10.11.2017 | Tunisia starts to show signs of economic recovery

Tunis has all the trappings of a great Mediterranean city, but the visitors that once thronged its beaches, corniche and historic centre are these days few and far between. The terraces of Gammarth’s swanky hotels, where you used to struggle to find a table, are now mostly occupied by wealthy Tunisois, business travellers and the odd tourist.

Strike up a conversation in Tunis and the subject of the economy is almost guaranteed to come up. For those I spoke to, newly-won political freedoms have been overshadowed by increasing privations. The country has been struggling through a series of economic setbacks since the 2011 overthrow of the Ben Ali regime, which set off the Arab Spring. Two of the biggest were the flight of foreign investment following the revolution and the sharp fall in tourist numbers after the Bardo and Sousse terrorist attacks in March and June 2015. 

The economy has been under significant strain – it grew by just over 1 per cent last year – with high levels of unemployment amongst both university graduates and the underdeveloped regions of the south and west, where demonstrations over poverty and lack of opportunity have been a regular occurrence. Even in the relatively prosperous north and east of the country, there are substantial inequalities between the country’s three main commercial centres of Tunis, Sousse and Sfax.

Such disparities are also evident in Tunis itself. The prosperity of the Berges du Lac business district and trendy Gammarth, where the vast majority of Tunis’s riches are concentrated, stands in sharp contrast to the southern and eastern quarters of the city, where dilapidated storefronts and abandoned buildings are increasingly common.

In the wealthy suburb of Sidi Bou Said, the sumptuous, now abandoned palace that Ben Ali built for himself is a stark reminder of his tyrannical 25-year reign.  When it was thrown open to the public after the dictator fled the country, its lavish contents offered a glimpse of the personal wealth he amassed. The former regime’s control of the country was almost absolute, making it nigh-impossible to run a successful business without cultivating links with the President’s inner circle. 

Fall foul of Ben Ali or the more predatory members of his family and one could expect to be targeted by a ‘tax audit’, which often resulted in a hefty fine or the seizure of one’s business.  When asked whether any Tunisian businessmen had attempted to speak out against this system, one senior executive I spoke to offered darkly, “Of course, some did – I can show you their graves.”

When Ben Ali went into exile, the most egregious profiteers of his abusive rule followed suit, and their assets were subsequently seized by the post-revolution government. This, however, presented another problem: despite their corruption, Ben Ali’s associates represented a large portion of the country’s commercial elite.  Their flight, coupled with the loss of foreign investment and the decision of many Tunisian expats to remain abroad, left a dearth of experienced business talent which continues to harm the country. 

It is this lack of talent that led Tunisia’s two largest parties, the secular Nidaa Tunis and the Islamic Ennahda party, to push for a wide-ranging amnesty law for prominent Ben Ali business figures.  However, the proposed bill, passed by parliament in mid-September, has angered the Tunisian population, who see it as a step backwards. They have not hesitated to voice their dissatisfaction over the lack of economic progress. The number of public protests has been steadily growing, with 4,000 reportedly held in just the first four months of the year. 

Despite the problems still facing the country, there is little nostalgia for the Ben Ali regime. Public anger has been aimed at the perceived failures of individual politicians or political parties, rather than at the system as a whole.  Many of the people I spoke to in Tunis expressed the view that “things are far from perfect, but at least we can talk openly about them now”.

Meanwhile, there are indications that the economic tide is turning. The World Bank expects growth to pick up this year, as the political and security situation stabilises and foreign investment begins to return. Tour operators are showing renewed interest in the country, which was stung by the near collapse of the tourism industry following the 2015 terrorist attacks.

Most middle- and upper-class Tunisians continue to travel abroad, mainly to France, to complete their education and pursue careers. A tiny but growing number are coming back to launch or join companies. I met one young returnee whose internet business had been so successful that he was about to expand into two other francophone African countries.

Still, more must be done to revive the economy. Foreign governments and companies alike complain of the difficulty in navigating a still challenging regulatory landscape, and militant Islamist groups continue to threaten to spill over the Libyan and Algerian borders. The government has to address these issues to draw the foreign investment needed to resolve geographic inequalities and the high levels of youth unemployment. Joblessness among university graduates is a particular problem, threatening to turn into a ruinous brain-drain.

Some young Tunisians are doing their best to get on. I came across a shared office in Berges du Lac hosting five companies, including a venture capital fund, an online bookshop, and a finance news website. Tunisia may have lost much of its business talent, but there are pockets of innovation and enterprise. These need to be nurtured if the country is to recover.

(This article first appeared in the FT's Beyondbrics forum)