Purchase OBG Publications

Because of its effects on employment and supply chains, Tunisia’s construction sector has always been a central component of the economy. Despite its importance, however, the challenging macroeconomic environment has had a toll on public and private spending, but a return to more stable levels is expected to come through government-backed infrastructure development plans. While real estate is recognised as one of the most interesting markets in the region due to its stability and development potential, recent years have nonetheless brought some challenges, including regulatory blockage and rising scarcity of land to expand housing options. In hand with this, rising construction costs and the difficulty gauging demand patterns due to uncertainty have somewhat increased risks for real estate developers. Despite these challenges, the sector continues to demonstrate growth potential.

Despite its comparably lower volume of hydrocarbons reserves, Tunisia has largely been able to effectively allocate them to meet its development needs. However, as its oil and gas reserves diminish, the long-term energy strategy will increasingly rely on diversified sources. Although an uptake in exploration efforts may yield new exploitable reserves, an acceleration of renewable energy generation will be required to reduce the country’s vulnerability to energy shocks. Equally challenging and necessary will be to continue reducing subsidies and eliminating market distortions. Increasing energy security will likely remain the sector’s primary priority, and drive public and private investment over the medium term. This chapter contains interviews with Nabil Smida, Chairman and CEO, Société Nationale de Distribution des Pétroles AGIL; and Moncef Harrabi, Chairman, Société Tunisienne de l’Electricité et du Gaz.

Leveraging its geographic positioning at the centre of the Mediterranean, Tunisia’s transport sector has been crucial for the country’s economic progress. Well-connected shipping and air transport lines have proven essential to developing the tourism sector and raising commercial trade levels in international markets. Key industrial segments such as aeronautics, automotive components and agro-industrial processing have been built on the premise of efficient transport networks that interlink the country’s production base with international value-chains, such as those in Europe.

Despite relatively low penetration, Tunisia’s insurance sector has been growing steadily, with the rapid expansion of existing segments, such as life insurance, and the development of new ones, like takaful (Islamic insurance) and micro-insurance. Among the factors that should contribute to growth in the future are the General Insurance Committee’s ongoing reforms to the regulatory framework, which aim to support the development of new insurance segments and improve customer care. Efforts to raise profitability by investing in risk-management tools are expected to contribute to better pricing and service quality, both seen as essential for boosting the sector’s appeal and penetration. This chapter contains interviews with Hassène Feki, CEO, STAR Assurances; and Lamia Ben Mahmoud, CEO and Chairman, Tunis Re.

While Tunisia has faced weak economic growth and high inflation in recent years, the country’s stock market continued to grow over the 2016-17 period, even though its contribution to private investment financing remains relatively modest compared to that of the banking sector. Measures to deepen the market, however, are under way, aiming to attract an increased number of small and medium-sized enterprises to the bourse, while improving its security and transparency standards to entice further institutional and foreign investors to join the currently retail investor-dominated exchange. With economic growth expected to continue to pick up, market observers are cautiously optimistic regarding the development of the country’s capital markets. This chapter contains interviews with Bilel Sahnoun, CEO, Tunis Stock Exchange; and Walid Saibi, General Manager, Tunisie Valeurs.

Despite the challenges to Tunisia’s economy, the banking sector has experienced positive growth in recent years. Several risks, however, still threaten the overall health of the sector, including a reduction in available liquidity, low levels of capitalisation and credit risk. In an effort to address these issues, the Central Bank of Tunisia has been implementing significant structural reforms, however, barriers to consolidation may limit activity in the short term. In the longer term, the financial system will be instrumental to diversifying the economy’s sources of funding away from traditional banks, with more inclusive opportunities stemming from the Islamic banking, microfinance and leasing segments. This chapter contains interviews with Chedli Ayari, Former Governor, Central Bank of Tunisia; and Habib Ben Hadj Kouider, Director-General, Banque Nationale Agricole (BNA).