Can the Tunisian economy be revived?
A question on the mind of Tunisia’s leaders and many of its citizens concerns the recent economic slump and what it will take to make it ancient history.
We should start by recognising how lucky Tunisia is to have the basic social, political and economic makeup with which it has been gifted. Tunisia’s GDP is $45 billion on a purchasing power parity basis, vastly greater on a per-person basis than any of its neighbours.
It is the 14th highest GDP in Africa, competing with such economic powerhouses as Egypt and Nigeria, which rank higher not because their citizens are smarter or work harder but mainly because of the huge geographic disparity with Tunisia. On a per-person basis, Tunisia is one of the most highly educated and highly economically productive countries but the population numbers only 11.5 million.
Tunisia has hit a few bumps in the road of late. Yet the first Organisation for Economic Co-operation and Development Economic Survey of Tunisia emphasised the significant improvements that have been made since the onset of democratic rule. The survey noted weak job creation as a major issue, along with high unemployment and unsustainable public finances.
What is to be done? Current growth has been projected at 3.5% for 2019, which is enviable for many of Tunisia’s neighbours. Recent good harvests have been a blessing of nature and of remarkably good agricultural policies. However, this doesn’t mean much to a young Tunisian who lacks a job.
What we must see in the coming months is vastly increased effort to promote expansion driven by business investment, particularly foreign investment drawn to Tunisia by the simply astonishing level of education of its younger citizens.
Tunisians make some of the finest employees in the world when they are given the opportunity to work. British, American and German investors have been astonished how quickly young Tunisians, who are often trilingual, mesh successfully with a home office in London or New York or Berlin.
The Tunisian government must attract vastly more such overseas investors by speeding up structural reform in investment regulations, reforming the tax system, lowering public debt and cutting back on costly public financings. The tax-to-GDP level is also much too high.
There must be a greater focus on regional benefits offered to investors rather than those that are simply national. Job creation will be sustained by better tax and logistical performance to facilitate external trade. This will attract more of those desirable foreign investors.
Policies that promote female employment in the workforce will also have a highly attractive effect.
Job creation and regional focus will continue to be the strongest incentives to create more sustained and more vigorous regional growth — and therefore success on a national level when these results are aggregated. Though it is a small country, Tunisia is a nation of enormous regional diversity, urban versus rural, coastal versus internal, take your pick.
Let’s make these reforms happen and see unemployment drop precipitously!
That would make Tunisia the strongest country in North Africa.