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Since the 1970s Tunisia has opted for an economic model geared toward exports and industrialisation, sustained by the implementation of investor-friendly legislation, as well as supportive public investment in infrastructure and human capital. The approach has been successful for decades, with manufacturing forming the basis of GDP growth over the last 40 years. However, manufacturing industries experienced a dip in production during the post-revolution years as a result of broader instability, more frequent labour disputes, a slowing of capital spending and heightened international competition. The challenges are far from minor and, in the broader context of the macroeconomic slowdown, industrial producers have some way to go. However, as a whole, the economy benefits from some encouraging fundamental traits, and growth in Tunisia is projected to improve in 2017 and 2018 on the back of new capital spending on transport infrastructure and a new law governing investment, which came into force in 2017, and which is expected to shore up investor confidence and stimulate activity. As in other North African markets, the Tunisian retail sector has been predominantly controlled by a myriad of small shops. However, modern distribution channels have gradually emerged over the past 15 years with the expansion of international supermarket chains and franchises across the country. Despite some economic downturn, the modern distribution sector has continued to thrive, with the expansion of international franchising and supermarket brands, and the proliferation of large retail outlets. During the next few years the sector is expected to keep posting strong growth, driven by a growing population and rising purchasing power. However, from a purchasing power standpoint, retail performance will also be reliant on the country’s capacity to attract foreign tourists, boost the economy and create jobs. This chapter contains an interview with Habib Fekih, President, Airbus Africa and Middle East.

As one of the most developed markets in North Africa, Tunisia’s insurance sector has seen a steady increase in premiums and penetration in recent years, with life and medical insurance segments in particular experiencing notable growth. On the back of this momentum, the market is turning to diversified insurance products to further increase penetration and profitability. Segments including life insurance, bancassurance, micro-insurance and takaful (Islamic insurance) are all expected to grow rapidly in coming years. Growth in such product lines will help boost overall penetration, but the extent to which the wider sector grows and penetration levels rise will depend in part on trends in investment and the wider economic situation. Efforts to stimulate countrywide investment through measures such as the revised investment code are encouraging in this respect. This chapter contains an interview with Nejla Harrouch, General Manager, Assurances BIAT.

Tunisia’s stock market has seen steady growth in capitalisation in recent years, and while the number of initial public offerings (IPOs) was limited in 2016, the exchange registered a positive performance over the year due to strong results in the industrial, consumer goods and financial sectors. The near-term outlook appears equally encouraging, with several IPOs in the pipeline. The bourse is looking to accelerate that momentum by bringing in new products and calling for supportive measures from the government to further raise its level of development. The extent of economic growth, successful efforts to attract increased financing and investment, and whether or not the government goes ahead with previously suggested listings of major state-owned firms will strongly influence market performance and development going forward.

The banking sector in Tunisia has benefitted from a history of relative stability, thanks to a steady hand from the regulator, a focus on banking fundamentals and a comparatively high level of sophistication, particularly in terms of services like leasing. In 2016 several indicators continued to rise, including assets and lending. However, creeping weaknesses, in terms of both public sector institutions and competition, have become more prevalent and are prompting a period of change. The industry, which is currently facing a tight liquidity environment, is also widely thought to be ripe for consolidation, though new players continue to enter the market, attracted in part by the limited level of financial inclusion, which points to extensive greenfield opportunities. Changes such as the recent recapitalisation and restructuring of the country’s public banks, and plans to move the sector towards Basel III norms by 2020 should all help reinforce the stability of the banking system in the years ahead. This chapter contains interviews with Chedly Ayari, Governor, Central Bank of Tunisia; and Ahmed El Karm, President, Tunisian Professional Association of Banks and Financial Institutions.

Tunisia’s economy has been buffeted in previous years by the fallout from factors such as domestic and regional political and security instability, and the eurozone slowdown. While a strong recovery has yet to materialise, growth prospects have been ticking upward over the past 12 months and, with a successful political transition now behind it, the country has a strong base from which to boost output and revenues. Equally importantly, Tunisia is seeing improvements in export competitiveness and the trade deficit. To help encourage this trend further, the authorities are implementing a range of economic reforms and initiatives, such as a new investment law passed in September 2016 that should help raise the pace of economic expansion in coming years. This chapter contains interviews with Lamia Boujnah Zribi, Former Minister of Finance; Mohamed Fadhel Abdelkefi, Minister of Development, Investment and International Cooperation; Boutheina Ben Yaghlane Ben Slimane, General Manager, Caisse des Dépôts et Consignations; and Noureddine Taboubi, Secretary-General, Tunisian General Labour Union.