Yassine Brahim, Minister of Development, Investment and International Cooperation: Interview

Interview: Yassine Brahim

What has been the impact of the 2011 events on the foreign direct investment flow?

YASSINE BRAHIM: Globally, foreign direct investment (FDI) in Tunisia has remained low since 2011, accounting for less than 4% of GDP. Before the revolution FDI was already low, mainly driven by the energy sector that accounted for around 50% of this. That said, FDI in the energy sector is unstable because it is heavily linked to the discovery of new oil wells. Nonetheless, the sector’s prospects in terms of FDI for the next few years are promising given the relaunch of many small exploration licences. Also, we have seen an increase in FDI in some industries between 2011 and 2015. For instance, in the mechanical industry, for which Tunisia is an outsourcing platform, numerous construction sites have been extended in the past few years and FDI grew by around 20% in the first half 2015.

What needs to be done to attract more FDI?

BRAHIM: The most important measure is the improvement of governance with reforms that aim to enhance the economic environment, upgrade social services, offer better human resource training and minimise regional disparities. To improve the ease of doing business, measures have been taken like the implementation of the new investment code, and others are in the pipeline like the fiscal reforms, the simplification of Customs procedures, the reduction in Customs duties and the reform of the administration. All those measures aim to also create jobs and add value to the economy across the country.

Which sectors have the most potential for growth in terms of foreign and local investments?

BRAHIM: Two sectors are in the forefront in terms of growth potential: the automotive industry and the aviation industry. There is no plant in Tunisia to produce the heavy components in those sectors, thus the components are only assembled here. But at the end of the day around 35% of a car and 15% of a plane can be produced in Tunisia. The automotive and aviation sectors did not stop growing after the 2011 events, which means that international operators relied on the Tunisian industry and continued to invest in it. This is due to the capacity of the country to provide high-quality work in those segments. Indeed, those industries need a lot of technical engineering, and the fact that we find such qualified human resources locally and at an affordable cost makes Tunisia attractive compared to other countries in the region. Other industries offering growth potential include the pharmaceutical industry, where a lot of new patents are put down every year. We also see software companies coming to Tunisia partly due to Smart Tunisia, a government initiative that gives logistical and legal support for firms in the ICT sector that aim to settle in Tunisia. Another sector that has potential is archaeological tourism, which is an opportunity to diversify and boost the tourism sector.

How is Tunisia collaborating with international institutional investors?

BRAHIM: Tunisia has been supported by many organisations and countries, although the country’s expectations from international lenders are huge because it is in the midst of a democratic transition. Tunisia enjoys a rather good macroeconomic equilibrium, but it spends a lot of money to solve social issues in superficial ways, thus misdirecting funds that could be used create added value in the economy and solve the social problems in depth. Today the country needs exceptional financial support from the international community in order to get the economy going. Tunisia needs more funding than it received over the last five years. The country is suffering from regional insecurity, with one of the main sources coming from Libya. Thus military expenses have increased, but this must not prevent investment in more valuable sectors.