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Tunisia ranked first for competitiveness in Africa
The achievements of Tunisia in its 44 years of independence are nothing short of extraordinary. If this small North African nation had a motto, it would probably be “always forward, always better.” The economic, political and social landscape of Tunisia today has little to do with that of Tunisia 15 years ago. It seems that a new country is being born. It is perhaps symbolic that new construction is taking place throughout Tunisia. More than 50 projects are currently under way for a total value $4.5 billion.
The new Tunisia is intent on fully participating in globalization and not being a victim of it. All policies are geared at transitioning Tunisia from a developing country to a developed nation. Tunisia is entering a new phase characterized by the opening of a pluralistic dialogue. The opposition won 20 percent of the seats at the last parliamentary elections. President Zine El Abidine Ben Ali is also insisting that the media take a bigger role in pluralistic debates. He recently convened a meeting with the press to come up with suggestions aimed at introducing changes to the country’s press laws and further liberalizing the media.
Not much is known about Tunisia. Tunisians are modest, and it is unlikely that they will boast about their achievements. Tunisia has not been exposed in the international press like the many countries on the continent ravaged by war, conflict and disease.
Tunisia has led a peaceful revolution, one that is characterized by a population of nine million with a standard of living three times higher than that of 12 years ago. Tunisia has channeled all its resources and energy into its economic development.
International institutions frequently have cited Tunisia as a “model for success” in economic structural adjustment. Summarizing its 1999 consultation mission, the International Monetary Fund found that “Tunisia’s economic performance remains highly satisfactory in a difficult international environment” and that “strong policy coordination has contributed to the clarity of objectives and the effective implementation of the government’s economic strategy.”
The World Economic Forum ranked Tunisia first for competitiveness on the continent last year, and foreign investments have increased tenfold in the past 10 years.
All economic and social indicators have improved. Abdellatif Saddam, minister of economic development, summarized the situation, “In the period 1987 to 2000 the economy has been growing at a faster rate, surpassing 5.5 percent annual growth for the first time. More than 60.000 jobs are being created annually. What is amazing is that the growth has not led to inflationary conditions. On the contrary, inflation has decreased continually with a 2.7 percent rate last year, the lowest since 1972. The budget deficit has decreased to 2.7 percent and the balance of trade deficit stands at 2.1 percent. More importantly, the debt ratio has been decreased to 47 percent of gross domestic product in 1999 compared to 58 percent in 1986.”
The improvement of the macroeconomic indicators has been paralleled by the improvement of social development indicators. Per capita gross domestic product has nearly tripled since 1986 reaching about $2200. Six percent of the population lives in poverty compared to 33 percent in 1966. Seventy percent of the Tunisian population now belongs to the middle class. Ninety-nine percent of children attend school. Women have equal rights as men. Tunisians now have a life expectancy of 72.6 years.
These achievements are the result of prudent macroeconomic policies. Tunisia has taken on the formidable task of restructuring its economy, raising its living standards to the level of industrial nations and decreasing unemployment.
The leadership of Ben Ali has been instrumental in these achievements. Ben Ali became Tunisia’s president on Nov. 7, 1987, a day known as the Change. Many things have changed since then. Sweeping reforms were introduced in the political, economic and social spheres.
Ben Ali did away with “presidency for life”. Now a president is elected for a five-year term for a maximum of three terms. In June 1999, a constitutional amendment paved the way for the country’s first contested presidential elections. The opposition won 20 percent of the seats during the last parliamentary elections.
Structural reforms are changing the economic landscape of Tunisia. Starting in 1987 structural reforms have aimed to liberalize the economy and reduce the role of the state in competitive sectors. The reforms have touched all sectors. The banking sector is being consolidated and restructured. The industrial sector is being upgraded to prepare companies for the upcoming competition from European companies. The privatization and liberalization of the economy has been continuous. “The period 1987 to 1991 was significant because it allowed Tunisia to transition from an administered economy to a liberalized one” noted Saddam.
In 1986, the Tunisian economy was on the verge of collapse. As an indication, the Central Bank reserves were limited to one week of foreign exchange. All aspects of the economy were controlled by the state. Prices, investments, credit and profit margins were fixed. Following the widespread reforms, the economy regained strength. Exports increased, the productivity improved, and the economy became more diversified.
In 1995, Tunisia was the first country south of the Mediterranean to sign a free-trade agreement with the European Union. This agreement has already led to a significant increase in foreign investments. A market of 350 million consumers is now open to goods produced in Tunisia.
Tunisia is putting in place all the elements to become a regional leader. The country has signed agreements with several North African and Arab countries and has emerged as the leader in the proposed unified Maghreb.
On a domestic level, privatization and diversification of the economy are following their course. The private sector still contributes only half to the national economy. Saddam noted, “We need to improve our competitiveness on a qualitative and quantitative level. We need to further diversify the economy.”
Tunisia is also addressing its biggest challenge to date. Unemployment remains very high and is expected to grow at the onset of the EU-Tunisia free trade agreement before decreasing again. The National Employment Fund, called Fund 21-21 will help create job opportunities and further adjust-training and educational programs to the needs of the job market. Perhaps the achievements of Tunisia are best summarized by Nayera Amin, general director at Citibank Tunisia, who says, “Tunisia is doing a fabulous job. The economy is well managed. They are aware of all the issues and are tackling them.”
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