Frustrated privatization in Tunisia

Research note originally commissioned May 2016

A confused policy over privatization, along with unclear and corrupt investment paths, complicate Tunisia’s development.

– Desire within areas of the Tunisian government to privatize and rationalize the country’s state-run infrastructure is frustrated by opposition from unions and powerful regime-era elites
– Investors seeking to enter the Tunisian market are left confused
– State-run industries are powerful symbols of Tunisia’s sovereignty but their efficiency is dragging the country’s economy down; a compromise should be sought

State-run Tunisian companies were used after the 2011 revolution to effectively buy off the powerful unions and secure social peace, by providing un-needed jobs to thousands. The legacy of this is bloated, inefficient, over-staffed organizations, supported by the state, weighing down the government.

Efforts to privatize these, however, have been blocked from three angles. Firstly, the powerful unions can threaten the government with mass protests in a time of fragile stability. Secondly, powerful regime-era elites, who still have a significant hand in many of these, block this with patronage networks. Finally, these companies are symbols of Tunisia’s sovereignty and in a time of national economic and physical suffering, giving these up would be an unpopular and difficult move politically.

Adding to these difficulties is confusion over market entry. With official processes not respected, potential investors must seek out unofficial, potentially corrupt channels, and navigate political intrigues. At a time when Tunisia’s economy is suffering, this is an extra, dangerous obstacle. The greed of officials and politicians is, in this way, hurting Tunisia. Tunisia could benefit from foreign investment and interest.

While it is understandable that Tunisians are wary of letting their country and labour be exploited by foreign companies and interests, the economy is in a situation where it could seriously benefit from at least some foreign money. Moreover, officials’ wariness is not motivated by fear of exploitation, rather from losing their stranglehold of the country.

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