NO MARMITE IN TUNISIA

For a small nation with little or no natural resources such as Tunisia, the last 50 years of independence have witnessed achievements nothing short of spectacular!

International institutions have often cited Tunisia as a “model for success” in economic structural adjustment.  The International Monetary Fund found that “ Tunisia’s economic performance remains highly satisfactory in a difficult international environment” and that “ strong policy coordination has contributed to the clarity of objectives and the effective implementation of the government’s economic strategy”.  The World Economic Forum ranked Tunisia first for competitiveness in Africa and 33^rd in the world.  Crucially, Tunisia’s climb in world ranking has been consistent, sure and continuous, while the Japanese agency R&I has raised Tunisia’s sovereign rating from BBB+ to A- in 2007.

All economic and social indicators have shown a marked improvement.  Since 1987 the economy has been growing at a rate surpassing 5.5% annually and forecasted to be around 6.1% over the next five years.  Tens of thousands of jobs are being created every year.  Amazingly, inflation has continued to fall reaching 2.1% in 2005.  For most of last year, annual inflation rate accelerated to 4.5% due largely to the relentless rise in energy prices. 

Increases in transport and food costs, as well as housing costs have equally contributed to the rise.  However the figures for June and July of the present year show a return to the more familiar rates of 2 to 3 percentage points.  The budget deficit has decreased to 2.9% and the balance of trade deficit is currently 2.1%.  More importantly, the debt ratio has been decreasing from 58% of gross domestic product in 1986 to around 45.6% currently and is expected to full further to around 42.8% by the end of 2008.

Since 1987 the Tunisian citizen’s income has quadrupled.  National wealth has also grown six folds during the same period (real GDP growth accelerated, from 4% in 2005 to 5.4% in 2006.)  Robust income growth and abundant liquidity have boosted domestic demand and the rapid pace of economic expansion has helped absorb the big flow of new job seekers.  The reforms adopted have opened up the economy on its international environment resulting in a net annual increase in exports of more than 12%.

The improvement of the macroeconomic indicators has been paralleled by the improvement of social development indicators.  Per capita gross domestic product has tripled since 1986. Poverty figure today stands at 3.8% of total population with plans to eradicate it within the next 10 years.  80% of Tunisians now belong to the middle classes and own their own homes. 99% of children attend school.  Women have long achieved equal rights (and pay) as men.  As well as their significant contribution in all aspects of life, they enjoy a strong and effective participation in the political life.  Although already well represented (even more so than in many of the developed countries,) the aim is to achieve 25% of women representation in parliament. Tunisians now have a life expectancy of 74.2 years which will rise to 80 years within the next decade. These achievements are the result of prudent macroeconomic policies and stable political life. Tunisia has taken on the formidable task of restructuring its economy, raising its living standards to the level of industrialized nations.

In 1995, Tunisia was the first nation south of the Mediterranean to sign a free-trade agreement with the European Union. This agreement has already led to a significant increase in foreign investment. Foreign investors have observed the improvement in general business climate in Tunisia and have reacted accordingly.  Nearly 2,000 foreign companies are currently operating in Tunisia generating over 260,000 jobs.  It is expected that a breath-taking sum of 50 to 60 billion dollars will be invested in the country within the next 10 to 15 years. Different factors explain these developments.

1. Tunisia has implemented measures to facilitate the investment process. 
2. Foreign investments are viewed as a way of job creation.
3. A way of technology and know-how transfer to bring added value to Tunisian’s products and services.
4. Since 1990 Tunisia has become a full member of the World Trade Organization.
5. Gateway to Europe. With the signing of the free-trade agreement with the European Union, industrial products produced in Tunisia are now able to gain access to a market of more than 350 million consumers. So for American investors (for example) this will be a major incentive, in addition there is the close proximity to Europe, a factor which will be viewed by investors as a big money saver on transport for instance.
6. Qualified work-force.  Education has been a government priority since independence and it has paid off.  Well over 55% of job seekers have a university or professional degree! Sutcliffe of British Gas one of the major foreign investors in Tunisia supplying gas to well over 50% of house-holds said, “ Tunisia has a well-educated workforce.  We have 220 employees and less than 20 are expatriates.  They are highly professional.  One of our Tunisian employees has just gone to Egypt to lead our health and safety loss prevention work”. Amin at Citibank added, “ The best thing in Tunisia for business people is the very good quality of the education system.  At the bank 98% of the employees are Tunisians.  Foreign companies do not need to invest in expatriates, which is a big plus considering their costs”

Today Tunisia is poised to become a regional leader. The country has signed agreements with several North African and Arab countries and has emerged as the leader in the proposed unified Maghreb.  However, and as a direct result of the trade agreement signing with the European Union, Tunisia will be facing its biggest challenge yet.  Unemployment although falling remains relatively high and expected to rise further at the onset of the EU-Tunisia free trade agreement before decreasing again.

Perhaps Tunisia’s achievements are best summarized by Nayera Amin, general director at Citibank Tunisia, who says, “ Tunisia is doing a fabulous job. The economy is well managed. They are aware of all the issues and are tackling them!”

Researched and written by Man In The Hat
man.inthehat@yahoo.fr