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Tunisia is a country in a state of good health. Long-term stability
has earned the country widespread respect and its economy is chugging along at a healthy pace, boasting steady GDP growth and a rising middle class. Tunisia is nearly fully integrated with the EU
and was the first country to endorse the French President Nicolas Sarkozy's plans for a Mediterranean Union. Tunisia is slowly but surely gaining the status of a developed country and being
recognised as a player on the world stage.
This section provides a quick overview of some facts about the country, its population, natural resources, geography, climate, language, religion, culture and education system.
Tunisia is one of the most politically stable countries in Africa and the Middle East. Diplomatic relations are, at the very least, cordial and it has been named Africa's most peaceful nation by the Global Peace Index. Indeed, wedged between Libya and Algeria, it has led peaceful diplomacy in the North Africa region and is at the forefront of continued efforts to promote further dialogue on security in the Maghreb and the Middle East. Its current administration, led by President Zine el-Abedine Ben Ali, who has been in power since 1987, favours a cautious, steady path and the maintenance of the status quo. This policy has reaped dividends – for example, Tunisia is now re-establishing dialogue with Libya after decades of strained relations. On the world stage, its two most powerful allies are the US and France. Tunisia was the first country to endorse the President Nicolas Sarkozy's plans for a Mediterranean Union. On the economic front, the state is reducing its control through a simplified tax code and some privatisation efforts. Meanwhile, trade barriers with the EU are gradually being removed and Tunisian goods have enjoyed duty-free status in the US since March 2008. Social policies are meanwhile progressive, although never radical, with Tunisia leading the way among Arab countries in areas such as women's rights, with education another priority. Jean-Pierre Raffarin, former French Prime Minister, offers an interview.
This chapter includes an interview with Zine El Abedine Ben Ali, President of Tunisia, and Jean-Pierre Raffarin, former French Prime Minister.
The Tunisian economy continued to grow in 2007. All the major macroeconomic indicators were positive. Tunisia achieved a growth rate of nearly 6.2% of GDP, the highest figure in a decade. Positive contributions came from all sectors and services, the star performer, accounted for 43% of GDP. Several major investment projects were announced by foreign companies, primarily from the Gulf, and the government is investing in infrastructure. However, it is expected that growth will decline slightly in 2008, which poses a threat to employment, as the number of young people entering the job market is expected to peak in 2010. The major risks were in the monetary environment. Inflation, for example, although under control, poses a risk in terms of deteriorating spending power and budgetary stability. In the meantime, the government continues to divest itself of state-owned enterprises and is focusing on expanding the tax base but still wants to alleviate the fiscal burden on companies. A 10% corporate tax on offshore companies, meant to start in 2008, has been postponed to 2010. The external environment is positive, though the economy remains over-reliant on the EU and more efforts need to be made to diversify.
The chapter includes interviews with Mohamed Rachid Kechich, Miniter of Finance; Miria A Pigato, Sector Manager, Middle East Africa Social and Economic Development Group, World Bank; Chekib Nouira, President, Institut Arabe des Chefs d'Entreprises (IACE); and Murio Portugal, Deputy Managing Director, IMF.
Tunisian banks performed well in 2007 and new regulations and the privatisation of BTK means they enter 2008 in better condition than before. Credits have been growing strongly, helped by a surge in consumer credit, and banks have been focusing on improving their portfolios by increasing provisioning. Branch expansion and cash-dispensers have also been a major focus. However, the sector remains one of the main weak points in the economy due to over-fragmentation and a dominant public banking sector. There are 43 banks in Tunisia but the three public banks maintain a significant market share and their lack of management autonomy makes for slow internal modernisation. Much still needs to be done for the industry to achieve EU banking standards by 2010. The authorities are also aiming for full dinar convertibility by 2011 at the latest. To the future, the local banking sector looks set to develop, with a focus on establishing subsidiaries in overseas markets, especially in Libya and Algeria. Banks may also start to mobilise to attract Tunisian expatriate savings.
The chapter includes an interview with Taoufik Baccar, Governor, Central Bank of Tunisia; and Hassan Bertal, General Manager, Attijari Bank Tunisia.
After a large inflow of Gulf portfolio investors caused the Tunisian stock market to soar in 2006, the reference index saw a much quieter year in 2007. Still, profits were good for most listed companies, and there was improvement in market turnover and market capitalisation, the latter helped by two new IPOs (ADWYA and Tunisie Profilés Aluminium). Foreign participation has increased gradually and stood at 28.2% at the end of 2007. The bourse does nonetheless face a number of key challenges if it is to reach its potential. These are: too few listings; too much of a focus on financials; too little exposure of listed companies to the stock market (few have more than 20-30% listed on the market); and too few institutional investors interested in short-term gains rather than long term fundamentals. The main challenge is getting more companies to list. Tunisia's new alternative market, designed to attract companies reluctant to list on the main market because of stringent requirements, is in that sense a step in the right direction but the market continues to be too undeveloped to fulfil its desired role as a regional financial platform and major source of corporate investment.
The chapter includes an interview with Youssef Kortobi, Chairman, Tunisia Stock Exchange (TSE) and a viewpoint from the Tunisie Valeurs team, on the country's open economy. Tunisie Valeurs also provides share analysis on Tunisair Group, ADWYA, Attijari Bank, BIAT, Tunisie Leasing and Tunisie Profilés Aluminium.
The insurance sector is well-organised and structured, and performs modestly well. However, it remains handicapped by a lack of dynamism and it lies behind the curve on modernisation. Despite seeing regular growth in all the key indicators, the Tunisian insurance sector constituted under 2% of the total national economy. To increase that percentage, efforts are now being made by the government to upgrade management within the industry, making it more efficient and improving the quality of services and products on offer to customers. At the same time, its regulatory framework is being brought in line with international standards. One of the aims of this policy is to ensure that local companies can compete with the predicted increase in the number of overseas players operating on Tunisian turf. Taking the sector segment by segment, motor insurance, accounts for the largest part of the market, although it continues to record losses, and efforts at diversification have been slow to materialise in what is still a closed market. Life insurance, despite new regulations brought in to aid it, is struggling. To the future, privatisation and increased foreign competition is on the agenda – take as proof the fact that Star has opened its capital to foreign investment and is seeking a partner to buy a 35% stake. Regulatory reforms and the privatisation of Société Tunisienne d'Assurance et de Réassurance (STAR) should shake up the sector and increase its importance to the economy.
In this chapter, Mohamed Dkhili, President, FTUSA, and CEO, Tunis Ré, provides a viewpoint on life insurance.
Although the number of visitors has gone up to 7m in 2007, with tourism still the country's main source of foreign currency income, the sector is underperforming and should be growing faster than just 3% annually. While the sector certainly offers a wide enough variety of attractions, the poor level of returning tourists is often attributed to second-rate service and badly maintained facilities in many hotels. Tunisia has not been able to shake off its image as a mass tourism destination – more than 80% of the industry is based on seaside tourism - and has failed to promote its tourism sector efficiently enough at the international level. The number of visitors from traditional European markets such as Germany and Italy continues to drop and the amount of foreign tourists spend per head in Tunisia is quite low in comparison with other tourist destinations in North Africa. To combat this, a $3.8m promotional programme is being implemented to regain a bigger share of these markets. Despite transient problems in the sector, investment is pouring into the sector, a nod to the country's promising future, with a number of major foreign companies developing projects in the country – Italy's Preatoni group, for example, is setting up an ecological tourism project in the northern area around Sejnane; the island of Zembra is to be developed by an international group headed by Chinese investor Li Ruo Hong; and the Libyan Arab Investment Company (LAICO) recently acquired four hotels. The government is also looking to for investors in the El Ghedhabna project to create what will be the country's second-biggest integrated resort, after Yasmina Hammamet.
The chapter includes interviews with Hichem Driss, CEO, Marhaba Hotels and a viewpoint with Mohamed Belajouza, President, Fédération Tunisienne de l'Hôtellerie, on the hotel industry.
Tunisia has been a hydrocarbons producer since the 1960s, although on a moderate scale. These days, hikes in oil prices have led to a surge in hydrocarbons exploration activity, with 2007 proving exceptionally successful - the Enterprise Tunisienne d'Activités Pétrolières is responsible for all exploration and exploitation activities, in general operating in conjunction with foreign companies. The most successful campaigns were undertaken by the US firm Pioneer Natural Resources (PNR). Regarding gas supplies, Tunisia need not worry, as the BG Group, in partnership with the Tunisian government, is in the process of developing the potent offshore Hasdrubal field, which is set to come online in early 2009 and to meet up to 20% of Tunisia's national gas demand. In addition to its own production, Tunisia receives royalties from the TRansMed gas pipeline that runs from Algeria through Tunisia to Sicily and beyond. Meanwhile, STEG and Libya's national oil company in 2007 founded a joint venture to build a gas pipeline from Libya to Tunisia. Still, as the country's hydrocarbons reserves will inevitably decline in the long term, the government has made a head start in reducing consumption by introducing an extensive programme aimed at rationalizing oil, gas and electricity use, and promoting alternative sources of energy. Tunisia also aims to have a nuclear reactor by 2020. One of the most worthy investments in 2007 was the Qatar Refining Company's construction of Tunisia's second oil refinery at Shkira at an estimated cost of $2bn. National electricity company STEG produces 70% of Tunisia's electricity output. By the end of 2007, Tunisia was in the final stages of awarding construction of a 400-MW power plant at Ghannoush. Last but not least, a joint Italian- Tunisian enterprise was established in 2007 to finalise studies for a 1200-MW combined cycle power plant at Hoauaria, which is set to become operational in 2012. One-third of production will be used to meet increasing Tunisian demands, while two-thirds will be exported to Italy. Looking to the future, seismic testing and drilling are set to continue in 2008 and Tunisia's oil production levels are likely to remain stable and even increase in the near future.
This chapter includes an interview with Derek Fischer, President, BG Tunisia and Othman Ben Arfa, Chairman & CEO, STEG.
Several new mega-projects underway, including Sama Dubai's City of the Century in the capital's centre and Bukhatir's Tunis Sports City, are expected to draw the construction sector out of its slump. Most foreign investment actually comes from the United Arab Emirates, which has overtaken Italy as Tunisia's leading foreign investor. Although the sate government still plays a major role, the construction sector in recent years has become an increasingly private affair. In 2007 other Arab property developers, such as Al Maabar, Damac and the Gulf Finance House, have also expressed an interest in investing in Tunisia. Besides, the government is constructing the Tunis Cultural City with help from the European Union, and expanding the Taparura project in Sfax, bringing the project's total surface area to 420 ha. The development should rehabilitate and develop northern Sfax which had been heavily polluted. A call for bids is due to be launched by late 2010. Other projects include the airport of Enfidha, for which Turkish construction firm TAV Holding won the $400m contract to build and operate it. In terms of infrastructure, Tunisia continues to improve its roads and highway network. Looking to the future, despite rising prices for all kinds of construction materials, Tunisian construction firms stand to profit from all these developments and investments, as foreign investors are likely to outsource part of their projects. What is more, due to the expected rise in domestic demand, as well as increased opportunities for European export, the Tunisian cement industry looks set to expand significantly. The same is true for the building materials sector, where tiles and ceramics companies face increased export opportunities in North Africa and Europe.
Under the country’s 11th development plan (2007-11), the government plans to construct 300,000 new homes. About half of the new housing will be low-income, while the other half will be middle-class and luxury housing. Long-term market drivers, such as population growth and foreign demand, remain positive. However, due to the hike in the price of land, especially in greater Tunis, combined with the rising cost of construction, it is becoming increasingly difficult to build low-income housing an still make a profit. Regarding the middle and high-end of the market, demand has grown considerably among young professionals and Tunisians living abroad. It is expected that construction of mega-projects, such as Sama Dubai’s City of the Century, will provide a much needed boom to an industry that is going through a quieter period after years of progress.
The chapter includes a viewpoint with Chokri Driss, President, National Federation of Buildings and Public Works Contractors, on the evolution of the construction sector.
Mobile usage has become widespread in Tunisia, and the penetration of GSM, currently standing at 75%, should reach 80% by the end of 2008 and should get close to 100% in the longer term. Tunisiana and TT are continuing their battle for domination, but will gradually shift their focus from gaining new customers to delivering better coverage and expanding their added-value service portfolios. The fixed telephony market, which is entirely dominated by TT, is likely to be boosted by the arrival of a second operator in the course of 2008, or by the legislation of VoIP services. ADSL has been the star of 2007, with the number of subscribers growing twofold for the year reaching 90,000. New technologies such as WiMax could potentially revolutionise internet access in Tunisia, with its advantage in terms of reducing the cost of expanding the network through cabling coupled with allowing ISPs to reach their customers without the need to go through TT’s network. The telecoms sector as a whole will be influenced by the regulator’s intervention on crucial questions, such as licences for a third mobile carrier and a second fixed provider, WiMax and 3G licences attributions and the status of the country’s ISPs.
Tunisian authorities have long acknowledged the It sector’s strategic importance for the development of a knowledge-based economy. The 11th development plan aims to increase the sector’s share of GDP from 7,8% in 2007 to 13,5% in 2012. The sector is carried by strong local demand, a developing near-shore services industry and new opportunities abroad. But some key hurdles still need to be vaulted, including an insufficient national infrastructureand international bandwidth, a lack of a viable branding of the sector causing poor interntional visibility and npn-tariff barriers on the European market.
The chapter includes interviews with Ahmed Mahjoub, CEO, Tunisie Télécom and Mohamad Garbouj, General Manager, Divona Télécom.
The industrial sector remains a highly strategic component of the economy, accounting for 29.2% of GDP and 84% of the country's total exports in 2006. January 2008 marked the complete application of the Free Trade Agreement (FTA) with the EU, but industrialists are optimistic that they can withstand European competition. The government has established modernisation programmes and fiscal incentives to gear investment funds towards the industrial sector. Textile remains the main branch of Tunisia's industrial sector. Over three years after the cancellation of the multi-fibre agreement (MFA), the sector has rebounded and mostly recovered, as customers disappointed by quality and delay issues experienced with their Asian suppliers, flocked back to Tunisia. In the meantime, Tunisian suppliers have learned to become co-contractors and finished-good suppliers, rather than mere outsourcing outfits selling cheap production minutes. However, Tunisian textile producers, who export the majority of their products to Europe, are facing increasing competition from neighbours like Morocco and Turkey who boast low labour costs and expertise in all aspects of production. Another weakness for local confectioners is that they cannot rely on local fabric-finishing capacities, forcing them to rely on foreign suppliers, but this issue should be addressed soon by the inauguration of the Monsatir El Feja techno-park, which will be dedicated to finishing activities and should start operating in 2009. Electromechanical goods are the second largest source of exports, and could replace the textile segment as the country's top cash earner in the next few years. Interesting times lie ahead for the automobile component industry, which with an annual growth of 15% between 2000 and 2006, is attracting attention from overseas investors, offering fast turnaround times and low production costs. Meanwhile the pharmaceuticals industry is going through a slump. Producers are gearing up to produce more local drugs, which will soon compete with imported medicine.
The retail sector, contributing 10.7% to GDP in 2006, is expanding, with the entrance of international brands such as Carrefour, Champion and Géant, and the privatisation of Magasin Général in 2007. However, organised retailers continue to be minority players in Tunisia due to the ban on franchise deals and other strict rules, and the sector remains dominated by traditional retailers – independent shops, groceries and market stalls.
The chapter includes interviews with Moncef Sellami, Chairman, One Tech and Isnardo Carta, CEO, Développement Industriel Enfidha Tunisie (DIET).
While television dominates the media scene, mostly thanks to satellite reception, which reaches 79% of the country's viewers, radio clearly emerges as the most vibrant media in the country, as more local private radio are launched, with the aim of extending their geographic coverage. Meanwhile, Tunisia's print media is going through a period of stagnation. There are over 200 locally produced newspapers and magazines in the country, around 90% privately owned, which are in competition with those imported from Europe and, increasingly, the Middle East. Sotupresse, owned in part by French distribution giant Nouvelles Messagerie de la Presse Parisienne, NMPP, dominates distribution of the more than 1000 foreign publications available, but sales are declining, in part due to the growing audience of the internet. In terms of broadcasting, 2007 was marked by the split of Radiodiffusion Télévision Tunisienne (ERTT) into two distinct broadcasters: the ETT, which regulates television; and the ERT, which oversees the country's several public radio stations.
The past few years have been marked by brisk growth in the advertising sector, with overall investment reaching its highest level ever. The sector is dominated by two companies – Karoui and Karoui and MIP, which specialises in billboards. The sector is heating up in part due to privatisation and competition between operators in the telecoms and banking sectors, while the processed food industry ranks first in terms of advertising spend, boasting six of the top-10 highest-spending companies in the market. Television attracts the highest ad revenue – almost $34.7m in 2006, spurred by Ramadan, major sporting events and programme sponsorship. The sector is expected to expand further over the next few years, with the rapidly growing online and mobile advertising capabilities, as well as the growing service industry, particularly banks and other industrial segments, ramping up their advertising budgets. Some issues remain, however, such as improving creativity.
This chapter includes an interview with Taieb Zahar, Publication Director, Réalités.
While the sector makes up approximately 12% of GDP, Tunisian agriculture is highly dependent on weather conditions, which can be sporadic. To combat this, the government has invested heavily in irrigation management. Other constraints include the shortage of arable land and insufficient availability of financial backing. Today the priority of the sector is to assure self-sufficiency and allow the export of competitive products, such as tomato paste, potatoes and citrus fruits for example. Although the olive oil industry is in good health – indeed Tunisia is the fourth-largest producer and exporter of olive oil - there is room for improvement in production and marketing for gaining global recognition. Rather than exporting olive oil in bulk, the aim is to increase exports of properly labelled products to 10% by 2011. To the future, improvement programmes to boost production and better promotion of the sector and its possibilities is vital.
This section provides a viewpoint with Samir Majoul, President, Agro-food National Federation, on agribusiness.
New developments in health care have reduced the incidence of the majority of infectious diseases. A wide range of medical problems in Tunisia now include those once only found in the developed world. Cardiovascular diseases now account for 40% of all deaths. Modern medicine is expensive to develop and maintain and Tunisian public health authorities have not been very successful in increasing the government's health expenditures. Though facilities in the public health sector are sometimes superior to the private sector's, the public sector suffers from poor general infrastructure and interruption in medical supplies, often leading people who can to pay for private care. In a laudable attempt to rationalise access to medical services, the Tunisian government has undertaken to replace the two government systems – the Caisse Nationale de Retraite et de Prévoyance Sociale for civil servants and the Caisse Nationale de Sécurité Sociale for private sector employees – by a new single national health scheme. The Caisse Nationale d'Assurance Maladie, inspired by France's social security system, was launched in 2007. The pharmaceuticals industry is well-regulated, though the industry face challenges with people who bypass medical consultations and buy drugs over the counter. Tunisia is fast gaining a reputation as a great place to get well, to get fit, or to get a whole new silhouette.
An increasing number of higher education institutions had led to growing numbers of students who successfully pass the national baccalaureate exam and attend university. However, with more Tunisians attending university, the challenge now facing the sector is providing them all with jobs. Some analysts estimate that as many as 25% of young graduates are unemployed. The government is tackling the problem on several fronts, including increasing the number of students in branches most favourable to creating employment, such as the services sector, and by providing low interest rate loans for students who want to set up their own businesses. The most popular university courses are in management and information and communications technology. Technological education is under the spotlight with the establishment of technological campuses across the country. The education authorities have been gradually introducing the BMD (bachelor's-master's-doctorate) reform to replace the existing four-year maîtrise system. The implementation of the bachelor's degree programme will be followed by the master's degree in 2008 and the doctorate in 2010. Private schools in Tunisia no longer carry the stigma they once did as places for students who had failed in the public sector. Now more parents think private schools offer better long-term prospects, although evaluation of private higher education is difficult as the quality of teaching varies enormously. Private education is a fairly new concept in Tunisia and is encouraged by the authorities through tax breaks, premiums and a wide range of other advantages for investors. Overall, Tunisia's education system is in good shape, offering learning possibilities for almost everyone, and is about as equitable as it can be.
This chapter provides an interview with Dr. Boubaker Zakhama, President, National Syndicate Chamber of Private Health Institutes and a viewpoint with Mahmoud Triki, President and Founder, South Mediterranean University.
In conjunction with partners Ernst & Young, this chapter examines the country's tax definitions and rules and their relevance to the foreign investor. Legal issues meanwhile, particularly those protecting the environment and pertaining to the ITC sector and intellectual property are explored with the assistance of our partners Kallel Associates. The 2007 Finance Law, designed to promote economic growth, as well as the foreign exchange regulation, also come under the microscope. Sami Zaoui, Business Advisory Partner, Ernst & Young Tunisia, shares his views on Tunisia's attractiveness in the knowledge economy while Sami Kallel, Partner, Kallel & Associates, gives his opinions on Tunisia's partnership with the EU and other countries.
This chapter offers readers a tour of the Tozeur region, which is famous for its distinctive yellow-brown brick architecture and one of the best places in Tunisia to go door spotting. It is also a good base for exploring the three oases surrounding the town and the Sahara desert. The section also portrays classical painter Foued Zaouche. Hotel, government and other listings are also included, alongside useful tips for visitors on topics like currency, visas, language, communications, dress, business hours and electricity.
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