[BLOG] Tunisia should look to sub-Saharan Africa to expand growth

Since the eruption of the revolution, Tunisia has suffered from several economic difficulties that have been aggravated due to rising inflation, lack of foreign currency and rising oil and food prices. But what should be done given that 80% of the country’s trade is conducted with Europe, which is a partner that achieves nearly 1% of growth per year, while Tunisia must achieve 6% or 7% of growth to solve its problems and catch up? The answer is simple: Turn toward Africa.

In its recent Africa Pulse report published in April, the World Bank predicts that economic growth in sub-Saharan Africa is expected to keep on increasing from 4.7% in 2013 to 5.2% in 2014. Six African countries are in the top 10 countries with the most important economic growth in the world. Thus, there is a need to set a new strategic policy direction for the country.

It is in this context that President Moncef Marzouki went on an African tour from June 20 to 25. Accompanied by a delegation of businessmen and representatives of professional organizations and public and private economic enterprises, he made friendship and work visits in four African countries, namely Mali, Niger, Chad and Gabon.

Moreover, The Arab Institute Of Business Managers (IACE) devoted the second Tunis Forum, held on June 5, to the topic of “Tunisia and sub-Saharan Africa: For a Sustainable Integration Strategy,” with the attendance of Tunisian officials and African policymakers. IACE had prepared a study, titled the Tunisia-Africa Renewed Strategy (STAR), which proposed a focused strategy to establish an optimal and promising partnership with these countries, along with clear and practical guidance that can represent in a future road map for both political and economic actors.

The studies show that between 2008 and 2020, Africa’s GDP and consumption will double, while the number of mobile-phone users will be multiplied by 3.5 in 2040. This makes this rapidly changing market very appealing. Tunis Forum was an opportunity to show the Tunisian skills and products to African policymakers and to introduce this large market to Tunisian investors so they can seize the emerging opportunities.

Several recommendations were made. First, it is important not to just consider these countries as mere markets to conquer, but rather as countries with large development potential and with which Tunisia must establish a sustainable multi-sector partnership that affects political, economic, cultural and scientific sectors.

Nevertheless, investors speak about several issues related to funding, logistics, taxation, etc. They also indicate that the Central Bank of Tunisia does not encourage investments abroad by depriving them of its approval.

Other difficulties have been identified in the STAR report, including the absence of a Tunisian banking network in sub-Saharan Africa, at a time when Morocco has a strong banking presence on the continent. Some figures illustrate this situation: There are just eight bilateral agreements concerning sub-Saharan countries out of 49 concluded between Tunisia and the rest of the world; there are just four tax treaties with countries of sub-Saharan Africa out of 34 others signed by Tunisia; there is not any preferential trade agreement with countries and regional governments of sub-Saharan Africa, in addition to the weak airlines connection with sub-Saharan Africa (Tunisair lags behind when compared with other competitors, such as Royal Air Morocco or Egypt Air) and the total absence of direct shipping lines to the ports of sub-Saharan Africa from the east and the west.

The IACE included in its STAR report a series of recommendations that are conducive to benefiting from African growth, where Tunisians and their expertise are expected to contribute. According to the statement of the various participants in Tunis Forum, the Tunisian government and stakeholders must tackle several projects of high importance for making this initiative a success.

For the short term, we must encourage banks, via the Central Bank of Tunisia, to conclude partnership agreements with French and Moroccan banking networks for the establishment of a Tunisian banking network by 2020. The STAR report also recommends facilitating the opening of accounts in African CFA franc (African Financial Community) for operators working in the countries of West and Central Africa.

Also, there must be negotiations of agreements concerning investment protection, double taxation avoidance and preferential trade with African countries. It is also important to conclude at least one free trade agreement with a regional cluster: West African Economic and Monetary Union (UEMOA) — consisting of Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo — and the Economic and Monetary Community of Central Africa (CEMAC), consisting of Cameroon, Central African Republic, Republic of Congo, Gabon, Equatorial Guinea and Chad.

Concerning transportation, according to the institute, the 20 new lines that Tunisair intends to launch in sub-Saharan Africa by 2018 should serve cities where Tunisia has no consular presence. This will facilitate visa procedures or partnership agreements with any of the three RAM, Egyptair or Alitalia companies in order to increase links with the cities of Casablanca, Cairo or Rome. The cities will serve as hubs.

In terms of maritime transportation, current maritime lines must be operated and strategic partnerships must be concluded between international shipping companies and port-operating companies on the one hand and Compagnie Tunisienne de Navigation (CTN) on the other. Local facilitation branches must be created in the hubs used in coordination with freight forwarders.

Despite lagging behind in terms of infrastructure, IT equipment and training, sub-Saharan Africa is witnessing a real technological awakening, which suggests growth prospects for the short term.

Tunisia, within the scope of its development strategy in the ICT sector, must support the IT services companies capable of spreading in Africa and double in five years the exports of goods that are currently around 700 million dinars [$416 million].

National leading companies (structured and recognized companies), such as Africa Works, International Steg, Comete Engineering, SBF, which have the ability to tap into new markets in Africa and the world, should participate in this national effort. Tunisia-West Africa Chamber of Commerce and Central Africa-Tunisia Chamber of Commerce should be strengthened by considering the idea of involving these companies in decision-making and during official trips.

The majority of experts in Africa have emphasized the importance of making a decision now because, in just 36 months, it will be yet another missed opportunity, according to their estimate. Indeed, sub-Saharan Africa is evolving exponentially.

Moussa Seck, Chairman of PanAAC (Kenya), explained that the food weapon was one of the most dreadful. According to Seck, we must invest in this sector, as Tunisia could provide Africa with its know-how in irrigation. Instead of allowing countries like Saudi Arabia and China to buy land and produce their own harvest, Tunisians and Africans could join in the food industry projects with high added value to produce, store and sell food on the world market, benefiting from the generated margins.

Africa represents a real growth opportunity for Tunisia. It should not be wasted. In this transitional phase of our country, seizing this opportunity could be of great advantage for Tunisia, have a significant impact in the coming years and change our future.

Almonitor