Tunisia has long been recognised for its strategic position in the centre of North Africa, close to vital shipping routes and mainland Europe. It borders Algeria, Libya and the Mediterranean Sea and, while it contains the northern reaches of the Sahara desert, much of the country’s land is fertile soil which makes it a more prosperous country than its neighbours, with a strong reliance on agriculture.
Tunisia is the only democracy in the Arab World and boasts a high human development index – meaning its citizens have a high life expectancy, a good level of education and a decent income per capita. It has strong links to Europe, especially France and Italy, and has an association agreement with the European Union. On the back of this agreement, in 2008 Tunisia liberalised the trade of industrial goods with Europe and most EU-manufactured goods can be imported without any customs duties.
While Tunisia is now an export-orientated economy, it is still recovering in part from its history of corruption. Famously, ex-president Zine al-Abidine Ben Ali, who held the post from 1987-2011, was accused of embezzlement and misuse of the nation’s funds and was forced to step down following unparalleled street protests. Tunisia’s Penal Code criminalises active and passive bribery, abuse of office, extortion and conflicts of interest. UK Trade and Investment recommends that companies looking to export to Tunisia ensure that they comply with the UK Bribery Act.
In terms of business culture, Arabic is the official language but French is also widely spoken and often used for business correspondence.
Many international companies operate within Tunisia, such as Airbus and Hewlett-Packard.
Strengths of the Tunisian market:
- Tunisia has strong links with Europe. Around 80 per cent of its exports are bound for European Union member countries
- There are no customs duties on the majority of products manufactured within the EU
- It is only a three-hour flight from London, so flying over to check out representatives and facilities is not impractical
- Tunisia also has trade agreements with Algeria, Morocco, Libya, Egypt and Jordan, which makes it a good place to set up an HQ to enter the African market
- It is supported by the International Financial Institution to encourage economic growth
Challenges of the Tunisian market:
- Ben Ali’s corruption during his time in office and his subsequent overthrow lead to a sharp decline in investment and tourism in Tunisia
- Continued political upheaval throughout 2012-2013 contributed to the deterioration of the economy and several downgrades of Tunisia’s credit rating. The country is still recovering from these shocks to its system as the government seeks to reassure businesses and investors
- There is a high level of unemployment; less than 0.2% of Tunisian enterprises employ more than 200 people
- There is an economic imbalance in the country whereby the coastal region is significantly more developed compared to the heart of the country
- The World Bank has reported that Tunisia’s ease of doing business ranking has lowered in recent years
- It takes around 13-17 days to import or export a container
- It has a declining portfolio investment and Foreign Direct Investment is also on the wane
- The country was rocked by the terrorist attacks in June 2015, which saw the deaths of 38 people. Confidence in its tourism industry was shaken as a result
The financial sector in Tunisia is fragmented and dominated by state-owned banks. The sector is floundering despite its high penetration of banking services.
There are opportunities in the country for UK financial companies that can reform the sector and help develop the capital market.
The energy sector in Tunisia has many strong links to the UK and in fact British Gas is the largest single foreign investor in the country.
Shell, Enquest and Nur Energy all have pending contracts with the Tunisian authorities. The links between the UK and Tunisian energy sectors provide a solid point of entry for firms operating in this field.
Tunisia has recently abandoned plans for two nuclear facilities and is instead interested in diversifying its energy mix to include renewable energies, coal, gas and shale.
Information Communications Technology (ICT)
There are several challenges facing the ICT sector in Tunisia. Technology services are expensive, which creates an obstacle for foreign direct investment and competition is limited.
In order to encourage this struggling sector, several reforms have been recommended to open it up to investment. This means that there are plenty of opportunities for UK firms specialising in this area.
The education sector in Tunisia is well developed and there is a high rate of private tutoring. Bordering countries have demonstrated interest in tapping into Tunisia’s education sector, and the country is fast becoming the continent’s leader in this area.
The Tunisian government has imposed some restrictions on foreign investment in the education sector, but it has nonetheless drawn some interest from UK investors. If these restrictions are lifted there are some excellent opportunities available.