoukna, Simpara, Medina, Les Oeillets, ... are living examples. Their role in the sector is now increasingly confirmed.  In fact, other institutions are not to be outdone and have kept on launching new real estate financing products that are regularly introduced. The Habitat Bank has played a key role throughout these past years. It has continued its policy of granting loans under the house saving scheme options, direct credits and credit for pre-financing of housing projects.

A new approach to housing

Traditional dwellings were rudimentary and the only type of accommodation available in 1966.  Today, they have considerably declined giving way to new bread of modern accommodation. Classifying properties by type, the results of the 2004 census still shows a predominance of traditional houses with 52.1%.  They are followed by villas with 37.6%.

Lagging far behind are apartments with 7.5%.  Studios represent 2% of the total housing stock while rudimentary properties come last with only 0.8%.

Developers had to adapt to a new vision of housing, combining performance and functionality with special emphasis put on larger living rooms with comfort and well-being at home being the key words.  Increasingly demanding customers have forced developers and estate agents to develop their communication process by offering a variety of value added services, promotional strategies, development of new sale techniques….

Public owned companies adding their weight

Many public companies have embarked on the development of real estate. For example, the Agency Foncière d’Habitation (AFH) has sold a huge number of collective, semi-collective and mixed plots in several areas in Greater Tunis including Ain Zaghouan (northern suburb of Tunis), the North Urban Center (Governorate of Tunis) in the governorate of Ariana, Ben Arous, Nabeul, Sousse, Kairouan and Sfax.

Société Nationale Immobilière de Tunisie (SNIT), another major player providing one house on every eight built in Tunisia is adding to this process of home production.

The company has achieved since its inception in 1957, some 250 000 dwellings which is essential for families with low income. This has not prevented the construction of housing for other middle and high income earners.

A significant construction industry 

According to statistics from the last population census, conducted by the National Institute of Statistics in 2004 (www.tunisie-statistiques.tn), the number of dwellings was 2 500 830 against only 1 865 522 in 1994. In 10 years the country has therefore built 635 308 housing units, an average of 63 531 houses per year (+2.97%). Also according to the same survey, the 3 bed accommodations come in pole position, representing 36.9% share of all properties built.

They are followed by those made of 2 bedrooms (26.6%) and those consisting of 4 bedrooms (21.1%). In comparison with the results of the previous census, conducted in 1994, it appears that the proportion of housing units consisting of one or two bedrooms fell, while dwelling consisting of 3 and 4 bedrooms has risen.

Property development is an activity that is growing at a certain and sure pace. The figures of the number of developers grew from 827 in 2001 to over 1290 end 2006, a further proof to the constant growth of the sector

27th May 2009

In its latest regular meeting session, the Tunisian Central Bank’s Board of Directors has acknowledged the recently emerging signs of improvement in economic activities, particularly in the United States, which could augur the beginning of a reflexive impact of the crisis, thanks to the accommodative fiscal and monetary policies that have been implemented in most countries.

Meanwhile, the economic situation in Tunisia was characterized by a decline in both, the trade with the outside world and the industrial production geared for export, due to the contraction of global demand, particularly in the main partner countries. However, the available indicators point to a promising agricultural season and to an improvement in mining and energy activity as well as in some service activities, such as communication technologies and the financial services sectors.

In monetary terms, the money supply (M3) continued during the first four months of 2009, the same pace of growth as that recorded during the same period last year of 3.9%, while the economy competitiveness grew by 3% against 2.4% a year earlier. Excess liquidity contracted slightly in the month of May. However, the Central Bank continued its intervention to regulate the liquidity by injecting a further cash envelope averaging 856 MTD. The interest rate on the money market fluctuated during the same month, between 4.13% and 4.39%. The average MMR was thus set at 4.28% until May 25^th. As to the Dinar, it has recorded a depreciation of 1.9% against the euro during the first 4 to 5 months of the year.

Inflation has declined significantly compared to the previous year, averaging 3.2% at the end of April 2009, against 5.8% during the same period a year earlier.

In the light of these developments, the Board of Directors has decided to keep the TCB’s key interest rate unchanged, while stressing the need to continue the close monitoring of the evolving international economic and financial situation and the conditions of financing the country’s economic activities.

7th March 2009

European, Arab and American airlines will be allowed to operate freely in Tunisian airspace in the wake of Tunisia’s accession to the open skies agreement.  This is the fruit of the negotiations which were conducted for several years and will result in an increased number of passengers to and from Tunisia.

Speaking of flights linking Tunisia to the UK, the Tunisian National Office for Tourism said that, services to Tunisia are already accessible to British Airways aircrafts and to the national carrier Tunis Air.  The way is now open to other airline companies including schedule low-cost airlines to start planning flights from Britain to Tunisia.

In anticipation of these services, a new airport is being constructed at Enfidha which will be Tunisia’s 9^th airport.  Its first phase will be achieved by the end of this year and will have an estimated capacity of 7 million passengers annually rising to 30 million once completed.  

7th March 2009

Three new golf courses will soon enter the construction phase following the settlement of land disputes that had delayed their realization by the “Agence Fonciere Touristique” (AFT).  These courses will be developed in Hammamet, Mahdia and Djerba.

With ten already operational courses, Tunisia attracts just 60 thousand golfers per annum at a time when there are more than 120 million golfers around the world; a great number of which are in nearby Europe.  Tunisia could only manage 1.2% of the European market, which accounts for some 2 million golfers.  For a country that claims to be a golf destination, it should at least be able to attract 5% of that market.

A strategic study for the development of golf courses in the country is well underway. A dozen golf courses are planned for 2020, notably in Hammamet, Djerba, Mahdia, Korbous (El Ghedhabna), Lilla Hadhria, Hergla and Gabes.

 25th February 2009

Tunisia has been ranked at the top of Arab countries for quality of life by the Irish magazine “International Living”.

International Living is a private, monthly magazine founded in 1979 by an Irish man called Bill Bonner.  The magazine’s main target audience is expatriates and those who want to leave their own countries of origin and rebuild new lives outside them.  They are people who are seeking, in particular, the cheapest places to live.  A target population much more akin to what is happening in Morocco, where the right to property ownership attracts a different type of “tourism” to that of Tunisia, where this kind of “resident tourist” is rather scarce because of the stringent property laws, however, with the new real estate projects to be built by investors from the Gulf, things are slowly changing.  Nevertheless, it is true that the assessments which were carried out on the basis of questionnaires filled by individuals do not lack in subjectivity, nor do they reflect the reality on the ground for the average Tunisian resident. 

The 100 index of quality of life is made of 15% for cost of living, 15% for the economy (a series of macroeconomic indicators such as GDP, GDP per capita, growth rate,…), 10% for the environment, 10% for culture and recreation, 10% for climate, 10% liberties, 10% for infrastructure, 10% for security risk.  The ranking which is based on ten criteria relating to quality of life and human wellbeing (cost of living, economy, environment, culture, leisure, liberties, health, infrastructure, security risk, security and climate), puts Tunisia with 56 points ahead of Morocco (55 points), Lebanon and Jordan (54 points), Bahrain (51 points), Egypt and Syria (50 points).

That being said, one can now dissect Tunisia’s ranking in a little more detail!

Credited with 56 points on 100, Tunisia has responded positively to most of the criteria in question.  The results are proof of the steady increase in wages and income redistributions which have impacted positively on living conditions, evidenced by the decline in the poverty rate to around 3.9%, the drop in crude dwellings to less than 0.8% and the improvement in home ownership to over 80%.

However, questions are asked of the Ministries of Environment, Health and Equipment!  First, Tunisia’s ranking in 91^st position worldwide in 2009 is rather a regression by comparison to 87^th in 2008 despite the fact that the number of the countries covered by the survey has dropped by 3, from 196 counties to only 193.  Second, the details of the various components of this classification show that the country’s position has deteriorated. In the “culture and leisure” segment, Tunisia which had an average of 65 points last year gets no more than 59 points.  A drop of 6 points puts it behind Qatar (60 points) and Bahrain (63 points).  On the subject of free economy, Tunisia has lost 8 points.  It must be said that some products such as major labels still unavailable in Tunisia, but seen as more important to “expatriates” than other obvious economic openness did not help!  In this segment, Gulf countries score higher than Tunisia with Bahrain on 41 points and Qatar on 57.   

On the environment, Tunisia loses 3 points, consequently ranking it behind more than one African country such as Tanzania and Zambia.  A whopping 12 points drop in the health sector in just one year, in the eyes of the expatriates, (65 points compared to 77 a year earlier) seems incredible for a country known for it’s “health exporting” image. This is equally valid for the infrastructure segment, in a country that does not stop investing in this important economic sector where no year goes by without the inauguration of a bridge or the birth of a new project. 

Undeniably, although there is more than one question to be asked, this classification is very important.  Important because it is Tunisia’s image in the eyes of others.  Important because it conveys Tunisia’s image to the outside world. Last but not least it is important because these types of reports which are well listed and documented become a bible for travellers and investors. 

25th February 2009

Neither Morocco nor Algeria were included in the annual ranking of the countries best connected, according to Leonard Waverman, consultant and professor at the London Business School. The study puts Tunisia in 14^th place with a score of 3.5 in the list of emerging countries.

The January 2009 Connectivity Scorecard commissioned by Mr. Waverman for the German-Finnish Nokia Siemens Networks equipment network included 50 countries and was based on thirty criteria, which covered fixed and mobile networks, quality of infrastructure, usage of broadband by businesses and the general public and politicians involvement in the development of information technologies.

The table for developed countries is dominated by the United States with a score of 7.71 out of 10, followed by Sweden (7.47), Denmark (7.18) and the Netherlands (6.75).  Another Scandinavian country, Norway, completes the top 5 with 6.51 points.  France can only manage 15^th position in the ranking with a score of 5.22 points.

The table of emerging countries is however, dominated by Malaysia with a score of 7.07 followed by Turkey with 6.71.  With 3.5 points, Tunisia is ranked mid-table ahead of China and Egypt.

25th February 2009

In a space of two days, two mega projects have confirmed their establishment on the Tunisian soil.  One is technological with high added value, strategic and major flow generator and employer of the first order and the second is in the mining industry.

Airbus has just formalized the establishment of its subsidiary in Tunisia for the production of aeronautical subassemblies by the signing of an agreement, few days ago, with the Tunisian government.  This agreement which was signed on behalf of the government by the Tunisian Minister of Development and International Cooperation, Mr. Nouri Jouini, was announced at a press conference held by the Director General of Airbus, Fabrice Bregier and Mr. Christian Cornille, President of the subsidiary “ Aerolia”.

The project will be located on the outskirts of the Tunisian capital on a plot of 20 hectares with 10 hectares being reserved for future expansion.  Its achievement will require an investment totaling 60 million euros approximately and will eventually help create 1,500 jobs in high technology by 2014.

Most recent, is the announcement of the Brazilian Minister of Development, Industry and Foreign Trade, Mr. Miguel George of his country’s intention to invest in Tunisia’s fertilizer industry.  This investment will amount to 2 billion dinars and will allow for the creation of 18 to 20 thousand jobs.

25th February 2009

The development group “Kelibia la Blanche”, the developer of the Kelibian tourist resort “La Blanche” was granted the Five Star Diamond Award by the American Academy of Hospitality Sciences for the best online real estate development in 2009.

The coronation took place during the Monte Carlo Travel Market 5^th edition, which saw the participation of 440 exhibitors from 44 countries. 

More than 14 thousand visitors, mostly professionals, took part in this show considered to be one of the greatest events of the Principality of Monaco

25th February 2009

In his opening speech, the minister of Developments and International Cooperation, Mr. Mohamed Nouri Jouini, announced that the volume of Direct Foreign Investment (DFI) in Tunisia has risen to reach 3,100 million dinars in 2008 compared to 2,000 million dinars in 2007 and to only 300 million dinars in 1998.

Despite a below expectation agricultural season and a decline in hydrocarbons and mining production, the Tunisian economy has managed to achieve a 5% growth rate resulting in the creation of more than 80,000 additional jobs.

For 2009, however, the state has revised downwards its initial forecasted growth of 6.3% to 5% as well as its 82,000 projected new jobs to 77,000 taking into consideration the current global economic downturn and the possible negative impacts that may have on the Tunisian economy.

The minister declared that 2009 will be the start year for the implementation for the program of the competitiveness improvement of economic enterprises for which the sum of around 450 million dinars has been mobilized in addition to the 500 million dinars earmarked for the program of integrated development which will cover 90 delegations of which 54 in the border areas, the meridian coastline and other zones close to major urban areas such Tunis Sfax and Sousse.

On the subject of the global financial crisis and its possible impacts on the Tunisian economy, Mr. Jouini stressed in this context that there will be no serious or major repercussions on the country’s financial balances or its banking sector. He reminded his audience that Tunisia has chosen not to proceed, in 2009, with any borrowing from the international financial market and or private outlays, in parallel and in agreement with donor funds such as the World Bank, the European Investment Bank (EIB) and the African Development Bank (ADB) in order to increase the volume of financing consecrated to Tunisia.  As to the decline which was recently registered in export volumes of certain sectors such as textile, car components and electrical goods, the minister said that it is directly linked to the weakening in demand in the countries of the European Union, Tunisia’s number one trading partner. He added that Tunisia’s program for the crisis management takes into account the limitations (as far as possible) and repercussions of potential impacts as well as the exploitation of opportunities which will benefit the national economy and guarantees a strong economic recovery once the crisis is over.  He also said that the government will conduct a comprehensive assessment in February of the impact of the crisis on the Tunisian economy.  The assessment will constitute the basis on which preventive and curative measures will be determined.

With regard to the major projects for which agreements have been concluded between the Tunisian government and foreign investors, the minister has indicated that their implementation is on schedule, stressing, that no group of investors had expressed its wish to withdraw.  He added that he expects changes in the international economic situation and to other investments influx towards Tunisia after the crisis. He emphasizes, that Tunisia has become an important player on the world map of investments, indicating that the pattern of the country’s development will in the future be based on promising sectors such as information technology and communication, transportation services and logistics, service industry, financial services, health, tourism and export oriented sectors.  

The task of preparing studies on the prospects of investing in these sectors has been entrusted to several specialized international firms. The results of their studies will be presented to foreign and local investors in order to encourage them to invest even more on the Tunisian territory.  

18th January 2009

The Tunisian National Civil Aviation Authorities has announced that the European low-cost carrier Easy Jet has been given the authorization to operate in Tunisia.

 Easy Jet disposes of an important fleet which includes Boeing 737-700, Airbus A320-200 and Airbus A321-200.  The company operates 380 routes, short and medium-haul, serving nearly 100 airports in Europe, Morocco, Egypt and Turkey.  During 2008 the airliner carried 43.7 million passengers which represent an increase in passenger traffic of 17.3% compared to 2007.

11th January 2009

A brand new mega project will soon see the light in Tunisia.

Following the meeting held on Thursday January 8^th between the head of the state and Mr. Issam Yousef Janahi, Chairman of the Board of Directors of the group “Vision 3 Alliance” and “Gulf Finance House” (GFH), the birth of a new mega project baptized “Tunis Telecom City” was announced.

According to the agency TAP, the group “Vision 3 Alliance” plans to achieve the said project for the sum of 3 billion US dollars (approximately, 4 billion Tunisian Dinars).  The project will help create some 26,000 jobs.

In a presentation, Mr. Issam Yousef Janahi presented the different components of this project which will include a university and a bourse for international communication, a group for technology development, a free trade zone destined for business as well as a technology hub in the domains of multimedia and substance development.

In the course of his meeting with Mr. Janahi, the head of the state stressed the importance that Tunisia attaches to the strategic sectors that fall within the priorities and guidelines of the communication technologies domain.

Mr. Janahi declared that the works on the “Tunis Financial Harbour” that the group is planning to build will start during the month of February this year, a project that does not cease to attract a number of investors. He added that "Tunis Telecom city" figures among the leading technology centres in North Africa and is an integrated project involving more training institutions, research and teaching, real estate, residential as well as leisure.  The Chairman has underlined, that the choice of Tunisia to host this project has been driven by investment incentives, noting that the ranking of Tunisia by the Davos World Economic Forum amongst the top countries in the field of information technologies and 35^th overall in macroeconomic competitiveness out of 122 countries was a consolidating factor.  

9th January 2009

Today, there is no question of ignoring the problem of the financial crisis affecting most countries. It is therefore imperative to identify their possible impacts and to find appropriate solutions. This crisis has, according to experts and analysts from around the world, had effect on all sectors of activity including tourism.

In Tunisia, it is clear that the tourism market is highly dependent on Europe, potentially putting it through a few twists and turns, given the reluctance of the European tour operators. However, these are only the findings, but nothing is certain as yet, as several other factors in Tunisia ensure that the proximity of the Tunisian market combined with its multitude of possibilities could enable it to cope, or even gain.

One thing is quite clear, the figures are convincing, because during the first eleven months of 2008, Tunisia has hosted 6.6 million tourists, an increase of 3.7% compared to the same period of 2007. Libyans occupy the first position with 1.6 million tourists.

According to the Office National du Tourisme Tunisien (ONTT), the French top the list of Tunisia’s traditional market with 1.3 million visitors (+4.8%), followed by Algerians with some 1 million tourists.  Over the full year entries should exceed the milestone of 7 millions, thus surpassing the predictions of the World Tourism Organisation (WTO), which now expects a growth of 2% against the initial average fixed at 4% in 2008.   In terms of revenues, the industry is expected to exceed 3 billion dinars.

These results were achieved thanks to the increase in tourist accommodation units.  An additional 3,147 beds in the course of 2008 were introduced raising the total bed capacity from 235,647 to 238,794.  Some 10,959 additional beds resulting from other ongoing projects with investments in the order of 488 million dinars are also planned. The projects which are currently being studied will add a further 22,175 beds and will mobilize 1075 million dinars of investment.

Regarding the outlook for the sector, things are somewhat fuzzy thanks to the financial crisis that is currently plaguing the world, a predicament that is preventing all previsions and all forecasts.

Two scenarios are possible; if the European middle classes are affected by the crisis, then the decline in reservations will be felt in the early months of 2009.  However, if this section of the public, which represents a significant proportion of travellers to Tunisia, somehow remains untouched by the crisis, Tunisia will be able to keep its market share and increase its revenue providing that it focuses on promoting its natural potentials, cultural and environmental.

The sector’s operators are therefore required to provide more efforts to improve the quality of the services, either through close partnerships with major European tour operators or promoters of the Tunisia destination.  Such actions must be well targeted in 2009, perhaps more than ever before in order to preserve the Tunisia destination and help maintain its place among the tough competition prevailing in the southern Mediterranean.

9th January 2009

The financial meltdown and the downturn in the international economic activities which dominate the news agenda have prompted a massive government intervention throughout the world.  Plans aiming at reviving economic activities and specific measures targeting sectors affected by the crisis such as the motorcar industry were hurriedly implemented.

Against a backdrop of falling inflation rates in most of these countries, monetary authorities have continued during the month of December 2008, the easing of monetary policy by reducing interest rates, especially in industrialized countries. However, and despite the importance of these measures, the economic recession which has affected most of the developed countries should continue to persist in 2009 with a contraction in the pace of global growth by 2.2% expected against 3.7% growth rate for the year 2008. Foreign exchange markets continue to be volatile, international stock exchanges and the prices of most commodities, including crude oil have slumped.

At the national level, the data accumulated at the end of November 2008 shows a continued rise in both, industrial production and the pace of trade with the outside world, the results of November also show that some export sectors are beginning to suffer due to lower global demand and the deteriorating growth prospects in the countries of the European Union.

It should be noted that the board of directors at the Tunisian Central Bank (TCB) has already stated in previous releases that it is not anticipated that the global financial crisis will directly affect the banking and financial sector, the decline in global growth is however, likely to affect the real economy and especially export prospects and growth.

In monetary terms, the money supply (M3) and the economic contests grew during the first eleven months of 2008 by 14.2% and 12.2% respectively, while the contraction of the surplus liquidity continued and interest rate has fluctuated on a daily basis on the money market during the month of December, between 4.99% and 5.38%.

Regarding inflation, annual prices fell back to 4.3% in November 2008 against 4.5% the previous month and 4.6% a year earlier. For its part, the exchange rate for the dinar has recorded a slight depreciation against the euro (2.8%) over the course of the year 2008.

In view of these developments, the Council welcomed the steps taken by the President of the Republic, during the Council of Ministers on December 23^rd 2008, aimed at increasing support for exporters who could experience a contraction in their activities following the deterioration of the global economic situation, strengthen their competitiveness and help them overcome the fallout from the global financial crisis, to enable them to continue operating and preserve jobs.

The Council stresses, in particular, the importance of the measures of a financial nature involving the takeover by the state of two percentage points of interest rates on credit as part of the rescheduling operations for the benefit of exporting companies, which are experiencing a delay in the recovery of their claims in respect of the export or contraction of their businesses, and support for these companies to enable them to cover their additional working capital needs and the establishment of a fund of 100 million euros for the benefit of non-residents enterprises in order to finance their new investments and maintain the pace of increase  in direct foreign investments.

To support these measures, the Board of Directors of the Central Bank decided to cut the rate of the obligatory reserves as from January 2009, to make available to the banking system an additional liquidity in the order of 250 MTD which would certainly help to broaden the scope of its intervention in the financing of the economy in general and the enterprise in particular.

7th January 2009

In its 2008 report on the Tunisian economy, the Oxford Business Group affirmed that in a context marked by the unfavorable world economic crisis, "the Tunisian economy remains surprisingly robust at the end of the year 2008", citing the considerable progress accomplished in privatization and liberalization, as a result of the constant and progressive evolution with which the country seeks to implement fundamental economic reforms.

Detailing the performance of Tunisia, the report stresses that, on the macroeconomic level, Tunisia displays a healthy growth and a controlled inflation. GDP growth is estimated at 5.1% for 2008 - a rate lower than the 6.3% registered in 2007 but remains strong, especially given the slowdown in activity in the euro zone, Tunisia’s largest trading partner. Moreover, despite soaring food prices and construction materials, inflation has slowed to 5%, while other countries in the region, like Egypt or Jordan, are grappling with inflation above 12%.

The report also highlighted the "spectacular results" posted in 2008 by the Tunisian national banking sector, yet faced with a number of difficulties over recent years and despite the uncertain global economy. The sector has also been reporting an important level of outstanding receivables (NPL) for several years. However, with 43 financial institutions, the sector equally suffers from too much fragmentation. Nevertheless, the fundamentals seem in constant progression.

The introduction of the Poulina Group to the Tunis bourse and the coming of age in late March of Artes, a group of car distribution which offered 39% of its share capital to the public on the local market gave a boost to the BVMT, allowing the index “Tunindex” to progress by more than 13% over the course of the year.  

The Oxford Business Group then addressed "the Government's commitment to make Tunisia a knowledge based economy that has quickly resulted in a marked improvement in the level of penetration and sophistication of the sectors of telecommunications and information technology. The group cites in this regard the World Report on the use of information technology where Tunisia was ranked 35^th by the World Economic Forum in 2008 in terms of technological ability, accessibility and regulations. At the regional level, the country is ranked second-largest in the Middle East and North Africa after the United Arab Emirates and ahead of several countries in the region like Jordan (47th) and Morocco (74th).

Record tourism revenues were recorded 

Traditional industries have also experienced strong growth, noted the Oxford Business Group and despite the slowdown in the European markets, tourism (one of the key economic sectors of Tunisia and the second largest employer after Agriculture) has shown steady growth during the first nine months of 2008, with record revenues recorded by the end of the year.

The face of the country is also being changed rapidly, due to the completion of a series of huge real estate projects and infrastructure. “Sama Dubai” has received the approval of the State for the launch of its huge real estate project "Gate of the Mediterranean" which will be realised for an amount of 25 billion dollars, on the banks of the South Lake. To the north of the lake, another Emirati developer “Bukhatir” has started to build the Tunis sports city, a joint project that stretches along the highway of La Marsa in the northern suburb of Tunis, whose work is expected to be completed in 2015. Nearby, “Al Maabar”, a native of Abu Dhabi, has announced its intention to launch Bled El Ward, a project which covers 5000 hectares, also in the northern suburbs of Tunis and whose investments expected to caracole around the 10 billion dollars. The Bahraini group "Gulf Finance House is also on track for achieving its project “Tunis Financial Harbour”, with an investment of 3 billion dollars.

Despite global economic uncertainty, the Tunisian government expects that the year 2009 will take good shape economically and that it will be fruitful. In its budget bill recently introduced in 2009, the government has increased public spending, which should reach more than $ 12 billion. This increase of 12% should be partly offset by inflows of foreign investment amounting to 1.75 billion dollars and a GDP growth estimated at 5%. Inflation is expected to fall to 3.5%, a rate that is more accommodating to continue the process of privatization and liberalization already underway concludes the report.

7th January 2009

Olive oil production occupies a strategic place in the Tunisian economy and is the subject of high attention reflected in the various policies and strategies adopted for its development, such as the re-launch of the national strategy for the promotion of the industry, which has been abandoned since 1988, in addition to the restructuring of the sector, initiated in 1994, and the opening of its market to exporters.

This strategy has been strengthened following the program decided by the head of state in 2005 aiming at reorganising the traditional forests and renewing irrigated plantations to improve productivity and ensure stable production.

The policies adopted have permitted to build up the sector by extending the areas of olive groves which now represent one third of the arable land in Tunisia.

These efforts have had a positive impact on olive growing in terms of production, increase and diversification of exports as well as in attracting private investment in the new plantation, processing and packaging of the olive oil.

The emphasis on the olive oil sector has allowed for the tripling of production in the period between 1960 and 2008, putting Tunisia in second place worldwide in terms of areas reserved for olive growing to 1.7 million hectares and 70 million olive trees. 

Tunisia is the second largest producer of olive oil after the European Union, with an average production of about 165, 000 tones recorded during the last quarter, the equivalent of 6 % of total world production.
   
The transformation device includes over 1,700 mills with a capacity exceeding 40,000 tons. The storage capacity is estimated to be 350,000 tons.

This sector has an important social dimension since it constitutes a source of income for more than one million people including 309,000 farmers (the equivalent of 60% of all farmers in Tunisia) partially or fully engaged in this activity.

The economic importance of the sector is reflected through its contribution which accounts for up to 44% of all Tunisian agricultural export.  The average annual olive oil exports, has reached over the past decade nearly 120,000 tons of which 70% is exported.

7th January 2009

During the first eleven months of 2008, Tunisia’s balance of foreign trade has recorded an increase of 24.9% for exports and 26% for imports.  The coverage rate stands at 78.8%.

Exports in general, grew by 49.4% and imports by 35.8%, establishing the coverage rate at 50.8%.

Offshore exports grew by only 9.4%, while imports stood at 6.3%. The coverage rate, meanwhile, stands at 150.1%

2nd December 2008

Confined for several months in the upper echelons of international finance, the crisis is beginning to conquer what the experts call the "real economy". In this context, these are the sectors that are more or less related to the well-being and comfort such as tourism and the car manufacturing industry who were the first to pay for the mess. What's easier for households to delay or even abandon completely than the purchase of a week in the sun or a new vehicle?

Given the current climate of uncertainty that affects consumer confidence, it is very likely according to the experts to see the tourism industry facing major challenges in the coming months, even during the two or three years to come. For 2008, the World Tourism Organization (UNWTO) expects a growth of 2% against an average initially set at 4% worldwide. This winter, the Europeans will be less likely to go on holiday. Besides, according to an investigation carried out by TNS Sofres / Logica and subsequently published last October, found that more than 40% of French people have changed their consumption patterns. They have already reduced their holiday weekends’ budget by 50%.

An unmatched resilience.

The "belt’s tightening” resulting from a decline in purchasing power and a lower morale took immediate effect on bookings for destinations in the sun this winter. The decline in holiday reservations for some tour operators reached 20% causing them to slash their prices.  New destinations such as Tunisia, offer more attractive prices that could save the holiday maker as much as 40%, launching publicity campaigns with shock slogans like “Crisis price, go on holiday despite the crisis!! Yes We Can” a slogan that was borrowed from the architects of the historic accession of the first black president of the United States of America to the White House.  For its part, the tour operator “Fram” focuses its campaigns on the “low-cost” destinations urging travelers to flee “misery” and abandon their “worries”. These operators use and rely on a report on destinations considered to be “advantageous for quality-price.” And one of its key destinations remains Tunisia. The destination has indeed achieved during the first ten months of this year 2,900 million dinars of tourism revenue, an increase of 6% compared with the same period last year. Entries saw an increase of 3.4% between January 1 and October 30^th, the equivalent to 6,288,000 tourists. Meanwhile, the nights have exceeded 35.1 million, an increase of 2%. According to the Ministry of Tourism, the total number of tourist entries should exceed seven million over the full year 2008.

Several of the most popular tourist destinations rankings, confirm Tunisia’s excellent resistance capacity in facing the financial “tsunami.”  Ranked in the top 10 by “Lastminute.com,” the Tunisia destination has managed to stay ahead of the game.  A position that is also confirmed by the online agency “Opodo”, which states that “Tunisia, always plays on the “interesting prices” theme, a determining factor in times of pressure on purchasing power.”

An emergency brake on the horizon!

Despite these satisfactory results in this lean period, we began increasingly to recognise that Tunisia will not remain always untouched by the crisis. The Director General of the French group Accor Hospitality for Egypt, Algeria and Tunisia, Thierry de Jahan, has recently estimated that “vision is fairly good for the four or five months to come in the southern Mediterranean” but revealed that echoes from Europe are very negative. "The slowdown in the tourism industry seems inevitable throughout the world," he emphasized.

Having predicted in a way, perhaps, a little bit optimistic at a press conference in early November that the effects of the crisis will be felt in Tunisia from 2010, the Minister of Tourism, Lâajimi Khelil, has recently indicated that the impact of the slowdown in the global economy "will be felt sooner or later in Tunisia", noting, however, that the authorities are already trying to find adequate remedies to the likely brake. "The year 2009 will be an opportunity for us to meet the challenges of quality, good value and competitiveness of the Tunisian tourism product," said the minister at a seminar on the quality in the tourism sector which was held November 27^th in Hammamet.  

In addition to the promotional activities aimed at improving the visibility of the industry, Tunisia is now looking at changing the structure of its tourism sector to better cope with the global slowdown and the increasing regional competition from Morocco and Turkey. Since the 70s, Tunisia has been a major market of mass tourism, with a market that relies heavily on tour operators and groups of wholesale package. Although this strategy has launched the country into its role as the first tourist destination, it had a negative impact on its viability and growth prospects. Given that travel packages rarely go outside their prescribed routes, tourism-related revenues have remained limited. Per tourist income in Tunisia is around 333 dollars, while in Morocco which is considered to be a more upmarket destination, receives about 1040 dollars per head. Similarly, Egypt receives around $ 850 per head.

In an attempt to go beyond the model of mass tourism, Tunisia has begun to strengthen its niche markets, particularly in the medical tourism, the spa therapy Saharan tourism and golf.

29th November 2008

Mr. Abdelhamid Triki, expressed his satisfaction at the excellent cooperation between Tunisia and the EIB, indicating his appreciation for the support that this financial institution offers to Tunisia in order to achieve these important projects as part of its development priorities.
   
He pointed out that development and modernisation of basic infrastructure such as roads, has a particular role to play in development programs agreed for the next period and its positive impact on improving the competitiveness of the economy and the amelioration of the business environment and investment.

Mr. Philippe de Fontaine Vive, for his part, expressed the disposition of his institution to support Tunisia in achieving its development projects and programs which target high social and economic returns. He has saluted and welcomed the efficiency that characterises the execution of these projects.

Mr. De Fontaine Vive has also expressed the interest of the EIB in continuing its cooperation as well as the strengthening of its financing to both public and private projects given their complementarities

28th November 2008

Since early 2008, Tunisia has witnessed a great movement of foreign industries relocation in particular in the aeronautic sector and the different services related to it.  According to the Groupement des Industries Tunisiennes Aéronautiques et Spatiales (GITAS), which brings together 17 companies, mostly of French origin, the Tunisian subcontracting aeronautic industry knows an unprecedented development.  It currently employs no less than 2,000 people and this figure is likely to double within the next two years.

This movement began in January with the opening of a new headquarters by the group SITA in Tunisia. The implementation of this group which is considered to be a leading global provider of communications services for the airline industry, has enabled the strengthening of the sector in Tunisia.

Also, there is Latécoère a group that is present in Tunisia since 1995 and already has two production sites, one at Charguia near Tunis, while the other is in Zaghouan since 2006. Both sites specialise in wiring. Latécoère’s successful experience drew the attention of the group Zodiac a company that has been in business since 1896 and specialises in four activities aero safety Systems, Aircraft Systems, Airline Equipment and Aircraft Technology.

Present in Tunisia since 2000, Zodiac dedicates part of its production to the Aero safety Systems which designs and  manufactures equipment destined primarily for aircraft manufacturers, (fixed wing aircraft manufacturers and helicopter manufacturers) weapons systems as well as military aircrafts and space research.

This relocation movement which we have witnessed in the last few years is due primarily to Tunisia’s low labour costs. It is in this context that Mr. Philippe Cussonnet, president of Gitas has said that, "The Tunisian labour cost is four to six times cheaper than that of France."

But this is not the only reason for which these groups and companies have chosen Tunisia relocate to.  More importantly, Tunisia has a skilled work force that speaks excellent French.

These reasons have also been a major factor in Airbus’ decision to open up a new factory in Tunisia as part of its Power8 + plan.  This investment, which was announced last September, will help create up to 2,000 new jobs, with a budget of 100 million euros. This mega project will be based at the industrial area Mghira 3 near Tunis on an area of 20 hectares.

Another aircraft manufacturer, of Italian origin, has recently announced its relocation to Tunisia. Storm Aircraft, which specialises in tourism aircraft, is busy building a production and assembly site worth 2 million euros in Mateur in the north of the country. A further sixty jobs will be created. 

Tabarka will host in turn a mega project in the same area. According to Mr. Abderrahim Zouari, Minister of Transport, a US-Kuwaiti company specialising in aircraft maintenance, has chosen this tourist town in the North-west to settle.  An investment of 1 billion dinars is expected.

The trend of settling in the North continues with the company Mecahers which recently chose to create a new production site in Tunis. The French aerospace subcontractor, specialising in precision engineering operations of high quality, will start its activities in its purpose built, first workshop, of 1 600 square meters, with 15 people.

On the other hand, and always in the aviation industry, Tunisia is in the process of building a new airport located at Enfidha.  This future airport will serve principally, the northern Sahel of Tunisia (including Sousse and Kairouan) and the Southern Cape Bon. With an investment of 392.5 million euros, this mega project should be operational no later than October 1^st 2009.

Directed by Tunisia TAV, a subsidiary of the Turkish operator TAV Airport Holding, the international airport of Enfidha will have an initial capacity of 7 million passengers per year and cover 90,000 m 2. The project could well include a section for aviation maintenance.

How could one explain such a "migration" of companies in the aviation sector?

It is neither chance nor hazard that made these manufacturers and subcontractors choose to relocate part of their production to Tunisia. Obviously, a large company cannot be content with a given turnover growth. Especially with new realities imposed by globalisation, fierce competition, the hysterical fluctuation of fuel prices, the increasingly high labour costs.

Add to this the prevailing international financial crisis, which has caused huge inflationary pressures in the U.S. and Europe, turning quickly into deflation with the bankruptcy of several banks and falling oil prices.

Faced with this situation, European countries have understood that outsourcing will play an essential part in coping with an unbeatable Asian labour costs.

For Tunisia, the situation was different. The country has adopted a sound approach which led to achieve reassuring figures regarding economic growth and attractiveness to Direct Foreign Investment.

To pursue this approach and improve these indicators and to catalyze more DFI, the Tunisian government, in an era of change, has made several initiatives.

One example is the signing of the agreement relative to the complete dismantling of trade barriers with the European Union creating effectively a free trade area, the incentives granted to export enterprises, the Finance Act 2008 adopted with the objectives set by the State, the measures of tax relief ...

All these majestic achievements, which contribute to the strengthening of the Tunisian economic status, remain insufficient in light of the current international financial situation. It is true that on the national level, as stated by the Board of the Tunisian Central Bank (TCB) in its latest report, the financial sector has not been directly affected by the fallout from the global financial crisis. However, other industries such as textiles electromechanical industries and tourism require closer monitoring and supervision to avoid being damaged by the crisis.

In this sense, Tunisia must move forward in pursuing its initial approach of attracting more Direct Foreign Investments, which are likely to build a protective shield for the country.

21st November 2008

The first major DIY super store, Bricorama, will soon open its doors in Tunisia.  The superstore which is situated on the trading estate north of the capital, just off the motorway linking Tunis and Bizerte, spreads over five hectares and offers a large selection of local and imported products. 

No fewer than 40,000 items covering various areas including lighting, decoration, painting, bathrooms, kitchens, wood, electrical, hardware, tools, crafts, garden requirements and generally all that is necessary for home construction and improvement. Free parking large enough to accommodate nearly 350 vehicles will be made available to customers, in addition, spaces for catering, banking services and practical advice are also provided. 

8th November 2008

The new generation of mega-projects, are mobilizing investments in excess of 70 billion dollars. They aim to help create conditions for faster and more sustainable growth. The stakes are high when you consider that Tunisia is expected to achieve an annual growth rate of over 6%, to create up to one million new jobs over the next decade and double the purchasing power of its citizens.  
These mega-projects, which fall into five categories, meet the national priorities of job creation, energy self-sufficiency, and extension of the motorway network, safeguarding the environment, the promotion of culture and converting Tunis the capital into an international financial hub.

New cities

7th November 2008

Fears that the current global financial crisis would be transformed into an economic crisis which could potentially affect strategic sectors in both, developed and emerging countries is being confirmed with each day that passes.  Countries with economies where tourism plays a significant role, such as Tunisia are naturally apprehensive, as to what extent the effects of a global recession will impact on the behavior of their markets.

Indeed, if European citizens see their purchasing power decline and the premise of such a slowdown is already there, they will no longer come to Tunisia. The tourism sector output of a good year where the number of tourists has already gone passed the 5and half million during the first eight months, may suffer the consequences of this rampant turmoil. 

At a time where European markets are in trouble and where Tunisia is struggling to win back British, German and Italian clients, the current financial turmoil, chief generator of budgetary constraints for households, does not help in rearranging things any better.  A committee was established at the Ministry of Tourism to monitor economic and market behavior, says a source who informed that, "All bookings for 2008 were maintained. There were no cancellations. But the risks are posed for the year 2009.”  He added: "Currently the visibility is zero. The situation will probably become clearer in December or January. Tour Operators are also in the dark and we were promised a clarification of the situation earlier this year.”  The source went on to say that, “Tunisia will not be the only country hit.  Of course, the crisis is global and everyone is in the same basket.”

Will this lead on to a post September 11^th scenario, when the global tourism sector was hit pretty badly?  Certainly, the circumstances are different:  In the aftermath of the attack on the Twin Towers, the brake on traveling was psychological, a certain flying phobia was clearly illustrated and today the phobia is economic.

The result, if the chaos persists, will be the same: potential tourism immobilization inducing a great loss to the tourism industry and lowering foreign currency earnings for countries that fundamentally rely on tourism.  Certainly, no one will be spared. But the effects of the crisis will not be felt with the same intensity from one country to another.  The difference will depend on who is most likely to be more attractive and more aggressive on the markets to bring the maximum tourists.  The difference will also be on the level of the offers.  Although, on that score, the Tunisian offer remains relatively cheap in such a way that it will be difficult to imagine it going even cheaper.  One must not push the cap so far, at the risk of harming the image of a Tunisia destination still under construction. 

Everything is resting on how intelligently one could adapt to the vagaries of the economy. The same ritual of preparing for participation in fairs and exhibitions remains unconditional and indispensable.  Nevertheless, all that can be done will be done with a sense of an uncertain future.

3rd November 2008

Tunisia occupies the 2^nd place on the international level, after Singapore, in the field of public expenditure control.  It beats most of the developed and emerging countries throughout the world, like Qatar, United Arab Emirates (UAE), Finland, Oman, Denmark, Hong Kong, Iceland, Malaysia, Switzerland, Holland and France.

The list was prepared on the basis of an opinion poll conducted by the Davos World Economic Forum of some 12,297 entrepreneurs from all over the world in order to gather their opinions and impressions on "the role of government expenditure in services that the market place does not offer."

The scoring of the different nations involved in the ranking varied from 1 (waste of public money) to 7 (excellent control and good management of public funds).  Tunisia, for its part has managed to obtain 5.6 points, which has allowed it to occupy the second place on the international level out of 134 countries.

This ranking reflects, according to Mr. Noureddine Zekri, Director General of the Foreign Investment Department at the Ministry of Economic Development and International Cooperation, the success of the Tunisian approach based on the correlation between the social and the economic arenas.

The development policy in Tunisia has in fact given an increased interest to the social area through investment in all stages of education, health, vocational training and employment, in addition to the amounts allocated to subsidize basic products and hydrocarbons, while pursuing the investment efforts of basic infrastructure.

These development choices have contributed to the preservation of the social peace, secure an environment conducive to investment and production and helped consolidate the social and political stability factors.

This classification is also the result of the measures that Tunisia has adopted in curbing public debt and budget deficit, rationalization of taxation, preserving and strengthening the income per capita, the promulgation of appropriate legislation and the creation of support structures to aid  the work of social development.  Respect by Tunisia of its obligations, both inside and outside, bearing in mind that the country has never resorted to the rescheduling of its debt, found a positive response from the surveyed entrepreneurs who confirmed Tunisia’s good standing in the world.

The report of the World Economic Forum in Davos for the period 2008-2009, ranked Tunisia among the top 20 countries in the world on 17 themes, namely:-

• good government decisions (14^th)
• public expenditure control (2^nd)
• rigidity procedures and regulations (16^th)
• transparency of public policies (15^th)
• quality of basic education (21^st)
• expenditure in the education sector (14^th)
• quality of the education system (17^th)
• the quality of teaching science and mathematics (7^th)
• quality of management of the education institutions (17^th)
• the impact of taxation (21^st)
• deadlines for setting up businesses (19^th)
• the cost of the agricultural sector policy (4^th)
• the impact of direct foreign investment on the business environment (16^th)
• the contribution of the public offer in market supply (21^st)
• the acquisition by the Government of products at the cutting edge of technology (3^rd)
• on the subject of availability of scientists and engineers (10th).

In an interview to the Agence Tunis Afrique Press, Mr. Noureddine Zekri has reiterated that, Tunisia follows with great attention its international rankings, which encourages it to take the necessary measures required to consolidate the achievements and to introduce reforms in a timely fashion. He made it clear that Tunisia could well improve its current classification which did not take into account the multiple decisions and measures taken recently, which would have had a positive and tangible impact on ranking indicators, like the upgrading of education, the new law on economic initiative and the law relative to the Concession Act as well as the Code of Customs.

The Honourable international ranking of Tunisia in the field of public expenditure control has a significant and deep meaning on the economic and social dimensions, highlighting the efforts made by Tunisia in the good management domain and establishing the rules of governance by excellence.

2nd November 2008

According to a report published by the travel site “easier.com” based on a statement made by the travel specialist, “lastminute.com”, the number of British tourists who choose Tunisia as their holiday destination should rise substantially.  “Diving temperatures and the off season snow appearance in England, has seen bookings to countries with warmer climate skyrocket,” reported the travel retailer “lastminute.com”.

According to the site, “bookings to Morocco and Turkey are at their highest with 25% increase compared to the same period last year, while Egypt and Tunisia are experiencing even higher demand with the Brits who are seeking warmer climates, increasing by more than 30%.”

29th October 2008

24th October 2008

Direct Foreign Investments (DFI) in Tunisia increased by 38% during the course of the first nine months of 2008 compared with the same period last year, according to Reuters.

Direct Foreign Investments have surpassed the 1.22 billion dinars to 1.68 billion dinars during the course of the same period.  With 352 million, the manufacturing industry sector has managed to attract the largest share of DFI during the period stretching from January to September, the equivalent to a 32% rise.

The tourism sector registered an increase of 21% of foreign investments reaching 183 million dinars.  DIF in the service sector went up by 47% to 233 million dinars compared to the same period in 2007.

A source was saying that, the Tunisian government expects Direct Foreign Investments to reach 26.1% of Gross Domestic Product (GDP) by 2016.  

24th October 2008

After the announcement of Mr. Louis Gallois, Chief Executive of EADS, on the website “Monde”, that Airbus has decided to open a factory in Tunisia in the framework of its “Power8+ plan” and following the meeting that took place on the 09/09/2008 in Toulouse by a European committee to discuss the project of Latecoere’s implantation in Tunisia, FIPA has just confirmed that Airbus’s planned investment is in the order of 100 million euros.

As was previously announced, the project will create help 2,000 new jobs in Tunisia

24th October 2008

Destination Tunisia is currently registering an increase in orders for the period stretching from November to 1^st of April compared with the same period last year, according to Jean-Marc Roze, Secretary General of SNAV-the professionals travel, in an interview with the French news agency AFP.

The AFP adds that, “the financial crisis coupled with the lack of confidence causes consumers to stop and wait, especially as holidays are not an essential necessity”, according to the SNAV Secretary General, speaking on behalf of 1,400 members, representing 60%of French travel agencies .

Perhaps worth mentioning, the remark, reported by the AFP that, “among the still very popular destinations for late October early November are, Egypt, Spain, Morocco, Tunisia for the short haul, Canada, USA and Mauritius for the long haul.”

24th October 2008

According to the latest figures issued by the Tunisian National Institute for Statistics, inflation did not fall below 5%.

In September inflation which began 2008 at around 6% (or 5.8% to be accurate) stood at 5.3%.  For the first 9 months of 2008, all the components of the eight year old basket were on the rise as compared to the same period in the previous year.

21st October 2008

20th October 2008

Present at the Paris motor show, Wallys Izis the 100% Tunisian car which has experienced a great success and already realized an important number of orders and firm reservations, in nearly 30 countries.

Born in 2005, says its designer, Mr. Zied Guiga, the idea was to build a Tunisian car which will integrate components manufactured in Tunisia such as body, wiring, chassis, joints and mechanical parts. 

In a telephone interview with the Agence Tunis Afrique Press (TAP), he says, that the Wallys Izis uses automotive components certified and manufactured in Tunisia, with the exception of the engine which is purchased from Peugeot.  He also said that we have managed to pull off the challenge of approving the car in Europe with European standards.  He added that the car would be sold mainly on the French markets and the Dom-Tom (overseas territories).  Contrary to other Tunisian promoters who wanted to design a car and position themselves on major brands and mass production, the team of Wallys Izis has targeted niche markets and will only produce between three to four hundred cars per annum.

Of the 100% private capitals, 80% are invested in research and development. The Wallys Izis was made possible thanks to a team of 15 dedicated engineers which will grow to reach 40 by the end of the year.

20th October 2008

13th October 2008

This tax which will be collect for the treasury is yet to be determined.  It will help financing the promotional fund for tourism competitiveness.  The decision of creating this fund was called forth before the outbreak of the global financial crisis which could have an effect on the timing of its implementation

13th October 2008

The first phase of the Sama Dubai project in Tunisia is going in accordance with plans.  A number of Tunisian companies will be selected for its execution and for the achievement of its first phase.

The project which will be constructed over an area of 3 million square meters nearby the existing port of Tunis, will cover in its first phase some 14 hectares which will include the 16 towers mentioned by Mr. Farhan Fraidooni during his last press conference in Tunis.

It is believed that this first installment at a cost of 30 million Tunisian dinars will be carried out exclusively by Sama Dubai who does not plan to subcontract anyone else for the task.  This exclusivity should send a strong signal of the investor’s total commitment to the project which will have a significant financial impact on the Tunisian economy.

12th October 2008

During the first eight months of the year, investments in the Tunisian industrial sector have evolved by 19.4% compared with the same eight months a year earlier.  Up until May last year, these investments have increased from 1575.8 million dinars to well over 1881 million dinars this year.  The document published by the National Institute for Statistics, shows that the manufacturing industries specializing in materials such as ceramics, glassware and building materials reported healthy results, thanks to an evolution of 119.7%. 

Textile industries results, however are pointing towards the opposite direction, with 50.7% depreciation compared to the first eight months of 2007, investment in the sector was in the order of 255 million dinars during the course of the first eight months of 2007.  Only 162.7 million dinars were invested in the sector during the first eight months of this year, representing a significant decrease in the leather clothing and footwear industry.  The sector having indeed registered fairly good results during the first few months of the current year, have slumped by 27.7% in the latter part of the eight months period. After the 225 million dinars investment recorded during the eight months trial period of 2007, the industry could only manage 162.7 million dinars this year, a decline of 8.8%.  Miscellaneous manufacturing industries in general saw investment fall from 254.3million dinars during the first eight months of 2007 to 231.8 million dinars in the same period a year later.

The document also shows that the building materials industries are in the lead. Thanks to a remarkable evolution of 199.7% investments in the sector, having risen from 219.9 million dinars in the first eight months of 2007 to 483.1 million dinars during the same period this year.  The food industries, in turn, have continued their climb.  Investments in this sector have increased by 12.2%, from 386.2 million dinars to 413 million dinars during the course of the eight comparative months of 2007 and 2008 respectively.  The chemical industries have also experienced an interesting evolution with the amounts of investments going into the sector increasing by more than 250 million dinars in the first eight months of 2008 as compared to 148.3 million dinars for the same period in 2007, the evolution of these industries is in the order of 69.1%.  With a small change of 1.9%, the electro-mechanical industries have kept their pace of growth.  These industries have seen investments which they have managed to attract rise to 315.3 million dinars in the first eight months of this year compared to 309.4 million dinars for the same period in 2007.

These investments in all sectors combined, have witnessed an evolution which was in part foreign.  They have increased from 732.8 million dinars during the first eight months of 2007 to 990.4 million dinars for the same period this year.  Foreign investments have recorded a 5.8% evolution reaching 541.7 million dinars in the eight months trial period as compared to 512 million dinars for the same trial period in 2007.   

11th October 2008

A surveillance unit was established and placed under the responsibility of the Tunisian Central Bank (TCB) on the instructions of the government, following the financial crises that hit the world economy, to closely monitor the evolving situation on the world financial markets, in order to take the necessary timely decisions for the preservation of the Tunisian economic achievements.

Mr. Baccar, the governor of the (TCB), argued that the gravity of the crises has been measured since its outbreak.  In July-August 2007, Tunisia was fully out on the Japanese financial market, when the signs of serious financial crises were emerging.  Faced with a credit line expected at 45 to 50 base points, the (TCB) had to cede 25 base points in order to successfully mobilize resources. Shortly after, an evaluation and monitoring commission was established and a series of measures have been adopted on the level of the country’s foreign exchange reserves management and on the level of housing loans regulations, recalled the governor.

Evaluating the possible impact of these crises on the Tunisian economy, Mr. Baccar felt the need to distinguish between direct and indirect impact as well as the time scale. In the immediate term the crisis will have an impact on the margin applied to the raised funds on the international financial markets, particularly by emerging markets, explained the governor.

It is a question of an old reflex, he said, since for once this crisis was not born in emerging countries as was the case in the Southeast Asia crisis, or the Mexican debt crisis. For instance, the Tunisian emission margins which have fallen to 40-50 base points for maturities of 5 to 10 years, have passed in the peak of the crisis, at the time of Lehman Brothers bankruptcy, to more than 200 base points.  For this reason, Tunisia did not go out on to the financial market in 2008 and the (TCB) has advised the government not to do so in 2009 and instead mobilize the necessary resources for next year’s budget exclusively on the local market, especially as the country is experiencing a liquidity surplus on the domestic level since the beginning of 2008.

Other than this, he stressed that the Tunisian financial institutions do not use the techniques that were at the origin of the crisis on a massive scale and the gap between the real sphere and the financial sphere such as structured products, Mortgage Backed Securities (MBS), Credits Default Swap (CDS) and Collateralized Debt Obligations (CDO) to the fact that local banks investments of their foreign currency in international financial markets obey to strict rules.

On the Tunis Stock Exchange (Bourse), the foreign market share of capitalization in the order of 25% is held by shareholders of reference and not financial investors, giving it, he said, certain stability and puts it at a priori immune to the risk of contagion.

With regard to the indirect impact, it is clear, argued the governor, that if the global economy enters a recession, its impact on the Tunisian economy will be felt.  Eventually no country will be immune to this crisis which many experts are already comparing it with that of 1929, he added.

The adopted plan for 2009, noted the governor, is tabled around a growth increase of 6% against 5.1% in 2008, thanks in particular to a strong external demand, and this emphasizes the need to continue strengthening our competitive capacity, said the governor of the (TCB).    

11th October 2008

The 2009 fiscal budget is estimated at 17.2 billion dinars, an increase of 12% compared with an estimated 15.3 billion dinars in 2008.

The budget is an important event constituting a principal mechanism through which the state sets its objectives for the New Year.

2009 represents a turning point for the Tunisian economy, as it is the final year of implementing the presidential program for “Tomorrow’s Tunisia” and a reference year for the elaboration of the dynamic plan of development for the period 2010-2014.

The government will use the budget to focus on the strengthening of its own resources, streamline costs and increase the amounts allocated for development.

The budget will retain its role in boosting employment, strengthening the basic infrastructure and momentum of investment, in addition to the compensation policy of petroleum and consumer products.  An amount of around 850 million dinars will be devoted to the General Compensation Fund and a subsidy of 890 million dinars will be reserved in this context to compensate for fuel in order to preserve the purchasing power of the citizen, on the one hand, and to improve competitiveness on the other.

Estimates of public finances for next year require the limiting of the net deficit to 3% of GDP, without taking account of privatization transactions. Those estimates are based on reducing public dept and the mobilization of borrowing resources in the local market, especially as the Tunisian Central Bank (TCB) confirms that there will be no “Tunisia release” on the international market neither this year or next.

The finance bill for next year includes a set of measures and actions to strengthen the tax system as part of compliance with the requirements of transparency and justice, in such a way that it will contribute to the development of its own resources.

The development pattern on the basis of which next year’s budget is fixed, aims to achieve a growth rate of around 6% at constant prices against an expected rate of 5.1% for 2008.  This objective is based on the progression of the value added in the agricultural sector of 2.8% as compared to a decline of 0.5% in 2008 and the expected growth of the manufacturing industries (5%) through the significant increase in the value added in the electro-mechanical industries.  The development plan is also based on achieving a growth rate of 9.8% for non-manufacturing sectors and the evolution of the services sector by 8.1%.  Achieving high levels of growth remains the key challenge to boost the pace of job creation.

The fulfillment of these objectives requires, encouraging investment, notably in high value added sectors as well as the promotion of exports in an international environment characterized by an ever increasing competition.  The overall investment will progress in 2009 from 9.9% to establish the investment rate to 26.7% of GDP against a rate of 25.1% for 2008.

The private sector contribution to such investments should rise to 61% in the light of the progress made on the subject of implementation of the mega-projects in the confessional framework and the given importance to the measures in order to enhance the role of private sector.

The development plan for 2009 is based on 6.4% increase in exports and imports growth of 6.3%.   The various estimates have been determined taking into account a limitation of the current account deficit to around 3% of GDP.  This deficit, in addition to repayment of principal debt and consolidation of assets in foreign currency to cover 135 days of imports, will be funded through the mobilization of resources in the form of grants and loans from various sources as well as Direct Foreign Investment (DFI).

The volume of external debt would be reduced to 36.1% of GDP and the principal of the debt to 7.2% of revenue against a rate of 7.6% originally set for 2008.

All of these choices are based on the correlation between the Tunisian social and economic development plan and confirms the strength of the country’s economy in face of the international financial crisis which the President has ordered its monitoring in accordance with the vision which characterizes Tunisian policy in numerous areas. 

10th October 2008

The global report 2008-2009 of the Davos World Economic Competitiveness Forum has ranked the Tunisian economy 1^st in the Magreb region as well as the whole of Africa. Tunisia was also ranked 4^th in the Arab world and 35^th globally on a total of 134 countries, 3 countries more than the previous year’s total of 131 economies.

This year’s report was established on the basis of 12 pillars, these were as follows: institutions, infrastructure, macroeconomic stability, health, primary education, higher education and training, real estate market efficiency, labour market efficiency, financial market sophistication, technological ability, market size, business sophistication and innovation.

This ranking puts Tunisia ahead of very many nations within its environment, countries such as Bahrain (37^th), Oman (38^th), Jordan (48^th), Morocco (73^rd), Syria (78^th), Egypt (81^st), Libya (91^st) and Algeria (99^th).  Tunisia has done better than several countries in the euro zone such as Portugal (43^rd), Italy (49^th) and Greece (67^th).

In terms of category ranking the country comes 22^nd for its institutions.  Tunisia has, notably distinguished with its ranking in the sub-topics of public management (2^nd), public confidence in politicians (14^th) and in the field of transparency in government decision making (15^th).

Tunisia scores well in the areas of health and primary education (27^th), for higher education and training the country is also ranked 27^th.  For real estate market efficiency Tunisia claims the 30^th spot, an improvement of one place compared to last year’s ranking.

At the level of business sophistication, Tunisia is ranked 2^nd in Africa after South Africa, 3^rd in the Arab world after the United Arab Emirates and 40^th globally.    

11th May 2008

Emaar Properties PJSC plans to develop the Dh 6.7 billion ($1.88 billion) Marina Al Qussor project on Tunisia's eastern coastline.  The 442 hectare Marina development is located within the county of Sousse towards the southern end of the ‘Golfe de Hammamet’ and will offer a mix of living options and tourist attractions with a large Marina Village at its centre.

The project will add a premier tourist destination on the southern shores of the Mediterranean away from the hustle and bustle and yet be closely located to Tunisia's key cultural sites for tourists to explore.

Speaking at the event Alabbar said: 'We are honoured to present the ‘Marina Al Qussor project’ to Tunisia's President Zine el Abidine Ben Ali. Tunisia is a country rich in heritage and we look forward to the opportunity of adding to its world class attractions with the development of Marina Al Qussor.  This project is a timely addition to Tunisia's thriving tourism industry which has been attracting the world's attention.'

'The presentation sees us looking at other parts of North Africa for the development of our master planned communities and lifestyle options that have become synonymous with Emaar. With its thriving tourism industry, Tunisia is a significant market for Emaar to roll out such communities that offer everything from a thriving resort atmosphere to a quiet retreat,' said Alabbar.

Emaar's Marina Al Qusoor development is in line with Tunisia's tourism policy which is currently focused on residence tourism which enables high end tourists to buy homes in areas with beautiful landscape for longer stays.

The various components of Marina Al Qussor range from over 4,000 residential units with villas, townhouses and apartments located on the lakeside, beach, marina and quayside; six hotels ranging from three to five star as well as luxury boutiques located on the beach front and marina, leisure facilities with a marina, yacht club, beach clubs, spa resort and sports club.

Away from the Sousse area , the town of Gammarth in the northern suburbs of Tunis is the location for the most important investments project of the businessman Aziz Miled, where the ‘Gammarth Marina’ is taking shape. The infrastructure works are at an advanced stage.  The pattern of funding is also at a well supported pace.

Most recently the company in charge of the marina project’s realisation has decided to increase its share capital from 20 to 30 million dinars.

The project consists of a marina containing 400 to 500 berths conforming to international standards and can serve as a port of transit for vessels of all sizes. Inspired by the village of Sidi Bou Said, the project will be modern and innovative, with white residences sandwiched between the green hills of Gammarth and the blue waters of the Mediterranean sea.

Villas and duplexes placed around the harbour basin offer space and well-being.  Perched on the hills and buried in the vegetation, the apartments are ideally located in a pleasant and airy position.  Shops, cafés and restaurants are located throughout the development.  A maze of streets, pedestrian walkways lined with palm trees and forest paths criss-crossing the developments will be created for residents and visitors alike.  At the western boundary of the site, a sheltered beach has been set giving residents a space for relaxation and leisure

1st May 2008

In monetary terms, the money supply and the economy grew in March 2008 by 2.8% and 1.8%, respectively compared with the month of December 2007.  The money market has been characterised throughout the months of March and April 2008, with a surplus of cash, requiring the intervention of the Central Bank in order to ensure an optimal level of liquidity, while continuing the funding of the economy.  Interest rates have fluctuated on a daily basis in the money market between 5.13% and 5.38% since the beginning of this month.

As for the dinar’s evolution on the foreign exchange market since the beginning of the year and up until April 28^th, it registered a 4.4% appreciation vis-à-vis the U.S. dollar and a depreciation of 1.6% against the euro.

In light of the given data, and after a further examining of the global economic situation and its potential impacts on the Tunisian economy, the Board of Directors has decided to increase the rate of compulsory reserve on deposits, to more than the current 5% set previously by the TCB.  According to some experts the rise is likely to reach the 6 percentage points.

This latest decision involves, in addition to the excess liquidity noticed by the board of the TCB, a surge in inflation. So, in order not to raise interest rate and consequently burdening investment, the Tunisian Central Bank has opted for reducing the banks’ capacity to give loans by draining monetary resources serving as basis for credit distribution.  The limitation of credit, should help reduce inflationary tensions.

23rd April 2008

20th April 2008

During the course of a relaxed press conference held by Monsieur Eric Besson, French Secretary of State in charge of the Evaluation Perspectives of Public Policy Assessment and Digital Economy Development, in the presence of his Excellency Monsieur Serge de Gallaix, the Ambassador of France to Tunisia, the French official has declared that there is “No fear, the Mediterranean Union is a concrete project.”

Monsieur Besson said, that he was extremely impressed by the smooth organisation of the symposium and that he found certain interventions to be very interesting, especially on the level of the quality of the issues raised, “It is true that the word ‘partner’ dominates our relations but I have really appreciated the intervention of a bank manager highlighting the benefits resulting from the ‘competition’ between our two countries.” He added that he emerged from the debate very pleased with the frankness of the direct interventions which made him feel amongst friends.

Speaking of friends, Monsieur Besson touched on the subject of the Mediterranean Union, saying that he did not understand why the southern countries consider the outcome of the discussions, negotiations and compromises reached with European countries constituted a retreat from the project.  He reaffirmed, in a reassuring tone, that to the contrary, European partners are showing great interest to the proposed union which was initiated by the French President, Monsieur Nicolas Sarkozy and consider themselves part of it, approve of it, and that they will even contribute financially to its projects.

Responding to a question dealing with the Barcelona process, Mr. Besson said that "The Mediterranean Union is the business of all of us, maybe you perceive that the Barcelona process is not proceeding quickly enough, but this does not mean that nothing has pre-existed prior to the declaration , in fact countries of northern Europe do not want to limit the project and its financing to the countries bordering the Mediterranean. T he idea of the commitment of the European Commission to the Mediterranean Union was not envisaged at the beginning.”

Mr. Besson affirmed that the initiative is seen as "Good news, there has been a compromise between Mr. Sarkozy, Merkel and other partners to integrate the commission, which shows a sign of continuity, for the major concrete projects."

On the change in the naming of the ‘Mediterranean Union’ to ‘Unity for the Mediterranean,’ Monsieur Besson was asked “Does it not in itself represent a setback to the project?”

“Whatever the name was, what counts is what this union will bring to its members, in terms of the content, the concrete projects, the economic development, advanced partnerships, trade on all levels and frankly the ’logo’ is not decisive, what counts is the contribution” responded the French official.

Indeed, the proposed Mediterranean Union was followed with great interest by the southern countries ever since Monsieur Sarkozy’s presidential campaign and they believed in it.

On this point Monsieur Besson said “I understand that there is a sense of disappointment which is in my opinion, respectable, explainable, but unfounded.”

On this feeling of doubt, Monsieur Besson, said that in few months things will dissipate and that we will all go beyond the doubts on this issue if the Paris summit of July 13^th should succeed.  He added that there is no reason for it not to succeed and that he will prepare for its success by organising a working meeting with the ministers in charge of Strategic Prospective and Planning in Marseille on June 9^th, together with the Tunisian ministers who will also be a major contributors to this gathering by preparing a document which will be tabled, reflecting the relations between the countries bordering the Mediterranean and projecting the next 10 to 15 years of the union with the objective of reaching an agreement on the document for presentation to the French head of state in Paris on July 13^th 2008.

Taking a detour on his visit to Tangier in Morocco, Mr Besson noted that the Moroccan government has instantly declared itself ready for the project, but also insisted that the project must be concrete and that there will be job creation for Youth, "We do not want to celebrate a great hymn to the Mediterranean without it being translated into practical projects."

Mr. Besson has also spoken of a document which he intends to make public in a week, where he will present a forward-looking exercise about France in 2025.

"The most important thing is to show that Germany derives its growth from relations and partnerships with the former countries of the east, which makes these countries Germany’s industrial suppliers, the idea is to do exactly the same thing with France and the countries bordering the Mediterranean," reported the Secretary of State.

On the topic of the Union’s capital, Mr Besson explained that the question of the location is still on Mr. Sarkozy’s table and that he has not yet a clear idea as to where the seat of the Mediterranean Union will be.  However, according to several Tunisian and foreign sources, Tunisia would have already been chosen by the French President Nicolas Sarkozy to host the secretariat of the Mediterranean Union.

The same sources reported that the capital Tunis was chosen to host the headquarters of the secretariat, in appreciation of the continuous support of President Ben Ali to the Mediterranean Union project.

17th April 2008

The journey to the capital from the south will be shortened with the forthcoming opening of the motorway M’saken/Sfax.  At a cost of 430 million dinars, the motorway stretches 97.7 km.

The motorway network will expand three folds by 2030.  This expansion will be in the form of sections, M’saken/Sfax (97.7 km), Sfax/Gabes (151.2 km) and Gabes/Ras Jddir (Libyan border).  On the East/West side of the country, Oued Zarga/Bouselem (70 km) and in a later stage Beja/Jendouba eventually reaching the Algerian border.  Currently, the studies on the new sections are ready, notably for the southern part of the country, but no commencement date has yet been fixed.

According to a reliable source at the ministry of infrastructure, the M’sake/Sfax section of the motorway will be operational in June and will comprise six interchanges at M’saken, Borgine, Karkar, El Jem, and Hancha, Sfax North.  Tolls will be at the level of a main station located in M’saken and five secondary tolls on the level of the interchanges.  Specifications on the equipping of the toll stations are currently being developed.

The motorway which was realised by four different construction companies, will be equipped with 4 rest stations (two in each direction) at Borgine and El Jem.

15th April 2008

According to the website ‘ybw.com’ Avon Inflatables Limited has decided to close its manufacturing facility in Llanelli, Wales, in order to relocate its production to a new site in Tunisia.  The company’s plants in France and Spain will also be closed for the same purpose.

The company has equally declared that it will proceed with the closure of its plants any time, between now and December 2010.

Avon Inflatables Limited has produced more than 200,000 canoes and inflatable tyres (RIB).  Recognised as a pioneer and world leader, Avon has an enviable reputation for innovation, performance and quality of its exceptional products.

15th April 2008

According to the Oxford Business Group, the surge in oil and wheat prices on the world markets obliges Tunisia to reconsider its policies of support.  The soaring of prices on a global scale, will have an increasingly important impact on the Tunisian economy and threatens to sweep aside the government’s commitment to maintain the budget deficit. The country, nevertheless, seems ready to cope with all obstacles this year.

The General Compensation Fund in charge of the implementation of the government’s policy of support, has been, up until now, able to maintain its oil grants to 1% of GDP over the course of the year 2007, thanks to the two consecutive rises in fuel prices at the pumps, in May and in October.  Meanwhile, the continuous rise in prices have necessitated an additional package in December, which saw the total subsidies (including those for wheat and other raw materials) increase to the tune of 1.3% of GDP.

Tunisia which has ‘proven’ oil reserves of 700 million barrels, does not have a great margin for manoeuvre in terms of supply in response to the price increases of oil.  Given that the price rises of the oil barrel are in dollar, Tunisian oil becomes economically viable to exploit favouring production.  Consequently, causing energy export to rise to more than 50% in 2007, thus preventing the deficit from widening, reaching just 2.5% of GDP compared to 2% in 2006.  However there is a limit to the overall prices compensation through energy exports.  Considering that currently oil prices are refusing to drop below $100 a barrel, the government could well make an effort to maintain its fiscal deficit target of 3% of GDP, especially if one considers that its subsidy calculations are based on an average price per barrel of $75.  If the average price of oil were to exceed $100 per barrel, the subsidy of 400 million dinars provided by the government will then be far from sufficient, causing a delicate compromise between higher prices at the pumps and a more important budget deficit.

In anticipation of such eventuality, the Fund was rumoured to have provided for reassessment of its subsidy programme.  This should allow for an increase in agricultural production, in order to offset the rapidly rising costs of cereal imports.  For instance, subsidies for wheat are expected to be 800 million dinars this year and the Fund already accounts for an increase of around 60% of all food subsidies.  It is likely that a new policy will be announced soon, as a deterioration in the external position could well become a ‘dead weight’ slowing economic growth.

The International Monetary Fund (IMF) remains, nonetheless, satisfied since the government’s general monetary policy is expected to be able to head-off current pressures facing the economy.  Any unexpected slowdown in growth in 2008 will be caused by external rather than internal factors.  Inflation, in its biggest part imported, is constantly rising, reaching 5.3%, an increase of 2% compared to December 2007.  The Tunisian Central Bank has already responded by increasing the reserves requirement from 3.5% to 5% in November 2007 hoping for a liquidity recovery.  Interest rates remain relatively stable, with a monthly average contained in the range of 18 points for the past 12 months.

Such restrictive monetary measures stand a good chance of having the desired effect and maintain steady growth, nevertheless, the entire country remains vigilant to avoid any potential slowdown in the coming year.  The IMF has, however, revised downwards its growth forecast for 2008 from 6.3% in 2007 to 5.7%.  This is largely attributed to the increase in commodity prices and to the weaker international demand.  The IMF has added its own advice in the area of subsidies, recommending ‘alternative options’, different to the General Compensation Fund system in order to protect the purchasing power of low income families.

The IMF has not explicitly stated what such alternatives could include, however, it is certainly the case of introducing instruments to promote structural policies such as more restrained public expenditure to keep budget deficit within target and thus suppress inflationary pressures resulting from public sector expenditure.  By combining efforts in order to increase domestic production and substitute imports, Tunisia should be well placed to avoid the current global depression.

13th April 2008

The energy crises which have dominated the world’s economic agenda as a result of soaring prices and diminishing oil reserves, made foreign companies fall over each other in a mad rush to get their hands on previously unexploited, but potentially promising locations, in order to extract these precious resources from the depths of the earth.

This ‘black gold’ rush, has benefited many countries, including Tunisia, which has seen its energy investments substantially grow in recent years.  Investments in which the British have the lion’s share.  A trend that is going to be consolidate further with the granting of a new exploitation permit to ‘Cairn Energy Group‘.  Having already secured two exploration permits in Tunisia, which could reach 80 million US dollars in 2008, through its two subsidiaries Plectrum and Medoil, the group plans to strengthen its presence in the country through ‘Reap Tunisia’, also one of its subsidiaries, according to a communiqué released by the British Embassy.

The group will also obtain a new exploration licence for the Nabeul offshore deposits.  The cost of the new project is estimated to be at 20 million US dollars per well.

A signing ceremony for the new licence ‘Nabeul’ will be held, added the communiqué, Monday, April 14^th, 2008 at the headquarters of the Ministry of Industry, Energy and Small to Medium Size Enterprises, in the presence of Alan Goulty, the UK ambassador to Tunisia, Simon Thomson, Robert JE Jones and Ivo Augelli on behalf of the Group Cairn Energy.

Tunisia and Great Britain have signed a protocol of understanding in 2004 aiming at strengthening their cooperation in the field of energy.  It has been qualified as fruitful by the committee overseeing the cooperation progress.

12th April 2008

At the first ever forum on investment of the Agadir member states which was held in Brussels, Mr Afif Chelbi, minister of Industry, Energy and Small to Medium Size Enterprises has spoken of the tripling of trade with the European Union during the period 1995-2007.

The minister has revealed that the export figures of textile have doubled in the course of this period from 1.2 billion euros to 3 billion euros, while figures in the automobile component and aerospace sectors have exploded from 0.6 billion euros to 3.1 billion euros.  He then went on to say, that more than 2,500 European companies are currently operating in Tunisia compared to 1,200 in 1995.  He also confirmed Tunisia’s position as the number one industrial exporter South-Meda (south of the Mediterranean.)

The minister has underlined the importance of the Agadir Agreement by saying that ‘the agreement represents real advantage for the signatory countries and the European Union as it reinforces the integration process of the Euro-Mediterranean and provides opportunities for economic and industrial complementarity through the diagonal cumulation of origin.’

10th April 2008

9th April 2008

American and Canadian investments in Tunisia have experienced significant increase last year, according to the report published Monday April 7^th by the Agency for the Promotion of External Investments (FIPA-Tunisia.)

The report shows 176.35% and 42.6% growth in investment flows from the United States and Canada respectively.  Other countries, in spite of the lesser important volumes of their investments, have also shown strong progress in 2007, such as Portugal (125.2%) and Germany (101.3%).

In terms of overall ranking, France continues to be by far and away the biggest investor, followed by Italy and Germany respectively.

On another level, foreign investment flows oriented towards Tunisia in 2007 accounted for 19.1% of Tunisian productive investment, 4.8% of GDP, 45% of foreign capital and 24% of job creation.

9th April 2008

A construction agreement of a permanent headquarters for the World Health Organisation (WHO), in Tunis was signed Monday April 7^th.

The signing ceremony was attended by Mr Mondher Zenaidi, Minister of Public Health and Ms Najoua Miladi, Secretary of State in charge of hospitals.  The minister has welcomed the agreement, which coincides with the World Health Day celebrations and comes as a confirmation to the strength of the relationship between Tunisia and The World Health Organisation, opening up new prospects for expertise exchanges on both sides.

For his part, Mr Ibrahim Mohamed Abderrahim, the WHO Tunis office Director, said that the new headquarters will be built on an area of 1,700 squared meters at the El Khadhra site in Tunis.  The building which will have four floors, will cost around 3,150 million dinars to construct.  He also said that the building work will take 15 months to complete and that the new headquarters will host the WHO’s major regional activities.  The choice of Tunisia for this project, was the result of the prevailing stable and secure climate, as well as its excellent geographical position, he added.

8th April 2008

7th April 2008

The Governor of the Tunisian Central Bank (TCB), Mr Taoufik Baccar, has announced during a press conference, that the evolution of the banking sector is perceptible at three levels : the financing of the economy, the mobilisation of the savings and the indicators of financial strength.

Regarding the financing of the economy, the Governor said that the evolution rate of the outstanding assistance from the banking sector to the economy (loans and participations) rose to reach 9.8% compared to 7.1% in 2006. The deposits recorded an increase of 15% against 11% in 2006, reflecting the improvement in the ability of banks to mobilise savings, he added.

The increase in the pace of the deposits’ mobilisation and the financing of the economy, has contributed to the liquidity improvement in the sector compared to 2006, which was reflected positively on the soundness of the financial indicators of the banking sector, resulting in a fall in the rate of classified debts (vis-à-vis commitments) from 19.3% in 2006 to 17.3% in 2007, a considerable step towards meeting the target set at 15% by 2009. The debt’s coverage rate classified by savings has improved, reaching 54.5% in December 2007 compared to 48.5% during the same month in 2006. The objective is to increase this rate to 70% by 2009. The rate of debts classified net of provisions in relation to commitments fell by 10.9% to 8.7% in the course of the same period (the objective for 2009 is to reach 5%.)

These results can be explained, according to the Governor of the TCB, by the efforts deployed to control the risks and not by the transfer of those debts to debt recovery companies or their cancellation. It should be noted that the overall volume of transfers to debt recovery companies and/or cancellations of the debts has not exceeded the 130 million dinars, emphasising that these measures reflect new practices that are beginning to be adopted by the banking sector. Mr Baccar has added that the international rating agencies have agreed that the approach taken by Tunisia for the evaluation of classified debts, is in line with international standards. It is a ‘very cautious approach’ and a positive one for the overall risk evaluation. (Noting, that classified debts are those which have not been reimbursed for more than three months.)

The Governor of the TCB has also said that 5 banking institutions have already achieved the objectives of 2009 regarding the rate of classified debts and their coverage rate by the provisions, while 9 banks have realised the fixed objective rate of classified debts of not exceeding 15%. He added that improving the financial foundation of the banking industry, will permit for an optimistic outlook on the future, given that the improvement of the banking sector situation makes it more suited to accompany the country’s development process.

The Governor then referred to the measure relating to the reduction of excessive interest rates calculated on the basis of a 20% increase in the current average effective interest rate against 33%, which causes a decline in the excessive interest rates of around 1.25%. This important measure, he explained, involves all categories of loans including housing loans, overdrafts and others…Mr Baccar said that a bill has been prepared to amend the current law, it will be submitted to the government in the coming days. He argued that the third measure authorising the ‘Banque de l’Habitat’ to reduce interest rates on housing loans, while maintaining the rate unchanged whenever the repayment period of the loan surpasses the 15 years, happens thanks to the improvement of the bank’s financial indicators. This measure relates to the 3 categories of funds, the first concerns loans obtained from regular sources of the bank (not conditioned by savings), the interest rate of the equivalent credit, in this case, in the Money Market Rates (MMR) + 3% for a repayment period of 15 years. Interest rate was fixed at 8.5% for loans with repayment period varying between 15 years and 20 years.

The second category of loans granted under the system of housing savings, in turn relates to two types of credits in the first instance the regular appropriations where interest rate remained unchanged (6.75%) with an extension of the repayment period up to 25 years instead of 20 years and a second supplementary appropriations where interest rate was fixed at 7.5%, with a repayment period of up to 25 years instead of 20 years today.

The 3^rd category, deals with loans under the housing savings scheme (EL Jedid), the interest rate equals the MMR + 2% for the savings system of one year and where the repayment period is 10 years.

The interest rate was fixed at MMR + 2.5% for the savings system of two years, where the repayment period is 15 years, the rate is the same for the savings system of 3 years, while the 4 years savings system is fixed at 8% for a repayment period of 20years.

The governor of the central bank has also outlined the measures targeting customers of the banking sector, stating that they concern the creation of an index to track changes in the cost of banking services, noting the need for the banks to inform their customers in the case of the adoption of a variable interest rate, the impact of the increase in the MMR on the monthly payment (capital and interest.)

06th April 2008

The Tunisian economy has not recorded negative growth since 1986, showing great resilience to external shocks.  Over the past decade, GDP has increased by nearly 5% on average.  For the year 2007, growth was estimated at 6.3% compared to 5.5% in 2006.

For the year 2008, the budget was established on the basis of a forecast growth rate of 6.1%.  The principal engines of growth are Tunisian household consumption and exports.  Household consumption is still by and large driven by the dynamism of consumer credit.  Exports are stimulated by the important amounts of cash invested in the offshore sector.  However, the balance of the total investment is more nuanced, given the persistent weakness of private investment locally.

On the supply side, the electromechanical and plastic industries supported by foreign investment are experiencing rapid growth, the textile sector is enjoying a certain recovery after several years of recession.  In addition, the year 2007 was marked by an increase in oil production.

Economic growth has allowed for the considerable improvement in the incomes of the population : In 2007, GDP per capita was estimated to be at around 3,300$.  In terms of purchasing power parity, Tunisia is gradually converging to the income levels of developed countries.  This trend is accompanied by progress in terms of life expectancy, the place of women in society, health infrastructure and education.  A true ’middle class’ is progressively emerging in Tunisia.

Tunisia has recorded an economic growth of 5.8% over the period of one year.  The official figures published Friday March 28^th on the National Institute for Statistics’ website, also demonstrate an enhanced performance in the areas of transport and telecommunications.  According to the same source, the growth achieved exceeded government’s forecasts : 6.26% instead of 6.0%.  The Gross Domestic Product (GDP), stood at 6,074 billion dinars in the last three months of the year, compared to 5,739 billion dinars for the same period a year earlier. Services provided by the telecommunications and transport industries, grew by 16% during the same quarter, while manufacturing industry went up by 11%.  Sales from the textile sector abroad increased by 9.7% in the last three months of the year.  Food processing industries have also recorded an increase of 4.4%.

The Tunisian government is hoping for reinforcement of the private sector in the field of information technologies and in the service industry sector.  This strengthening should allow for the acceleration of the average annual growth rate to 6.3% in the next decade, which should help to reduce unemployment further.

06th April 2008

In terms of recreation, Bizerte now plays a major role along side the other great metropolises of the Mediterranean.  This great city of the north will soon have a marina of 1,000 berths. This marina will be of the same size as those erected on the northern shores of the Mediterranean.

Baptised ‘Cap 3000’, the project, whose realisation will take approximately two years, will mobilise investments in the order of 160.8 million Tunisian dinars.  The work which will be undertaken consists of enlarging the basin of the old port, strengthening the linking-up capacity to reach one thousand berths and give a facelift to the neighbouring areas of the old port and Medina.  In addition, a seven floor luxury hotel as well as an oceanographic museum will be created.  The marina represents a component of a strategy aiming at developing, all along the country’s coast line, recreational and cruising activities.

Two factors in favour of this development : Firstly, there is big demand for this type of project, the overbooking facing marinas in the northern basin of the Mediterranean makes the venture all the more attractive.  Pleasure boats are forced to wait for weeks and months for a berth.  Secondly, there is the expansion which the shipping industry is experiencing, particularly the construction of pleasure boats.  With high levels of purchasing power, yachtsmen and sailors are increasingly inclined to buy their yachts and sailboats, synonyms of escape and freedom.  Add to this the availability of quality hotel infrastructure and archaeological heritage within the area.

A market study prepared for this purpose, in collaboration with the ’Societe de Services et de Conseil en Environnement Marin et Oceanographique‘, ’Creoceon’, the Port Authority of Marseilles and the ’Societe Tunisienne' Somete (engineering building and civil engineering), shows great interest in exploring and exploiting this profitable niche in Tunisia.  This should enhance Tunisia’s 1,300 km of coast line, diversify the tourism product, reinforce the country’s share in this lucrative market and attract high-end clientele reputed to be exceptionally high spenders.

The economic stakes of this activity are enormous.  The study shows that 16 million dinars per annum of revenue could be gained through an increase in turnover of Tunisian marinas, services generated by this activity as well as local and foreign expenditure.  As for the overall financial impact, the study estimates that 200 million dinars could be generated by leasing, real estate acquisitions, management of ports and nautical services.  On the social front, the number of jobs that the marina project could generate is estimated to be around 15,000 over ten years.

05th April 2008

Following the mission conducted by its delegation in Tunisia, Standard & Poor’s confirmed the notes, BBB/A-3 in foreign currency and A/A-1 in local currency, attributed to the Republic of Tunisia.  The outlook is qualified as ‘stable’.  The notes assigned to Tunisia reflect the authorities' commitment to pursue a prudent macroeconomic policy and to continue their efforts for structural reforms.

These reforms have helped supporting an average annual growth rate of per capita GDP of more than 4% over the last decade, they have also helped to maintain a moderate primary deficit of less than 1% of GDP.  This performance has contributed to the steady and regular decline in government debt, estimated at 49% of GDP by the end of 2008, compared to 56% in 2005.

05th April 2008

Thanks to a sustained pace of economic growth, Tunisia has made remarkable progress in terms of its Association Agreement with the European Union (EU), emphasises an EU report.  The report adds, that progress has been made in areas targeted by the plan of action adopted by the two parties in July 2005.

First country south of the Mediterranean to sign such an agreement with the European Union in 1998, Tunisia remains an active partner and quick to carry out the reforms required in order to benefit from the shared advantages of the agreement, added the report.  Tunisia is notably the partner most advanced in the context of implementing the European Union’s Agreement of Association.  Mrs Benita Ferrero-Walder, member of the commission, responsible for External Relations and European Policies for Neighbouring Countries, has confirmed this by describing the relationship as ‘successful’.  She added “We are working hand in hand with Tunisia and other partners to help them carry out structural reforms in order to establish closer ties with the EU.”

In fact, the year 2007 has witnessed an impetus in the Tunisia-EU dialogue.  An institutional dialogue which is activated by the various working groups established by the Association Agreement, opening prospects for negotiations in the socio-economic domains.  The EU has therefore embarked on a process of supporting the reforms undertaken in several areas including education, health, employment and poverty alleviation.

In the field of education, the EU contributes to the training of teachers and to the development of training centres.  In the employment area, the EU has provided assistance to 10% of Tunisian enterprises to help them get in line with European standards in terms of innovation, competitiveness and quality.  In health, the EU supports the reform of the health insurance system which should expand to cover the entire population, including the poorest.  The EU also supports the upgrading of the public health sector which aims at improving the benefits, qualitatively and quantitatively.  Rural development is another important area to which the EU provides assistance, notably on the level of natural resources protection and the fight against poverty.

In terms of financial cooperation, the aid granted by the EU in 2007 in order to achieve ‘priority goals’ as defined by the action plan, amounts to 103 million euros out of a sum totalling 300 million euros programmed for the period 2007-2010.  The achieved results will pave the way towards the establishment of the free trade zone Euro-Mediterranean by 2010, the ultimate objective of the Association Agreement.  An objective that will be gradually introduced and which has already seen the realisation of two significant milestones.  First of all, there is the dismantling of trade tariffs, engaged since early 1996. Then the integration in the free trade Euro-Mediterranean zone which has come to force on January 1^st 2008 resulting in manufactured products imported from Europe being exempted from customs duties.

02 April 2008

Recent indictors related to inflation in Tunisia do not appear to be flattering !! The rise in the general price index is no longer just a tale of statistics, inflation is being felt on a daily basis by the ordinary man on the street. The question is to what extent a country like Tunisia can control and contain this phenomenon of sustained ‘imported’ price increases which are not due to internal inflationary pressures. These threatening inflationary pressures are the result of an unfavourable, if not chaotic, international economic environment and this is for various reasons.

Behind the correlation, now largely proven, implicating the rising prices of natural resources following the successive falls of the dollar against other currencies, there is the never ending ‘subprime’ crisis undermining the United States’ and other major credit markets.  Indeed, analysts expect losses of around 600 billion dollars, of which only about 180 were traced so far. This means that the crisis is only at its beginning, it is even not half way and the damage is already being felt around the world. The American Federal Reserve has accordingly injected 800 billion dollars to support troubled institutions and prevent liquidity risk from materialising. This action, together with the successive falls in the dollar rate, brought to 2.25%, designed to facilitate the repayment of loans indexed contracted by American households, has eventually ended up in sending the green note into the abyss, with dire consequences to the rest of the world.  Effected, notably, by a quasi-proportional increase in the prices of natural resources.  A shock that will unfortunately hit the Tunisian economy.

The prices of natural resources adjusted by the United States inflation, currently at around 7.4% over the year according to the latest statistics released in January, have yet to reach their maximum levels in times of crisis, as seen in the early eighties for example.  Indeed, gold is expected to reach the 2200$ per ounce at constant prices.  The ounce currently stands at only 875$.

Sugar is at 1179$ and could reach 5895$ at constant prices, the crisis of ‘savings and loans’ observed in the US during the early eighties, has resulted in several institutions declaring loans bankruptcy.

Although wheat is only 10$ the bushel, it could well reach 48$ at constant prices.  Corn still at 5.07$, could increase by 600% to reach 34$ the bushel.  Steel could in turn go up by almost 400%. The main lesson that emerges, is that natural resources are likely to evolve at rates ranging between 200% and 600% before reaching their peak in the crisis phase !  Past natural resources price booms observation has shown that they tend to have evolving cycles of between 11 years and 21 years, theoretically implying a conclusion which is not very pretty, stipulating that the current crisis is only at its infancy and that the worst is yet to come.

Despite the economic slowdown of the American economy, there is no evidence that there will be a fall in demand on natural resources.  Demand for wheat, oil, copper and other precious metals remains at record highs in the absence of adequate supply.  Supply is even not close, to be able to restore some certain equilibrium situation.

Across the globe, supply is undergoing constraints of different orders, such as disinvestment in infrastructure or interruptions due to terrorism and other geo-political tensions. The ‘subprime’ credit crisis, is not over yet, just as the rising prices of the world’s natural resources.

Tunisia must therefore, learn to live with this new unfavourable world economic situation, inflation has already risen without being able to do much to prevent it.  It is true that there has been an increase in the director rate of the Tunisian dinar, as well as the recent raising of the obligatory reserves imposed on banks.  The aim being the curbing of local consumption, however, evil comes from elsewhere and it is alas, uncontrollable.

02nd April 2008

The Governor of the Tunisian Central Bank, Mr Taoufik Baccar, has recently presided at the TCB’s headquarters over a meeting aimed at assessing results of the mission conducted by the Japanese rating agency R&I (Rating and Investment Information inc.)  During the course of its visit, the R&I’s delegation met-up with the ministers for the International Cooperation and Development, finance, Tourism and Employment.  This evaluation meeting helped to highlight the results achieved by Tunisia in terms of economic development, notably the progress that has been accomplished in the financial and banking sectors’ reform.

The meeting, has equally focused on the latest developments in the international economic environment and on the Tunisian economic outlook for 2008.

In this regard, Mr Baccar emphasised Tunisia’s efforts to cope with the shocks in the world economy and maintain a rapid pace of growth, allowing, amongst other things, for the enhancement of employment prospects.

On its part, the R&I delegation, has saluted the positive and progressive march of the reforms undertaken by Tunisia and decided to improve the country’s credit rating of the sovereign risk for its bond issues in foreign currency from “A-” to” A”

It must be noted that the R&I’s visit comes as part of Tunisia’s rating follow-up.  Indeed, in addition to the R&I, there were the recent visits of the agency “Standard and Poor’s” and the “International Monetary Fund” mission (end of 2007) which were crowned by positive reports- published, respectively on the IMF’s and the TCB’s websites highlighting Tunisia’s economic performances which were picked on by several media groups.

23rd March 2008

Yazaki, a Japanese company specialising in cable manufacturing, has just been given the final agreement for the creation of its new factory in El Kef, north west of Tunisia. The company is expected to create 1,800 jobs by the end of 2009.

El Kef has become a very attractive site for the implantation of industrial companies specialising in the motorcar spare parts.  Numerous promoters as well as other big foreign enterprises have already expressed their desire to establish factories in the area.

The German company Somitu is also showing interest in the site. The company wishes to build a factory in El Kef which could generate a further 1,000 jobs. The agreement is believed to be imminent, thanks to the favourable business and investment climate that currently prevails in this region where basic infrastructure is considerably developed.  Koroplast, another German company engaged in the same line of business, is also showing interest in the El Kef site. Talks are at an advanced stage and it is hoped that they will be concluded shortly.

Worth mentioning that roughly, 40 other diverse projects have been adopted by the banks and their realisation should have a positive impact on the job market. These projects mobilise will 48 million euros and will allow for the creation of 880 direct jobs.

At this pace, unemployment will be significantly reduced, thanks to the creation of almost 3,000 jobs every year, against an additional demand of 1,300 forecasted for the next three years.  This augurs a new era for the industrial sector in this traditionally agricultural region which could quickly join the fold of the major industrial metropolises, provided that all of these projects take root!

15th March 2008

In 2007, world tourism accounted for 900 million tourists. Tourism represents more than 8% of the world’s GDP and employs some 200 million people. The data emphasises the importance of the sector to the global economy as a whole.  However, the current economic climate raises doubts about the industry’s immediate future.

Several facts suggest the emergence of an international economic ’crisis’.  On the one hand, at $1.5625, the euro has reached its highest level against the dollar since its inception. The green note has also fallen below 100 yen for the first time since 1995.  Add to this, the price of one barrel of crude oil has again broken its own record, closing at $111.  An ounce of gold had reached $1,000.  On the other hand, and according to the second estimation of the European Office for Statistics (Eurostat), reported on March 14^th 2008, the rate of inflation in the euro zone currently stands at 3.3% compared to the 3.2% initially announced, reaching its highest level in ten years.

While these problems may well contribute to a decline in European living standards, it will be perfectly possible, however, that this phenomenon will have some knock-on effects on Tunisia.

Tunisian professionals in the tourism sector, hoteliers, caterers and travel agents are all major job creators.  In addition, other related activities such as the construction industry, retail trade, handicrafts, etc…. are all contributing areas which are currently in full development.

With regard to the new tourism trends, notably medical tourism, Tunisia has managed to claim the second place globally in Thalassotherapy after France, with 25 centres frequented by 200,000 tourists a year.  The hotel Abou Nawas in Sousse, was the founder of the first Thalassotherapy centre in Tunisia.  Several other centres have emerged since then.

Cosmetic surgery has also contributed to the sector’s development.  Europe’s first destination for cosmetic surgery, Tunisia is attracting more and more medical tourists, who come for treatment combined with a pleasant holiday.  Whether they were French, Belgians, Italians, Germans, British or Swiss, European tourists are attracted to high quality medical services and prices that are two to three times cheaper than those in Europe including the stay at the hotel and the time at the clinic.

One might ask why such services are two to three times cheaper than in Europe?

• The cost of living is a lot cheaper in Tunisia and salaries are much lower than those in Europe.
• The euro is worth nearly two dinars (1.8 TD).
• The granting of tax incentives to the medical tourism by the government to encourage growth in the sector.

Returning to the point of the ever growing pessimism surrounding the global economic outlook and how European inflation might impact on the Tunisian economy : As already explained, tourism constitutes an important lever in the country’s economy and Europe is Tunisia’s number one client in this domain.  The upwards inflation revision, accompanied by sharp rises in oil prices and increases in housing, food products, transport, etc… costs will undoubtedly contribute to the decline of European living standards, which will could lead to a drop in the number of Europeans visiting the country.  The question is, how could Tunisia react in face of this phenomenon?

Tunisia could adjust its prices perhaps.  At this level, however, price adjustment is not the right solution since Tunisia already enjoys an advantage in terms of tourism competitiveness over its main rivals, namely Turkey, Egypt and Morocco respectively ranked 54^th, 66^th and 67^th as compared to Tunisia who is ranked 34^th globally according to the world economic forum. Perhaps more importantly, Tunisia is ranked 10^th world wide in terms of price competitiveness.  So revising prices downwards is not an issue.

However, Tunisia could perhaps, concentrate its efforts on other sectors within the industry or directly linked to it which already exist, but have never been developed enough.  There is talk of socio-cultural tourism, a niche eminently yielding, which will allow its followers to discover new cultures through exchanges, apprenticeships and detente programmes.  These new sectors could attract new bread of tourists from Europe and other far away continents.  One could think of the Chinese considered as ‘spenders.'  According to the French magazine Le Figaro, Chinese tourists have managed to spend 590 billion dollars in 2008.  Chinese tend to travel more to destinations where ‘bio’ culture is well developed, this niche is constantly developing in Tunisia.  The reputation of the Tunisian olive oil remains incontestable.

The realisation of seminars and conferences on the subject, the encouragement of the state to young college graduates and farmers for the development of this activity reflects the new biological aspect of Tunisia.  By continuing along this path, there will undoubtedly be rosy economic prospects for the future.

13th March2008

According to the statistics provided by the Agency for the Promotion of Foreign Investment (APFI), 91 new French projects were created and a further 83 were extended in 2007. This has allowed for the creation of some 5,000 direct jobs. Over three quarters or (75%), of these projects relate to the manufacturing industry, followed by the energy sector (17%), services (4%), tourism (2%) and agriculture (1.5%).

Given the maintained steady pace of the French presence of development in the manufacturing industry in recent years, the API (Agency for the Promotion of Industry) identified 1,180 implantations resulting in the creation of 106,000 jobs by the end of 2007.

Italy figures in second place in the ranking with 653 implantations and approximately 53,000 jobs, followed by Germany (256 implantations and 34,500 jobs). For both of these countries, the manufacturing industry is also largely dominant.

This leaves the mega projects proliferating in Tunisia by foreign investors. According to different sources, they are expected to total 65 billion dinars and spread over the next ten years, at least. These projects which will be entirely financed by private equity investors, should contribute to the creation of no less than 950,000 jobs. Financial and economic sources believe that these projects will help reduce the rate of unemployment by 4 percentage points.

13th March 2008

Even the largely watered down version of the Mediterranean Union project designed to defeat German hostility, risks taking a knock from other reticent member states of the European Union.

After a lengthy diplomatic tug-of-war, the French President had to reconsider his position and revise his ambitions downwards in order to obtain the support of the German Chancellor Angela Merkel, by accepting that other European countries non-bordering the Mediterranean are to be fully involved in the initiative.

According to the French-German text of the proposal which President Sarkozy and Chancellor Merkel will present to their European counterparts, the original idea is henceforth, largely downgraded to give ’new impetus’ to the Barcelona process, launched by the EU in 1995 to establish a partnership with its south of the Mediterranean neighbours.  Also, renaming what is currently known as  the ‘Barcelona Process’ or ‘Euromed’, little identifiable by the citizens of the Mediterranean by the ‘Mediterranean Union’. However, even the new name of the project, ironically called ‘Club Med’ by some critics, may not be acceptable unanimously. The name changing is yet to be settled, as noted by a high ranking European diplomat.

The Mediterranean Union has in the mean time received the full support of the European Commission. “We fully support the project, we have said from the beginning that it was a very good idea to move more towards the Mediterranean (….) At the same time, it is important that all European member states are involved and now it seems that all conditions are in place to move forward”, declared the President of the Commission Jose Manuel Barroso.  While the Franco-German document, barely two pages, proposes the creation of a co-presidency provided by a non-EU member and an EU member bordering the Mediterranean, some other countries, on the other hand, are wary of structure duplications.

“We do not need the duplication of jobs and/or institutions which will compete with the European Union”, reiterated the Slovenian Foreign Minister, Janez Lenarcic, whose country currently presides over the EU.

“Great Britain is satisfied with the Euromed, we are ready to strengthen its structures”, added the British Foreign Secretary David Miliband to the French daily newspaper La Tribune.

Another potential bone of contention is the sensitive question of the use of European funds, which requires unanimity among the 27 member states. “We believe that the expenditure programmes for the Mediterranean are already established and we do not support a significant redirection of funds” emphasised the British official.

The most fervent supporters of Turkey could equally make their voices heard against a project perceived since its launch as a way of imposing an alternative to Turkey’s entrance to the EU, to which Nicolas Sarkozy has always been opposed.

France, previously supported by Spain and Italy, hopes despite everything, to convince its European partners that this union, which focuses on concrete projects, such as cleaning up 130 polluted sites around the Mediterranean or improving the access to safe drinking water, will be more effective than the current European policies.

12th March 2008

At the end of his stay in Tunisia and before departing for Morocco, Shaun Donnelly, deputy representative of the United States for the external trade with Europe and the Middle East, gave a press conference at the United States Embassy’s headquarters in Tunis, where he expressed confidence regarding the future of relations between the two countries, given the potential that remains unexploited. The current volume of trade between the two countries is "not satisfactory." The U.S. official called to seize the opportunity of investment to ensure that the potentials are utilized properly. Currently, 70 American companies are present in Tunisia. They employ 18,000 people, with a total investment of between 700 and 750 million dollars.

Tunisia already benefits from the generalised preferential system set up by the United States. In fact, Tunisia is ranked 17^th beneficiary. Some 5,000 Tunisian products are eligible to be exported to the U.S. Referring to his Tunisia visit, the American official told the press that he has held excellent talks with members of the Tunisian government, in occurrence Mohamed Ghannouchi, the prime minister, Ridha Touiti, minister of trade and craft and Nouri Jouini, minister for economic development. “This visit has enabled us to make good progress. We have tried to identify the areas on which we will work. But, the negotiations will only be initiated once the ground is marked by both sides.”

10th March 2008

The announced January 2008 figures by the National Institute for Statistics, show that the price index for household consumption has risen by 5.7% during the past twelve months.  This growth rate is significantly superior to that recorded in 2007 which was only 2.5%.  It is even higher than the 2006 rate of 4.4%.  This significant shift in prices is explained by the widespread increases, touching food +9%, transport +4.7%, leisure +4.1%, housing +3.9%, maintenance and hygiene products +2% and clothing +3.1%.

The Tunisian citizen directly felt these increases in bread, pasta, dairy products, petrol and building materials.  The prices of these groups have already undergone a revision last year. This is from the official statistics point of view.  As to the ’unofficial’ sources, they argue that there has been a rise of 15% in the household price index. They base their evaluations on the fact that the National Institute for Statistics’ methods of calculation would have been very prudent.  According to these sources, several consistent increases would have touched basic items such as fruits and vegetables, cakes, white meat, fish, eggs, detergent, etc….’The prices of the mentioned items, have no competition on the parallel market, they have, completely shot up.  Their growth rate fluctuated between 20% and 50% in the period between January 2007 and January 2008.  Prices of fruits and vegetables have experienced an increase of more than 30%.

Such increases have effected the ordinary citizen’s purchasing power.  In particular, those with fixed incomes which are not subject to market fluctuations, essentially, salaried employees and pensioners.  Indeed, according to the experts : “The solution can only come from a monetary policy that controls inflation.  Experts say that energy prices cannot effect growth.  It can only intervene by around 10% in the production cost.  It will not be the cause of an overall imbalance, not in Tunisia’s case at least.  Thus it is a case of juggling fluctuations in the energy cost, especially since the energy trade balance for 2007 managed a surplus of 136.9 million dinars (3.138,5 million dinars of exports, against 3.001,6 million dinars of imports.)

One must certainly take account of foreign currency outflow in respect of the remuneration of foreign capital in Tunisia, in particular in the oil industry sector, which amounted to 740 million euros or 1.3 billion dinars.  This, however, is a fact which is part and parcel of the economic situation in general and not the result of some cyclical effect.  Thus, it does not enter the calculations of the energy balance and as such another solution must be found elsewhere.  The answer lies in maintaining growth and better exploitation of the compensation fund’s resources.  Nevertheless, it is the case of government charges that should be reduced.”

09 March 2008

Little Sicily, La Goulette

While the renovation project on the La Goulette’s old neighbourhood Little Sicily is nearing completion, major works have begun, for some time, only few hundred metres away, in the southern part of the town’s port, on a tourist village designed to accommodate cruise ships in the immediate vicinity of the Bac’s TGM railway station linking Tunis, La Goulette and La Marsa.

Followed with interest by the locals, the project is expected to be devoted to ameliorate the town’s tourist infrastructure by giving it a beautiful medina to welcome cruising tourists, in line with the spectacular growth that this destination has been experiencing in recent years, in terms of cruise tourism.

Indeed, according to the information made available by the promoter, ‘La Goulette Shipping Cruise’, this future tourist village covers 6,500 square metres capable of accommodating 3,000 guests at any given time.

The project will allow for the creation of new jobs and should contribute, in particular to the enhancement of the Bacs’ urban zone, which has remained unexploited, so to speak, with several places of abandoned bare land.

 Judging by the project’s models shown on site, the village for accommodating La Goulette’s cruising tourists and which will be intimately integrated with all other port constructions, will not fail in transforming the urban landscape of the area by significantly improving its aesthetic appeal. Especially since all of its neighbours, on the same side of the motorway between La Goulette and Tunis are currently witnessing huge renovation programmes in general, as part of the bridge construction project linking Rades and La Goulette whose entry into service is scheduled for next summer, probably in August 2008. The bridge is an important portion of the metropolitan ringroad crossing the Tunis Lake Canal and linking the southern and northern areas of the Greater Tunis region to connect Rades on the northern side and La Goulette on the southern side.

The village that will be built to accommodate the cruising tourists should resemble the medina in Hammamet Yasmine, in order to meet its function, presenting on the spot live models of the diverse and rich heritage that characterise Tunisia to its hosts. A complementary discovery tour will continue to figure on the menu for those who wish, but it will be in an organised framework and better conditions than those currently exist.

The project can thus, rightly be seen as a work of upgrading the triple urban plan, socially and economically, and reinforces the renovation action undertaken throughout the other neighbouring projects, relating to the rehabilitation of the Little Sicily’s old neighbourhood which helped resettle former residents in modern apartments located in a zone of prime quality at El Kram and develop the site with an open and valuable outlook on the future.

9th March 2008

7th March 2008

Despite a deceleration of more than 8 points in export growth, Tunisia’s external trade began the year 2008 with an 8 points gain in the coverage rate and a decrease in the pace of imports of more than 50%, compared to January of last year.

Exports have reported more than 19409 MD in 2007, an increase of 24.8% compared to 2006. One might be tempted to explain this increase uniquely and simply by the devaluation of the dinar vis-à-vis the euro of Europe, a trading partner which accounts for 79.3% of Tunisia’s exports. However, this would almost be misleading, since Tunisian exports have also increased in quantity. From 12.4 million tonnes in 2006, the volume of Tunisia’s exports to Europe have risen by 14.6%.  It remains, nonetheless, true that between the financial envelope and the quantity of exports, the rate of increase is somewhat different. Thus, the 24.8% rise of exports in 2007, is certainly influenced by the euro effect.

Using Tunisia’s external trade figures for 2007, one can make even more observations. Firstly, the two-tier system characterising the export activity, between enterprises operating under the on-shore general regime and those operating entirely for export or off-shore. Furthermore, there is this difference of size, in terms of export volumes, between on-shore and off-shore. Of the 19409.6 MD, the financial volume of Tunisian exports of almost 11794MD were realised by wholly exporting companies (off-shore companies.)  While the on-shore companies were 8716MD in deficit and could only manage a coverage rate of merely 45.5%. Off-shore companies trade balance, for the same year, achieved a ’gain’ of more than 3686MD with a coverage rate of 145.5%.  At first glance, exclusively exporting companies seem to have imported less and exported more.  Small compensation, exports of on-shore (+29.1%) have progressed better than those of totally exporting companies (+22.1%).  It is certainly true that some of these off-shores are owned by Tunisians.  What proportion do they represent ? Official figures do not tell.  Tunisian exports, thus, remain dependent on foreign wholly exporting companies implantation within the country, hence Direct Foreign Investment !

In addition to the effects of exchange rate in the rise of exports, one must note that Tunisia is the world’s third largest exporter of olive oil after Spain and Italy, the world’s first exporter of dates, 5^th supplier of Europe in ready-to-wear and 6^th in footwear.  In 2007, the largest exports were those of crude oil reaching 2632MD, Jeans trousers 811.2MD, olive oil 696MD, footwear 505.5MD, car parts 337.3MD and dates 68.9MD.  What is certain, however, is that Tunisia does not export just that.  It exports agricultural products, industrial and other products.  It so happens, however, according to more than one professional, and in particular amongst companies trading internationally, that on more than one occasion, they were unable to honour their commitments.  According to the same sources, other problems arise on the levels of production and export for a number of products outside the production conventionally exportable, limiting them to the relic of national consumption, in certain cases such in milk and tomatoes, the trade ministry may even declare an embargo and prohibit producers to export, under the obligation of the necessity to build up strategic reserves for local consumption.  For export professionals, it is high time to think of introducing the notion of ’production dedicated for export’, in the form of contracts between producers and exporters.  As noted by Companies of International Trade (CIT), those producers having the desire to export must have the confidence in CIT to carry out the task on their behalf and not try to compete with them and do it themselves.

7th March 2008

The Governor of the Tunisian Central Bank (TCB) Mr Taoufik Baccar and the Italian Ambassador, Mr Antonio D’andria, have inaugurated Thursday March 6^th the new bureau of the Italian Bank, Banca Agrileasing in Tunis. Banca Agrileasing is a subsidiary of the banking group ‘Cooperative Credit’ and one of the largest leasing companies in Italy, this new institution’s mission is to collect information on the Mediterranean markets, and identify the best ways of supporting the internationalisation process of Italian Small to Medium Enterprises (SME).

It should be noted that, in addition to SME, Banca Agrileasing also targets families and operates at several levels of banking activities offering highly varied services, ranging from ordinary financing to factoring.  Its President Mr Giulio Magagni, describes it as a young enterprise, creative and innovative that is constantly evolving and improving the services it offers its customers.

Mr Baccar has stressed that “it is in a context characterised by an important economic and financial dynamics that Banca Agrileasing has to evolve, I am convinced that it will give new impetus to the Tuniso-Italian relations and should bring closer the business communities of both countries.“  He added, “it comes at a time of major restructuring of the Tunisian banking system, based on the reforms of the juridical framework, the diversification of banking products and the strengthening of the banks’ base capital.” Ms Mariella Liverani, Director of the Agrileasing-Tunisia office, told the media, that “the opening of this office constitutes the first step on the road of greater presence of the Italian Cooperative Credit in the Mediterranean zone.“  She also added,“Tunisia, a country geographically and culturally close to Italy, will play the ‘natural hub’ role (or a relay market at the point of access) in order to conquer the North African countries, such as Libya, Algeria and Egypt.”

6th March 2008

The Mediterranean Union project, bone of contention in recent months between Paris and Berlin, seems less and less ‘caressed’ than that proposed by President Nicolas Sarkozy only few weeks ago. During his meeting with the German Chancellor, Angela Merkel in Hanover, President Sarkozy had to give up what constituted the originality of the Mediterranean Union cooperation which was born in the fertile mind of his Eurosceptic advisor Henri Guaino.

The ‘compromise’ to which France and Germany have finally agreed and yet to be the subject of a ‘joint proposal’ for the European summit of twenty seven next Thursday in Brussels, the Mediterranean Union will not ‘exclude anyone’ as stated by Nicolas Sarkozy in Hanover. “We have agreed, that this will be a European Union project” said Merkel, “we have found a compromise around the Mediterranean Union issue that we both want and which will not exclude anyone” added the German Chancellor. Therefore there is no question of limiting cooperation to countries on the Mediterranean shores alone, other European countries will be associated, beginning with Germany which will be in the heart of the project when its launched.

The Chancellor’s entourage stressed that the new initiative is no longer inscribed in the exclusion logic : According to Berlin, all EU countries should have the same status and the same degree of commitment potentials. The German capital’s interpretation of the Mediterranean Union is one of ’revitalisation’ of the Barcelona European process. The access or the lack of it to European funds is not yet settled, according to the department for foreign affairs. But a spokesman said, that funding could only be authorised on the basis of “decisions taken by the council on the proposition of the commission."  A way of functioning which is very different to the initial scenario that President Sarkozy wanted whereby the money is raised from outside the Union.

4th March 2008

Jacques Vallin, Director of Emeritus Research at the French NIDS (National Institute of Demographic Studies) is a keen observer of the Tunisian demographic evolution. According to him, the current challenges facing Tunisia are two folds : to ensure full employment and to invest a good portion of today’s dividends to face up to tomorrow’s aging population’s costs. His analysis are highly enlightening and call for swift action. It shows in filigree, the golden demographic age that Tunisia is currently living risks in time, being turned against it, if it does not act and prepare the necessary tools that allow it to deal with the expected imbalances between younger generations and aging population. In fact, Jacques Vallin does not exclude the possibility that, Tunisia will soon have to reverse the family planning policy pursued successfully for four decades and support fertility.

According to Monsieur Vallin, Tunisia has accomplished most of the major evolutionary movement of demographic behaviour during the course of the last half century, known as ’Demographic Transition’. In the aftermath of the second world war and in particular after independence and as a result of health policies and changes in health behaviour, as well as the improvement in living standards, life expectancy has increased, accompanied by a spectacular reduction in child mortality. With 75 years of life expectancy, the Tunisian population enjoys more or less the standards characterising the developed countries. Logically, this major progress has began with a very high demographic growth difficult to sustain by a developing country (in the order of 3% per annum in the mid-sixties), however, this fast fertility rate, in turn, started to decline, to be no more than 2 children per woman at present, reducing the rate of population growth to 1%.

The restoration of the balance, was the objective which the country set, when it committed itself in the late sixties, to a policy aimed at controlling fertility. It can be said that so far the transition is successful. Following these demographic evolutions, Tunisia must now face up to the germ in this transition.

Even if fertility is maintained at a sustainable 2 children per woman, the principal demographic challenge requires the transition and the management of the consequences of the formidable transformation of the age structure (Age Pyramid) it imposes. In fact, as a first step, the Age Pyramid is going through a very favourable phase of development, where the proportion of under 20 years has considerably diminished whilst that of over 60 years has not grown significantly, taking the proportion of working age to an exceptionally high level. This is known as a ’Demographic Window’ of economic and social opportunities. However, in order to take full advantage of this window, it is essential to get as close as possible to full employment. The immediate challenge for Tunisia, is thus, to put its youth to work. Given the current level of unemployment there is clearly a lot of work to be done. And it is urgent, because in less than three decades the window will be closed, with the rise in the number of elderly and the decline in the number of younger people. Tunisia will end up with a reduced population of working age assuming the burden of a growing aging population. It is therefore imperative for Tunisia to invest a massive amount of dividends from the current phase in order to prepare the necessary tools that will enable it to cope with tomorrow’s burden of aging population. Thus, the current challenge is two folds : ensuring full employment today and invest wisely for the future.

The double challenge in question can become more preoccupying if the 2 children per woman fertility continues to fall, because the base of the pyramid will continue to shrink, this will lead ultimately to a more severe imbalance between a population of working age and another depending on them. If the current fertility appears to be stabilising, this is largely due to the extraordinary rise of the marriage age that has been observed since the sixties which seems to have reached its end, provoking fertility in general to be maintained, while fertility in marriage continues to show signs of weakening. It will not be surprising that very soon, Tunisia will be forced to reverse the family planning policy pursued successfully for four decades and support fertility. One of the major challenges of this approach is the establishment of facilities and structures for child care such as nurseries, crèches, etc…, free of charge allowing mothers to pursue a normal professional career while having children.

The unprecedented rise in the marriage age of Tunisian women (where the average today reaches 33 years instead of 18 years in the early fifties) causes the great majority amongst them to remain celibates until the age of 25, 30 and even 35 years. At 40 years even, the proportion of unmarried women is still strong. The situation for men, of course, does not differ. If this phenomenon was one of the pillars of the decline in fertility, the motifs lie largely elsewhere. Youth unemployment and lack of affordable housing are evidently the causes in this delay of marriage, but do not constitute a sufficient explanation to the magnitude of the phenomenon. One can imagine that especially at the base, there is an affirmation of willingness of women to be educated and to make a start to their careers before getting married and possibly abandon the idea of marriage all together if the latter will put an end to their future ambitions. In a society where sex outside marriage remains by enlarge a taboo, there is of course, behind this prolonged celibacy a great difficulty in life style for young adults of both sexes. In reality, on the side of causes and in particular on the side of consequences, the need for research on celibacy and the causes of celibacy are pressing in Tunisia, as only a good knowledge of the ins and outs of the phenomenon will help develop appropriate policies.

As the ’Demographic Window’ which has been set forth is more favourable in the context of workers export (as another way of offering youth employment) than of imports, it seems, therefore, that Tunisia is not on the eve of becoming a destination for immigrants. But, the before-eve, perhaps, when the deficit in the population of working age becomes too apparent (pessimistic hypothesis on fertility) or the Tunisian economy, using the Demographic Window, becomes much more competitive and much more dynamic that it will attract foreign labour in mass (an otherwise more optimistic hypothesis.)

2nd March 2008

Conforming with established standards by the International Olive Oil Council in which Tunisia is a full member and a cofounder, should allow the Tunisian olive oil to occupy authoritatively a prominent place on the global market. Height of its achievements, Tunisia continues to deploy efforts to create the right conditions in order to promote this flagship product, with the primary objective of increasing the rate of packaged olive oil exports from 1% to 10% by 2011.

According to the news agency Tunis Afrique Press (TAP), the Office National de l’Huile (ONH) ‘National Office for Olive Oil,’ Tunisia is busy working towards providing Tunisian olive oil with the reputation it deserves. To this end and in order to prevail in the face of increased competition, Tunisia intends on modernising its production means, develop new marketing methods and put in place new and better export strategy. New measures for continuous monitoring of the various production stages in order to ensure a higher quality will be implemented. In addition, there will be compliance with the technical requirements in terms of production and processing, upgrading of human resources, as well as conquering new markets such as the USA, Russia, Japan and China, where Tunisian olive oil stands a good chance of being commercialised and becoming popular.

The establishment of partnerships with European distribution networks, according to the ONH, is an indispensable way of making the Tunisian label better known on the international markets. In this context, Tunisia has opted for an approach of traceability which determines the ‘quality marks’ of olive oil. This, in particular, is about ‘Controlled Appellations of Origin’ (CAO) and ‘Source Indication’ (SI) which are essential for the survival and development of the country’s exports of olive oil. In the same perspectives, efforts continue on the funding and promotion levels of the packaged Tunisian olive oil (FOPROHOC), to help Tunisian exporters conquer new markets, identify the best means of communication and marketing in order to sell more of this product. On another level, the ONH is in the process of studying ways to encourage the exports of packaged olive oil with the aim of creating a label for the Tunisian olive oil, presently exported in bulk in its majority. In this perspective, the regrouping of exporters within a consortium is currently being planned.

The Tokyo food show ’Foodex’ which will be held from the 11^th until the 14^th of March will see the participation of no less than 12 Tunisian food companies, the bulk of which are specialised in the olive oil sector such as Alyssa Oils, Imex Olive Oil and the Mediterranean Olive Oil Consortium which includes four different companies. This new strategy of aggressive marketing appears to have yielded favourable results, following a trip made recently to the United Kingdom by a group of Tunisian businessmen specialising in the food industry in general and the olive oil industry in particular. The group has conducted meetings with representatives from the British retail chains who between them control 70% of the UK market, such as the prestigious Harrods and the likes of Asda, Tesco, Morissons, Somerfield and the Windsor Food Group. A number of contracts were agreed and will be signed by 2009, the date when other contracts undertaken by these retailers and which are currently in force, will come to an end.

Tunisia is ranking second in the world with regard to agricultural land reserved for olive trees. Some 1.7 million hectares are consecrated for the purpose, which represent, roughly, 19% of the total land dedicated for olive tree growing world wide. At the international level, recent statistics show Tunisia ranking third largest exporter of olive oil after Spain and Italy. The country exports 120,000 tonnes of its produce on average every year, a figure which represents 70% of Tunisia’s overall production of olive oil

1st March 2008

Despite a trade balance surplus in energy for 2007, Tunisia remains a net oil importer. The energy trade balance, commenced 2008 with 70.5 million dinars in deficit and oil prices are showing no sign of coming down, to the contrary prices keep on soaring, oil producing countries and brokers alike are in no hurry to see their earnings decline.

To cope with the situation the government was forced to develop a plan aiming at streamlining and rationalising energy consumption and more importantly, to identify energy substitutes (eg, low electricity consumption bulbs, etc…) and renewable energy for future use. The plan is currently under the aegis of the Agency for the Management of Energy, a singulatery almost unique in the countries south of the Mediterranean.

Tunsia is a country which is not short of wind and/or sun, indeed the STEG (Societe Tunisiene d’Electricite et Gaz) have and will make efforts in the field of wind energy. It already has 55 megawatts of which 35 in the realisation stage and a further 120 megawatts in the preparation stage in the Bizerte area. Nevertheless, all of this does not represent more than 4% of the global electricity production. A rate which equals the current European average production. In addition it is an energy source in which big investments cannot be made due to its instability and its storability which is yet to be feasible. As for the sun energy, the opinion of the STEG experts is that, it can only be beneficial in heating through the use of photovoltaic panels and could never produce electricity. This is for one simple reason and that is the cost per kilowatt is 15 times more expensive than the convential kilowatt produced by the STEG. This would leave nuclear power.

For some time, nuclear power is no longer an option, but a decision in which the STEG is in charge of its realisation. The STEG teams have yet to decide on the technology to adopt. The Canadians of Canadu and soon the French of Areva, have already presented their applications. On their part the STEG teams have begun the recruiting process for outdoor and indoor activities. Announcements are displayed in the main Tunisian specialised universities for training in this new technology. Trips are planned in order to recruit highly educated Tunisians from major foreign universities. This recrutment move will aim at assembling several thousand people.

The consultation call which signifies the final choice of technology, will be made in 2011. The reactor to be installed should not be more than 1,000 megawatts, representing only 15% of energy consumption in Tunisia and will cost 2 billion dinars to build. More important than the date 2020 when nuclear energy becomes a reality in Tunisia, the fact is that this will only be the first. Tunisia, according to experts, is expected to have more than one reactor as from 2020.

29th February 2008

“Tunisia has drawn advantage from the talents and the intelligence of its children and can serve as a model in the region and even beyond” declared Mr David Welch, Under Secretary of State in charge of the Middle East in a briefing held at the headquarters of the United States Embassy in Tunis.

“Tunisia has an interest in having good relations with the United States of America“, added the Under-Secretary of State, emphasising that the economic relations between the two countries are good and that an economic dialogue has been initiated between the two parties and discussions will take place between the Tunisian government and the United States Department of commerce regarding the free trade agreement.

Mr David Welch has commented on the atmosphere and ambiance of openness which is developing in Tunisia, congratulating and welcoming the Tunisian government’s commitment to increase the volume of direct foreign investments and improving the business environment.

Mr David Welch has also said following a meeting with the President of the Republic, that he has had an important meeting with the head of state, a meeting which offered an opportunity to review the excellent relations established between Tunisia and the United States of America. “These relations, he said, are very important to President George Walker Bush and the American people and we believe that they are equally as important to the Tunisian people.”

28th February 2008

26th February 2008

Hammam Bourguiba  Ain Draham

Ecological tourism is henceforth a very promising niche for the whole of the northwest region in view of the continuous development of the sector in recent years.

The towns of Tabarka and Ain Draham have become a destination with a specific character in Tunisia, in general, and in the northwest region in particular, thanks to natural and historic richness they contain and their diversified tourism product, responding to visitors’ aspirations whether they were foreigners or Tunisians, offering beach, cultural and ecological tourism.

El Mouradi Hotel, Hammam Bourguiba

25th February 2008

According to the World Bank (WB), Tunisia is a country which continues to display sustained growth. The organisation predicts that the country is capable of achieving an economic growth in the order of 6.2% in 2008, a growth rate which is higher than the 5.7% forecasted by the International Monetary Fund.

In its latest report on the prospects of the world economy for 2008, the WB affirms that Tunisia could achieve this growth through export diversification and the development of the investments volume notably Direct Foreign Investments (DFI).

The achievement of high growth rate, constitutes a necessity for Tunisia in order for it to cope with the challenges it is facing, challenges which other similar countries are also confronted with, where the natural resources are scarce but the highly qualified workforce is plentiful. Tunisia aims at taking the growth rate to 6.3% over the next decade, in order to strengthen the economy’s capacity to be able to respond to additional demand for employment and reduce unemployment rate. Indeed, the country is expected to create one million jobs during this stage, in order to absorb the additional demands, estimated to be 85,000 applicants per annum and lower the rate of unemployment from 14.2% at present to 10.3% by 2016.

Achieving these objectives will be founded on increased exports and investments notably private investment, be it home grown or foreign. The World Bank’s report, which outlines development prospects in key regions of the world, noted that Tunisia which has successfully managed to diversify its exports of goods and services, will achieve a double-digit growth in this area in 2008, a 10% progression in exports, resulting from increased demand in the European Union (EU) brought about by the continuous rise of the euro vis-à-vis the dinar.

This result was possible, according to the report, thanks to the multiple reforms adopted by Tunisia in the course of recent years which aimed at improving the business environment, impacting positively on the competitiveness of its exports. The report has also highlighted the importance of DFI in the stimulation of fast growth momentum and the efforts deployed by Tunisia to raise its capacity of attracting investment, taking advantage of the satisfactory awards bestowed to it by the various international agencies and organisations (* For a comprehensive list on these awards see foot note.) The investments from the Gulf states, will, according to the provisions, contribute substantially to the strengthening of investments activities in Tunisia within the next five years, thanks to mega-projects such as Tunis Sports City, Portal of the Mediterranean and Bled El Ward. Direct Foreign Investment in 2007, reached 2157.9 million dinars excluding privatisation receipts.

23rd February 2008

At a time where the global financial place is beating the drums of the sub-prime crises and stock markets volatility, the Tunis Bourse tends to get out of its ‘cottage’ and find its straight path after a long period of lethargy.

In accordance with the monthly activity indicators published by the Tunis Bourse, the index TUNINDEX has recorded in the course of the first month of the current year an increase of 1.58% compared to December 2007. The market capitalisation has increased by 1.55% for a transaction volume of 57.5 million dinars against 89.6 million dinars recorded during the same period last year, representing a drop of 35.7%. The daily average volume of transactions has also registered a decline of 33.5%. Furthermore, it should be noted that the overall volume of realised transactions at the Bourse, as well as listings and declarations have reached 426.6 million dinars in value against 125.4 million dinars recorded the previous year, a growth rate of 240%. More than 85% of the overall volume of transactions are due to new listings operations which totalled 364.6 million dinars for the month of January 2008. As for stock prices development, there were 28 values in the green and 18 in the red.

With 22 listed companies, the financial sector, as per usual, holds the lion’s share of the number of securities admitted as well as of the volume of capitals. The recorded market capitalisation by the banking and financial sector is estimated at 4.233.982 (thousands of dinars). The Attijari Bank has achieved the strongest increase followed by the STAR insurance group and the Habitat Bank. In terms of return on listed securities, the industrial sector comes in second position behind the banking and financial sector, both in terms of capital and shares traded.

The health, oil and gas sectors, seem to be slow to take off in the primary market. At the time of the same reference period, the companies ADWYA and SIPHAT have realised no less than 1487 exchanges.

As for the telecommunications sector, SOTOFEL is the only listed company on the Tunis Bourse. The company has registered a regressive performance in 2008, 13.55% for 72,862 traded shares. The annual yield of SOTRAPIL, also the only listed oil company on the Bourse, has experienced a decline of -3.77%.

Regarding foreign participation, the Bourse’s bulletin reported an increase of 17.12% in purchases, cessions made by foreigners were in excess of 74.4%, a monthly downward variation of -7.75%. The proportion of market capitalisation made by foreigners for the month of January 2008 is estimated at 0.43%.

Ultimately, the index TUNINDEX continued to pursue a ‘saw-teeth’ curve for the month of January, the average daily treated equity showed a slight decline compared to the end of 2007 and foreign participation remains minimal.

23rd February 2008

The latest World Bank report on education in the Middle East and the North African region (MENA), tells the tale of the education reform with special emphasis on its contribution to social and economic development. A never ending journey in which Tunisia can be seen as excelling in more ways than one.

The World Bank’s report establishes a composite index of educational results for 14 countries incorporating accomplishments relating to access, quality, efficiency and equity of education to all three formal levels, corrected by a starting point. In the case of access, the index includes the net rates of enrolment in primary schools and the gross rates of enrolment in secondary and higher education. The index for integrated access shows that the Lebanon, Jordan, Egypt and Tunisia have been particularly high performers, compared to Djibouti, Yemen, Iraq and Morocco who were ranked bottom of the list. The rest of the countries were considered to be middle performers. The differences concerning the rates of higher education, are the main cause of the variation between the countries.

The relative success in equity was measured by comparing the indices of parity between the sexes’ (IPG) gross enrolment ratio of schooling and the distribution of the schooling years. (The IPG is defined as the gross rate of enrolment for girls divided by the gross rate of enrolment for boys.) Nowadays all countries, with the exception of Djibouti, Egypt, Iraq, Yemen and Morocco have an IPG of no less than 0.95 for all levels of education. The IPG for higher education, is much higher than that of primary and secondary education in most countries of the MENA region. In Iran, Jordan, Kuwait, Lebanon, Saudi Arabia and Tunisia, the number of female students in higher education exceeds that of male students by a substantial margin.