TUNIS, Tunisia – The newly elected president of Tunisia faces deep-seated economic problems as he takes power in the country that blazed the trail in the Arab Spring.
While much of the election campaign revolved around questions of security and political freedoms, economic issues are likely to feature heavily in the policy in-tray of Beji Caid Essebsi, who won Sunday’s elections in the North African country of 11 million.
Economic factors were largely behind Tunisia’s revolution in 2010 that saw the overthrown of dictator Zine El Abidine Ben Ali and set in motion a series of uprisings across the Arab world.
Four years on, the economic concerns that stoked the revolutionary fervour remain to be addressed. Unemployment in Tunisia stands at nearly 15 per cent — it’s double that for the young and women.
Here are some of the economic issues that Essebsi has to deal with:
A key problem in Tunisia is the imbalance between the Mediterranean coast and the interior.
Poverty rates provide a clear indicator of the divide. In the north-west and centre-west regions — where the revolution began — poverty rates stand at 26 and 32 per cent respectively, according to the World Bank, compared to just 8 per cent in the capital and northern coastal region.
Most of the investments in the country have been targeted on the coast — tourism, a major beneficiary.
The result of this lop-sided approach — an interior cursed by poor infrastructure ignored by investors.
For the impoverished interior, agriculture remains the main source of income — a third of Tunisians live in rural areas and of those, nearly half depend on agriculture.
Tunisia heavily subsidizes beef and dairy for local consumption but neglects areas where it is strong, according to the World Bank. Tunisia could focus more on its strengths like olive oil, tomatoes and other fruits and vegetables desired by the European Union.
On the whole, the sector needs to modernize — many small farmers use techniques that go back centuries.
Tunisia has a long history of cronyism, which has hobbled its economy.
Ever since independence from France in 1956, it’s depended on just a few wealthy families.
To make matters worse, the heavily regulated economy makes it difficult for anyone to start up a new business unless they have the necessary connections — the revolution hasn’t changed that.
“The problem of crony capitalism is not just about Ben Ali and his clan— on the contrary it remains one of the key development challenges facing Tunisia today,” the World Bank said.
Tunisia’s bureaucracy is widely seen as a drain on resources and a source of much corruption. Dealing with the bureaucratic demands costs firms almost 13 per cent of their revenue.
The time it takes to get the necessary approvals also discourage investment. For investment projects subject to pre-authorization — those where foreigners hold majority shares or projects focused outside of industrial centres — authorization can take many months, and sometimes one to two years.