Tunisia Market Opportunities
The tenth anniversary of the fall of President Ben Ali’s regime on January 14, 2021, finds Tunisia in the midst of its worst economic downturn since the country’s independence in 1956. However, the IMF predicts a return to economic growth of 3.8% of GDP in 2021 and a recovery of the economy, subject to the adoption of long-delayed structural reforms.
Restrictions on cross-border mobility due to sanitary measures against the spread of covid-19 and a drop in demand have had the worst impact on the key tourism sector, with a 60% loss of income, and on the export-oriented mechanical and textile industries, which saw revenues fall by 20 and 25% compared to the first quarter of 2020. The pharmaceutical industry and food agriculture remained the strategic sectors, which recorded moderate growth.
Unemployment rose by almost two percent to 17.4% and hit the university-educated group the most with 31.2% unemployment. Losses also affected the so-called gray economy, which according to estimates employs up to 40% of economically active Tunisians in the fields of tourism, agriculture or gastronomy.
At the end of the first quarter, the national debt reached 86.1% of GDP, foreign debt already exceeded 100% of GDP. Moody’s downgraded Tunisia’s overall rating to B3 with a negative outlook due to the uncertain capacity of Tunisia to meet its financial obligations.
In order to reduce the impact of covid-19 on the economic situation, the Tunisian government invested in the so-called emergency plan of the economy USD 0.93 billion (2.3% of GDP) for the years 2020 and 2021. It introduced measures in the form of accelerated VAT refunds or postponement of tax arrears, the “Coronavirus 1818 Fund” was set up to support the health system, which reached about USD 71 million as of October 2020.
The 2021 budget law includes additional steps to support the most affected businesses and sectors, especially tourism. The Central Bank has extended the loan repayment deferral of this sector until September 2021. From international sources, Tunisia obtained, for example, a loan from the World Bank for 300 million USD for social protection of the most vulnerable sections of the population.
Further financial assistance from the IMF is under negotiation, and will depend on the will of the Tunisian side to implement key reforms. This is mainly about the restructuring of state-owned companies and a reduction in the number of state employees, whose salaries in 2020 represented a record 17% of GDP.
Post-covid-19 opportunities for foreign exporters
According to allcountrylist, the energy balance has been negative for a long time in Tunisia, while the demand for energy is growing. About 97% of energy is obtained from gas using steam and combustion turbines or a combination of these.
Renewable energy sources so far represent only about 3% of electricity production compared to fossil fuels, but their use is gradually increasing, and the government has an ambitious goal of reaching up to 30% by 2030.
Of the renewable sources, wind and water energy are the most commonly used, but solar energy is experiencing the fastest growth in accordance with the Tunisian Solar Plan, which, in addition to wind energy, envisages the use of concentrated solar energy (CSP) and concentrated photovoltaic (CPV) technologies.
Both private users and, for example, municipal authorities that have their own budgets or have access to foreign grants are often interested in renewable energy sources. This is currently a program priority of a number of international donors.
Digitization, information and communication technologies have gained full attention in Tunisia during the sanitary crisis, even though the country has long presented itself as the continent’s leader in this area. The government has an ambitious goal to digitize at least 70% of the state administration by the end of 2021.
Current developments in the field of e-commerce and so-called decashing are accompanied by legislative changes. Cashless operations are seen as attractive areas for foreign investment as well as a way to reduce the gray economy.
Opportunities for Czech entities can be found on several levels. Internet penetration in the country is still insufficient at 52%, so Tunisia can be expected to strengthen its Internet infrastructure. Digital security, whether of online transactions or stored data, is a key area.
The legislation from 2018 to support the creation of innovative companies, the so-called Start up Act, added considerable dynamism to the field of ICT. About 450 registered companies are interested in both investors and partners for activities in Tunisia, in the countries of the African continent and beyond.
Textile and footwear industry
Textiles account for 31% of employment in the industry with 1,600 firms, making it the second most important sector for Tunisian exports and employment. After a deep slump during the covid-19 crisis, the sector is expected to revive, around 87% of companies managed to maintain their activities even after the second wave of infection.
In order for Tunisia to face increasing competition from other North African countries, the textile industry needs to expand and streamline its production capacity. For this, the country will need investment, technology and machinery. Currently, the auto industry uses the craftsmanship of Tunisian seamstresses for the production of leather seats.
Water management and waste industry
Tunisia is in a situation of hydric stress, with abundant resources in the south of the territory being overexploited and deteriorating due to salinization and pollution from chemical additives used in industry and agriculture.
On the other hand, the northern region, including the capital Tunis, regularly faces floods from torrential rains, which state authorities try to prevent by cleaning pipes and tributaries or maintaining hydraulic structures.
However, as urban centers expand and the burden on existing infrastructure increases, capacities in this area need to be strengthened, for example through innovative and affordable technologies in the context of “Smart Cities” solutions. An interesting area of development is the treatment of waste water as a usable resource for irrigation of agricultural crops.
In the tourism sector, the automation of water quality management in the swimming pools of hotel complexes can be applied, which in the post-coronavirus period will help to restore the confidence of hotel guests in their sanitary safety.
Healthcare and pharmaceutical industry
Although the state healthcare sector faces extensive structural problems, private clinics and hospitals are frequented by patients from neighboring Libya and other countries on the African continent.
The covid-19 crisis, which exposed the weaknesses of the state health system globally, is also leading to plans to strengthen it in Tunisia.
There is therefore a demand for supplies of medical material, but it is necessary to take into account the condition of technical verification. The Tunisian pharmaceutical industry, which was one of the few sectors to experience moderate growth during 2020, is also positioned as regionally dominant, with a vision of greater involvement in the Libyan market.