Ahlan wa sahlan. These three words may represent the path to success for any investor in Tunisia. It is not only a key expression meaning “welcome” which represents the Tunisian philosophy; it reflects the positive economic trend and forecast which Tunisia will experience in the future. Tunisia’s Jasmine Revolution will make the country flourish and turn it into an even more welcoming country. The recent political changes will result in a country opening up to the world and experiencing notable growth and prosperity.
The Tunisian business environment is mostly made out of small and medium enterprises (SMEs). According to the Bulletin of the Conseil du Marché Financier (Council of the Financial Market) issued on Wednesday, 3rd May 2006, and pursuant to the recommendations of the Conseil Interministériel (Inter Ministerial Council) of Monday, 13th March 2006, SMEs are defined as those enterprises whose workforce is made out of less than 300 people and whose net real estate assets are lower than four million Tunisian dinars.
Given the huge amount of SMEs composing the Tunisian business network, this kind of enterprise is the mainly responsible for fostering the Tunisian economy. SMEs are key contributors to innovation, flexibility and digital adaptation. Moreover, the Tunisian effort on development and solar energy are shaping a new source of income for one of the powers of Northern Africa and the Maghreb.
As stated by the Public Economic Interest Business Centres, the vast presence of SMEs in the Tunisian economy is the proof of the wide support provided by the Tunisian financial and administrative institutions in every business sector and infrastructure, such as:
- Industry Promotion Agency (Agence de Promotion de l’Industrie, API)
- Industrial Modernization Programme (Programme de Modernisation Industrielle, PMI)
- Foreign Investment Promotion Agency (Agence de Promotion de l’Investment Extérieur, APIE)
- Sectorial Technical Centres
- National Institute for Standardization and Industrial Property (Institut National de Normalisation et de la Propriété Industrielle, INNORPI)
- Agricultural Investment Promotion Agency (Agence de Promotion des Investissements Agricoles, APIA)
- Industrial Land Agency (Agence Foncière Industrielle, AFI)
- Central Bank of Tunisia (BCT)
- Mixed Chambers of Commerce and Industry
- Tunisian National Tourist Office (ONTT)
- Development Offices
- Regional societies for Investment and Development
- Export Promotion Centre of Tunisia (CEPEX)
- National Agency for Employment and Independent Work (Agence National de l’Emploi ou du Travail Indépendant, ANETI).
Likewise, the mission of each of the aforementioned institutions has been reinforced by the recent creation of other support institutions such as business centres (that aim to provide support to investors with a view to launch and unfold their projects); the Guichet Unique (which makes it easier to fulfill the conditions and other required administrative procedures involved with setting up a company); and Pépinières D’entreprise (a business incubator aimed at advising investors to develop their projects). These institutions, together with improvement in the access of promoters to credits and financing, foster the interests of SMEs. Entities contributing to financial accessibility include the Fund for Industrial Promotion and Decentralization (Fonds de Promotion et de Décentralisation Industrielle, FOPRODI), the System of Incentives for Innovation in Information Technologies (Régime d’Incitation à l’Innovation dans les Technologies de l’Information, RIITI); the Tunisian Solidarity Bank (BTS); la Banque de Financement des PME (offering financing to SMEs), and start-up funding (fonds d’amorçage).
Economic Framework Prior to 2011
According to the economic report written in July 2010 by the Spanish Chamber of Commerce in Tunisia, Tunisia’s economy grew by 3% in 2009, which represents a light economic slowdown compared to growth of 4.6% and 6.3% registered in the two previous years. The economic slowdown will continue during the present year and growth will not be higher than 2.6% in 2011, as this report states. Regarding the three sectors of activity, the industrial sector will contribute the most to Tunisia’s GDP (it registered a contribution of 56.6% in 2009), followed by services (23.7% of the Tunisian GDP in 2009), and the agricultural sector (19.8% of the Tunisian GDP in 2009).
Tunisia registered an inflation rate in 2009 of 4.2%, remaining unchanged from the previous year.
Tunisia has not been deeply hit by the global financial crisis. Although exports have decreased, national incomes from tourism and remittances have helped the reserve account remain stable. Therefore, the global crisis did not hit the Tunisian financial sector as much as it affected other countries.
According to the CIA World Factbook of 2009, manufacturing industries are the main export producer and, as a consequence, a relevant source of foreign currency revenue. It is worth highlighting that textiles constitute a major source of revenue for Tunisia, registering an export rate higher than 90% in 2009. Other export industries include oil, mining, footwear, and food processing.
Regarding foreign exchange, tourism represents the major source of hard currency receipts and a relevant factor for employment. Therefore, the decrease in Tunisian tourism as a consequence of political instability will reduce incomes, shaping remittances as a key source of income for a country which has about 1 million locals living abroad. As the CIA World Factbook states, “in 2008, remittances from abroad reached 2.4 billion dinars (approximately $1.97 billion), or roughly 4.71% of Tunisia’s GDP and 20.5% of the country’s foreign currency earnings (TND 11.687 billion, or U.S. $9.583 billion).”
2011: Economic Perspective
According to some pieces of information provided by the Spanish Chamber of Commerce in its report of July 2010, manufacturing industries (mainly textiles, food and agriculture industry, as well as mining) will contribute in a significant way to the Tunisian GDP. Nevertheless, tourism will remain the main contributing sector.
It is important to point out that the main commercial relations between Tunisia and other foreign countries are determined by a free trade agreement related to industrial products signed between Tunisia and the European Union on 1st January 2008 pursuant to the provisions of the Agadir Agreement. However, services and agricultural products are still not regulated by any agreement, so Tunisia and the European Union are working on a future agreement which should guarantee a free trade of any kind of product.
Tunisia is also working on the employment and education sectors with a view to strengthen the role of SMEs, which would entail a notable improvement in the private investment sector. Tunisia is also making a big effort on the modernisation of infrastructures and other sectors of activity, such as agriculture, since it approved the 11th Development Plan 2007-2011. In addition, according to some other sources of information such as allAfrica.com, the new Development Plan 2010-2014 pursues to achieve a growth rate of 5.5%, making a special effort on services, whose participation in the aforementioned growth rate reaches 70%, followed by 18.6% for manufacturing, and 6.5% for non-manufacturing industries.
Tunisian authorities intend to reduce unemployment, especially among university graduates, by coordinating labour supply and demand and creating around 415,000 job positions, as well as to increase private investment by 11.2%, reaching a participation equivalent to 26% of Tunisia’s GDP. Private investment is expected to reach 60.8% of the country’s GDP in 2014. Furthermore, this Development Plan focuses its attention on savings, as well as on foreign direct investment and export, intending to register higher figures with regard to previous terms.
The year 2011 appears as an open door giving investors the possibility to unfold their projects in leading sectors such as the energy sector, waste management, water treatment, infrastructures, transports and food and agricultural industries, in whose framework local authorities have been working on agreements and plans, giving birth to significant projects such as the Tunisian Solar Plan 2010-2016.
Despite the intentions of the aforementioned 12th Development Plan, it seems that its provisions will not be attainable at least in the short term because of the political changes which Tunisia is currently experiencing. Nevertheless, authorities will maintain their effort on the reduction of unemployment, especially among graduates, as well as on raising the living standard by pressing for the reduction in prices of basic food items.
According to the Country Report of Tunisia for 2011 written by the Economist Intelligence Unit, tourism and foreign direct investment will still be two key elements of the Tunisian economic policy, given that tourism contributes between 6% and 7% of Tunisian GDP.
Due to the current political instability, the new government will boost investment, foreign direct investment and capital spending, especially in the interior, the south and the west of Tunisia. Revenues will be limited, so measures related to national high spending will be taken with a view to stimulate the Tunisian economy.
Regarding the economic trend for Tunisia in the following years, the Economist Intelligence Unit predicts a reduction going from 3.4% in 2010 down to 2.4% of GDP in 2011, followed by a notable recovery reaching 3.1%, 3.5%, 3.9% and 4.1% of GDP in 2012, 2013, 2014 and 2015 respectively. With regard to exports, they will decrease in 2011 by 2.5%, going from 5% down to 2.5%. Nevertheless, they will recover in an outstanding way in 2012, reaching 6.7%.
Other data referring to agriculture, industry and service provided by the Economist Intelligence Unit show that agriculture will not register negative figures anymore (against its performance in 2010) and it will attain 1% in 2011 and 2.5% in the following years, remaining unchanged from 2012 until 2015; industry will keep on growing steadily, maintaining positive figures which do not seem to be affected by the global crisis nor the current political instability (1.6% in 2010, 2.7% in 2011, 3% in 2012, 3.2% in 2013, 3.3% in 2014, 3.4% in 2015); services will decrease in 2011 by 1.7% attaining 2.5% and it will start to recover from 2012, registering 3.2%, 3.7%, 4.1% and 4.3% in 2012, 2013, 2014 and 2015 respectively.
To sum up the economic predictions of the Economist Intelligence Unit, Tunisia will register an average growth of 3.2% between 2011 and 2020, followed by 4.7% between 2021 and 2030. In addition, Tunisian real GDP will grow by an average of 4.1% between 2011 and 2020, followed by a growth of 5.2% between 2021 and 2030. Labour productivity growth will almost double in the next decade, registering 2.7% between 2011 and 2020 and 4.5% between 2021 and 2030.
In order to analyse 2011’s business perspective in Tunisia, it is not only important to pay attention to economic forecasts and growth predictions, but to all the procedures, costs and time involved with starting a business. According to “Doing Business 2011,” a country report written by the World Bank which gathers some useful information about how to set up a company in Tunisia, it is compulsory to fulfill ten procedures to start a business. It takes 11 days and its cost reaches 5% of income per capita, not being necessary a paid-in minimum capital.
According to the aforementioned report, over the last four years (2007-2010), the number of necessary procedures to start a business in Tunisia has been higher than the average of the Middle East and North Africa. However, it takes less time to start a business, and its costs and paid-in minimum capital are much lower than the average rate registered by the Middle East and North Africa during the past four years.
Regarding trading across borders and its procedures, exporting takes 13 days, it is necessary to hand in four documents to export, and its cost reaches US $773 per container. With regard to imports, it is compulsory to hand in seven documents, it takes 17 days and its cost reaches US $8,583 per container.
According to data provided in the aforementioned Report Doing Business 2011, trading across borders requires fewer procedures compared to the Middle East and North Africa. Tunisia represents a country already involved in the international dynamics, acting as a leader amongst its peers. Documents, costs and time both to export and import are much lower in Tunisia compared to Middle East and North African countries.
Likewise, it is worth highlighting the business reforms carried out by Tunisia recently. Tunisia has adapted its payment systems with a view to meet the needs emerging from the current international scene. It has set up the use of electronic systems for payment of corporate income tax and value added tax, making any task carried out in the framework of commercial relations easier and quicker, both for exports and imports.
Despite the current political instability, Tunisia’s strong and consolidated economic policy makes the country rank among the leading nations in North Africa and the Middle East. Even though it is expected that the Tunisian GDP and growth rate will decrease during the present year, both the foreign direct investment and tourism will remain the cornerstone of the Tunisian economic policy, making the country recover steadily in the four following years.
Tunisia opens up to the world as an economy whose outstanding potential makes it extremely attractive for investors to develop their projects, making available to the world an array of significant innovative and traditional resources. So, Tunisia welcomes you. Ahlan wa sahlan.
By Pedro Muñoz Alonso
- Public Economic Interest Business Centres, Les mécanismes d’appui aux PME. http://caipe.tunisieindustrie.nat.tn/IMG/doc/mecanismes_appui_pme.doc http://caipe.tunisieindustrie.nat.tn/
- Spanish Chamber of Commerce in Tunisia. http://www.oficinascomerciales.es/icex/cma/contentTypes/common/records/viewDocument/0,,,00.bin?doc=4423770 http://www.oficinascomerciales.es/icex/cda/controller/pageOfecomes/0,5310,5280449_5296140_5296234_0_TN,00.html
- CIA World Factbook, September 2009 http://globaledge.msu.edu/countries/tunisia/economy/
- The Economist Intelligence Unit, Country report: Tunisia, 3rd August 2010. http://country.eiu.com/article.aspx?articleid=1607338945&Country=Tunisia&topic=Economy&subtopic=Long-term+outlook&subsubtopic=Tunisia–highlights%3a+Long-term+outlook http://country.eiu.com/article.aspx?articleid=987817283&Country=Tunisia&topic=Economy&subtopic=Forecast&subsubtopic=Outlook+for+2011-15%3a+Economic+growth
- World Bank, Doing Business 2011 Tunisia: Making a difference for entrepreneurs, 2011. http://www.doingbusiness.org/~/media/FPDKM/Doing%20Business/Documents/Profiles/Country/DB11/TUN.pdf