Complex Made Simple

Tunisia hosts investors to revive post-revolution economy

* Foreign investment has fallen since 2011 uprising

* Government says new law improves terms for investors

* Participation in projects worth $30 billion on offer

 

Tunisia is hoping to reverse a decline in foreign investment and shake off some of its post-revolution economic malaise at an international conference that opens on Tuesday.

The two-day event is aimed at drumming up interest in projects worth some $30 billion and boosting an economy hurt by militant attacks, labour unrest and political instability.

It comes as Prime Minister Youssef Chahed’s government tries to contain a fresh wave of resistance against austerity measures demanded by international creditors.

 

(Tunisia to issue ‎€1bn Eurobond in January: government source)

 

Reviving hope

“We have to revive hope among our youth,” Chahed said before the conference, in which the government says representatives from at least 40 countries are expected to take part.

France and Qatar are the main foreign backers, with French Prime Minister Manuel Valls and the Emir of Qatar, Sheikh Tamim bin Hamad al-Thani, due to address the opening session.

After arriving in the capital, Tunis, Valls pledged fresh support.

“We will increase our financial assistance,” Valls told reporters. He said Tunisia would be allowed to convert some debt into finances for new investments, but did not elaborate further.

 

(New Tunisian premier tries to break economic reform curse)

 

Sole success

Tunisia has been held up as the sole political success of the 2011 Arab Spring uprisings, but its democratic transition has been undermined by economic uncertainty and weak growth.

The government also faces a major challenge to provide economic opportunities to young people frustrated by high unemployment and a lack of development.

Some 500 foreign companies have left the North African country due to labour protests and security problems, including several militant attacks in 2015. New foreign investment fell to 2 billion dinars ($885 million) in 2015 from 3.5bn dinars in 2010.

Chahed’s administration, in place since August, points to a new investment law that it hopes will revive the flow of foreign capital by reducing bureaucracy, taxes on profits, and restrictions on transferring funds out of the country.

 

(Reforms backed by international aid to make way for Tunisia’s revival)

Financial park

The conference will make the case that with its political transition essentially completed, Tunisia now needs longer-term investments to develop industries and create jobs.

On Sunday, Chahed relaunched a $3bn financial park and real estate development north of Tunis funded by Bahrain’s Gulf Finance House, which had been suspended for five years. The project would create nearly 1,000 jobs in its first phase, he said, and showed that Tunisia was still “an attractive and competitive site for investors”.

On Saturday, President Beji Caid Essebsi received a group of local businessmen who he said would launch 1.5bn dinars ($650m) worth of projects in Tunisia’s poorest regions.

But protests against austerity measures included in the 2017 budget provide an awkward backdrop to the conference.

Tunisia’s powerful UGTT union has threatened to hold a public sector general strike over plans to freeze wages, and various groups including lawyers, teachers and pharmacists are threatening to strike this week against new taxes.

Chahed said the budget was “the most controversial in the history of the country.” But, he added, “we have had the courage to begin these reforms in order to balance our public finances”.