Africa’s rise over the past decade has been very real. While sceptics still abound, the evidence of the continent’s clear progress over the past decade is irrefutable. Over this period, a critical mass of African economies, especially the Northern African region have grown at high and sustained rates; so much so that, despite the impact of the on-going global economic situation, the size of the African economy has more than tripled since 2000. The outlook also remains positive, with many parts of Northern Africa forecast to continue experiencing relatively high growth rates and a number of Northern African economies predicted to remain among the fastest growing in the world for the foreseeable future. At present, five North African countries, have attained “middle income” status as defined by The World Bank, and, if current growth rates are sustained, 6 more could reach middle income status by 2025.

 

One of these 5 Northern African countries is Tunisia.  Tunisia is a middle-income North African country. First in North Africa, ahead of Egypt (94th), Morocco (114th), Algeria (136th) and Mauritania (165th), Tunisia is ranked 55th out of 183 countries surveyed by the 8th annual report ”Doing Business 2011: Making a Difference for Entrepreneurs”, released in November 2011 by the International Finance Corporation (IFC) and the World Bank.

 

Since the late 1980s, Tunisia has undertaken macro-economic policies and structural reforms designed to transform the country into a market-driven economy with a liberalized trade regime. The reforms have borne fruit: GDP averaged 5% between 1999 and 2009, while inflation remained stable at 3%; the public debt-to-GDP ratio declined by 9 percentage points; and reserves more than doubled from 2 to 5 months of imports. With US$ 3.597 in 2009, Tunisia has one of the highest GDP per capita in Africa. Confidence of investors in doing business in Tunisia has also increased as the Arab Institute of Business Managers published in late September that the business confidence index which, featured a sharp increase of about 18% reaching a rate of 14. 8% compared to a value of 2.9% three months earlier. This rise is hence reflected through a significant increase in the level of utilization of production capacity and through the prospects for expansion of this capacity.

 

What this means is that more and more entrepreneurs are willing to invest in businesses in Tunisia. Tunisia has some 12,000 private businesses employing 10 or more people. 2,763 of them enjoy offshore incentives, 35% in the textile industry and 18% in foodstuffs. Of 3,135 businesses with foreign investment, 2,454 are in manufacturing, 380 in services, 158 in tourism, 81 in agriculture and 62 in energy, with a total of close to 325,000 jobs. Some forms of interference such as “implicit quotas” in the purchase of public-sector entities have been reduced. Prior government approval the import of foodstuffs was abolished in August 2011. Price control has been relaxed and new ways of financing SMEs are being studied. However, businesses still cite as obstacles the lack of access to finance, bureaucracy, delays in docking in ports and unjustified delays in customs clearance.

 

The Government of Tunisia has played a strong role in the economy. The Government amongst other things, gives advice as well as mentorship and substantial funding (for a three year period) to small and medium-scale entrepreneurs (SMEs).  The Government also wants to transform the country into a hub for banking services and a regional financial centre within five years through the “Port financier de Tunis” (Tunis financial port) mega-project. In 2011 the government launched a reform of the Investment Code so as to speed up a project aimed at creating business centres, which began in 2005. The ten existing industrial zones should be joined by 28 others being built as public-private partnerships. The aim is to set up 85 within five years, 50 of them in inland regions.

 

Tunisia is also a country with a relatively diverse economy. There are a number of factors that are responsible for this. Among them are political stability and its geographic location allowing for easy access to the African, Middle Eastern and European markets and enabling its companies to link into European Union (EU) supply chains.  Despite the dearth of natural resources, Tunisia has relied largely on a good business climate, infrastructure, geo-strategic location and highly skilled human resources to drive economic diversification. This has helped to make the economy more resilient to internal and external shocks, such as the surge in energy prices in 2008 and downturns in agriculture caused by drought.

 

The Tunisian Government has taken advantage of its proximity to Europe to create an economic programme that is geared towards integration with the EU economy. For example, 72% of Tunisia’s exports and 69% of its imports are with the EU. Tunisia’s trade policies have also helped it to become more competitive in international markets. Tunisia became the first country in the Mediterranean area to enter in a free trade area with the EU. It is also undertaking an Upgrading Program which aims to make Tunisian private sector enterprises globally competitive and includes training and infrastructure upgrading for SMEs and indigenous entrepreneurs. In light of these achievements, many West African governments are sending delegations to Tunisia to look at how to replicate such programmes in their own countries.

 

Tunisia has achieved a favourable business climate thanks to its political and economic stability. This is in no small measure due to pragmatic government leadership, taking advantage of a strong human resource base and a favourable geographic location to modernise the economy. Tunisia’s strengths in tourism, agriculture and ICT/services could be a major boost for the overall development of the North African economy. Moreover, its tourism sector is now being further developed to be a regional hub through new ventures such as healthcare, well-being and sporting centres underpinned by massive investments from some Gulf countries.

 

In addition and perhaps most importantly, the Tunisian Government has taken great strides towards improving the quality of life of its citizens, with strong investments in health and education. 95.5% of the population have access to health services and sector spending stood at 8.6% of the national budget in 2009. Life expectancy rose to 74 years in 2008, up from 68 years in 1987, while infant mortality has fallen to 18% and fertility rates have gone down to 1. 70%, leading to population control. Tunisia is also a fairly egalitarian society, with 80% of the population considered to be middle-class.

Tunisia though is not a perfect reflection of the story of business in the rest of the African region. Africa’s economic development has been constrained by many factors but none more than conflict. More than 28 African countries have been involved in some kind of war since 1980. Most states in Africa (Northern Africa inclusive) are still in a conflict, sporadic conflict or post-conflict situation, depending on the definition used. The legacy of conflict in Africa includes serious poverty, the breakdown of systems and institutions, political control of the economy, endemic corruption and an unpredictable operating environment. Also most of the growth and development in the African economy is being driven by natural resources. The volatile nature of commodity prices and an over-dependency on a few key sectors clearly raises questions about the sustainability of development.

 

There is however, good reason to hope, as well as to celebrate the progress that Africa has made thus far. At the same time, though, individual countries and the region as a whole still need to address significant challenges in order to sustain this progress, and to emulate the kind of developmental path we have seen in places like Southeast Asia over the past 30–40 years.  Following the Tunisian model, which is by no means a perfect one though, is one sure way to ensure good business and economic growth across the Northern African region and Africa as a whole is a reality and not merely a mirage.

 

 

REFERENCES

  1. AfDB, OECD, UNDP & UNECA (2012) African Economic Outlook
  2. Development Bank of Southern Africa (2011) Doing business in post-conflict and fragile states: Challenges and risks
  3. Ernst & Young (2013) Attractiveness Survey: Getting down to business
  4. OECD, United Nations & OSAA (2010) Economic diversification in Africa: a review of selected countries
  5. World Bank (2013) Doing Business 2013 Fact Sheet: Middle East and North Africa

 

 

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Charles Akhimien
About Author: Charles Akhimien
Dr. Charles Immanuel Akhimien is a young medical doctor from Benin City, Nigeria. He is the official representative and blogger for the United Nations Environment Programme (UNEP) for World Environment Day 2013 and the winner of the World Environment Day 2013 blogging competition. He represented the United Nations in Mongolia in June 2013, for World Environment Day 2013, where he met with important dignitaries including the President of Mongolia, Tsakhia Elbegdorj and the UNEP Executive Director, Achim Steiner. He has also served as an expert for the UNEP on numerous online platforms. A prolific writer, he is very passionate about the environment, especially its effects on public health. Charles is a United Nations Volunteer (UNV) and he writes for various Human rights Organisations including the Delta Women Initiative and the Organization for Abused and battered individuals (O.A.B.I), two organisations that are concerned with safeguarding the well-being of women and children as well as preventing and reporting the abuse of women worldwide. He also works as an editor for the HAID (Health Access and Integrated Development) Initiative, a non-governmental Organization that focuses on ensuring adequate healthcare access to the poorest, most vulnerable communities in Nigeria, with a special focus on children. He also worked as the Project Manager and Student facilitator for Solina Health on behalf of the Nigerian Government and the World Health Organisation (WHO) for the National Vaccine Summit in Benin City, Nigeria in March 2012. Furthermore, He was the Editor-in-Chief of the medical journal of the University of Benin Medical Students’ Association (UBEMSA) from June 2010 - July 2011, where he successfully produced the annual journal “The Stethoscope” in May 2011. Dr Charles graduated from the prestigious School of Medicine of the University of Benin. A social media aficionado and a mobile app developer, him and his patrners, have created GOBIFF a vaccine tracker and child growth monitoring app for android devices that would enable parents and healthcare personnel to monitor the vaccination status of infants and young children in Nigeria.