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11/12/2016

Tunisia wins billion-dollar pledges for ailing economy

Development Policy

Tunisia wins billion-dollar pledges for ailing economy

tunisia-protester

[Amine GHRABI / Flickr]

Tunisia won pledges of billions of dollars in support on Tuesday (29 November) at an investment conference aimed at reviving the country’s economy following its Arab Spring revolution.

Nearly six years after dictator Zine El Abidine Ben Ali was toppled, Tunis hopes the meeting will help it tackle challenges including high unemployment, low growth and a tourism sector battered by jihadist attacks.

The two-day “Tunisia 2020” conference aims to put the North African nation “back on the investment map of the Mediterranean”, officials said.

“Tunisia faces exceptional circumstances and needs exceptional support,” said 90-year-old President Beji Caid Essebsi.

“The success of the democratic project in Tunisia… serves the interests of the region and can help strengthen security and stability regionally and globally,” he said ahead of attending an EU-Tunisia summit in Brussels on Wednesday and Thursday.

More than 2,000 business, finance and political leaders from 40 countries are attending the Tunis conference, including officials from global lenders such as the World Bank.

The government is seeking bids on 140 ventures – from infrastructure and agricultural projects to hi-tech schemes – worth roughly $32 billion (€30 billion).

At Tuesday’s opening session, Qatari Emir Sheikh Tamim bin Hamad Al-Thani pledged $1.25 billion (€1.18 billion) to “support the Tunisian economy and strengthen its process of development”.

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French pledges

Kuwait said it would lend Tunisia $500 million (470 million euros) over the next five years, while Canada and Algeria also pledged financial support.

French Prime Minister Manuel Valls said the French Development Agency (AFD) would invest “at least €250 million ($265 million) every year” in Tunisia, a former French colony.

That is on top of an aid package France announced last year to pump a billion euros ($1.06 billion) into Tunisia’s economy by 2020.

“We want to go further,” Valls said, adding that France has “duty and a responsibility” to support Tunisia, and urged Europe to “live up to expectations”.

The International Monetary Fund approved a $2.9-billion loan to Tunisia in May to help implement economic and financial reforms.

The European Union also announced a doubling of its financial support in 2017 to $318 million (€300 million).

On Tuesday, the EU’s European Investment Bank announced that loans amounting to €2.5 billion would be granted to Tunisia by 2020.

EU neighbourhood commissioner Johannes Hahn said this would make Tunisia “the first beneficiary of EU funds” in the region.

“Today, the world has hailed Tunisian democracy with its confidence,” Prime Minister Youssef Chahed said during the evening signing of some 30 funding agreements and conventions.

Earlier, Investment Minister Fadhel Abdelkefi spoke of a “new business climate” in Tunisia, referring to the recent adoption of a code to simplify investment procedures.

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‘New governance’

“We are trying to put in place new governance,” said Abdelkefi, who is also on a government anti-corruption team.

The meeting coincided with an announcement by French auto giant PSA that it would open a factory in Tunisia producing Peugeot pick-ups for the local market.

PSA and its Tunisian partner Stafim said they would produce 1,200 vehicles a year from 2018.

But with some 15% of its workforce unemployed as of spring 2016, according to the World Bank, Tunisia needs much more investment to stave off social unrest.

Many of its jobless are young graduates who have seen the hope of the Arab Spring dissipate.

Chahed’s government took office in August in place of an administration heavily criticised for its economic management.

That followed a catastrophic 2015 in which attacks claimed by the Islamic State group killed 59 foreign visitors and 13 Tunisians.

The attacks dealt a devastating blow to the tourism industry, which in 2010 employed 400,000 people and represented 10% of gross domestic product.

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Strikes and social unrest have also hit strategic sectors including phosphate mining. In January, Tunisia faced its biggest social unrest since the revolution.

Chahed told AFP last week that the international community “should invest in Tunisian democracy”.

Incoming UN Secretary General Antonio Guterres told Tuesday’s conference that Tunisia had not yet received enough support.

“The success of Tunisia requires a strong economy,” he said. “For the private sector, investing in Tunisia is an intelligent decision.”

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