Country Profile:
Tunisia
Tunisia
With rising levels of private sector investment, a robust manufacturing segment and a diversified array of energy and agricultural resources, Tunisia is well placed for economic growth in the coming years. As domestic energy consumption rises, the country is now exploring its gas reserves to prevent an import dependency. Already home to one of North Africa’s best education systems, Tunisia is looking to become a regional health care centre, with the volume of medical tourists rising.
ISBN: 978-1-907065-02-6
ISSN (Online): 1758-3993
ISSN (Print): 1758-2830
TABLE OF CONTENTS
COUNTRY PROFILE
This section provides a quick overview of some facts about the country, its population, languages, natural resources, geography, climate, religion and history.
POLITICS
In October 2009 President Zine El Abidine Ben Ali was elected for a fifth term in office. He is a member of the longstanding Rassemblement Constitutionnel Democratique party, which will receive 75% of the 214 deputy seats in parliament. Ben Ali ran on a 24-point platform to seek additional investments in industries where Tunisia is traditionally competitive (tourism, agribusiness) as well as in high value-added industries such as such as electronics and IT outsourcing. A member of the Union for the Mediterranean, Tunisia has strong ties to the EU, which is its largest trading partner and where many of the 700,000 Tunisian nationals abroad live. The World Bank’s 2010 Doing Business report showed that Tunisia had improved the ranking of its business environment to 69th internationally, from 73rd the previous year, while the Global Peace Index named it Africa’s second-safest nation.
This chapter contains an interview with José Socrates, Prime Minister of Portugal. President Zine El Abidine Ben Ali provides a viewpoint on plans for the next five years. Luiz Inácio Lula da Silva, President of Brazil, provides a viewpoint on Brazilian-African relations and trade integration.
THE ECONOMY
Despite increasing trade with the EU, Tunisia’s economy escaped the worst of the global crisis due to a low level of external liabilities. The decline of the Tunisian dinar against the euro helped to stabilise the trade market at the start of the recession. GDP growth slowed down to 3% in 2009 from 4.6% in 2008. In 2009 foreign direct investment reached TD2.38bn (€1.26bn), with oil and gas receiving TD1.38bn (€732.5m), while TD657.6m (€349m) was spent on manufacturing. Unemployment is officially at 14.2%, although it is estimated to rise among among young graduates. The 2010 budget includes stimulus funds to aid job creation and income growth, building on a TD730m (€387.5) stimulus package in 2009. Government subsidies for hydrocarbons, convenience goods and transportation have also been increased in the 2010 budget to neutralise a 20% drop in aggregate demand for manufactured goods. The Direction Générale de la Privatisation oversees the privatisation of state-owned enterprises – as of 2010, there are 11 companies left on its list: five industrial, five services and an agribusiness. The EU continues to serve as the dominant trade partner, with France playing a prominent role, but Germany is becoming increasingly important – bilateral trade with Tunisia reached €2.35bn in 2009.
This chapter contains an interview with Mohamed Nouri Jouini, Minister of Development and International Cooperation; Mohamed Sakhr El Materi, CEO of Princess El Materi Holding and Founder of Banque Zitouna; and Amor Tahari, Deputy Director, Middle East and Central Asia Department, IMF.
BANKING
Tunisian financial institutions remained fairly robust in the crisis due to excess liquidity and limited exposure to global markets. Reducing the amount of non-performing loans (NPLs) has been a major objective of the Central Bank – at the end of 2009, the level of NPLs stood at around 14%, while single digits are expected by 2014. The leasing segment grew at a record 24% on the back of increased competition, and most leasing companies have NPLs below 10%. There are now 20 commercial banks operating in Tunisia, with 11 publicly traded on the Tunis Stock Exchange. As this is a large number for a population of 10.4m, the banking sector is expected to consolidate in the coming years, with a number of firms eying up regional expansion. Zitouna Bank became the country’s first licensed sharia-compliant retail bank in October 2009. Capital is increasing in the offshore banking segment, reaching TD174.17m (€92.45m) in 2009. Construction of the Tunis Financial Harbour, which will be the first offshoring centre in North Africa, kicked off in June 2009.
Kamel Ben Salah, Partner at Gide Loyrette Nouel, provides a viewpoint on Islamic finance; while Taoufik Baccar, Governor of the Central Bank, gives an interview.
CAPITAL MARKETS
The Tunis Stock Exchange (TSE) performed strongly at the onset of the financial crisis – up 48% at the end of 2008, it was the only Arab stock exchange to close in positive territory. Large family-owned holdings and retail investors drove growth on the TSE throughout 2009, as did the extended trading hours instituted at the end of 2008. By mid-2009 average volume per day had reached TD6.8m (€3.6m), up from TD4.6m (€2.4m) in 2008. Local cement firm Ciments de Bizerte, the only IPO of 2009, mobilised more than TD1bn (€530.8m) on the stock market. Foreign portfolio investors, representing only up to 2% of TSE market capitalisation in Q1 2010, are expected to return once new IPOs are launched in 2010. The Q2 2010 IPO of Tunisiana, the country’s largest telecoms operator, will be the largest public offering ever on the bourse. In 2010 the TSE will become a member of the International Federation of Stock Exchanges and the African Stock Exchanges Association.
This chapter contains an interview with Mohamed Bichiou, Director-General of the Tunis Stock Exchange. The Tunisie Valeurs team provides a viewpoint on the Tunisian Stock Exchange (Tunindex).
INSURANCE
With €507.2m in premium income in 2008, Tunisia’s insurance sector has plenty of room to grow. The insurance penetration rate is currently a low 1.96% of GDP, compared to regional leader Morocco’s 2.9%, but the insurance market is rising steadily due to an affluent, educated population and strong competition between the 23 active insurance firms. The top 10 market leaders account for 90% of turnover. Part-public, part-private Société Tunisienne d’Assurances et de Réassurances (STAR) is the largest player, with a 21% market share. Tunis Re listed on the Tunisia Stock Exchange in 2010. Though local firms must hold the majority of capital, several foreign insurers hold stakes in Tunisian insurance companies, including France’s Groupama. A takaful firm is expected to be introduced by Banque Zitouna in 2010. Motor insurance accounts for the greatest share of total premiums (45.6%), followed by health (13.9%) and miscellaneous risk (13.3%).
This chapter contains an interview with Jean Azema, CEO of Groupama.
TRANSPORT
Increased spending under the latest national development plan has propelled growth in the transport sector, which currently contributes 7% of GDP. An estimated TD6.5bn (€3.45bn) will be spent on the sector between 2007 and 2011, with the public sector financing 58% of these investments. The biggest infrastructure project of 2009 was the opening of Zin El Abidine Ben Ali International Airport at Enfidha, the country’s ninth airport, with passenger throughput of 7m. An open-skies agreement with EU-member countries is expected to come into force by the end of 2010, while the tender for a deep-sea port at Enfidha is also planned for this year. Approximately 95% of the nation’s international trade is conducted via the maritime segment – the Tunisian shipping firms hope to increase their share of this trade from 9% to 20% by 2016. Several projects are in progress on the country’s railway network, including the electrification of the Tunis-Borj Cedria line. Tunisia’s stretch of the Trans-Maghreb highway link is almost finished – upon reaching the Algerian border, it will be the first country to complete its portion.
This chapter contains an interview with Haluk Bilgi, Managing Director of TAV Tunisie.
ENERGY
Petroleum products provide the greatest share (56%) of Tunisia’s energy consumption. Of the 7.7m tonnes of oil equivalent consumed in 2007, 14% was imported. However, decreasing crude production and growing energy demand has led the country to ramp up exploration of its natural gas reserves. Five gas projects are in the works to help Tunisia to become a gas exporter by 2012. Natural gas makes up 95% of electricity production, while renewable energy sources had a share of less than 1% in 2008. In April 2009 France signed a €80m aid deal to help Tunisia develop civil nuclear technology. The Tunisian Solar Plan (TSP), launched in 2009, is comprised of 40 projects aiming to increase domestic production of renewable energy by 550 MW within five years. Tunisian Gas and Electricity Company (Societé Tunisienne de l’Electricité et du Gaz, STEG) is improving power distribution by constructing overhead and underground lines. A €2bn joint venture between STEG and Italy’s Terna will integrate the countries’ electrical grids. A new conservation programme for 2008-11 is targeting a reduction of energy demand by 20%.
This chapter provides an interview with Ian Perks, President of BG Tunisia.
CONSTRUCTION & REAL ESTATE
In spite of uncertainties over some of the larger projects, the global crisis did little to dampen investment in Tunisia’s construction market, which had turnover of €2.65bn in 2009. The industry employs one-third of the country’s workforce, represents 7% of GDP and features over 2000 small and medium-sized enterprises. An estimated €37bn in construction projects, many of which are large mixed-use developments from GCC conglomerates, are in the pipeline in Tunisia. In addition to financing tourism and infrastructure projects, the government is funneling money into the transport sector, including €329m on road upgrades and construction. Some €2bn in transport-related investment is being invested in Endifha, the site of the new airport. The energy sector is also providing plenty of projects, with a €1bn oil refinery being built at La Skhira, while 14 desalination plants will be built as part of a government programme to improve water quality. To keep up with increasing construction demand, investment in cement production has increased from TD102m (€54m) in 2004 to TD167m (€89m) in 2008, with the goal of reaching 12.8m tonnes per year by 2012.
While the majority of the real estate growth seen in recent years has been in the high-end sector, where profits are higher for developers, the government is prioritising the low-income segment. The 11th Economic Development Plan (2007-11) targets building 300,000 new homes to make up for a housing shortfall. Rising land prices have put an upward pressure on house prices. In order to encourage home ownership among the lower and middle class, access to credit has been widened with the creation of the Fund to Promote Housing for Wage Earners.TELECOMS & IT
The telecoms market is nearing saturation, with mobile penetration reaching 93% in 2009, up from 82.1% in 2008. Internet use is also on the rise, and while fixed-line growth has essentially flat-lined, this should change as the demand for broadband services rises. Tunisiana and the partially state-owned Tunisie Telecom are the two incumbent mobile operators – the entry of a third, Orange Tunisie, which has the country’s first 3G licence, will heat up competition in 2010. Tunisiana is expected to unveil an IPO before the end of 2010. Use of voice over internet protocol (VoIP) by businesses was authorised in 2009, increasing Tunisia’s appeal as a call centre destination.
Having demonstrated high levels of growth in recent years, the IT sector contributed 11.4% to GDP in 2009. The government’s 11th Development Plan of 2007-11 promotes sector development via tax breaks and other incentives for foreign IT firms. Total investment spending in the sector in 2007-11 is set to reach TD3.9bn (€2.1bn). International and local actors are primarily oriented to the service sector. Topnet is the leading internet service provider, with a 32% share in 2008. Around 80% of primary schools and 100% of secondary schools and universities are now connected to the internet, while 14% of the graduates specialise in ICT.
This chapter contains an interview with Mohamed Mehdi Khemiri, Managing Director of Topnet.
INDUSTRY & RETAIL
A robust industrial sector has helped steer the Tunisian economy out of the global crisis, with industries in several segments, including manufacturing and textiles, showing real signs of recovery at the end of 2009. Total exports of industrial products were TD16bn (€8.5bn) in 2009. A favourable investment climate led FDI to reach a high of TD3bn (€1.6bn) in 2008, with TD1.5bn (€796.2m) projected for 2010. As part of a longstanding privatisation programme, state iron and steel producer El Fouladh will open its capital to a strategic partner in 2010. The production of cabling systems is rapidly expanding in the automotive sector. A leading world producer of phosphates, Tunisia’s annual production of merchant phosphates reached 8m tonnes in 2008. Growth in the electrical and mechanical equipment sector, which was in the double digits prior to the crisis, slowed due to sluggish export markets during the crisis. The government has targeted increasing pharmaceutical exports fivefold within the next five years to TD730m (€387.5m). Aeronautical production will receive a boost from Airbus subsidiary Aerolia, which will open a components manufacturing plant in Tunisia in 2010.
The retail sector has transformed as a real consumer society emerges. However, shopping malls and local supermarkets still account for just 20% of the country’s retail trade, which remains dominated by the local corner shop. An August 2009 trading law has given proper legal status to franchising. Several large malls are under construction, including the 15-ha Tunis City Centre. A new big box player, Bricorama, arrived on the supermarket scene in 2009, joining Carrefour, the Géant and the Magasin General chain.This chapter contains interviews with Afif Chelbi, Minister of Industry and Technology; Christian Cornille, President of Aerolia; and Hedi Djilani, Chairman, Union Tunisienne de L’Industrie, du Commerce et de L’Artisanat.
TOURISM
The sector withstood the global crisis, with revenue increasing 2% to €1.8bn in 2009, despite a 2.1% decline in visitor numbers. Europe remains the largest source market for tourists, taking a 54% share, benefitting from its reputation as a destination for medical tourism and thalassotherapy. To change the country’s reputation for budget tourism and package tours, the government has increased its advertising spending and started participating in international tourism fairs. At the end of 2008, the National Tourism Authority launched a nationwide quality inspection and certification scheme to encourage hotel operators to upgrade infrastructure. The Ministry of Tourism signed a partnership with the World Tourism Organisation in April 2010 to improve human resources. Government incentives have been made available for investors, including a tax holiday for the first five years of operation, with a five-year extension available for projects in the Saharan region. Business travel is also on the rise, with a growing MICE segment.
Taleb Rifai, Secretary-General of the UN World Tourism Organisation (UNWTO), provides a viewpoint on the importance of tourism for Tunisia’s economy.
AGRICULTURE
Agriculture is an economic keystone, contributing 23% of GDP in 2009. The state’s strategy for the sector in 2009-14 is focused on boosting production, maximising natural resources and expanding exports. Food imports decreased 39% in 2009 due to record cereal yields. Tunisia is the world’s fourth-largest producer of olive oil, its biggest agricultural export. Other major agricultural exports include fish and seafood products and dates, with Europe as the primary export market. Private investment in the agricultural sector dipped due to the global financial downturn, but still remains higher than public spending. Bringing in foreign partners via PPPs and JVs should help to modernise operations and facilitate knowledge transfer. The state has targeted increasing organic farmland by 75% to take advantage of a profitable market.
This chapter contains an interview with Adel Tlili, Managing Director of La Cinquième Saison.
MEDIA & ADVERTISING
The government has taken steps to liberalise the media in recent years, with foreign investment allowed in the sector in 2008. Television has a penetration rate of 88%, and 77% of Tunisians have access to a satellite dish. Tunis 7 and Tunisie 21, the two public channels, are popular, especially during Ramadan, while private newcomer Nessma TV is trying to gain a market share. The television network is expected to be fully digitalised by the end of 2010. Radio continues to be an important medium, with music station Mosaique FM the market leader. Arabic-language newspapers are the most successful print publications. Internet usage is growing, with 33.4% of the population regularly using internet in 2009. Internet content is not subject to press laws, providing a platform for public dialogue.
Advertising is steadily evolving in Tunisia – in 2009 the sector’s gross revenue increased 7% over 2008, reaching €73.73m in value and contributing to 0.25% the nation’s GDP. Several international advertising giants have opened local offices within the past five years, including Young & Rubicam, JWT and Grey Group. A new advertising bill passed in February 2010 requires all new advertising executives and firms be approved by the Minister of Commerce. Taking 52.6% of advertising revenues in 2009, television is the most popular media, followed by printed press with an 18.4% share and radio with 15.3%. Food and drinks producers and telecommunications companies are the biggest spenders in advertising, accounting for 35% and 21.3% of total expenditure, respectively.
This chapter contains an interview with Hassen Zargouni, General Manager of Sigma Conseil.HEALTH & EDUCATION
Tunisia is a regional leader in health care, with sector spending reaching €650m, or 8.6% of the national budget, in 2009. Life expectancy at birth rose to 74 years in 2008, up from 68 years in 1987, while infant mortality has fallen to 18%. Established in 2007, the national health insurance fund Caisse Nationale d’Assurance Maladie has made private care more accessible, stimulating investment in large-scale private projects, including a €37m opening at the end of 2010. Some 250,000 visitors came to Tunisia for medical treatment in 2009, representing a 67% increase from 2007. The national strategy to become a regional medical centre envisions increasing the production of pharmaceuticals to meet 60% of local demand while exporting 20% of output.
The Tunisian education system is also one of the most developed in the MENA region – in 2009 over 22% of the national budget was spent on education. Higher education has experienced rapid growth, with 360,172 students enrolled in higher education progammes in 2009, 59.5% of whom were women. Unemployment, however, remains high among university graduates. The government has worked to integrate ICT into schools, while a five-year plan launched in October 2009 aims to promote the development of science and technology-based industries. A European model for higher education is to be fully adopted by 2011.
THE BUSINESS GUIDE
OBG introduces the reader to the different aspects of the legal system in Tunisia, in partnership with Kallel & Associates. Sami Kallel, Partner at Kallel & Associates, provides a viewpoint on the benefits of renewable energy. In conjunction with Ernest & Young Tunisia, OBG also explores the taxation system, examining Tunisia’s investor-friendly environment. Noureddine Hajji, Managing Partner of Ernst & Young Tunisia, provides a viewpoint on the crisis and government plans going forward.
THE GUIDE
This section includes articles about Djerba and Kairouan, as well as information on hotels, government and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress, business hours and electricity.
