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University of Economics, Prague

International Business

Doing business in Tunisia.

Author: Sarra Chouchane

Thesis instructor: doc. Ing. Ludmila Štěrbová Scholar year: 2020/2021

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Declaration:

I hereby declare that I am the sole author of the thesis entitled “Doing business in Tunisia.” I duly marked out all quotations. The used literature and sources are stated in the attached list of references.

In Prague on ... Signature

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Acknowledgement

I hereby wish to express my appreciation and gratitude to doc. Ing. Ludmila Štěrbová, the Supervisor of my thesis, for supporting, advising and guiding me throughout this Project.

I would also like to thank my parents for their constant support, along with my dearest friends Ayah Al Jafarawi and Mahmoud Sharawneh.

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Introduction

Each country has its own sets of cultural, political, environmental and economic

standards. This thesis will provide a discussion and shed light on the Republic of Tunisia, its past and present included. The aim of this project is set to discuss the Tunisian marketplace, and highlight its weaknesses or discouraging aspects and strengths that could be appealing for any future investors that are interested in conducting business or investing their capital into the country while also introducing perspectives and opportunities for doing business in Tunisia.

The first chapter is devoted to the description of the basic characteristics of the Republic of Tunisia in order to familiarize the reader with some geographical data such as information about the area, the population and where the country is situated. Furthermore, an overview of the development of the Tunisian economy from a historical perspective will be incorporated, as well as the country’s three main economic sectors. This chapter is essential as it gives any person who is interested in investing a crucial background and a deeper understanding of Tunisia as a

country.

The second chapter analyzes Tunisia’s environment as a whole by using the PESTEL analysis. Very commonly used, the PESTEL analysis is one of the best methods used to point out the best and the worst of the current situation in the country. This is done by using the four segments which include: Political, Economic, Social, and Technological. Gerard Hendrik Hofstede’s sociological model will also be incorporated into this chapter. It is very important to understand the current situation of the country from every facet which is what this chapter is aimed for.

Lastly, the third chapter provides an outlook on business and investment opportunities in the country in addition to using The World Bank’s “Doing Business” report to acquire further understanding of how the business procedures and regulations in the Tunisian Republic are carried out.

The qualitative research method that will be utilized in this project is named Document Analysis, in which data is investigated and examined so as to gain a better understanding about the topic.

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1. Characteristics of Tunisia

The Republic of Tunisia is positioned along the Mediterranean Sea in Northern Africa. It is bordered by both Algeria and Libya and is considered the northernmost African country. It has a population of 11,516,189, (lastly recorded in 2018) and an area of 163,610 square kilometers.

Additionally, Shatt al Gharsah is the country’s lowest point at -17 meters and is located near the Algerian border in the central part. On the other hand, “Jebel ech Chambi” is the highest point at 1544 meters and is located close to the town Kasserine in the country’s northern part. The north side of Tunisia is highly mountainous, while the central and southern side are considered dry and an arid desert near the Sahara desert. However, along the Mediterranean coast, the country also features a fruitful and fertile coastal plain known as the Sahel. This area is especially renowned for its olives (Briney, 2019).

1.1 Historical and Economic Development of Tunisia

In the year 1956, after Tunisia gained its independence, nearly all the French civil servants working for the Tunisian administration (almost all 12,000) were obligated to repatriate and leave the country, thus causing a void that needed to be filled in the civil service sector. The new government’s primary focus was then to restore the civil service and institutions.

Nonetheless, the significance and emphasis were put more on education, women’s rights, family planning and major elements of human development as a whole (Ayadi & Mattoussi, 2014).

Following the next few years, in 1960, an agreement was signed by the French government to give back the annexed lands to Tunisia. Still adapting to these changes, the country had a terribly low standard of living, as there was hardly any tourism or industry, and agriculture was the main activity. In addition to this, illiteracy rates were only growing higher.

The 1960s were also referred to as the years of policy experimentation, hence the “collectivism”

experiment, agricultural cooperatives and state-led import substitution. These industries indeed decreased Tunisia’s reliance on imported goods, but unfortunately, it did not generate any new jobs or employment. The leading source of growth during these years (around 60 per cent) was

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capital accumulation. Although most of the investment resources went into largely funded projects such as oil refinery, steel mills, automobile assembly plant and textile factories. They barely contributed to new job opportunities. Eventually, in the year 1969, the failure of collectivism led Tunisia to change its approach and strategy to combine import substitution, export promotion and private sector development (Ayadi & Mattoussi, 2014).

In the 1970s, the country embraced a quasi-liberal policy known as “The Infitah” that promoted the harmony and coexistence of the private and public sectors. The state helped regulate heavy industries that surpassed the private sector’s interest and proficiency, while the private sector handled the quick return manufacturing projects that are less costly (Bellin 1994).

The Infitah strategy inspired the private sector to take up a more active role by opening up foreign trade and granting several incentives. These consisted of technical and governmental support, as new state bodies such as the Export Promotion Centre (CEPEX) and the Industrial Promotion Agency (API) were established in 1973. The Industry Promotion Agency’s task was to aid promoters and investors with the legal, contractual and administrative procedures that are necessary for business incorporation in the country. In comparison, the Export Promotion Centre’s task was to provide foreign importers with all the business knowledge and information required (WTO, 1994).

Moreover, the policy packages executed in the 1970s have majorly assisted in the

uprising of labour productivity, as tourism and light manufacturing expanded at rates larger than 13 percent annually on average. The private sector also grew swiftly under the protection and preservation of import restrictions. Between the years of 1972 and 1977, private investment had been thriving and even exceeded the public investments. As a result, 85000 new jobs were generated (King, 1988). In the year 1977, 87 percent of employment along with 54 percent of new investments were centralized in the leather, clothing and textile sectors. Nearly all the new corporations were based in the North-Eastern district, therefore encouraging individuals to relocate to that region (UNIDO, 2001).

At the end of the decade, the foreign debt in Tunisia had expanded as the economy was not able to export a competitive range of products nor absorb the excess labour force. Moreover, in the years of 1981 to 1986, the country’s economy suffered a further stagnation reaching its

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worst growth performance of 2.8 percent annually along with the productivity decline coming to 1.5 percent annually. Economic inefficiency and mismanagement together with political

instability were the basis and the main cause of this poor performance. Regardless of that, Tunisia's government still put a public sector wage raise in motion, which in turn inflated the wage bill. The current account deficit rose over 10 percent of GDP. Meanwhile, inflation had grown over 8 percent, resulting in Tunisia documenting a negative growth amidst ongoing labour and social strikes in the year 1986 (Ayadi & Mattoussi, 2014). Faced with these difficulties, the government ended up negotiating its first Economic Recovery and Structural Adjustment Programme (ERSAP). This program concentrated on several things such as tariff reduction, the establishment of a value-added tax, the devaluation of Tunisia’s currency (the Tunisian Dinar), the lowering of personal income taxes and lastly, extending the maturity of Tunisia’s foreign debt worth US$10 billion (The African Development Bank, The Government of Tunisia & The Government of the United States, 2013.)

Following the change in political regime in the year 1987, along with a decrease in political instability, there was a noticeable encouragement in the private sector, specifically export-oriented projects. Additionally, the programme of privatization resulted in the partial or even full privatization of 160 government-owned businesses. In the year 1996, Tunisia’s

macroeconomic strength and stability were rebuilt as the burden of the foreign debt had ended. In addition to this, inflation declined to under 5 percent in less than 10 years and even a decrease in the current account deficit from 7.8 percent of GDP in 1986 to 2.4 percent of GDP in 1996 (Ayadi & Mattoussi, 2014).

Throughout the 1990s, the authorities of Tunisia were further encouraging foreign

investments, privatization and a growing integration towards the European market by liberalizing measures throughout a legislative body (UNIDO 2001).

The Republic of Tunisia is a member of various trade agreements. This includes joining the General Agreement on Tariffs and Trade (GATT) in the year 1990 and the World Trade Organization five years later in the year 1995 (WTO, n.d). Furthermore, Tunisia became a signatory in the 1997 convention intended for the formation of an Arab free trade zone over the

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interval of ten years. The country has also signed bilateral agreements with Jordan, Egypt and Morocco expediting the dismantling of tariffs (Péridy & Abedini, 2008).

The state had also been keen on supporting and promoting the innovation of the industrial sector by introducing the industrial modernization programme (PMI) and the “Programme de mise à niveau” which was initiated in the year 1996 (signed 1995). These programmes were launched to give companies and firms technical aid, subsidies, managerial training and

infrastructural advancements so as to help them compete internationally and persist in an open market economy (IMF, 2000).

In the 2000s, the economic policies implemented made it possible to enhance the economy’s performance, improve competitiveness, and progress its structure. This approach modernized companies in the service sector by expediting access to the latest technology, remodeling hotel units and overall skills advancement. Special plans were conducted for the purpose of the development of the touristic and industrial sectors, developing the

communications infrastructure and upgrading the roads’ quality. Furthermore, efforts have been made to assist entrepreneurs too, by making the latest business creation regulations simpler and establishing a network of business hubs (Ayadi & Mattoussi, 2014).

Throughout the years of 2002 to 2006, there was a prominent rise in Tunisia’s

investments, exports of products and services, the overall gross domestic product (GDP), and its foreign direct investment (FDI) which grew extensively on account of the investment policies that motivated foreign companies and firms to engage and take place (almost 884 joint ventures were established). Even though the agricultural field declined due to rough climate and

environmental conditions, the country’s real GDP still managed to rise at an average rate reaching 4.5 percent (Ayadi & Mattoussi, 2014).

These years were distinguished by not only the importance of several industrial projects in both the electrical and mechanical fields (wherein growth rates reached an average of 8.9 percent) but also by the ongoing evolution of the service sector. Tourism and textile exports alongside automotive components and many other products in the service industry helped the export rate of goods and services to grow up to 8.5 percent. Additionally, the technology- concentrated sectors have even further contributed to the GDP growth. In the year 2001, its

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percentage of GDP had only reached 16.8 per cent, while in the year 2006, just five years later, it increased to 20.4 percent. Tunisia’s private sector had also become the leading power in the country’s economy, making up about 57 percent of total investment, 91 percent of new job opportunities and 85 percent of exports (Ayadi & Mattoussi, 2014).

In the year of 2011, different elements had led to the start of the Tunisian revolution.

These factors include a lack of political freedom, corrupt regimes and high unemployment rates.

Consequently, the uprising, also known as the Arab Spring, also had huge consequences on the country’s economy (Sofi, 2019). Investments diminished in every sector with an exception to electronics, which had remained stable. The shrinkage in FDI affected the energy and

manufacturing sectors and also experienced a loss equating to 61 percent combined (Ayadi &

Mattoussi, 2014). However, Tunisia’s tourism sector experienced the worst decline, as the revolution caused the loss of 3000 jobs, a drop of 3 million tourists and a 33% sink in revenues (Makhlouf, 2017). Moreover, the Tunisian stock market (which is one of the two main Arab stock markets alongside Egypt) experienced a considerable loss due to the uprising. It had lost 50% of its total value, thus furthering economic instability (Abumustafa, 2016).

The Tunisian government had set some measures to limit and minimize the losses affected companies and businesses suffered due to the uprising, including a reduction of fifty percent contribution to social security, reduction or even removal of taxes dues in the year 2011, and reducing two points in the credit fees. The government had also embraced a social and economic enhancement plan stating that less developed areas would be entitled to more

investments (Ayadi & Mattoussi, 2014). It had also introduced several short-term economic and social policies aimed at helping the most affected groups. Which mainly addressed

unemployment amongst youth, migrants returning, job security and the overall growth of the private sector (Corley-Coulibaly, Khatiwada, Prasad & Richiardi, 2011).

Finally, in 2012, the Tunisian economy was able to start healing and recovering. Foreign Direct Investment flows were recuperated by 44.9 percent, from 775 million Tunisian Dinars in the first six months of 2011 to 1121 million Tunisian Dinars in just the first six months of 2012.

It is also worth noting that about 71 overseas companies were built in the same year, creating almost 6700 new jobs (Khawaja, 2012).

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1.2 Tunisia’s Economic Sectors

Economic sectors can be described as a country’s economy being split into so-called sections in order to highlight the percentage of the population working and engaging in different fields. Firstly, the primary sector, which handles the harvesting and overall extraction of earth- grown products such as raw materials (processing and packaging included) and basic foods (fruits and vegetables). Divisions linked with the primary sector usually include agriculture, hunting, mining and fishing. Furthermore, the secondary sector, which handles the production of all finished goods. Jobs within this section include construction, manufacturing and even

processing. Other divisions associated with this sector also include textile and automobile production, engineering industries, smelting and metalwork. Finally, the tertiary sector is also referred to as the economy’s service field. This service sector deals with selling and marketing the goods that have been manufactured by the secondary sector, while also presenting

commercial services to its inhabitants and businesses. Divisions linked with the tertiary sector often comprise of tourism, transportation, retail, law, insurance and healthcare (Rosenberg, 2020)

1.2.1 The Primary Sector

The Republic of Tunisia’s most vital primary field would be agriculture. Essentially it was made up of generations of family farmers mainly growing crops, but recently, bigger companies are becoming more noticeable, as the sector has grown consistently over the years in terms of production and investments. The agricultural sector alone represents about twelve to sixteen percent of the country’s GDP, roughly sixteen percent of the entire workforce and up to six percent of Tunisia’s export revenues. Almost sixty-seven percent of the country’s land is fit for agriculture which naturally attracts many investors. However, foreigners can only be lent lands from the Tunisian Ministry of Agricultural but never acquire ownership (Van der Gaast &

Doornebal, 2018).

Some of Tunisia’s most relevant agricultural products include dates, almonds, wheat, various dairy products, tomatoes and of utmost importance, olive oil, as Tunisia is the fourth biggest exporter and second-biggest manufacturer of olive oil on an international level. The

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Republic’s eastern coast, often known as “The Sahel”, is well known and celebrated for its cultivation of olives. Moreover, about 46 percent of all farming land is used for planting olives exclusively. The European Union countries (about seventy-three per cent) along with North America (about eighteen per cent) represent where the oil exportation in bulk is mainly going to (Van der Gaast & Doornebal, 2018). Through just November 2019 and January 2020, Tunisia has exported 63,000 tons of olive oil making profits reaching 423 million Tunisian Dinars.

Estimations have also been made suggesting that overseas sales may surpass 250,000 tons by the end of the year 2020, generating around 2.4 billion Tunisian Dinar (Guilherme, 2020).

Additionally, the country is highly self-sustaining with regard to fruits, vegetables and dairy produce. The country’s date exports alone have made profits reaching 871 million Tunisian Dinars in the 2018/2019 harvest season. Adding on, Tunisia’s date production has reached a huge 288,000 tons, where 228,000 tons of it belongs to the famous brand of “Deglat Nour”, to later on be exported to around seventy-three countries including Spain and Morocco

(AfricanManager, 2019).

In the year 2016, Foreign Direct Investment amounted to about 755 million Tunisian Dinars just in the field of agriculture. The biggest countries to invest were the United Arab Emirates, France and the Netherlands. The government had also set in motion a five-year plan that went by the name “Tunisia 2020”, which plan of action was to enlarge the yearly growth rate in agriculture by four per cent. Some of its main targets were to firstly raise the salaries and income of Tunisian farmers, boost the overall production in agriculture, creation of more jobs, higher employment in rural regions and finally the strengthening of national food security. The country’s ability to challenge forthcoming obstacles, for instance farmers’ debt, climate-change- related problems (drought) or even land fragmentation, will determine how much growth they can actually achieve (Van der Gaast & Doornebal, 2018).

Lastly, the sector of agriculture has won Tunisia the Special Prize of the Best

Performance for 2020 in the African Union Summit. The country’s minister of agriculture has stated how much of an important achievement this is to Tunisia, pointing out a rise in investment would enhance research quality and create numerous job opportunities across the country

(CGTN 2020).

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1.2.2 The Secondary Sector

Tunisia’s manufacturing and industrial sector is heavily dependent on exports. It makes up about twenty-three per cent of the country’s GDP and about thirty-three per cent of the workforce. In the year 2019, the secondary sector went through a stagnation. Wood, cardboard, plastic, construction materials and leather divisions had diminished. On the other hand, sectors of clothing materials, textiles and chemistry thrived during this time (Import-Export Solutions, 2020). The industrial field is mostly situated in coastal regions of the country, as about 85 percent of wholly exporting companies are located there. The Republic’s government had also established free trade zones referred to as “parcs d’activités économiques” in the towns of Zarzis and Bizerte, where firms would be spared from any customs duties and taxes. Companies would also have the advantage of unhindered foreign exchange transactions (Oxford Business Group 2017).

Tunisia is also a mass manufacturer of energy and electricity, as the whole population is connected to the electrical network. In the year 2019, power production reached 5,781 megawatts of which almost 92 per cent was created by just 25 power plants. The country creates 97 per cent of its power through fossil fuels, whereas the remaining 3 per cent belongs to renewable energy sources like solar and hydro energy. Additionally, in the year 2016, Tunisia embraced a

programme dedicated to renewable power aiming to create 1000 megawatts by 2021, and 1250 megawatts by 2025 (Kiprop, 2019).

Furthermore, another important division in Tunisia’s economic sectors includes the automotive industry. Automobiles are not entirely manufactured locally. Despite this, the country has a vehicle assembly industry. The Tunisian government uses a firm quota system in order to limit the number of cars or any motor vehicles allowed inside the country’s territory annually.

Regulations also state that all vehicles must not be older than five years as they will not be allowed entry. In addition, the Republic’s custom duties require all imported automobiles to pay an added tax that increases gradually in accordance to the year the vehicle’s model was released.

Other elements have also been shown to affect the tax range such as fuel and engine types. For instance, tax rates can go up to 360 per cent for engines that use up diesel fuel whereas gasoline engines rates rise up to 277 per cent. Nevertheless, if imported through the government’s verified distributors these rates could decrease down to 88 and 67 per cent. The country’s intent behind

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this is to allow the Tunisian marketplace to become more competitive (U.S. Department of Commerce, 2019).

1.2.3 The Tertiary Sector

The service sector makes up the largest percentage of Tunisia’s local economy, adding up almost 64 per cent of the total GDP. The tertiary sector’s top prospering sectors include tourism and Information Communication Technologies. To add on, the service sector has been

responsible for employing almost half the country’s workforce (about 52 per cent) (Import- Export Solutions 2020).

The Information and Communication Technologies division has been an important asset to the Tunisian economy, as it not only helped other sectors grow but a forceful source of innovation that is open to exporting, overseas investments and affiliation, especially with other African regions. In the year 2018, the National Institute of Statistics has stated that ICT alone created jobs for 86,000 people and makes up around 7.5 percent of GDP. Moreover, as part of the government’s project named “Tunisia Digital 2020”, “Technopark El Ghazala'' along with 18 smaller cyber parks are set wholly for scientific training, analysis and research. The plan’s objectives also include making Tunisia a global benchmark by creating and establishing a system or network of ambitious and inventive companies. The country also executed a set of measures targeting the substructure for the telecommunication field. For instance, the National Frequency Agency to regulate radio spectrums and the National Telecommunications Authority to modulate numbering issues and interconnections along with conflict resolution matters (Ezzeddine 2020).

The tourism field on its own makes up a large 8 percent of the whole GDP while also being responsible for the employment of 400,000 people. Tourism experts have reported that the sudden rise of foreign tourists has mainly been from neighbouring countries like Algeria and Europe (Bouazza 2020).

A statement from Tunisia’s minister of tourism Rene Trabelsi announced that tourists increased a percentage of nearly 14 per cent in the year 2019 to reach 9.5 million. This has exceeded all expectations, as political instability tends to usually have a negative effect on

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tourism alongside the terrorist attacks that took place in the year 2015. Great Britain, France and Germany have currently been Tunisia’s most important markets. Another benefit the rise of tourism brought to the country would be an increase in its foreign reserves reaching 18.5 billion Tunisian Dinars, which would aid the Republic’s monetary imbalances ever since the 2011 Arab Spring (Bouazza, 2020).

Adding on, the country has joined the Open Skies Agreement, revealing that all its airports with the exception of the Tunis-Carthage International Airport in the capital, would be open to working with cost-effective European airways. The exemption of the capital’s airport is only valid for 5 years and is done to give Tunisair, the national airline, time to recover and grow accustomed to its new competition (Bouazza 2020).

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2. PESTEL Analysis of Tunisia

This chapter investigates the Tunisian Republic’s business macro-environment using the PESTEL analysis. Political, Economic, Social, and Technological factors will be examined alongside the overall business environment, which regularly affects businesses operations greatly. The PESTEL analysis is usually carried out when a firm is in the process of choosing a new foreign market in order to assess any potential threats. It has often collaborated with other analytical instruments such as Porter's five forces model together with the SWOT analysis to highlight both internal and external elements (Administrator 2016).

2.1 Political and Legal Environment

The level of political and legal stability plays a huge factor in instilling further confidence in investors and entrepreneurs, whether they are foreign or domestic. Furthermore, it is directly linked to how stable the legislative structure and framework will be, and can aid the country in the process of globalization and entering foreign markets. A shaky or unstable political

environment will only risk Tunisia’s ongoing development and lead it to economic isolation in the long run.

The Tunisian Republic is led by a president that is nominated by its citizens for a term of five years. However, for the country to not fall under dictatorship rule again, preventative measures have been taken. For instance, the president can only be elected twice, serving a maximum of a ten-year term, and the Assembly of the People’s Representatives have the power to impeach the president with a 66.7 percent vote. The head of state is mostly responsible for handling foreign affairs and the country’s defence. Their tasks also comprise of appointing a prime minister, military and diplomatic officials and a “Mufti” who is assigned all religious Islamic matters. The Republic’s head of government has to be elected by the majority party together with the president. The prime minister’s tasks include regulating the country’s general policy while also making certain it is executed (Touchent & Zimbris 2017).

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Following the new constitution set in the year 2014, just 3 years after the Arab Spring, the “Chamber of Deputies” along with the “Chamber of Advisors” were disintegrated. The Legislative power (the Parliament) is now led by the Assembly of the People’s Representatives (involving 217 seats and persons) which is also elected every 5 years by a safe, discrete and honest ballot that abides by all Electoral Law rulings. Moreover, Article 60 of the constitution states that “The opposition is an essential component of the Assembly of the Representatives of the People. It shall enjoy the rights that enable it to undertake its parliamentary duties and is guaranteed an adequate and effective representation in all bodies of the Assembly, as well as in its internal and external activities. The opposition is assigned the chair of the Finance

Committee, and rapporteur of the External Relations Committee. It has the right to establish and head a committee of enquiry annually. The opposition’s duties include active and constructive participation in parliamentary work.” (Tunisian Constitution 2014). This is a turning point for Tunisia, as the prior regime’s parliament passed a law that made oppositions a criminal act (Touchent & Zimbris 2017).

The judicial system in Tunisia is divided into “ordre judiciaire”, which deals with civil and criminal litigation and “ordre administrative” which organizes and directs the government and handles any criticisms or complaints. Additionally, the judicial system also includes military and financial jurisdictions (Amouri 2018).

The 2014 Tunisian constitution has only shown how important the independence of the judicial system is, as article 102 states, “The judiciary is independent. It ensures the

administration of justice, the supremacy of the Constitution, the sovereignty of the law, and the protection of rights and freedoms. Judges are independent with the law being the sole authority over them in discharging their functions” (Tunisian Constitution, 2014). This is a huge and positive change for the Republic, as in the prior regime the judicial system was just under the power of the executive (Jeune Afrique 2011).

One of the country’s greatest advancements of the newer found constitution is the establishment of a “Constitutional Court''. This court regulates the legislative power and goes against laws that are in opposition to human rights and liberations from ratification. Furthermore, it is very common in Tunisian politics that persons of the parliament shift or change their

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alliances to another party or even just become independent. Consequently, their support for the state changes too. The country’s most recent change involves nine members of the parliament resigning from the “Qalb Tounis” party. the new structure of the parliament blocs now consists of Ennahda with 54 seats, Democratic bloc with 41 seats, Qalb Tounes with 29 seats, Al Karam coalition with 19 seats, Free Destourian with 16 seats, The Reform with also 16 seats, Tahiya Tounes with 14 seats, Al Mustakbal with 8 seats, and about 20 parliament members who are not affiliated with any blocs (European Forum, n.d.).

The Republic of Tunisia's largest political drawbacks has always been its ongoing fight against corruption. Despite the country’s efforts, it is not making any headways in this battle.

Data gathered on Tunisia’s transparency state show that the Republic has not made any noticeable advancements against corruption for the past 9 years. Even with former Prime Minister Youssef Chahed’s best attempts in the year 2017, it has not been effective due to partisan quotes and political misconducts. Transparency International has also denounced that the main cause of Tunisia going down its ranks (currently at 74th) is authorities not making this matter their top priority together with, failing to initiate a law securing and safeguarding any whistleblowers. The Tunisian Governance Association declared that the Republic’s revenue losses due to the present state of corruption has reached up to 4 percent. Recent data has estimated this loss to about 2,287 million Tunisian Dinars yearly (Bouazza 2020).

2.2 Economic Environment

The second part of this analysis is focused on the economic environment of the Republic of Tunisia. When entering a foreign market, firms usually take into account a region’s economic influences. Main macroeconomic indicators will be analyzed in this subchapter, including GDP and its growth rates, inflation rates and unemployment rates. Moreover, a detailed interpretation of the three major economic sectors is discussed in the first chapter to give any investors and entrepreneurs a better idea of the overall economic environment in the country.

GDP short for Gross Domestic Product is the most important measure of expressing economic activities and market value of all produced goods and services during a certain period

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of time (usually yearly) (OECD 2020). Graph 1 below shows the evolution of Tunisia’s GDP from years 2009 to 2019. The country’s GDP peaked in 2014 reaching what equates to 47.63 billion US Dollars, recovering from the 2011 Arab Spring Revolution. However, the following year, it had dropped to a shocking 43.17 billion US Dollars. This huge drop was caused by several external factors such as, two terrorist attacks that hit the country, a fall in the commercial services section and a further decline in the non-manufacturing sector (Oxford Business Group 2017). From there on the country has been trying to get back to where it was, but unfortunately, its GDP has only been going down as the years went by reaching 38.80 billion US Dollars in the year 2019.

Graph 1: Tunisia’s GDP in US billion Dollars through the years

Source: The World Bank. (n.d.). GDP (current US$) - Tunisia. Available at:

https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?end=2019

Due to the ongoing pandemic of the COVID-19 virus, the projected forecast of Tunisia’s GDP for the year 2020 and 2021 would send the Republic into a steep recession. GDP growth reduction is estimated to be between -3.4 and -4.0 percent in the worst-case scenario in 2020, along with -0.5 and -0.7 percent in the upcoming year. This decline in GDP growth would only further advance the country’s fiscal deficit, while also raising the 2020 borrowing requirement.

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Already evaluating at 11.4 billion Tunisian Dinars, the finance bill would have to go up by 30 to 50 percent. Notwithstanding the decrease in the oil bill caused by a drop in overall oil prices, the current account deficit is forecasted to go up to 2.3 percent. These predictions were made even before the COVID-19 crisis, due to the diminishment of the tourism division and a decrease in exports (African Development Bank Group 2020).

Inflation

Inflation reflects a general rise in the prices of all goods and services during a certain period of time. As stated by the International Monetary Fund, in graph 2 below, between the years 2010 and 2017 inflation in the Republic of Tunisia has been constantly in the range of about 3 to 5 percent. In the years 2018 and 2019, it sparked up to a high 7.31 percent followed by a 6.72 due to various reasons including, the depreciation of the Tunisia Dinar, a rise in energy and food imports, an increase in salaries, trade deficits, and a value-added tax along with a further rise in custom duties (The World Bank 2018) (Ghanmi 2018).

Graph 2: Tunisia’s inflation rates through the years

Source: Writer’s Illustration, IMF. (2020). Tunisia: Inflation rate from 1984 to 2021 (compared to the previous year) [Graph]. In Statista. Available at: https://www.statista.com/statistics/524512/inflation- rate-in-tunisia/

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Despite the inflation rate being recorded at 6.16 percent in the first half of 2020, it has dropped down to below 6 percent, stated the National Statistics Institute. This decline is caused by a fall in the prices of food, clothing, and transport facilities. Other economists have declared that the decrease in local demand of several goods due to the weakening of the Tunisia Dinar’s buying power, has also been directly linked to the inflation dropping (Saidani 2020).

The labour market

Unemployment can be defined as individuals or people who are employable seeking out job opportunities but cannot find any appropriate work. Unemployment rates are usually

calculated by dividing the number of all unemployed individuals by the total amount of individuals in the workforce (CFI 2019).

Graph 3: Tunisia’s Unemployment rates through the years

Source: Writer’s Illustration. The World Bank. (2020, June 21). Unemployment, total (% of total labor force) (modeled ILO estimate). Available at:

https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?end=2020

As shown above, in graph 3, unemployment rates hit the highest at 18.3 percent and17.6 in the years 2011 and 2012. This has been largely due to the Arab Spring Revolution, as the

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economy has had a hard time gaining any growth since. Another factor would be the instability in its neighbouring country, Libya, had only added more worries over Tunisia’s overall security.

Affecting it severely as tourism is one of the Republic’s core industries. Along with the country’s exports declining to its most predominant trading partner, the European Union (CIPE 2013). In the year 2013, the unemployment rate has lowered to 15.9 percent and stayed in the 15 percent range until the year 2018. However, in 2019 and 2020, it only rose again to reach the 16 percent mark. The World Bank has stated that the unemployment issue in the Republic of Tunisia is not only restricted to a number of job opportunities created annually but to the country’s yearly growth rate. As for the employment rates to rise, the Republic has to reach 5-6 percent of growth per annum to provide for its citizens (Bouazza 2020).

Furthermore, the Tunisian government has set in motion an economic rescue programme for the year 2021. This plan includes the restructure and aid of five strategic organizations in the public sector to uplift the economy by furthering public investment. First being, the Gafsa Phosphate Company, Tunisian Company of Electricity and Gas, Tunisian Chemical Group, National Company of Water Exploitation and Distribution and finally, Tunisair. The rescue programme also declared that additional capital, amounting to 100 million Tunisian Dinars would be issued to fight the unemployment crisis (Saidani 2020).

Tunisia’s Trade Structure

The value of Tunisia’s commodity exports amounted to about 41.46 billion Tunisian Dinars in the year 2019, decreasing by 3.7 percent (1.6 billion Tunisian Dinars) in comparison to the previous year. The Republic’s most important export destinations include firstly, France with an overall share of 29 percent, Italy coming second with a 16.1 percent share, Germany with a 12.8 percent share, Spain at 3.77 percent share, and Libya with a share amounting to 3.6 percent.

Moreover, the country’s top export merchandise groups mainly consist of electronic machinery, equipment and their parts, which make up 24 percent. Clothing and accessories (not knitted) stood at 11.3 percent while mineral fuels, oils, and waxes at 5.52 percent. Surgical, optical, medical and photographic apparatus and tools comprised 4.25 percent. And finally, mechanical

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machinery and its parts, boilers and nuclear reactors made up 3.74 percent of all commodities (TrendEconomy 2020).

Moreover, the value of Tunisia’s imported commodities amounted to be 58.3 billion Tunisian Dinars in the year 2019, decreasing by 4.9 percent (3.11 billion Tunsiain dinars) in comparison to 2018. The country’s most essential import sources (partners) include Italy

holding a share worth 15.3 percent, France with a share of 14.2 percent, China holding a share of 9.46 percent, Germany with a share of 6.76 percent and finally, Algeria having a share of 6.63 percent. The Republic’s top five import merchandise groups primarily include mineral fuels, oils and their products worth 16.7 percent. Then, electrical machinery along with its parts and

components at 14.1 percent. This is followed by mechanical equipment, boilers and nuclear reactors at 8.9 percent. Plastics and their articles worth 6.1 percent and lastly, motor vehicles (with the exception of trams and railways) in addition to their components make up 5.5 percent of commodities (TrendEconomy 2020).

Over the years, the Tunisian Republic has been a part of numerous trade agreements, including the Association Agreement, as part of the Euro-Mediterranean Partnership, often referred to as Euromed. Signed in 1995, its main aim was to build a free trade area between the regions of the EU and the Southern Mediterranean countries. It grants Tunisia the right to duty- free access for its manufactured goods to the European Union, together with a preferential treatment for marine and agricultural goods. The two parties have also agreed upon regulations on the usage of quotas and product standards, the right to create establishments and give out services in other regions, authorize current payments along with the movement of capital, and lastly, having universal competition and intellectual property regulations (European Commission 2020).

The European Union and Tunisia have also signed a bilateral agreement on the basis of a dispute settlement mechanism that came into force in the year 2011. Moreover, the Deep and Comprehensive Free Trade Area negotiations (DCFTA) were launched in the year 2015. Some of these agreements’ objectives was to establish new investment and trade possibilities that would secure Tunisia’s assimilation into the European Union’s single market and to back the

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Republic’s preceding economic reforms. The most recent negotiation round was held in Tunisia’s capital city the year 2019 (European Commission 2020).

Furthermore, Tunisia had signed The Agadir Agreement with Morocco, Jordan and Egypt in the year 2004, granting free trade to all its signatory territories. However, the Republic also has bilateral free trade agreements with Libya and Algeria separately. The 2011 Arab Spring had caused trade volumes to drop between these countries though, as they both achieved a low 5 percent combined of the country’s total trade in the year 2018. Adding on, the Republic is a part of a smaller union known as the Arab Maghreb Union (AMU), which includes a total of five countries being Tunisia, Morocco, Mauritania, Libya and Algeria. Although the Union is mostly dealing with political issues it has also permitted duty-free trade among its members (Export.gov 2019).

2.3 Social Environment

For the third part of this analysis, the Tunisian Republic’s social environment is going to be examined. It is important for potential entrepreneurs and investors to understand the country’s culture and any differences they might encounter. The most utilized measure that has been used to compare these cultural distinctions has been the Geert Hofstede’s cultural dimensions model.

This model of national culture comprises of six dimensions: Power Distance Index,

Individualism versus Collectivism, Masculinity versus Femininity, Uncertainty Avoidance Index, and Long Term Orientation versus Short Term Normative Orientation and, Indulgence versus Restraint.

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Graph 4: Tunisia’s Hofstede model dimensions

Source: Hofstede Insights. (n.d.). Tunisia*. Available at: https://www.hofstede- insights.com/country/tunisia/

Graph 4 above displays the Republic of Tunisia’s dimensions along with the scores they obtained. Unfortunately, there has been no data gathered for the last two indexes. Consequently, only the first four will be analyzed. To start off, the Power Distance dimension states that not all members of a society are of equal status, and how tolerant its inhabitants are by this inequality.

The Republic of Tunisia scores a high 70 out of 100, meaning that Tunisian citizens tolerate and accept the hierarchical chain in which everyone assumes their role, with no further need for justification (Hofstede Insights n.d.).

Moreover, the Individualism versus Collectivism dimension, describing the extent of interdependence the society maintains amid its people. Usually, individualistic communities tend to only care for themselves and immediate families at best whereas collectivistic communities are part of “in groups” that take care and are loyal to one another. The Republic has achieved a low score of 40 out of 100 on this criteria, making it a collectivist society. Meaning its culture nurtures long term commitments and strong relations within each other, making loyalty of utmost importance (Hofstede Insights n.d.).

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Furthermore, the Masculinity versus Femininity dimension, a high count on this index (usually above 50) shows that the society is Masculine, expressing that it is directed by accomplishment, competition and overall success. Whereas a low count (usually below 50) indicates that the country’s society is Feminine, meaning that the prevailing values include attending to other people and one’s quality of life. As these are what makes an individual successful as opposed to standing out. Tunisia obtained a score of yet again 40 out of 100, making it a relatively feminine culture. This implies that individuals of this culture appreciate honesty, fairness, and unity among each other. In the case of unresolved conflict, negotiations and a compromise are how a feminine society usually reaches consensus (Hofstede Insights n.d.).

Finally, the Uncertainty Avoidance index, which has to do with how a culture deals with the unknown future. The score in this dimension is exhibited through the extent to which a society feels endangered or threatened by obscurity and the overall unknown, therefore creating certain organizations and beliefs that are set to avoid them. The Tunisian Republic has scored the highest in this criteria, achieving a score of 75 out of 100. Meaning that the Tunisian culture is not very welcoming of change, the society is generally preserving its rigid beliefs and is set on maintaining their ideals. Having firm laws, rules and policies aids with cutting down and decreasing the uncertainty levels (Hofstede Insights n.d.).

2.4 Technological Environment

Tunisia’s “Digital Tunisia 2020” government strategy consists of 64 projects, which mainly will be executed as private-public sector partnerships. These plans will be incorporating e-government projects, developing households’ and educational institutes’ technological

infrastructure, boosting the overall e-business division through measures such as the encouragement of online payment, and finally, persuading overseas firms to outsource

technological and digital assistance to the Tunisian Republic. This Initiative’s aim is to reinforce the digital sector as currently, the economy’s dominant source of revenues are agriculture and tourism (Sold 2018).

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The Start-Up Act, a part of the Republic’ “Digital Tunisia 2020”, passed not so long ago on 2nd of April 2018 has set foot in the right path by acknowledging how essential technology is, and its direct link to the economy. However, for this law to reach its full potential and provide real added value, further advances have to be made. For the Start-Up initiative to start

contributing to regional growth, the Tunisian government must create communication programmes that clarify and encourage this law (Ben-Hassine 2019).

The Act has also been expected to enlarge the number of startups across the country and encourage innovation in entrepreneurship. Thus, making the Republic more competitive on a global level and possibly expanding the economic growth, while also decreasing the

unemployment burden among Tunisian youth. In the year 2017, Tunisia was chosen to be the official locale for the African Union’s planned Digital African Excellence Center. This centre’s main task is to train and guide government officials of the African continent along with private sector executives in the technological sector (Sold 2018).

In the year 2019, The World Bank Group had introduced two investment initiatives that are targeted to help the Republic establish a new economy, one that will motivate entrepreneurs and provide them with more opportunities. The first project is aimed at increasing access to funding the advancement of creative and innovative startups together with small and medium- sized businesses (SMEs). Whereas the second project is tasked with investing in the

digitalization of educational organizations and social security (The World Bank 2019).

The Tunisia Innovative Startups and SMEs project, worth around 206 million Tunisian Dinars, represents substantial support for the post Arab Spring revolution Tunisian business executives. The strategy will be certain to support all its creators and innovators by extending their programmes to women based startups and those even in remote regions of the country.

Tunisia’s Minister of Communication Technologies and Digital Economy has stated that “This project is a promise from the Tunisian Government towards its young and innovative

entrepreneurs to develop a stronger entrepreneurship ecosystem in which their ideas and businesses can thrive and grow" (The World Bank 2019).

Moreover, theDigital Transformation for User-Centric Public Services, worth about 275 million Tunisian Dinars, has its own set of objectives. Most importantly to secure

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underprivileged groups, people with disabilities, illiterates and women in the countryside with access to its prime services. While also prioritizing the refinement of social protection

programmes (to enhance medical insurance coverage and pension-related matters), digital education and management services (to keep track of student enrollment as well as dropouts), and a digital learning management programme set to encourage overall learning and teaching (The World Bank 2019).

Finally, by the end of the year 2020, the Tunisian tech corporation Telnet intends to set in motion the country’s first locally made satellite, named Challenge One. This satellite is set to progress the delivery of data from earth including but not limited to, climate and weather information. Other usages also include monitoring cattle and livestock that cross the Tunisian border, the tracking of cargo ships and detecting the long term effects of pollution. If this operation is found successful the Republic plans to send out 30 more satellites over the next 10 years, as this will mark Tunisia’s first journey into space (Ebel 2020).

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3. Doing Business in Tunisia

This last chapter will be divided into two sub-sections, the first discussing business and investment opportunities in the Tunisian Republic for probable investors. While the second would be dedicated to highlighting The World Bank’s recent “Doing Business 2020” report to describe how the government made it easier to carry out and establish projects within the country’s territory along with the weaknesses Tunisia should improve along the line.

3.1 Business and Investment Opportunities

The MENA, short for The Middle East and North African region, has always been portrayed by the media and, believed to be unstable and extremely repressive. The media’s inclination to report mainly just disastrous events ensures that these stories become the countries’

most known facts and their presumed reality. Thus making it tough for several investors to look past the 2015 non-state terrorist attack that hit the Tunisian city of Sousse for instance, which has affected the tourism sector the hardest (Vashchilko, Mihalache-O'Keef, Kleffner, Karakoç, &

Halek 2020).

However, since the year 2015, the Republic’s political violence and religious extremism risk have been determined to be of low level, along with having successful counter-terrorism procedures. On a political level, unlike all other Arab countries, the Tunisian uprising has been the only victorious one. As of today Tunisia’s most important features and elements include freedom of speech, valuing human rights, the rule of law and depoliticizing the army

(Vashchilko, Mihalache-O'Keef, Kleffner, Karakoç, & Halek 2020).

The investment incentives code in Tunisia protects all its organizations with the

exception of those related to the energy, trade, mining or finance divisions, as they are ruled by their own separate acts and directives. Businesses are entitled to the code’s benefits once they undergo the procedure of self-declaration or just by attaining preceding authorization (approval).

Some of the code’s tax benefits mainly comprise of advantages for investments in incentive territories for district expansion and development, full tax relief on any reinvested profit or

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income, along with unlimited reliefs provided to finance the promotion of housing for employees and the Taxe de formation professionnelle for investments in the divisions of tourism, industry and service activities (UHY CNBA 2019).

The Tunisian code has also offered further benefits for conducting investments in so- called “encouragement zones”. However, these projects would have to in one way or another, encourage agriculture or environment protection, advance and manage technology locally, or promote health, transport, education and culture (UHY CNBA 2019). And finally, new

businesses/companies will be absolved for the period of 10 years from income tax, and some in particular regions will even collect state subsidies for the so-called employer contribution.

Alongside above-mentioned incentives, investors will also have access to a wide range of professional and skilful labour force with about 65,000 graduates looking for jobs yearly (Invest in Tunisia n.d.).

As reported by the UNCTAD in its “World Investment Report 2020”, the foreign direct investment flows in the Republic of Tunisia have fallen to 2,324 million Tunisian Dinars in 2019, which is an 18 percent decrease when in comparison to the year 2018. The country’s largest FDI sectors regularly attracting investors include industry (worth 1,238 million TD), energy (worth 825 million TD), services (worth 261 million TD), tourism, manufacturing and electronics. Moreover, the Republic’s top investors are France accounting for 28 percent of total foreign investment, succeeded by the United Arab Emirates at 14 percent total investment, followed by Qatar at 9 percent, Italy, Germany, Malta and Saudi Arabia. Tunisia has only recently gotten this much attention from gulf countries, in terms of foreign investments, as they have been involved in tourism, banking and the services division. It is also worth noting that 20 percent of all foreign investments are solely dependent on Arab funding (Export Enterprises SA 2020) (UHY CNBA 2019).

Even though several businesses faced many difficulties due to the ever going effects of the Arab Spring, the Tunisian government has been relentless to make the best out of its situation and provide as many opportunities to serve its people. The state wishes to lower its

unemployment problem and raise its overall living standards to OECD, short for Organization of Economic Co-operation and Development, through growing both foreign and local investments,

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exports, production, while still managing to keep inflation and current account deficits at bay.

Furthermore, Oil exploration proposals are projected to revive FDI, for instance, the Republics of Tunisia and Malta are in the works of discussing the possibility of commercially utilizing the continental shelf between both regions (UHY CNBA 2019).

Due to the COVID-19 outbreak that has started in the first quarter of the year 2020, the Republic like most countries had its borders shut out of precaution for more than three months.

However, in June 2020, as the situation was more or less under control. The government had air, land and sea borders reopened along with operations at the capital’s Tunis Carthage airport being resumed. Nevertheless, the tourism sector was still affected greatly, a division that makes up almost 10 percent of total gross domestic product. Tourism profits in the first five months of the year 2020 have dropped by half, when in comparison with the previous year, due to hotels and retreat resorts left empty because of lockdown restrictions (Reuters 2020).

In the year 2016, the Tunisian Republic declared the establishment of the “Tunisia Solar Plan 2030” that is focusing on raising the share of renewable energy up to 30 percent by the next decade. The Sidi Mansour wind farm is only going to aid the country in reaching its renewable energy goals, together with lessening the overall dependence on fossil fuels, while also

showcasing that the Republic is an outstanding destination to invest in renewable resources in particular. It is also worth noting that this project will be one of Tunisia’s very first wind independent power manufacturers. The project of Sidi Mansour has also anticipated to bring down 56.6 thousand tons of carbon in the country, revive its economy, along with generating more than a hundred jobs and social plans for the community. The construction of this program has been set out to start by the end of the year 2020 and will be worth around 110 million Tunisian Dinars in total investment (Karume 2020).

Moreover, Tunisia’s former Prime Minister Youssef Chahed had stated that production had commenced in the Nawara natural gas project, in the early months of 2020. Owned by both the Tunisian Company of Petroleum Activities in collaboration with the Austrian OMV group, this will only strengthen the countries’ foreign relations. Manufacturing from this project will bring in about 7000 barrels of oil, 3200 barrels of liquified petroleum gas and 2.7 million cubic meters of gas on a daily basis. Investments made into this sector have been said to have

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amounted to 3500 million Tunisian Dinars, and once in action, the Nawara plant is expected to raise the country’s production of gas by 50 percent. The Republic's trade deficit together with its energy deficit will also notice a significant decrease of 7 percent and 20 percent, whilst overall economic growth increases by 1 percent (Qekeleshe 2020) (Reed 2020).

In the last few years, the Republic has taken measures in hopes of strengthening the competitiveness of its globally celebrated olive oil, as it is one of the country’s most important exports and is responsible for employing more than one million Tunisian citizens. In the year 2017, the stakeholders of this industry gathered up to outline a unified vision and scheme, with aid from the EBRD, short for the European Bank for Reconstruction and Development, the European Union, along with the FAO, short for Food and Agriculture Organization of the United Nations. This collaboration played a pivotal role in maintaining public-private sector harmony on all matters, including production, quality control, promotion and added value; all essential when tackling a new market (FAO 2020).

The 2019-2020 season exceeded all expectations manufacturing about 350,000 tonnes of olive oil, a noticeable increase in comparison to its previous season. Nonetheless, on account of the COVID-19 pandemic agrifood supply chains internationally were disturbed, from borders being shut close to a decrease in demand and diminished access to funds. FAO economic expert Lisa Paglietti, has stated that even the small-scaled Tunisian farmers are able to produce olive oil of high standards, thus making it stronger on the market and able to resist major shocks, COVID- 19 included (FAO 2020).

The Tunisian Confederation of Industry, in partnership with the Food and Agriculture Organization of the United Nations, and the Union of Industry Trade and Handicrafts are said to hold two conventions once all the movement restrictions are fully eliminated, as seeing the superb potential the olive oil sector holds in Tunisia. The first conference will be covering policies that will assist the progress of this industry, whilst the second will investigate

technology’s part in stimulating competitiveness, recognition and quality. Lastly, FAO declared plans on elaborating a 2020-2025 program to further invest in the Republic’s olive oil industry (FAO 2020).

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Furthermore, the aerospace field in Tunisia has been getting added recognition in recent years, just through the years of 2009-2019, the country achieved an average of 30 percent of added value, at the same time exports multiplied 9.5 times over. This industry’s top goods and services consist mainly of aeronautical systems, seat parts of aeroplanes, electrical parts, metal components, maintenance, engineering and overall training. In addition, about 80 percent of all industrial businesses and 20 percent of the service industry are involved in projects related to the aerospace sector, engulfing the whole supply chain. As Thierry Haure-Mirande GITAS

Chairman stated, “Tunisia has one of the most comprehensive aerospace supply chains in the world with the capability to make a product from A to Z” (Invest in Tunisia 2019).

The Republic also offers several technological infrastructures throughout its regions devoted solely for the aerospace division. Its largest being El Mghira Aerospace Cluster in Ben Arous, layered over an area of more than 200 hectares and is responsible for 20 percent of all aeronautical exports, with 15 training centers across the country also available, and over 150 developed industrial areas (Invest in Tunisia 2019). Thus, making the Tunisian Republic a hub for opportunities and investments in this domain and all the aforementioned ones.

3.2 Ease of doing business in Tunisia

The World Bank Group publishes a “Doing Business” report on an annual basis, ranking 190 economies on how favourable their environments are for conducting business in terms of regulations and their enforcement. In 2019, Tunisia went up eight spots ranking at the 80th position. However, this year the country went up two more positions coming at the 78th place in the world respectively. Wiem Zarrouk, the Minister of Development, Investment, and

International Cooperation’s advisor, has stated that in the year 2017, the Republic established a three-year program with the clear goal of breaking into the leading 50 economies globally (ExpectationState 2020). The report covers various dimensions that will be discussed further, including regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and lastly, resolving insolvency.

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Firstly, Starting a Business, this index calculates the number of procedures, time, and minimum capital specifications for small and medium-size LLC’s (Limited Liability

Companies), in order to get things started and officially operate in each region. Tunisia scored the highest on this dimension in comparison to all the others, getting a 94.6 out of 100 score, and achieving the 19th rank out of 190. The process of starting a company in the Republic is fairly straightforward and can be accomplished in three steps.

1) Reservation of the company name, the entrepreneur has to go to the National Center for Company Registration and reserve the selected name, which also needs to be accessible and unique. This process usually takes up one day to complete.

2) Depositing the capital in a bank account opened in the name of the company to be

incorporated, the corporation’s funds have to be deposited in a so-called “compte bloqué”

with the sole purpose of depositing said funds, however, once the company is established the money is returned to a regular bank account. This process also takes up one day to be finalized

3) Submitting the application at the Industry Promotion Agency to get registered with the Commercial Registry, Tax Authority, Social Security, and Labor Inspectorate and obtain the official company seal. This procedure can take up to seven days for completion (The World Bank 2020).

Secondly, Dealing with Construction Permits, this dimension traces the procedures, length, and costs to construct a warehouse as well as acquiring all the essential licenses and permits, submitting the required notifications, requesting and getting all the necessary

inspections and acquiring utility connections. In total there are 14 steps to be completed, from obtaining a soil test report for technical control and obtaining a topographical study of the construction site to requesting and receiving the final inspection and approval (“permis de récolement”) from the Municipality, getting a water connection, and acquiring a sewage connection from the Office National de l’Assainissement (ONAS). The entire process of

receiving construction permits should take up to 161 days. Tunisia has been ranked 32nd among 190 countries with a score of 77.4, a much higher rating than some of its neighbouring countries (Algeria ranked 121st and Egypt ranked 74th). The World Bank Group has also stated that the

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Republic of Tunisia has made it easier to do business this year by specifically merging more services into the one-stop-shop, and by decreasing fees,(The World Bank 2020).

Next, the Getting Electricity dimension, it examines the length, costs, and procedures necessary for an enterprise to procure a permanent electricity connection for newly constructed warehouses. The utility used to get electricity in Tunisia is STEG short for Societe Tunisienne de l'Electricité et du Gaz. The Republic’s process includes submitting an application to STEG and awaiting an estimate, then receiving a technical inspection also done by STEG, hiring a

registered electrical contractor along with purchasing material and installing a transformer, and lastly, getting an inspection of the installed transformer and a final connection from STEG. the entire procedure takes about 76 days. The Republic scored 82.3 out of a 100 on this criteria coming in at the 63rd rank (The World Bank 2020).

Then, Registering Property, this topic studies the steps, length and overall cost of registering property, while also examining the land administration system’s quality, that can be done by measuring the reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The five-step procedure should take up to 35 days to be finalized and involves:

1) A consultation of pending encumbrances on the property at the Regional Land Registry, stating that all parties involved must convey a search for any pending encumbrance of the property before notarizing the contract. This can be achieved by checking the data kept electronically at the property registry. The registry then issues a certificate (once requested) showing the land’s legal status to the parties included.

2) Preparation and notarization of the contract, the contract is put together by a lawyer, notary public, or local council clerk at the Conservation de la Propriété Foncière (the land registry) following a consultation with the property registry services. Said parties are then required to sign the contracts, which are then supposed to be notarized by a public notary or local council clerk.

3) Paying the transfer tax and the registration fee at the Local Tax Office

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4) The buyer files for a title deed at the Land Property Administration, the Land Registry inspects the application if approved the procedure is then deposited and transcribed to the Regional Land Registry.

5) The seller must inform the Municipality of the change of ownership

Even though Tunisia scored respectively low when compared to other economies coming at the 94th rank with a score of 63.7 out of 100 on this criteria, it is still higher than the MENA regional average and still managed to increase one point from its previous 2019 report. The country has also made property registration quicker by streamlining the internal process to transfer property, enhancing the transparency of the land administration by publishing statistics tracking property transactions at the Land Registry for the previous calendar year. (The World Bank 2020).

Moreover, Getting Credit, this indicator studies how strong the credit reporting system is and the efficacy of the collateral and bankruptcy laws when facilitating lending. The Republic obtained a sum total of 50 points out of 100, along with a rank of 104 among 190 countries.

Making it the country’s second-lowest dimension and one of its weakest points that might scare potential businesses away (The World Bank 2020).

Additionally, the Protecting Minority Investors dimension examines the strength of the minority shareholders protections against abuse of corporate assets by executives for their personal gain together with shareholder rights, governance safeguards and corporate

transparency requirements that lessen the risk of mistreatment. The sub-criteria used for this index include the extent of disclosure index, the extent of director liability index, the ease of shareholder suits index, the level of conflict of interest regulation index, the level of shareholder rights index, the extent of ownership and control index, the level of corporate transparency index, the extent of shareholder governance index and lastly, the strength of minority investor protection index. The Republic of Tunisia scored 62 points out of 100, thus giving it the 61st rank respectively (The World Bank 2020).

Moreover, Paying Taxes, this topic documents the taxes and compulsory contributions that medium-sized companies are required to pay or withhold in a given year, along with the administrative weight of paying taxes and contributions and complying with post filing