Tunisia Development Policy

Tunisia Development Policy

Poverty and Poverty Reduction

The living situation of the population in Tunisia has improved significantly over the past decades. Electricity and running water reach almost the entire population. However, rising unemployment and regional differences in the distribution of wealth are still major obstacles to development. Around two of the eleven million residents are poor(2011; the official figures before January 14th were 3-4%), more than 600,000 unemployed. In some regions and professions, the numbers are far higher. The Tunisian population is very young (more than half are under 30 years old), so that poverty and unemployment hit the young population very hard. In general, poverty and unemployment are more widespread in rural areas than in cities, but many rural families often still have an (albeit very low) undeclared additional income from farming on a small scale. The transition from the informal to the formal sector is often difficult.

Since the political upheaval in 2011 and the increasing economic crisis, the living situation and the risk of poverty has increased significantly. At the same time, more and more young, well-trained workers, especially from the medical and IT sectors, are leaving the country for Europe or the Gulf States.

National development efforts

In 2011, the Tunisian interim government passed a short-term emergency program to strengthen the economy and alleviate the immediate consequences of the revolution and alleviate poverty, especially in the regions. In addition to hiring 20,000 young unemployed people in the public sector, the government pays social security contributions for new employees in companies. Around 250 million dinars have been made available to strengthen the regions, and families who live below the poverty line are to be better supported. However, much of the existing development funds are not spent.

According to historyaah, the prestigious Tunisian project to fight poverty was the National Solidarity Fund (Fond de solidarité nationale), better known under the name of 26-26 (the number of the Fund’s Postbank account) under the Ben Ali government. This fund, which was set up in 1992, is used to fight poverty in the interior of the country. According to official figures, more than 850 million dinars were raised between 1993 and 2007, which were used, among other things, to build roads, improve the drinking water and electricity supply, and build facilities for the disabled and social housing. Although actually voluntary, companies were forced to pay dues to the fund per employee. So it’s a kind of hidden tax. The decision on the projects to be funded was in the hands of the President there was no parliamentary control and the official figures cannot be verified. It can therefore be assumed that large parts of the fund flowed directly into the private assets of the presidential family. The Tunisian interim government has the fund allocated to the Ministry of Social Affairs. To complement 26-26, the government founded the Tunisian Solidarity Bank in 1997, which is subordinate to the Ministry of Finance and the Tunisian Central Bank, which grants microcredits and supports young entrepreneurs. According to its own information, in the first ten years of its existence it supported more than 400,000 projects by young entrepreneurs.

An international donor conference in September 2014 brought together representatives from various international governments and institutions. Tunisia presented 22 infrastructure projects with a project volume of around 12 billion dinars, for which the government is soliciting funding. “Tunisia 202”, another conference in November 2016, brought in pledges of 34 billion dinars. In 2018, the government passed the so-called Startup Act, which aims to make it easier for aspiring small businesses to get started. Tunisia participated in the voluntary review of the SDGs in 2019. While progress has been made in some areas, economic issues and adaptation to climate change are the main challenges, the report says.

Tunisia Development Policy

Foreign development efforts

The website of the Ministry of Planning and International Cooperation provides an overview of Tunisian development efforts and (under “Coopération Financière”) an overview of ongoing development cooperation projects and existing agreements with donor organizations and countries.

The United Nations Development Program (UNDP) is very active in Tunisia. It focuses on three areas: poverty reduction and the Millennium Development Goals, democracy and governance, and energy supply and environmental protection. Tunisia also cooperates closely with the European Union, with which Tunisia has been associated since 1995. The World Bank also finances various projects in Tunisia.

The African Development Bank mainly supports infrastructure projects in Tunisia. It also made special funds available after the revolution. Various Arab states, especially from the Gulf region, and the Arab Development Fund are also active with various projects in Tunisia.

The European Union has agreed a privileged partnership with Tunisia, which has an impact above all in the economic field. Since the upheaval in 2011, more than a billion euros have flowed into Tunisia, but their use has not always been sustainable, according to a report by the Court of Auditors. In the recent past, China has also been increasingly present in Tunisia.

Two agreements between Tunisia and the International Monetary Fund, which provide for far-reaching changes primarily in the area of state subsidy policy and in the reform of the financial sector, are controversial across all political camps in Tunisia. Critics fear that the country is too dependent on international donors. The agreement with the IMF expires next year. An extension has not yet been decided.

German-Tunisian development cooperation

The BMZ is funding various projects in Tunisia. The projects of the German-Tunisian cooperation, focusing on the areas of environmental protection, economic development and democracy promotion will be conducted by GIZ and KfW. As part of a special program to promote democracy in the region, Germany is funding projects for democratization, further training for young adults and business development as well as increased cooperation in the university sector. A debt conversion agreement was signed in June 2012. In the first phase, 30 million euros were invested in development projects in the field of water and waste management in rural regions.