Overseas Business Risk – Tunisia
Political and Economic
Tunisia is the smallest country in North Africa by geographical area, but with a population of up to 11 million it is more populous than Libya and has a population roughly a third of Algeria or Morocco. Until Dec 2010 it was one of most politically stable in the MENA region, as the Ben Ali regime kept lid firmly on discontent and repressed political opposition. Press freedoms were almost non-existent. Despite this Tunisia was regularly praised for sound, conservative macroeconomic management and it had made good progress in some areas of social development, such as high levels of education. However widespread dissatisfaction, particularly over high levels of unemployment, finally boiled over in December 2010 with protests that led to what became known as the “Jasmine Revolution.” This culminated in the overthrow of Ben Ali in January 2011. The revolution, which sparked the Arab Spring across the region, removed all restrictions on freedom of the press and allowed public criticism of the government.
Democratic elections (widely regarded as free and fair) were held on 23 October 2011 and elected the Constituent Assembly. The main task of the Constituent Assembly was to draft the new Constitution. The new Constitution aims to lay the foundations for a multi-party democracy based on respect for human rights. There are public debates continuing on the draft of the new Constitution particularly in regard to the role of women and moral issues, amongst others, mainly between Islamists and secularists. Should the new Constitution not be agreed by two thirds of the Constituent Assembly, it would go to a referendum. The Constituent Assembly was given the task to draft the new Constitution within 1 year (although there was no legally defined time limit) but this deadline passed with no agreement and the Constitution remains at the draft stage with negotiations ongoing. Although the Constitution has yet to be passed the election committee was elected on 19 July 2013. This removes one bureaucratic barrier for the elections to take place. The government remain optimistic that elections can take place later this year but with the Constitution still under negotiation the date cannot be announced.
In December 2012 the Prime Minister announced he would reshuffle the cabinet, replacing underperforming ministers. However the reshuffle continued to be postponed and a political assassination in February 2013 plunged the coalition government into crisis and led to the resignation of the Prime Minister. A new, less political, government has now been formed and have promised to accelerate steps to finalise the constitution and hold the next elections.
The Tunisian economy was stifled pre-revolution as the corrupt ruling elite amassed great wealth and many businesses resisted growth; to become more successful to avoid the unwelcome attention of those in power, who might demand a share of the weath. There remains an uncertain political and economic environment, as indicated in the recent IMF report, but there are reasons to be optimistic for the future.
Tunisian Government is targeting 4.5% GDP growth in 2013, according to the Minister of Regional Development, and to help achieve this sectors such as mining and manufacturing are to be re-launched. There was 3.5% growth recorded for 1st 6 months of 2012.
The government aims to introduce reforms in many areas such as finance, education and the business and investment environment. For example a draft of a new Investment Code has been created but has yet to be adopted. But these reforms will be delayed while the immediate political environment remains uncertain.
The number of British Tourists who visited Tunisia in 2012 was 329 619, which is an increase of 44.9% against 2011, although they are not yet back to pre-revolution levels.
UK exports (goods only) to Tunisia for 2012 increased by 9% compared with 2011. UK Imports from Tunisia was up 51% in 2012 compared with 2011, but again have yet to reach pre-revolution levels.
The top UK exports to the Tunisian market in 2012 were textiles, cereals, gas (natural and manufactured), medicinal and pharmaceuticals, machinery, transport equipment, iron and steel, plastics and chemical products. The main UK imports from Tunisia in 2012 were textiles, petroleum products, fertilisers, fruits & vegetables, road vehicles, iron and steel.
The Tunisian market is challenging and will remain difficult in the short to medium term but has major potential for better opportunities in the longer term.
Civil Disobedience and Labour Unrest
Due to the new found freedoms of expression and demonstration there has been an increase in incidents since the Jasmine Revolution, although the main tourist areas have remained free of unrest. Unemployment, a key driver of the revolution, remains high with up to 40% of graduates unemployed and an overall unemployment rate of 17% (although these figures may be much lower than the reality). Unemployed jobseekers have blocked production sites demanding jobs, as expectations exceed the ability of the new government to create employment. This has resulted in bringing some companies production to a standstill for several days.
Political demonstrations, unheard of during the days of Ben Ali, are increasing and lively public debates rage between Islamists and secularists. Most of these have been peaceful and the debates are largely respectful. There have been incidents where extremist Islamists (Salafists) have disrupted art exhibitions or shows, which they believed were immoral. It is encouraging to note that these events went ahead as planned or were rescheduled. Activists claiming to be Salafists have also vandalised shops or hotels selling alcohol, mainly in the more rural areas, but these incidents have been repeated in some parts of the capital.
The funeral of Chokri Belaid, assassinated on 06 February 2013, brought up to 1 million mourners onto the streets on 08 February. Despite the tensions the funeral mostly passed off peacefully but the political aftermath brought the resignation of the Prime Minister. A new, less political, government has been formed and have promised to accelerate steps to finalise the constitution and hold the next election. So long as the new government keeps to its timetable the political environment should remain stable, but any further postponement of the next election could see more demonstrations and civil disorder.
More information on political risk, including political demonstrations, is available in the FCO Travel Advice.
Tunisia has made significant improvements in human rights since the Ben Ali era, particularly in the area of political freedoms and freedom of expression. Tunisians are now free to debate freely and form political parties, and the Tunisian media openly critics the government in ways that would have been unimaginable before the Revolution. Yet challenges remain. Reports suggest that torture and mistreatment in detention remain a problem, and civil society organisations have highlighted several cases of excessive use of force by the security forces that do not meet international standards. The Tunisian Government is often open about the need to address these concerns, and some draft laws have been proposed to tackle them. International partners are working on a range of these issues, and the UK supports EU engagement with Tunisia on security sector reform.
Labour Market and Practices
Nationals of European Union (EU) states are not required to obtain entry visas for Tunisia for stays up to 3 months, employment prohibited. Foreign nationals intending to take up employment in Tunisia must first obtain work and residence permits, which are only available in Tunisia and cannot be obtained before arrival.
Specific documentation is required before a foreign national is permitted to work in Tunisia. Professional employees must submit a signed employment contract to the Ministry of Vocational Training and Employment along with a curriculum vitae and proof of educational and professional qualifications.
Work permits are issued for a specific period, not exceeding two years. To renew a work permit, employers must re-justify to the Ministry the need to employ a foreign national.
Tunisian employers, with few exceptions, are prohibited from recruiting foreign nationals who do not have employment contracts authorised by the Ministry of Training and Employment. Employers are also prohibited from recruiting foreign nationals whose employment contracts with previous employers have expired.
Employers must notify the Ministry immediately following the departure of a foreign national from their business.
Certain foreign nationals are exempt from obtaining employment contract approval:
Foreign national acting as employers in Tunisia,
Foreign workers born and living permanently in Tunisia,
Employees of off-shore banks and financial companies working with non-residents,
Employees of petroleum companies,
Employees of companies involved in the export sector (such companies may recruit a limited number of foreign managers and executives after advising the Ministry of Training and Employment.)
In such cases, employers are still required to report the recruitment of foreign employees to the ministry who will issue an exemption certificate for each notification.
Bribery and Corruption
Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.
In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
Corruption in Tunisia Revolution
In 2012 Tunisia ranked 75th out of 178 countries in the falling 2 places from its 73rd place in 2011. The weakening of the state following the revolution and political instability, which has encouraged corruption at lower levels in the Tunisian administration, has been blamed for this fall.
The “National Commission of Fact-Finding in Cases of Corruption and Embezzlement” was set-up after the revolution to tackle previous corruption cases. Court cases were opened and some political figures of the previous regime were arrested for investigation. However, progress has been slow and the Commission has been criticised for its lack of communication and transparency.
Despite this there have been a series of trials of the former President and his family members which have resulted in a number of convictions for corruption. However, the trials themselves have been criticised by Amnesty International as being unfair. Amnesty International believes that procedural irregularities mean that the trials risk replicating the unfairness that was a characteristic of the justice system under the former regime: see the Q&A on Accountability in Tunisia and Egypt at .
The legal system lacks independence and remains in need of reform. This has helped some political figures to be released from jail and for others to leave the country. For example, on 9 August 2011 Tunisia dismissed its public prosecutor Nejib Maaoui for incompetence in allowing Saida Agrebi, an ally of former President Ben Ali, to leave the country.
The current political environment is making it difficult for much needed reform projects to be implemented, but once the new Constitution has been agreed and new elections conducted it is to be hoped that the reform agenda can be accelerated.
Visit the Business Anti-Corruption portalpage providing advice and guidance about corruption and some basic effective procedures you can establish to protect your company from them.
There is a general threat from terrorism in Tunisia. Attacks cannot be ruled out and could be indiscriminate, including in places frequented by British expatriates and foreign travellers. You are advised to maintain a high level of vigilance with regard to your personal security whilst you are in Tunisia. There is a risk of kidnap in Tunisia from terrorists operating in the area of the southern Tunisia/Algeria border, and we advise caution when travelling in such areas.
Protective Security Advice
The Centre for the Protection of National Infrastructure also provides protective security advice to businesses
For more advice please consult the UKinTunisia site.
Tunisia belongs to the World Intellectual Property Organisation (WIPO) and is a signatory to the Bern Convention for the Protection of Literary and Artistic Works (copyright) and the Paris Convention for the Protection of Industrial Property (patent, trademark and related industrial property). As a member of the World Intellectual Property Organisation (WIPO) and a signatory to the UNCTAD agreement on the protection of patents and trademarks, Tunisia undertakes to protect foreign property rights.
More information is available on overseas business risk in a range of markets.
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Topics: Insurance & Risk