South of Gafsa, the centre of Tunisia’s phosphate industry, there is a half-built road – the construction materials and equipment left to rust by the roadside.
The companies responsible for the road have closed. Like so many Tunisian business concerns, they were reputedly run by the Trabelsis, a family whose star rose rapidly after the marriage of one of their members, Leila, to the former leader Zine El Abidine Ben Ali.
The popular uprisings in Tunisia last year that led to the departure of Ben Ali after a 24-year reign sparked similar revolts across North Africa and the Arab world. One year on from the Arab Spring, the unfinished road south of Gafsa is an apt symbol for the challenges facing the Tunisian and wider North African economy.
Moderate differences
Tunisia’s new government, elected in October, is faced with untangling the former regime’s business interests. New strikes by emboldened workers and resurgence in protests last month are further undermining industrial output. Opposition leaders say the new government, led by moderately Islamist Ennahda party leader Rached Ghannouchi, is little different from the old regime: a fact they say was evidenced in the handling of the protests.
"The people are sick of the new Trabelsis," was one popular chant of the thousands of anti-government protesters who filled the streets of Tunis last month, according to a report by Reuters.
Portraits of Ben Ali used to adorn every street corner until last year. They have been torn down, and people can speak freely for the first time in decades.
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However, the hardline Islamist Salafist party appears to be growing in influence. And even in Tunisia – which has a reputation for relative stability compared with other North African nations – growing friction between secularists and Salafists is making citizens and investors fearful. Foreign-currency reserves are being run down, falling more than 8% in the first two months of this year to just under $6.9 billion. A rising import bill since the new government took control – imports rose by 25% in the first two months of the year, according to official statistics – has not been offset by a 10.7% improvement in exports.
On April 18, the Central Bank of Tunisia announced that Qatar had stepped in with a $500 million loan via five-year treasury bills at 2.5% interest. The investment banking arm of Qatar National Bank, QNB Capital, and Standard Chartered arranged the private placement. To further tap funds from the Middle East, the government is looking to launch its first sukuk this year.
Analysts say the central bank’s bond placement is the latest sign, after the Arab Spring, of the growing political and commercial influence in north Africa of Gulf countries, particularly Qatar. In Libya, too, last month, QNB paid an undisclosed sum for 49% of Bank of Commerce and Development: the latest move in QNB’s strategy to grow via acquisitions in the Middle East and north Africa.
Old friends
As those countries most affected by the Arab Spring struggle to resurrect political, economic and financial stability, more traditional supporters in the west are preoccupied with their own economic problems. The US government has offered to secure future lending by Tunisia and promised to pay off $100 million in debts to the World Bank and African Development Bank that were run up by the Ben Ali regime. But Tunisia still needs all the friends it can get.
The Ben Ali government focused intensely on its relationship with Europe, and Europe is still the destination for 80% of Tunisia’s exports. After the Tunisian economy shrank by almost 2% in 2011, the IMF predicts Tunisia’s economy will grow by only around 1.8% in 2012. Economists say growth is highly vulnerable to conditions in Western Europe.
Some of the country’s older investors, such as the Italian oil company Eni, have pledged they will continue to invest, but foreign direct investment has fallen 25% since the revolution, according to statistics from the UN, not helped by the continuing legal requirement of foreign firms for a local partner for investment.
Tourist numbers fell more than 30% last year – the country used to attract up to 7 million tourists a year, mostly from Western European countries such as former colonial master France, but Salafist calls for Shariah law do little to encourage Western Europeans to take to Tunisia’s beaches.