Tunisia

In-depth country-focused analysis on Tunisia's economic, political and operational risk environment, complemented by detailed sector insight

Tunisia

Tunisia is transitioning to a democratic political system, and is increasingly attracting our clients. Tunisia will be an economic outperformer in the North Africa region over the coming years, and foreign direct investment will return to the country as political stability improves. The country’s economy is well diversified, with its hugely important agricultural sector, strong manufacturing industries and a well-developed tourism sector.

We ensure our clients make sound investment decisions in Tunisia, using our risk-assessed total analysis model. Our teams keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Our expert views are supported by our interactive data and forecasting. We also provide in-depth analysis on four of Tunisia’s most important industries. Our analysts will make sure you are on top in Tunisia.

Country Risk

Tunisia Country Risk

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Core Views

  • The Tunisian coalition government is unlikely to unravel as a result of the breakdown of Nidaa Tounes - the main political party - but will continue to confront daunting socio-economic and political challenges over 2016. Popular pressures and opposition from vested interests will continue to slow the pace of reform, particularly in the run-up to local elections scheduled for the end of the year.

  • All three growth drivers of the Tunisian economy - consumption, investment and exports - will remain mired with problems, including the lingering effects of last year's terrorist attacks on the tourism sector, the unresolved weaknesses of the banking system, and low public investment. We project only a tepid recovery this year, with real growth of 2.4% compared to an estimated 0.7% for 2015.

  • Budgetary inflexibility, weak economic...

Tunisia Operational Risk Coverage (9)

Tunisia Operational Risk

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BMI View: Tunisia's logistics network is adequate and able to meet current demand. The country has relatively strong road connections, an open trade environment and a functional (if inconsistent) utilities supply. However, investors may be tempted to opt for other countries in the region, such as Israel, the UAE or Bahrain, which offer smoother supply chains. The country's overall score of 58.3 out of 100 in the BMI Logistics Risk Index is above the global average; yet Tunisia ranks poorly from a regional perspective at 10th out of 19 states in the Middle East and North Africa (MENA), between Egypt and Kuwait.

Tunisia is overly-reliant on thermal energy sources such as oil and gas. This problem is compounded by Tunisia's dwindling supply of its own fuel resources and need to import, which is driving up the cost of electricity and fuel. While investment in renewable...

Tunisia Crime & Security

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Tunisia is generally a safe place for foreign business travellers, expatriate workers and tourists. However, the most significant security risk facing business operations is terrorism. The 2011 revolution has destabilised the country somewhat, resulting in politically and ideologically motivated attacks by some terrorist groups. While these are often not targeted at foreigners, there are some organisations that reject any form of Western influence and may be motivated to target areas popular with foreigners. Overall, Tunisia scores 40.9 out of 100 in the BMI Criminal and Security Risk Index, placing 10 th out of 18 states in the MENA region, between Israel and Morocco.

The country is taking significant steps to improve its counter-terrorism capability. This has included establishing a counter-terrorism agency that aims to monitor telecommunication and internet activity of suspected terrorists. The Tunisian...

Tunisia Labour Market

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Overall, Tunisia places in the middle of the regional pack with regards to Labour Market risks in the Middle East and North Africa (MENA) region, despite low labour market participation, complex visa regulations and elevated labour tax posing the greatest risk to investors. While Tunisia scores favourably in terms of education, its literacy rate is still one of the lowest in the region, with high dropout rates preventing a number of Tunisians from gaining basic skills, such as numeracy. Overall, we give Tunisia a Labour Market Risk rating of 47 out of 100, placing it in 10th place out of 18 countries in the region.  

Relative to the region, Tunisia is hampered by a scarcity of labour.. This is due to a high rural population and low female participation in the workforce that drives down the size of the labour pool and limits the skills of those available. Furthermore, although Tunisia boasts second highest primary school...

Tunisia Logistics

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Tunisia's logistics network is adequate and able to meet current demand. The country has relatively strong road connections, an open trade environment, and functional (if inconsistent) utilities supply. However, investors may be tempted to opt for other countries in the region, such as Israel, UAE or Bahrain, which offer smoother supply chains. The country's overall score of 53.5 out of 100 in the BMI Logistics Risk Index is above the global average, yet ranks poorly from a regional perspective at 11th out of 18 states, between Kuwait and Lebanon.

Tunisia is overly-reliant on thermal energy sources such as oil and gas. This problem is compounded by Tunisia's dwindling supply of its own fuel resources and need to import, which is driving up the cost of electricity and fuel. While investment in renewable energy sources should help to drive down energy costs in the long term (beyond 2018), investors for the moment face...

Tunisia Trade & Investment

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Tunisia operates a relatively open economic environment and welcomes foreign investment in almost all sectors. Investors stand to benefit from the country's openness to trade and investment in terms of Foreign Direct Investment (FDI), access to financial markets and low levels of red tape. The principal drag on Tunisia's score is its fiscal and trade barriers. The country has low levels of government expenditure as a percentage of GDP and high levels of trade bureaucracy, such as tariff and non-tariff barriers. As a result, Tunisia scores well in our Trade and Investment Risk Index with a score of 54.9 out 100, which places the country seventh out of 18 states in the Middle East and North Africa (MENA) region, between Jordan and Saudi Arabia.

Tunisia welcomes FDI in almost all sectors of its economy, offers tax incentives to foreign investors, and operates a number of free trade zones, the largest of which is the Bizerte Harbor Free Trade...

Tunisia Industry Coverage (6)

Autos

Tunisia Autos

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BMI View: The combination of a slowing domestic economy and increased 'parallel market' sales lead us to retain a cautious stance on the Tunisian new vehicle sales market in 2016. We are targeting just 3.5% growth for the sector, with commercial vehicles set to outperform passenger cars.

Passenger Car and Light Commercial Vehicle Sales
(2013-2019)
e/f = BMI estimate/forecast. Source: National Institute Of Statistics, BMI
...

Food & Drink

Tunisia Food & Drink

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BMI View: Tunisia's consumer outlook will remain affected by concerns over insecurity - undermining consumer confidence - and the weak economic outlook. Nonetheless, the consumer sector will remain a bright spot in the economy, which will drive growth in the food and drink sector. The development of formal retail - driven by rising income and the entry of foreign players - will increase access to packaged food.

Headline Industry Data

  • Total food consumption (local currency) growth in 2015: +10.0%; compound annual growth rate (CAGR) to 2019: +9.8%.

  • Alcoholic drinks value sales (local currency) growth in 2015: +8.3%; CAGR to 2019: +8.4%.

  • Soft drinks volume sales (litres) growth in 2015: +2.4%; CAGR to 2019: +3.0%.

  • MGR value sales...

Insurance

Tunisia Insurance

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BMI View : We see significant potential in North Africa for insurers. However, continued economic constraints will hamper the full development of the sector over the short term, particularly the non-life segment. That being said, strong government impetus in much of the region to augment health insurance density will boost penetration over the medium term. However, we continue to expect life insurance will underperform in comparison to non-life insurance, owing to the disinclination among much of the population to purchase life insurance policies when household budgets are tight....

Tunisia Insurance

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BMI View: The insurance market in Libya remains in the very early stages of development, hampered both by the ongoing civil conflict and by pre-existing structural challenges such as the restricted domestic financial market and limited uptake of formal banking services. While we do expect to see some growth over the forecast period, forecasts remain weak and vulnerable to any further escalation of the conflict. Tunisia's insurance market, particularly the non life sector, is considerably more established, though it remains small by global standards. Short-term currency movements premiums are expected to contract over 2015 and potentially 2016, before returning to growth throughout the remainder of the forecast period.

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Headline Insurance Forecasts (Libya 2012-2019)

Oil & Gas

Tunisia Oil & Gas

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BMI View: Tunisia's investor-friendly government and stable business environment bodes well for foreign investors. However, the country's oil reserves are depleting and recent exploration efforts have only resulted in relatively small discoveries. We believe that a lack of new significant discoveries will continue pushing Tunisia's oil production volumes lower across our forecast period to 2024.

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Headline Forecasts (Tunisia 2013-2019)
2013 2014e 2015f

Telecommunications

Tunisia Telecommunications

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BMI View : North African telecommunications markets are rapidly evolving from voice-centric markets towards ones driven by data consumption, with mobile broadband being one of the core drivers in all markets. 3G services have been launched with success in Morocco, Algeria and Tunisia, and the licensing and rollout of 4G services is on track. Success is dependent on the overall macroeconomic situation, with higher purchasing power helping with the development of the telecoms market, while the security situation is always at the forefront in the region. All markets have a mix of public and private operators, though liberalisation is not present in all sectors, and the competition has always driven greater uptake in the region.

Latest Updates & Industry Developments

  • The ADSL market grew above 1mn in Morocco, with total 3G...

Latest Tunisia Articles

  • Despite a noticeable boost to export growth, Tunisia will continue to rely ...

  • Lower gas prices alone will not be enough to stimulate a major demand-respo...

  • We have revised down our CME milk price forecast for 2016 and now see price...

Latest Tunisia Blogs

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