Wided Bouchamaoui, President, Union Tunisienne de l’Industrie, du Commerce et de l’Artisanat (UTICA): Interview

Interview: Wided Bouchamaoui

How would you describe the evolution of Tunisia’s business environment since 2011?

WIDED BOUCHAMAOUI: In terms of business creation, the country experienced stagnation between 2011 and 2015, mainly due to a lack of economic visibility and political stability. The restoration of political stability should allow better economic visibility for future entrepreneurs, with numerous reforms in the pipeline, such as the investment code and the fiscal reform. Since 2011, the Tunisian private sector has maintained its investment in all the business sectors. Tunisia has very few natural resources, but thanks to big local holding groups and human capital, the country has continued to export products with high added value throughout its political transition.

What measures should be taken to create an appropriate business environment?

BOUCHAMAOUI: Improving the legal framework, offering a fair and transparent taxation scheme with rigorous controls and fighting corruption will all help foster a better business environment and attract foreign direct investment. The anticipated reforms include the investment code, the PPP reform, the fiscal reform and the banking reform.

What strategies can be pursued to encourage the growth of entrepreneurship in Tunisia?

BOUCHAMAOUI: First of all, we need to incentivise the Tunisian people to start businesses. To that end, there is a need for better communication. Young people have a lot of ideas but sometimes lack the courage and financial means to execute them. It is the role of companies and their representatives to promote entrepreneurship amongst young people. Secondly, there is a serious need to streamline administrative procedures, which remain too complicated and too centralised. There is a huge difference between economic activities in the capital and those in other regions of the country, so each environment requires appropriate administration. In general, the business environment is favourable, but there are still some social tensions. The social contract signed between the Tunisian General Labour Union and the UTICA in 2013 was intended to help resolve these.

What measures can be taken to encourage public-private partnerships (PPPs)?

BOUCHAMAOUI: In the face of a widening budget deficit and growing public debt, PPPs are crucial for Tunisia. They allow companies to mobilise additional financial resources, improve services and allow the state to keep certain strategic sectors under control. It is important that the government broadens the application criteria for PPPs by drafting a new law. Currently the law only authorises the public side to initiate a PPP project; the private side cannot make proposals. Parliamentarians must give more freedom to private entrepreneurs. It is also important that the Tunisian people understand that a PPP is not a public company privatisation but a combination of public and private efforts to achieve greater results.

How can taxation be made more efficient?

BOUCHAMAOUI: There is a need for fiscal justice in Tunisia since 80% of tax revenues are derived from less than 1% of companies. The injustice stems mainly from the rate tax scheme but also from the informal economy. The problem is that the administration has no means of control over the accuracy of tax revenues coming from the beneficiaries. This injustice could be solved by subjecting the employed population to the current tax regime. On the other hand, Tunisia suffers from a huge informal economy, which represents around 50% of GDP. To address the size of the informal sector, Tunisia must apply more control at its borders and decrease the tax on certain luxury products, to encourage people to trade legally.