Bureaucracy is killing Tunisia’s economy

There is widespread conviction among Tunisians that the private sector is the prime suspect for maintaining and nourishing corruption.
Saturday 17/08/2019
A general view of a cement factory in Tunis. (Reuters)
Reforms on hold. A general view of a cement factory in Tunis. (Reuters)

Many analysts and experts say that one of the reasons for the sharp decline of a country’s economy is its heavy and deep bureaucracy. Bureaucracy kills an economy by hampering investors’ projects and ambitions and depriving the state of badly needed revenues.

With few exceptions, the disturbing stereotype of a heavy, lumbering bureaucracy is pervasive in Arab countries. Only those that have undertaken a deep cleaning up of obsolete laws and regulations and of investment-killing administrative procedures have developed the appropriate business climate to succeed. The United Arab Emirates, for example, has become a global model for ending bureaucratic chaos.

The clean-up effort must be accompanied by tangible changes. Tunisia is a case in point because of the government’s lack of attention to establishing reform measures as the flip side of corruption.

One wonders why strategic projects in Tunisia, which were ready for implementation years ago, are still waiting for approval by administrative authorities. A problem with the Tunisian administration is the lengthy administrative procedure. This slow bureaucracy stands as an obstacle to implementation of any political or economic decisions.

Even top officials acknowledge there is a deep bureaucracy that must be fought to implement reforms. They, however, were unable to fight this hidden bureaucracy and gave another proof of the state’s inability to address the power of influential lobbies and individuals.

The Tunisian government doesn’t seem serious about remedying the problem. In 2018, the government announced a comprehensive programme to fight bureaucracy. Ironically, the problem has worsened at all levels of the administration. Dozens of strategic projects are collecting dust on ministry shelves under the excuse of “Tunisia first.”

Tunisian citizens and many companies and businessmen constantly complain about the complexity of administrative procedures, the slow resolution of important files and lengthy delays even in acquiring ordinary documents. Everything requires undue time, which is the main aspect of a deep bureaucracy that is often accused of being at the service of powerful political and economic lobbies.

While the business sector is trying to resolve the many crises as quickly as possible and move ahead with its activities, the bureaucracy and corruption factors are constraining the companies and investors with a foggy and fuzzy picture of the business climate, one the government has claimed was improving with a new investment law.

There is a well-known equation in Tunisia: The more administrative procedures there are, the more widespread the phenomenon of bribery and extortion within government bodies is. The government’s insistence that it is fighting bureaucracy  and corruption is no more than an electoral tool for reaping votes.

It is certain that some administrators take advantage of citizens’ or investors’ need for speeding up procedures to move forward with their projects and face them with two options: wait for the transactions to go through regular channels, which may take years, or submit to administrative blackmailing and pay a bribe to speed things up.

All the blame cannot solely be put on the person in charge of completing concrete transactions in any government agency because that person is a “passive” employee, a cog in a huge bureaucratic machinery unable to function smoothly, quickly and especially creatively.

Data from the World Bank indicate that Tunisian companies have spent since the beginning of the economic crisis eight years ago nearly 18% of annual revenues on bureaucratic burdens and related corruption. This represents a sizeable proportion of declining revenues because of the country’s endless troubles.

Reports by the Tunisian Anti-Corruption Commission state that the level of administrative and financial corruption had increased at all levels of the administration since 2011 in such a way that it can no longer be tolerated. It has become the major factor that is hindering economic growth while the country experienced losses of $830 million every year.

There is widespread conviction among Tunisians that the private sector is the prime suspect for maintaining and nourishing corruption. For years, the sector has been supported by a corrupt bureaucracy in the form of subsidies, concessions and loans from the state without real guarantees.

We should not ignore that the spread of administrative corruption in state structures has exacerbated the phenomenon of parallel commerce, which costs the country’s treasury billions of dollars in lost revenues each year. All these factors are causing Tunisia to lose 2-4 percentage points of growth annually and spinning the economy in a vicious circle indefinitely.