Mohamed Fadhel Abdelkefi, Minister of Development: Interview

Interview: Mohamed Fadhel Abdelkefi

How competitive is Tunisia’s economy?

MOHAMED FADHEL ABDELKEFI: Tunisia is competitive for several reasons. The country possesses a deep labour pool with a competitive quality-to-cost ratio, it boasts a millennia-old trading culture and it is close to Europe, thus holding a unique geostrategic position. Tunisia is known worldwide for its contributions to the global aeronautic supply chain, which ranges from manufacturing to hardware and software development. Similarly, Tunisia boasts a high position on the global automotive supply chain. Furthermore, Tunisia could become more competitive in agri-business if the country puts its mind to it. Tunisian agriculture has already made strides in moving up the value chain, especially given the global demand for products like olive oil. Already Tunisia is working with the World Bank on a project regarding the forestry and agri-business value chains.

What steps has the country taken to improve the investment environment?

ABDELKEFI: Tunisia has resolved to simplify investment. Tunisia has enacted a new investment law which replaced the former law that had 75 articles with one that now has 25 articles. The law details economic sectors open to foreign investment and has paved the way towards implementing a foreign investment negative list. In addition, Tunisia has enacted an economic emergency law that allows for fast-tracking of high-priority projects that serve the national interest. Modernising the regulatory framework also involved reducing the number of pre-authorisation requirements and creating a deadline for authorities after which requests are considered approved. The Investment Law 2016 and other recent reforms will increase investment flows and reposition Tunisia on the global investment map. Already Tunisia has established all of the pre-requisites for stimulating investment, such as the stabilisation of the country’s security and the resumption of phosphate production. Nevertheless, Tunisia’s recent efforts to improve the investment climate are only a first step. The most vital reforms are often the most difficult to realise.

How important is it to manage the perception of Tunisia’s business climate among investors?

ABDELKEFI: Improving the business climate is an ongoing mission, which involves changing perceptions as well as the regulatory framework. The Tunisia 2020 conference detailed three types of projects: government projects, public-private partnerships and private projects. Private projects were important to highlight because those can have a significant impact on the perception of Tunisia’s business climate. At the conference, agreements were signed with well-recognised and well-regarded global brands, which served as tangible votes of confidence in Tunisia’s business climate.

What should the government do to reduce regional disparities across the country?

ABDELKEFI: Government investment in under-developed regions must precede any foreign private investment by putting in place the necessary infrastructure. The new constitution promotes affirmative action in favour of less advanced regions. Already investment in regional development has risen from TD90m (€38.6m) in 2010 to TD700m (€300.2m) in 2016. Moreover, fiscal incentives have proven effective in turning under-developed cities into developed ones with schools, hospitals and viable economies. Offering premiums for investment in under-developed zones can also foster interest and development. Still, however essential the implementation of affirmative action is, promoting investments in under-developed regions cannot come at the expense of investment in developed ones. If a foreign investor were to be interested in setting up shop on the country’s coast, government pressure to focus on another region could endanger the investor’s decision to invest in Tunisia at all. The ministry’s objective is to promote investments across in the entire country.