2013 CCG FINAL.pdf


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Chapter 1: Doing Business In Tunisia
Market Overview
Market Challenges
Market Opportunities
Market Entry Strategy

Market Overview

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Tunisia is strategically located in the heart of the southern Mediterranean coast
and is an ideal platform for business with Europe, North Africa, and Sub-Saharan
Africa. It has the most diversified economy in the region and with a population of
slightly over 10 million, it has one of the highest standards of living on the
continent. The country does not have vast reserves of hydrocarbons like its
neighbors Algeria and Libya, but historically has prospered under long-standing
government policies to develop manufacturing, tourism, and agriculture. At the
same time, social programs have limited population growth, provided a high
standard of education, and ensured a quality standard of living for many
Tunisians. On January 14, 2011, after nearly a month of protests, President Ben
Ali fled Tunisia and a government was formed to manage Tunisia's transition to
democracy. On October 23, 2011, Tunisia held historic free and transparent
elections for a constituent assembly charged with drafting a new constitution,
appointing a government, and preparing for elections of a new president and
parliament. A government reshuffle in March 2013 included more technocrats in
ministerial positions although the Islamist Nahda party continues to lead the
three-party governing coalition. The slow pace of progress on the political
transition, coupled with security challenges, has led to a risk-averse attitude from
local and international investors looking to participate in the Tunisian economy.
In parallel, lender confidence has been reduced by the downgrading of Tunisian
debt to junk status by ratings agencies Moody's, Standard & Poor's, and Fitch
during 2012 and 2013. The business climate has not changed dramatically over
the course of 2012 and early 2013, but Tunisia may enact policy changes
intended to attract more foreign investment and create jobs.
Tunisia's past policies have resulted in a skilled, low-cost workforce. The 22.9%
national illiteracy rate is one of the lowest in North Africa and the Middle East.
The International Monetary Fund (IMF) World Economic Outlook estimates the
average annual income per capita to be $ 4,152 and the GDP based on
Purchasing Power Parity (PPP) per capita to be $9,698.
The Tunisian economy, which maintained a steady average annual growth rate
of about 4.5% between 2004 and 2009, grew by 3.6% in 2012 up from -1.9% in
2011, according to official Government of Tunisia (GOT) statistics. This recovery
was due to growth in manufacturing (1.8% up from -4.2% in 2011) and merchant

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