October 23 2011
By Farah Halime
TUNIS // Tunisia’s Jasmine Revolution inspired millions of Arabs in other countries to take to the streets in January, and now the nation’s top businessmen expect the country to set another example: rebuilding an economy after a revolution.
Tunisia, with a relatively large middle class, broad gender equality and liberal social system, catapulted the rest of the Arab world into a year of revolt when its people began demonstrating against the dictatorial Zine El Abidine Ben Ali last December, forcing him from the presidency in January.
It is also the first of the “Arab Spring” countries formally to begin the journey to democracy, with elections for the constituent assembly slated for today.
About 100 political parties have put forward economic policies with largely the same aim: resolving unemployment and dismantling entrenched corruption.
Moncef Cheikhrouhou, a prominent economist and a member of the Progressive Democratic Party (PDP), Tunisia’s biggest secular political party, is seen as a strong contender to become a finance or economy minister in a democratic administration.
He says the country needs to target an economic growth rate of 6 or 7 per cent by the end of next year to tackle unemployment.
Unemployment is a huge problem in Tunisia, with about 700,000 jobless in a population of approximately 10.6 million.
“That is very high for the number of people living [in Tunisia],” says Mr Cheikhrouhou. “But we need to reach that [growth] percentage in order for everyone to find jobs.”
Among the dominant political groups is Ennahda, an Islamist party that is widely acknowledged as having the largest support and highest profile of the parties. Ennahda says it seeks to create 590,000 jobs over the next five years and to reduce unemployment to 8.5 per cent from 14.4 per cent.
Tunisia’s economy grew at an average rate of 5 per cent a year in the 10 years leading up to the 2008 financial crisis, according to IMF figures. But the country slid into recession when the revolution wiped out tourism and employment opportunities at the beginning of this year.
As much as US$2 billion (Dh7.34bn) was lost from the economy during the first month of the revolution, Mr Cheikhrouhou says. But he estimates that Tunisia’s growth rate could be raised 2 or 3 percentage points if corruption is eliminated.
“We [the PDP] want to target that mine of potential growth by encouraging start-up firms, finding private equity for them and encouraging foreign direct investment,” he says.
A new focus on small and medium enterprises has been a tenet of post-revolution government strategy. This month, Jalloul Ayed, the interim finance minister, presented a “Jasmine plan” for the economywith an emphasis on micro-finance.
He said that by today, 3,000 micro-credit projects would have been approved and launched and that the government would support almost 300 micro-credit organisations.
“Tunisians are learning quickly the meanings of democracy and liberty; they are learning faster than what I was expecting, and so the impact on business and economy can be huge,” says Hatem Kchouk, the founder and former chairman of Arab Tunisia Bank, the fourth-largest bank in the country.
“Now everyone can feel free without being related to any dictator or government referring systematically to the dictator,” says Mr Kchouk.
With the removal of dictators such as Mr Ben Ali in potentially progressive countries, pan-Arab economic relations could also grow immensely, he says.
“In general in Arab countries, the obstacle between developing links between a lot of them are the governments,” Mr Kchouk says.
Tunisians will choose a constituent assembly to govern the country while a new constitution is drafted. Today’s vote promises to be the first free and fair election resulting from the Arab Spring uprisings in parts of North Africa and the Middle East.
Deciding whether to sell the seized assets of Mr Ben Ali and his family is also among the tasks of the assembly that is being elected.
The post-revolution Tunisian public now has stakes in Orange Tunisie, Banque de Tunisie and about 100 other companies, as well as 500 houses and 18 yachts – all previously held by Mr Ben Ali and his family and associates and seized by the new government after Mr Ben Ali fled the country in January.
Mr Ben Ali’s family is said to have accumulated its wealth by buying state companies at knockdown prices and luring overseas investors to do business with them.
“The corruption at the top will disappear. It’s really the end of this type of situation,” says Mohsen Zerelli, a top executive at Groupe Mabrouk, a conglomerate that controls vast sectors of the country’s business including retail, banking and telecommunications.
“Of course we have experienced a wait-and-see [approach] by, I think, the majority of investors, including international investors, and even in our group we had this type of attitude, but we are ready to restart and go for development internally and on international basis,” Mr Zerelli says.
“One of the dangers” the government faces is a potential drain on public finances, which could lead to heavy external borrowing, he says.
“The government will face a lot of social protests, and if they increase too much public expenses [to appease protesters], the country’s public finances have the potential to deteriorate too much within three to five years,” Mr Zerelli says.
External debt is about 40 per cent of Tunisia’s total public debt, which is “very reasonable”, Mr Zerelli says, and the budget deficit is about 3 per cent of GDP.
Tourism, a vital driver of employment and foreign currency earnings, was down by as much as 50 per cent after the revolution, government statistics showed.
“You cannot build a democracy without transparency and being up to date,” says Boubaker Mehri, the general manager of Délice, the largest dairy company by market share in Tunisia. “Of course it is difficult to change this culture, but we think it’s up to the private sector to build a new Tunisia.”