Post-Revolution Tunisia Needs More Foreign Investment

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VENTURES AFRICA – As confidence begin to return to the Tunisia business environment after the turmoil of the 2011 revolution; business leaders says the North African nation needs more investment in this democratic dispensation.

According to Tunisia’s Chambers of Commerce and Industry President, Wided Bouchamaoui, “There is still ambiguity that hinders economic growth…and efforts to provide more job opportunities.”

She told Reuters in an interview at the Reuters Middle East Investment Summit that “There is no clear political vision or final road map, and investors at home and abroad are often reluctant to wait for a resolution of these matters.”

Bouchamaoui, the first woman to head the Chambers of Commerce and Industry, said faster growth would be difficult without more political clarity. She asserts that political uncertainty was hampering the government’s response to economic problems.

“There is a lack of boldness in government decisions…Businessmen and investors do not feel they have adequate guarantees in light of the fragile security situation and the growing sit-ins, which could cost the companies huge losses,” she said.

Bouchamaoui, who is also the founder and chief executive of spinning and knitting enterprise Maille Fil, said the economic environment has deteriorated since hardline Islamists stormed the U.S. embassy in Tunis in September to protest a film made in California that was deemed offensive to Islam.

“The urgent thing is to adjust the political map…Most businessmen at home and abroad want to know the characteristics of the future, because this government is temporary.”

On the ban issued on about 70 businessmen who were suspected of involvement in corruption cases under the former regime, Bouchamaoui said the government need to resolve those suspicions one way or the other as soon as possible, rather than leaving the businessmen in limbo.

“The government should resolve these cases in the courts, so the innocent can take care of their projects and contribute to the growth of the country’s economy.”

Tunisia is waiting to hold its presidential and parliamentary elections by June 23, 2013 while the post-revolution ruling coalition, led by the moderate Islamist Ennahda Movement take charge of the government political affairs while trying to rebuild the country’s economy. The North African nation had experienced a setback in its economy as strikes and worker sit-ins at factories cut industrial output, while many foreign investors and tourists stayed away after the then authoritarian leader, Zine al-Abidine Ben Ali was ousted in January 2011.

Business confidence has however improved in the country this year as the new Foreign Direct Investment (FDI) in the country rose 24 percent from a year earlier in the first ten months of to $957 million this year. According to government data, this is not far below its level in the same period of 2010.

The government predicts economic growth of 3.5 percent this year and 4.5 percent in 2013, after the economy shrank 2.2 percent last year. Growth is still too slow, however, to make a major dent in unemployment, which is at an officially estimated 17 percent and was a major source of the discontent which fuelled the revolution, Reuters reported.

Meanwhile, apart from the need to look into the country’s political stabilisation, Bouchamaoui said , it was vital for the government to speed up revision of investment laws to cut bureaucratic red tape, make business more transparent and eliminate corruption.

Tunisia’s Finance Minister Slim Besbes however told the news agency that at the summit that government is in the “final stages” of preparing a new investment law that would strengthen protections given to investors and make procedures easier.

Tunisia aims to attract a target of 2.5 billion dinars ($1.6 billion) of foreign investment in 2013, according to Investment and International Cooperation Minister Riadh Bettaieb.

Besbes said Tunisia will need about 7 billion dinars ($4.4 billion) of loans and aid next year to compensate former political prisoners freed by the 2011 revolution

“The government is also committed to restoring many of the former prisoners to work, and this will cost the state a lot of money. The state will carry out its responsibility to provide immediate compensation to former prisoners who are in difficult situations because of their ideology,” he added, without specifying the amount of aid required.”

As the birthplace of the Arab Spring upheaval (a Tunisian vegetable seller’s suicide in December 2010 was the initial trigger for uprisings in the region) Tunisia is very sensitive to the need to cut unemployment and poverty, and that will require substantial spending, Besbes said.

“Our financial needs in the next year will be 7 billion dinars of loans and aid,” he said. That figure compares with the 4.3 billion dinars that the government has said it plans to borrow in 2012.

While affirming that the United States has pledged to guarantee a $500 million loan to his country, the finance minister said that Tunisia was discussing with the World Bank a potential loan of $500 million, plus a $500 million loan from the African Development Bank to meet next year’s needs.