Tunisia leads the way in democratic reform in region

Tunisia has been going through a watershed period in its modern history, with the revolution of 2011 bringing much-needed change and reform. While the country has avoided much of the instability of the wider region, it has nonetheless undergone a spell of turbulence, testing the country’s newly found democratic bonds. However, with a young population and the potential expansion of the resource base, along with well-maintained infrastructure, there is the opportunity for strong economic development. The country has a deserved reputation for stability and moderation, and while the political dialogue will undoubtedly be trying and the security environment a challenge, recent months have shown the propensity of key actors to focus on consensual policies – which bodes well for Tunisia’s long-term outlook.

History

The land now known as Tunisia has a rich and distinguished history. It has been ruled over by Berbers, Phoenicians, Romans and Arab dynasties. Modern Tunisia, and the country’s name itself, came into being as a French protectorate in the late nineteenth century. Tunisia gained full independence in 1956.

Two presidents, Habib Bourgiba and Zine El Abidine Ben Ali, dominated much of the post-independence republican period. However, following protests, which began in December 2010, Ben Ali fled into exile in January 2011, marking a new era for Tunisian politics. Following this period of protest, which helped ignite the Arab Spring, the country has held two sets of successful elections. The parliament also voted overwhelmingly in favour of a new constitution in 2014.

Geography

Tunisia sits between two large, and sometimes unstable, neighbours, Algeria and Libya. Coming in at less than a tenth of the size of Algeria and ranking 91st in the world by area, its size is dwarfed by these North African behemoths. However, emerging relatively strongly from the Arab Spring, which began in the country, Tunisia is respected diplomatically and remains a key player in a volatile neighbourhood.

With more than 1000 km of Mediterranean coastline, the country has a strong tradition of commerce and openness to the wider region. The economy is also shaped by a varied terrain. The north of the country is scattered with mountains, the highest of which is Jebel Chambi, standing at just over 1500 metres. This gives way to a dry central plain abutted in the south by arid desert that marks the beginnings of the Sahara.

While North Africa traditionally offers little productive capacity in terms of agriculture, the country – a former breadbasket in antiquity – retains a strong agrarian footprint. Almost two-thirds of Tunisian land is put to agricultural use. While much of this is for permanent pasture, 18.3% of land in the country is arable, and a further 15.4% is under permanent crop cultivation. This provides the basis for an important agricultural sector that contributes 9.5% to GDP. However, water resources are limited. As of 2011, the last year for which statistics were available, the country had 4600 cu metres of renewable water resources. As such, Tunisia is ranked 146th out of 173 countries globally in terms of renewable water resources. Water scarcity is likely to become an increasingly important policy issue in the coming years.

Climate

Indeed, the desert south of Tunisia receives little rainfall and offers few prospects for agricultural development. This region receives about 150mm of rain annually, with some areas going several years without any precipitation. Temperatures here can reach 45°C during the summer months. The north, on the other hand, is more habitable, with some potential for cultivation. Here, the Mediterranean climate prevails, with four seasons, including hot summers and wet mild winters. In Tunis, for example, rainfall can exceed 60mm per month during the winter. In this season, the capital can experience eight to nine days of rain every month. Temperatures range from an average high of 34°C in July to an average low of 8°C in February.

Natural Resources

Tunisia has a diverse range of mineral and metal reserves including lead, iron ore, phosphate and zinc. The country is one of the leading producers of phosphate, ranking 8th globally in 2014, with a production level of 5m tonnes. Production has been hit by labour disputes in 2015, but the sector remains an important economic contributor. Reserves in the country currently stand at 100m tonnes.

However, the most important natural resource for the country is petroleum. Tunisia holds 400m barrels of reserves, according to the BP Statistical Review. In 2014, production stood at 53,000 barrels per day (bpd), a decline of 13.3% on 2013. This gives the country a reserves-to-production ratio of 22.1 years. While production levels have been declining and current reserves limit future opportunities for the industry, there is still untapped potential in Tunisia. In May 2015, for example, Mazarine Energy discovered a new oil-bearing reservoir in its Zaafrane permit in central Tunisia. The initial well drew oil at a rate of 4300 bpd.

The country’s unconventional shale deposits also offer significant potential. According to the US Energy Information Administration, Tunisia has two shale formations in the south of the country, with 23trn cu feet of technically recoverable shale gas and 1.5bn barrels of technically recoverable shale oil. As such, the country has the potential to transition from a small-scale producer to a significant international player, though this depends on the cost of extraction and the global price of oil.

Population

Tunisia is home to just over 11m people, according to the latest estimates. Tunis, the capital, is the largest population centre, with 1.99m inhabitants. However, the country still has a sizeable rural population. As of 2015, the urban population comprised 66.8% of the overall population, with this growing at 1.38% per year between 2010 and 2015. This is above the MENA average of 60%, but well below the OECD average of 80%.

The continuing urbanisation of the country is likely to be a key demographic trend over the following decades. This will provide greater opportunities for wealth creation and the provision of basic social services and connectivity to the general populace. Indeed, with a positive correlation between urbanisation and GDP per capita, a shift in Tunisia’s demographic balance towards developed country levels of urban habitation will likely bring economic benefits.

The other major demographic trend will be the transition of Tunisia’s large youth cohort into the labour market. Currently, 38.6% of the population is under the age of 25. This is in line with wider regional demographics and the Middle East’s “youth bulge”, in which more than 28% of the population is between the ages of 15 and 29 and 60% is under 25. As such, Tunisia and the region are facing a potential demographic dividend in which the working age population expands, tax revenues grow, and recurrent government spending on welfare decreases. If employment is created and the population can meet labour market demands, the potential for economic growth is strong.

However, in the longer term, the country is set to face demographic challenges. The population growth rate stood at 0.89% in 2015, well below much of the developing world. The total fertility rate between 2010 and 2015 was estimated at 1.8 children per woman, the second lowest in the wider region behind Iran. This is particularly worrying given that it is well below the replacement rate, the level at which the country’s population would remain stable. Beyond the obvious existential threat that this poses, it presents policy challenges. As the developed world is finding out, an aging population places additional pressure on public resources and the very framework of the welfare state. However, Tunisia is many years away from crisis and is seeing an uptick in fertility. In 2015, the fertility rate was estimated at 1.99.

Language & Religion

The country is largely ethnically and religiously homogeneous. More than 99% of the population is Muslim, while 98% of inhabitants are Arab. Tunisia also has small European and Jewish populations. Thus it is perhaps unsurprising that the official language of the country is Arabic. Nonetheless, in the worlds of business and commerce, French is spoken widely. Indeed, approximately two-thirds of the population speaks French. The other major language used in the country is the Tamazight dialect of Berber.