Tunisia country report February 2013

An independent supplement distributed in The Observer on behalf of Business Focus who takes sole responsibility for its content

Finance

ICT

Tourism

Tunisia is looking to become a hub for the MENA region.

21st-century technoparks offer a futuristic base for global firms.

Tunisia’s tourism sector is starting to shine again.

TUNISIA

For more information on this report, please visit: www.businessfocus.org.uk BusinessFocus 29th Floor, One Canada Square Canary Wharf, London E14 5DY United Kingdom Tel. +44 20 7712 1699 Fax +44 20 7712 1501

Paving the road to democracy and a knowledge-based economy.

Written by Niki Thornton.

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02 TUNISIA

Sights set on a financial future Tunisia is looking to become a regional financial hub with cross-border banking links spanning the MENA region.

I

t’s now two years since Tunisia witnessed its peaceful revolution and moved toward democracy, and a lot has changed. The internationally lauded catalyst of the Arab Spring, the country garnered attention from around the world as its people toppled President Zine al-Abidine Ben Ali in January 2011, when he fled the country after a month of non-violent protests.

Free and transparent elections for a constituent assembly charged with drafting a new constitution and appointing a government were held on 23 October the same year. That body, comprised of 217 members, was elected in a process witnessed by thousands of domestic and hundreds of international observers, and since then, far-reaching reforms have taken place across social, political and economic spheres, with the government committed to progress.

“Revolution is like an earthquake,” says Tunisia’s Prime Minister Hamadi Jebali.

“After any earthquake, the earth is not going to come back together at once. We are looking for stability and we aren’t there yet. But we are very optimistic. We have gained limitless freedom of speech. People are done with dictatorship and want to express themselves freely.”

Tunisia has the potential to be an international platform on many levels.

Mr. Hamadi Jebali, Prime Minister

Change does not come without challenges and by the end of 2011, unemployment stood at around 18%, food prices soared, tourism revenues had decreased by 32.8% and foreign investment had gone down by 26%. But two years on, things are looking up again, with government officials predicting growth could rise to an average of 6.5% year-on-year over the next five years.

With a revised free trade agreement with the E.U. about to be ratified, and growth in tourism, industry and exports contributing to an overall rise in the economy of 3.5% in 2012, things are certainly looking up. Against all the odds, the World Bank’s Doing Business Report ranked Tunisia 46th out of 183 countries for Ease of Doing Business in 2012.

“No one can deny that in 2011 we had to face a lot of difficulties in the process of economic recovery, but now, our economy is entering a positive phase and we are working towards reducing our budget deficit,” the Prime Minister says. “We have several plans. We are reforming the investment code because that is very important, and we are also reforming the banking system to encourage the SMEs because they have the power to finance the economy.

“We want to create export incentives because we rely a lot on export for investment and we would like to revise the model of development and recovery which has come to a saturation point. It is thanks to the private sector that we will manage to do that. We are also relying on a model based on value-added technology. The main

incentive here is the private sector of course. We are hoping to see a comeback of private investment and the state is actively encouraging this. We are reforming the banking sector and public sector administration, which will help the economy get back on track. We are relying on the partnership between public and private sectors, and we are creating a new model.”

The level of positive support from the U.K. before, and during, this transition has been a crucial factor, Jebali says. Foreign Secretary William Hague, the first foreign minister to visit Tunisia after the revolution, announced £5 million of U.K. funding to support reform projects across the Middle East, including Tunisia, in the areas of access to justice, freedom of expression, democratic institutions and civil society.

Speaking of the Tunisian revolution, Foreign Office Minister for the Middle East and North Africa, Alistair Burt announced: “14th January marked the second anniversary of the Tunisian revolution, which began the Arab Spring. Since the revolution, Tunisia has made remarkable progress in its political transition, including free and fair elections, a free media and the drafting of a new constitution that safeguards the rights and fundamental freedoms of all Tunisians.

“The U.K. will continue to support Tunisia in its critical journey of building new, democratic institutions, including through our Arab Partnership programme, which is already supporting the democratisation process in Tunisia. We will work through the E.U. and with International Financial Institutions to help tackle the economic and financial challenges facing Tunisia. And we will use our G8 Presidency to work with Tunisia and the other transition countries in the Deauville Partnership to assist the political, social and economic transition taking place in the region, sparked by the revolution in Tunisia two years ago today.”

“I believe our relationship will go from strength to strength,” Prime Minister Jebali says. “I would like to congratulate the British investors for the efforts they have made within the energy sector. We hope they also invest in other sectors, such as transport, tourism, infrastructure—particularly industrial zones, technological centers and roads—and the health sector. Those sectors reflect the expectations of the Tunisian people.”

Moves are also underway to improve the country’s skills base and remove obstacles that will open it up to more regional integration with Libya, Algeria and the Arab Maghreb Union, as well as Europe and the U.S. “We want Tunisian investors to go and create jobs in Africa,” Jebali says. “We want Tunisia to be a democratic country, with institutions, transparency and good governance. We would also like Tunisian society to be open to other continents. Tunisia has the potential to be a meeting point and an international platform on a political, economic, financial and cultural level.”

Investing in Tunisia Less than three hours flying time from major European cities, including London, and at the crossroads of east and west, Tunisia has a sturdy foundation to build on.

Before the uprising, it was a significant foothold in Africa’s 800 million consumer market, it was the premier tourism destination in the southern Mediterranean, the world’s biggest supplier of dates, and its largest exporter of olive oil after the E.U.

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The country was the first south Mediterranean country to sign a free-trade agreement with the E.U., in 1995, and is strategically located in the heart of the southern Mediterranean coast, making it an ideal platform for business with Europe, North Africa, and Sub-Saharan Africa.

Add to that a proud, open and dynamic post-revolutionary identity, and the country is set to take a key role in globalisation in time.

Although Tunisia has always made high-quality education a priority, certain areas of the economy are suffering a vocational skills gap. The issue is, however, being addressed. As part of its Skills for Employability Programme in Tunisia, the British Council, in partnership with l’Agence Tunisienne de la Formation Professionnelle (ATFP), l’Union Tunisienne de l’Industrie, du Commerce et de l’Artisanat (UTICA) and the Foreign & Commonwealth Office, delivered a conference last year entitled ‘Building Effective Employer Engagement in Vocational Education’.

The conference aimed to showcase the expertise of the U.K., Egypt and other countries in the region, in order to inform thinking about the next steps that Tunisia can take to ensure training better meets the changing needs of business. It was attended by around 200 delegates including employers, policy makers, agencies, educational leaders and young people and focused on four major sectors: Construction, Engineering, Health and Tourism.

According to the World Economic Forum (WEF), Tunisia is still well placed in terms of infrastructure and communications. It lies in 30th place in the world for airports and 41st for port facilities, far ahead of large emerging countries and some in Europe. Tunisia has the highest level of Internet access in Africa at 34%, compared to a continent-wide average of 9.6%. A thirteenth cyberpark, devoted to information and communication technologies (ICT), has come into service in Médenine in the south-east.

We ended 2012 with positive results, which demonstrates that all the difficulties are behind us.

Mr. Brahim Hajji, CEO, Banque de l’Habitat

In 2011, the government launched a reform of the Investment Code in order to speed up a project aimed at creating industrial and technological technopoles, as well as business centres, which began in 2005. The 10 existing industrial zones should be joined by 28 others being built as public-private partnerships. The aim is to set up 85 within five years, 50 of them in inland regions.

A financial hub for the region Tunisia is keen to become a hub for banking services and a regional financial centre within five years through the “Port financier de Tunis” (Tunis financial port) megaproject. The financial sector has undergone three decades of gradual reform, but state-owned commercial banks dominate the landscape and account for more than half the market share, which has a negative impact on growth. The will to modernise is, however, foremost in the mind of Central Bank governor Chedly Ayari and he is clear about the objectives, particularly in terms of regulation.

Tunis International Bank, the bank of of the region.

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www.tib.com.tn

“We need an institution that is independent from the government and the central bank,” he says. “We cannot possibly supervise and regulate at the same time. We have many other areas that need our attention, and we want to use the English financial services authority as a role model.

“I have told the [Tunisian] government that we will learn more from our failures than our successes. I believe in free enterprise: it is pivotal to creating wealth. Employment has to be created by the private sector, but in order for that to happen, you have to provide an enabling framework for business to develop.

“We can be sovereign and global at the same time. I am fighting inflation right now, as prices were too high and were killing growth. I will help the government, but not at any cost. I won’t accept any deficits—you should spend at the level of need. I don’t want to see Tunisia become like Greece.”

The central bank plans to start issuing Islamic bonds, known as Sukuk bonds, this year in line with its diversification strategy. “Many U.K. banks trade with Sukuks and are extremely happy with them,” Ayari says. “The Sukuk is an instrument of savings and investment. We accepted it on the condition it would meet the needs of a plural Tunisian financial system.”

The central bank governor sums up the general mood of an transitioning Arab country perfectly. “It is imperative that the U.K. and other western countries are part and parcel of our democratic transformation; it cannot be done by Islamists alone as we don’t have a tradition of democracy. The young people of Tunisia want an identity. They don’t feel globalisation, they need to have a reference, but the references can only be Arab or Muslim. My message to British investors is a simple one: Bear with us. We are witnessing the birth of a new nation. We are building something that will produce change. By the summer, we will have a democratic government in power and by 2014, we will be stable. Then the economy will prosper.”

Building on firm foundations Prior to the Arab Spring, Tunisia was one of Africa’s economic leaders, with an economy that had grown at an average rate of 5% over the last 20 years. Public investment in infrastructure and human capital played an important role and a sound fiscal policy kept the budget deficit below 3%. Careful debt management saw public debt drop to 47% of gross domestic product by 2009.

Financing Housing and all Sectors of Economic Activity The Leader in Financing and Pre-Financing Housing Offering a diverse range of products and services, Banque de l’Habitat’s primary aim is to help people buy their own homes. Dedicated to good governance, and a professional and courteous service.

Banque de l’Habitat 18, Avenue Mohamed V 1080 Tunis, Tunisia Tel: + 216 71 126 000 | Call Center: +216 71 001 800 | Fax: + 216 71 337 957 | banquehabitat@bh.fin.tn | www.bh.com.tn

Builder of the Future

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The country’s financial sector also proved resilient to effects of the global recession, thanks to a combination of limited securities systems, strict rules governing foreign currency reserves, a 25% cap on foreign equities on the Tunis Stock Exchange, and a policy of granting fixed-rate loans all limited the financial sector’s exposure.

Post-revolution, the banking sector’s liberalisation and privatisation has been slow, but is gaining pace. The sector is well organised and good governance is improving the level transparency required. Ezzedine Khoja is CEO of Banque Zitouna, a universal commercial bank that was founded in October 2009. In May 2010, it began providing individuals, professionals and businesses with a range of innovative products and services consistent with the principles of Islamic finance—thereby becoming the first Islamic bank in the country, and indeed, the whole Maghreb Region (North Africa).

“Islamic Banking is more than just Islamic banking. It is also ethical banking.

More than ever, after the financial crisis, we can see there are many challenges to the classic banking system, and Islamic banking is therefore becoming more and more relevant. It is not only oriented toward Muslim consumers—what we provide are ethical, innovative products,” Khoja says.

“Islamic Finance is growing in importance and needs support throughout the world. There are very important principles in Islamic Finance. We need to rethink the financial system. It has to be closer to economic activity and adapt to the need of people. We can work on a more participative system and encourage participation and ethics that can benefit everyone, not just those who are in credit. We need to collaborate with financial institutions, because the world is looking for a new financial system.

“Banque Zitouna is the most modern bank in the country. The Bank has invested in a worldwide recognised Banking Solution. Everything is digitalised and our staff is young—on average 30 years old. In terms of branch layout and a communications strategy, we have succeeded in proposing an adequate mix of traditional values and a modern and innovative image.”

This forward-thinking attitude will see the company go from strength to strength, as an increasingly skilled, financially savvy and entrepreneurial population evolves.

“What we need now is to help our country by bringing new products that can reach specific people, particularly SMEs and microfinance,” Khoja says. “We face the problem of unemployment and people need finance in order to set up businesses.

The government must open the sector further for the people by implementing laws that favour access. Our customer portfolio is expanding month by month and we have 65,000 accounts and 54,000 clients. Our deposits total around 550 million dinars. We are now developing our new business plan for the next five years.”

Group

• Corporate Finance • Financing • Brokerage and Asset Management • Leasing • Trade Finance • International Banking • Accompanying foreign investors • Exporters support in Africa

Address: 95, Avenue de la liberté, 1002 Tunis, Tunisia. www.attijaribank.com.tn

The ambitious businessman adds: “It is not a question of if we are going to get there, but when will we get there. We can easily reach a 5% market share in Tunisia.

Over the next five years, we can do more, but we have fixed this objective for now because it is realistic. To support this growth, Zitouna Bank will extend its network of agencies throughout the country to reach 100 by 2017, enhance its products offering and launch new activities (Sukuks, Microfinance, Islamic Mutual Funds).

“We also need to increase our capital from 70 million to 100 million by the end of this year. We are also open to any interest of companies that want to be part of Zitouna Bank. We are planning to have a strategic partner, which is The Islamic Development Bank, a triple A-rated international institution. With their participation we can also expand our activities to North Africa and Europe.”

Khoja explains: “We are looking to move into France, the U.K., Libya and Algeria and hopefully we will then be able to be close to Tunisian citizens abroad. We already have partnerships with banks in Libya and Mauritania. We have very competent staff and we are further developing our IT system. We have developed mobile and Internet banking and we have very specific services to customers.

“We want to diversify our portfolio and become a reference in the region. Currently the State owns 87% of the bank’s assets, however we want to loosen government ownership to 35% of the shares, which will be granted in a second phase. We have options in the Middle East, Europe and Africa.

“As we focus mainly on retail banking, our major aim is to be as close as possible with the population in the different regions. We need to bring more people into the banking system. We just opened a branch in Djerba. We celebrated the opening with a big event, to explain to the people what Islamic banking is.”

Growing within the region Providing a comprehensive range of international financial services for corporations, financial institutions, governments and individuals both in Tunisia and abroad, Tunis International Bank (TIB) is the leading offshore bank in Tunisia.

TIB was established as a fully licensed banking corporation in 1982. In October 1997, the United Gulf Bank, part of the Kuwait Projects Company (Holding) (KIPCO) acquired 48% of the TIB’s issued capital, and this ownership has increased to 70%. The bank is internationally recognised for its commitment to high quality service, technology and innovation, as well as its professionalism and performance.

“We have motivated personnel that are highly qualified and who speak multiple languages to better assess capital with the specific advantage of our status as a nonresident bank in Tunisia, and our direct connection with global markets. We are very inclusive here at TIB. “With more than 25 years’ experience, we deliver to a diverse range of clients in search of international standards.

“Our corporate department offers companies a variety of services and financing needs, tailored to their specific requirements. We also act as a partner in growth strategies. Although the bank’s traditional customer base in Tunisia has been offshore, foreign-owned companies, our natural marketplace is the Maghreb counties, and this will remain TIB’s primary target market as we maximise opportunities. We want to play a key role in promoting business and partnerships between Gulf investors and the Maghreb. In addition, business has been developing through Western European and other Mediterranean countries.”

Founded in 2005, Attijari Bank has grown at an average rate of 20% a year over the last four years to become a leader in banking and financial services in Tunisia.

With 185 branches and business centres, 1,600 employees and more than 700,000 clients, it enjoys the largest banking network in the country. The bank is a key part of Morocco’s Attijariwafa Bank, now the premier banking group of the Maghreb region and sixth across the continent, with a presence in 23 countries across Africa, Europe and the Middle East.

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In 2012, Attijari was given the accolade of “Best Bank in Tunisia for Trade and Finance” by the Exporta Group for the second year running based on a survey of international traders. It’s a gratifying milestone for a bank that has made a huge impact in its short history, as CEO Hicham Seffa explains: “Attijariwafa Bank’s ambitious project began in 2003 with the merger of two average sized banks on the Moroccan market. Shareholders understood there was a need to diversity abroad, so the bank started with Tunisia in 2005, by buying majority shares in what was then Banque du Sud, a public bank that was undergoing privatisation. The experience was a great success, and everyone in Tunisia, from the Central Bank to the clients, sees that.

“The first thing we did as Attijari Bank was to orientate the bank commercially.

We then went through recovery phases, and after that, launched a wide range of products thanks to a strong marketing strategy. This created a lot of new developments and has led us to becoming one of the best performing banks.

“Being an international bank has a lot of advantages. Foreigners in Tunisia feel at ease straightaway with us. We have an entity specifically geared towards assisting offshore companies, as well as a subsidiary, Attijari Finances Tunisie, which provides clients with a team of multidisciplinary experts for the implementation of mergers and acquisitions, market transactions and privatisations.

“We also have Attijari Leasing, which finances the acquisitions of properties, and Attijari Asset Management, which provides a full range of investment solutions to access the financial market.”

The bigger the bank, the more crucial it is to diversify business services, Seffa believes. “We are a universal bank and our management system leads us to look into all possible sectors. We were the pioneers of business centers in Tunisia, and it is working very well.”

Building for the future The bank is also a keen advocate of Corporate Social Responsibility. This year, it plans to invest in children’s education and support regions affected by poverty with structural projects.

“I am happy to see these projects are not just financed with the budget allocated by the bank but also with the contribution of the bank’s collaborators,” Seffa says.

“It is very important to keep this spirit. At the beginning of 2012, we restored a school that was completely dilapidated and that was done purely by the collaborators themselves.

“We are continuously investing in the country, creating more branches and providing more grants. We are becoming more and more dynamic. Tunisia has a very strategic location and is an extraordinary mine of growth. Attijari offers financial ad-

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vice so our services start very early in terms of those seeking business opportunities.

We serve the interests of foreign investors in Tunisia and Africa.”

Meanwhile, as living standards increase, Tunisia’s housing sector now occupies a prominent place in the country’s development strategy.

Founded in 1974, Banque de l’Habitat has 90 million dinars in assets, the majority of which are in the property sector. A major player in Tunisian banking, Banque de l’Habitat has a market of 9% of the country’s deposits and has acquired a dominant position in the residential mortgage-lending sector.

In only three years of existence, we have the best information systems.

Dr. Ezzedine Khoja, CEO, Banque Zitouna

“We have a market share of 60% of all mortgages in Tunisia, made up of promotion for constructors and credit grants to households,” says Brahim Hajji, CEO of Banque de l’Habitat. “We are the only bank acting in this field, and are the intermediary between the government and the beneficiaries of those credits. This is not our sole activity, however: we grant credit to all citizens from different economic standings for housing.

“It is important to note that the real estate sector has never suffered from a crisis and the percentage of non-performing loans is very low as well.

“The banking sector in general and Banque de l’Habitat in particular has always continued to finance the economy and it has never stopped doing so, even in 2011 and 2012. During that time, the banking sector financed 95% of the economy and played a crucial role, which it is continuing now under the strict rules and guidelines given to banks by the Central Bank. Banque de l’ Habitat has consistently shown an increase in benefits, even within the difficulties of the environment during the past two years.

“We ended 2012 with positive results, which demonstrates that all the difficulties are behind us. Banque de l’Habitat will undoubtedly continue to grow stronger and bigger. The environment is now much more open to investment, it is democratised and safer and Tunisia can send a message of trust to all potential investors.”

Banque de l’Habitat already has an international presence. In partnership with the state, it enjoys 21% of housing capital in Congo Brazzaville and Burkina Faso,

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and is now looking forward to branching into Côte d’Ivoire and the Democratic Republic of Congo. “These states want to benefit from the experience of Banque de l’ Habitat and its role in the development of real estate and on the granting of credits to house holding,” Hajji says. “We can offer them our experience in the financing of the housing sector.”

Hajji has a very positive message for British investors. “After a revolution, it is natural for the country to go through transition stages that can prove to be difficult but I think that all the positive elements are extremely encouraging for the future of the country and the future of the foreign investor because the environment now operates in freedom and transparency and it is fundamental.

“The environment for investment is safer, more transparent, which is going to lead investors to choose Tunisia because the country has a strong background in terms of its human capital, experience, open-mindedness, especially now that we have acquired our freedom. All those elements should attract investors to Tunisia.”

Meanwhile, the Société de Promotion du Lac de Tunis (SPLT) is working on developing the Northern Lake of Tunis. One of the most ambitious urban development projects in modern Tunisia, the company’s mission is to rehabilitate the northern basin of the Tunis Lake, which was used for a long time as receptacle of waste and rain water of the northern districts of the city; to reorient part of the urban expansion of Tunis towards the hyper center of the metropolis and to contribute, thus, in safeguarding the arable lands located in periphery; and to support a planned and coherent development of the capital extension by the creation of the new city.

With the first two phases complete, Mohamed Ridha Trabelsi, CEO of the SPLT, says the objective for 2013 is to continue developing the Northern shore.

“Since we started with the planning of the new city, real estate prices have risen, however we are able to control the prices. Everyone wants to move here, the Cana-

Trends related to operational foreign companies Year

Number of Companies

Employment

2006

2,803

273,569

2007

2,895

290,985

2008

2,966

303,142

2009

3,069

314,299

2010

3,135

324,821

2011

3,102

324,730

dian embassy for example, has just moved here. SPLT benefited from the strategic position of its grounds and the total control of its land to promote a development strategy that has been the most successful in Tunisia so far.

“We expect to continue growth and continue allocating our empty lots. We have strict rules and regulations on the kind of development we want to have. We have allocated many plots of land to gardens and other projects that also make the plan sustainable not only for now but for the future.

SPLT has focused its efforts in 2013 to implement the recommendations of the strategic plan performed by a group of consultants, the world-renowned DTZ Consulting—Workshop lion—SOGREAH and Gide Loyrette Nouel—(study being finalised)—whose purpose is to develop the northwest and southwest lake banks as well as to develop a water plan for the north shore of Lake Tunis from 220 hectares to 400 hectares.

It will result in the execution of urban studies and infrastructure required, as well as the launch of construction work and property marketing.

“We have been going through transition stages that can prove to be difficult but I think that all the positive elements are extremely encouraging for the future of the country and the future of the foreign investor because the environment now operates in freedom and transparency and this is fundamental. Civil society plays a fundamental role in the development of the Tunisian society more than ever,” Trabelsi says.

Looking forward Tunisia is a vibrant place to be, a place where opportunity reigns. As Prime Minister Jebali says: “We want Tunisia to be a democratic country with institutions, with transparency, and good governance. We would also like Tunisian society to be open to the other continents. This is the image that we want Tunisia to have.

“We are in a transitional period. I am very optimistic because the people of Tunisia led this Revolution with peace and Tunisia will be an example to be followed.

“I only have one message for the international community: We need support in the democracy. Democracy is a human right, an economical development, it is a moderate society. This democracy is built on a difficult social and political situation, so we must invest in it.

“We need British investors and investors from elsewhere. In each investment there is a risk and one has to choose the right risk for Tunisia.

“We can’t leave this investment opportunity in Tunisia without the state’s encouragement. British investors must support Tunisia’s experience and have faith in this message because it represents the dream and hope of Tunisian people and will enable to support peace in the Arabic world.”

Tunis El Bouhaïra New City of the Third Millennium Quality management of an important land reserve in the heart of the capital. www.splt.com.tn

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ICT: A fast-growing sector Tunisia has always been well connected but post-revolution it has set its sights on becoming a hub for the region.

T

he end of Internet censorship in Tunisia was one of the most positive outcomes of the revolution. Tunisians, and the international community at large, can now enjoy full access to information and greater freedom of expression. The controversial Ammar 404 policy was scrapped with the launch of the country’s National Forum of Internet governance in September 2012, with the role of the Tunisian Internet Agency (ATI) now limited to providing Internet development and IXP services.

The ICT sector has become increasing important in Tunisia’s economy, contributing 10% to the GDP and employing more than 90,000 people. The sector grew 16% in 2011, thanks to an expansion of cyberparks and business incubators. Even before the Arab Spring, the country was held up as a technological beacon for the region by the World Economic Forum, whose Global Information Technology Report, published 2010, explained that “Investments made since the 1990s have enabled Tunisia to set up a state-of-the-art infrastructure that includes a high performance network with more than 10,000 kilometres of optical fibre links.”

These days, the country has three telecom operators, all of which offer 3G mobile and fixed services. Mobile penetration is 116% and there are around half a million broadband subscribers—far higher than the regional average. The rise in business process outsourcing operations has marked a new development in the service sector, and there are now more than 225 call centres in operation employing a combined total of around 17,500 people.

Our mission to lead will not be accomplished by technology or finance but by people.

Mr. Mokhtar Mnakri, Chairman and CEO, Groupe Tunisie Telecom

Minister of Information and Communication Technologies, Mongi Marzoug and his team are now focused on the promotion of Tunisia as a leader in ICT and an excellent role model for other countries in the Maghreb, Arab and African region.

“We believe in the benefits of the digital economy and the positive impact it has on our GDP,” he says. “We are currently talking to operators to encourage them to share their 4G network. Most of the content in Tunisia is from the outside, we should focus our efforts on providing more local content,” he says. “We have provided very attractive investment possibilities and incentives to investors and the sector is thriving. Each year we have more than 13,000 graduates in the ICT domain and around 3,000 of them are engineers. Well-known industry names, such as HP, SunGard, IBM, Google and Microsoft have a strong presence in the country, and also contribute to the training of new graduates.”

Following on from the World Summit on the Information Society (WSIS) held in Geneva 2003 and Tunis 2005, Tunisia has hosted the annual ICT4All conference, in partnership with the ITU, UNCTAD, UNESCO, the African Union, the League

of Arab States, the African Development Bank, World Bank, ECA and ESCWA, to discuss issues surrounding global information. Last year’s forum received more than 1,000 delegates, including eight African ICT ministers and high-ranking officers from international organisations and is now an important calendar date for people in the industry to share expertise and engage in dialogue.

“We’ve also launched the Internet Governance Framework for North Africa which aims to improve the participation of associations, the private sector, government and universities through the development of the Internet,” Marzoug says.

“Within five years, many changes will have taken place in Tunisia. The sector will provide a clearer regulatory and economic framework for investors and operators and provide many more incentives for investors. We have a lot of work to do in the infrastructure network to provide optical fibre to homes and to complete mobile Internet over 3G.” Since May last year, the Ministry has launched periodic campaigns to test the quality provided by the operators in order to improve services, and is pushing for higher speeds at affordable prices. While national tariffs are competitive, international tariffs need to be reduced in order to increase investment from foreign companies.

“Tunisia’s future should be bright,” Marzoug says. “We have a qualified workforce and can expand throughout the region. Tunisia will be an opportunity for investors that want to extend their presence in the region. Our highly-qualified human resources and favourable relations with other African countries will be the key to Tunisia positioning itself as a point of reference.”

An evolving landscape As the original telecom provider, Tunisie Telecom (TT) boasts more than 6 million subscribers in the fixed and mobile telephony sectors. Having recently undergone privatisation, things are moving fast for the pioneering company that boasts more than 13,000 retail outlets and 8,000 agents.

Chairman and CEO Mokhtar Mnakri, a veteran of the industry, moved to TT from Alcatel-Lucent in September last year. He outlines the company’s major milestones and his vision for the future.

“Tunisia was always within my parameters as a country and within my functions while I was working for Alcatel-Lucent,” he says. “I have seen it evolve from the 1980s to the present day, taking in digitalisation and the mobile and Internet revolutions. All changes were implemented by TT, and we are currently working on broadening the bandwidth. Although the mobile stage arrived in Tunisia later than most countries, it was up to speed in no time. TT now enjoys a relatively sophisticated market.”

The company has witnessed four major milestones to date, as Mnakri outlines: “First came the launch of GSM, then the opening of the sector to competition, and the introduction of a private player in 2002-3. Third came the introduction of a strategic partner in 2007, and finally, the revolution.”

With a robust and sophisticated infrastructure, and a highly skilled workforce to buoy TT, Mnakri is now on a mission to bring the institution back to the position of market leader. “This mission will not be accomplished by technology or finance, but by people,” he says. “We have the network and we have the technology—we want to

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Our future is bright. We have a qualified workforce and can expand throughout the region.

Mr. Mongi Marzoug Minister of Information and Communication Technologies

teach the people the concept of responsibility and accountability. You need to help people find what the real problem is themselves, rather than just providing them solutions. It takes more time, but this is the way it should be done.”

Meanwhile, the National Telecommunications Commission (INT) is also playing a vital role within the ICT sector by providing an environment conducive to investment through healthy and fair competition between traders and suppliers of telecommunications services. Having implemented a new telecommunications code in 2011, INT is now seizing on ICT as a driver in developing and creating new jobs, while contributing to regional development.

As Kamel Saadaoui, director general of the INT explains: “Competition is getting much tougher, which is where the regulator intervenes. Our role is to sustain healthy competition in order to improve prices, create jobs and offer better services. We protect everyone: the operators and the end users who will ultimately benefit from better prices coming from healthy competition, as well as better coverage. The regulator forces the operators to invest in the country, provide a better service and make wireless accessible to everyone.”

This year, the INT will also change the Land Management Code to allow fibre optics to be installed throughout the country. “We made amendments to the telecommunication code so that electricity companies can sell fibre optics to telecom operators,” Saadaoui says. “We recently helped Tunisiana and Orange have their own fibre-optic cable connected to Europe, and they will be using this to have better Internet connectivity and international telephony and roaming services. We are also trying to facilitate importing electronic goods and telecom equipment.”

The organisation is also focused on meeting the conditions needed to be able to grant a third 3G license this spring.

Injecting innovation and service An innovative company, with a high commitment to service quality, Tunisiana, was the first private operator in the country. Founded in 2002, the company is now the market leader in mobile telephony with a 56% share. Last summer, Tunisiana launched 3G services for more than 6.6 million subscribers, covering 48% of the population and plans to reach 82% by the second quarter of 2013. A key player in the technology sector, the company relies on rapid advances in technology to develop tailored, high quality products and systems, and on excellent customer service to win the trust of its customers.

“The business started from a greenfield operation and in 10 years, we have become the operator of choice for a huge percentage of the population, and the leaders in wireless technology with a 60% market share,” says CEO Ken Campbell. “I believe, however, that the key to success is to evolve to become a global provider, offering In-

INT for clear communication As the telecomunications regulator for Tunisia, we strive to provide an environment that is conducive to investment by creating fair and healthy competition between all market participants, thus ensuring a level playing field for business, and the best outcomes for customers.

Instance Nationale de Telecomunication Rue Echabiya 1073 Montplaisir, Tunis, Tunisia Tel: +216 71 900 868 / 901 526 | Fax: +216 71 904 811 | www.intt.tn

TUNISIA 09

ternet, fixed, private network and management services. We are currently building an underground cable to Italy to increase our capacity, in partnership with Orange.”

Campbell is convinced that with such a skilled workforce and some of the best engineers in the world, Tunisia is perfectly positioned to become an ICT hub where companies can base themselves and reach other markets in the region.

“With our infrastructure and professional know-how, Tunisiana is more than capable of providing services to companies wishing to expand their services to Libya, for example, as it starts to invest and build. We can also provide consultancy services to those companies within our partner Qtel group. We definitely have to look beyond our borders.

“That said, Tunisia has plenty of opportunities on its own, particularly in the fixed line market, which has historically been dominated by one operator. Additionally, there is only a 5% smart phone penetration rate, compared with the U.K. which is 50%, although the 3G roll-out will see prices come down significantly, with wireless leapfrogging fixed lines in some areas of the country.

“Tunisia is a market that welcomes investment. We have smart, well educated people, a skilled, cost-efficient workforce that speaks two languages, and, of course, political stability.”

As a modern and progressive company, Tunisiana boasts a grassroots approach to corporate social responsibility and has two new projects in the pipeline: football academies in Tunis and Sousse that will be expanded to other communities in order to promote sport, and the Tunisiana start-up factory: a fund and mentorship programme that aims to help high-tech companies get off the ground.

“We don’t expect to make money from it, we just expect to help,” Campbell says.

Tunisia has smart people, a skilled, cost-efficient workforce and political stability.

Mr. Ken Campbell, CEO, Tunisiana

10 TUNISIA

Celebrate 3,000 years of time With a sunny climate and only two hours away from London, enjoy “le savoir-faire” with year-round golf, refreshing spas and thalassotherapy.

A

s one of the U.K.’s more accessible exotic locations—Tunisia is situated less than a three-hour flight from London—the North African country has been a long-term favourite for tourists looking for sun, sea and adventure in a beautiful Mediterranean climate.

From the clean and safe cosmopolitan capital of Tunis, to the historic and cultural towns of Cap Bon and the golden-sand beaches of Hammamet, there really is something for even the most discerning visitor.

Camel trekking in the desert, diving, shopping (and haggling) in charming souks, sight-seeing—which includes the film sets of Star Wars and The English Patient, as well as ancient Phoenician and Roman ruins, Thalassotherapies and golf are all on the itinerary as the country’s tourism officials work to upgrade the country’s tourism product.

Investors are already showing their support and we have a number of new hotels entering.

Mr. Elyès Fakhfakh, Minister of Tourism

Although tourism figures were down during 2011 in the wake of the revolution, Tunisia’s Minister of Tourism Elyès Fakhfakh was delighted to see the sector grow by around a third last year, with World Tourism and Travel Council anticipating an 8% rise in GDP contributions. The British, with 350,693 arrivals in 2012, are one of the target markets and over the next four years there are plans to double the numbers of both British and German arrivals.

“The situation in Tunisia didn’t become stable until April 2012, so since then, we have been inviting travel agencies and more than 1,000 journalists to discover Tunisia,” Minister Fakhfakh says. “We increased our communications budget in order to do this, and also implemented a plan to help the hotels and travel agencies overcome their losses.

“Although some media has been negative, the British approach to the Tunisian transformation has been informative and set within a global context. Once democracy is fully restored here, the U.K. will be a great ally, and the British a potentially important market.

“We need to increase service levels, offer more diversity, show the other side of Tunisia and develop the wellness and spa tourism, which has existed since Roman times. We have already begun targeting desert tourism in the Sahara, and modifying the legislation for hostels and alternative tourism. Things have changed and we have a lot more scope to develop the industry.”

Opening up the skies News last autumn that the European Commission is aiming to complete open-sky agreements with neighbouring countries—including Tunisia—by 2015, which will allow more competitive pricing in terms of budget airlines, and allow more

companies into the Tunisian travel market. Although this may impact on flagship airline TunisAir, the view from Morocco, whose open-skies agreement with the E.U. was implemented in 2006, is that the increased access paid off handsomely. At a meeting with tour operators in Paris in December 2012, Fakhfakh confirmed the country will fully open up its skies in 2016.

Speaking to Business Focus in November, he said: “Our blueprint for growth— Tourism 2016—demonstrates our main priorities. We are working to create a new investment code that will support our strategy and give incentives to allow entities to invest in more innovative products. There is also the issue of hotel renovation and upgrading—we plan to help business owners modernize their facilities. We are also encouraging tour operators and establishments to improve their web content and booking flexibility so that they can attract more visitors.

“Investors are already showing their support. Since 2011, there has been a huge rise in the number of golf courses, convention centres and high-end facilities within the country. Luxury spa hotels, many of them specialising in the French-coined thalassotherapy—the use of seawater and marine products such as seaweed for cosmetic purposes—now form a major part of Tunisia’s competitive advantage, and there is endorsement of the country as a destination with strong potential from the big international names.

“We have Starwood, Ritz, Accord and the Hilton chains interested,” Fakhfakh says. “Some of them have already signed on the dotted line, the others are waiting for the process of transition to end before they do.”

In terms of markets, the tourism minister plans to look further afield while still elevating capacity within existing markets.

“In 2012, we saw an increase of 35% of Russian arrivals, compared to 2010,” he says. “We believe we can multiply the Russian market by four or five. We also have a specific strategy for attracting the African countries. Shopping tourism, for example, has a huge market, with high added value. China is also becoming more and more interested in us, so we plan to simplify the visa process, ensure better flight connections, and increase the budget for more visibility there. The Scandinavian markets are also interesting.”

In order to exploit Tunisia’s potential as a year-round destination, officials are keen to promote and improve its unique features.

“The landscape changes a lot as you drive through it,” Fakhfakh says. “The weather is stable and the people friendly and welcoming. We have six airports, easy connections, and excellent tourism infrastructure along the coast. Now we want to improve the infrastructure in the central region. The country is 600 kilometres long and 200 kilometres wide: there is plenty to discover here.”

Currying British favour As Habib Ammar of the National Tourism Office Board (ONTT) points out, British tourists first began flocking to Tunisia in the 1960s, when package tours took off.

For three decades, the climate and beaches were enough, but ten years ago, as global competition increased and fares came down, the seasonal influx became unsustainable, and diversification was needed.

“As any visitor knows, Tunisia has a lot more to offer than the sun and beaches.

TUNISIA 11

An independent supplement distributed in The Observer on behalf of Business Focus who takes sole responsibility for its content

We increased our income by 33% last year in comparison with 2011.

Mr. Habib Ammar, CEO, ONTT

fast. The Sahara also yields links to modern culture—the famous Chott el Djerid, in southern Tunisia, was the location for the film Star Wars and is the largest salt pan of the Sahara, for example.

Culture vultures can see Saharan towns and beautiful sites including those in Tamerza, Chebika, Kenili, Dou, Bled el Djerid and Mides among others, which, in December, are home to highly entertaining festivals.

“This product simply does not exist in other countries,” Ammar says.

Golf is another potential earner. “There are 10 golf courses in Tunisia, but we are planning to develop more and attract more golf players as there are over 6 million

Tourism arrivals and departures Constant 2011 TNDmn

mn 9

6,000

8

5,000

7

4,000

6 5

3,000

4 3

2,000

2

1,000

1

2022

2012

2011

2010

2009

2008

2007

2006

2005

2004

0 2003

0 2002

We have other possibilities that we need to exploit for the tourism sector. Cultural tourism is one example: We have 3,000 years of history here. Tunisia is the meeting point of civilisation and therefore a very high-valued product. We are a small country but we have an amazingly strong historical heritage.”

Carthage, for example. Jutting above the turquoise waters of the Gulf of Tunis, the ancient city is one of the world’s greatest examples of bygone civilisations and conquests. Situated nine miles from central Tunis, Carthage is a UNESCO World Heritage Site that has offered up an impressive range of artefacts and buildings from the Punic, Roman, Byzantine and Vandal history since archaeological work began in the 19th century.

It attracts thousands of tourists and historians every year thanks to its imposing columns and monuments, as well as its intricate mosaics and sculptures. Carthage also boasts two scenic stonewall harbours, connected by a narrow canal, and Byrsa Hill, the walled citadel that offers spectacular views.

Meanwhile, with its giddy mix of beautiful architecture, busy boulevards and alleyways criss-crossed by tramways, Tunis symbolises the vibrancy and heritage of the southern Mediterranean. With a charming, 9th-century Medina, souks, mosques, and historic structures, most of the city is a UNESCO World Heritage Site, while the Ville Nouvelle (New Town) contributes a neat, grid-style layout and French-colonial elegance.

In the centre of the capital, more-recent renovation has brought glamour and renovation to its fine art-nouveau theatres, Franco-Arabic market buildings and Roman Byzantine colonial cathedrals. The area around the tree-lined Avenue Bourguiba, which runs from the main train station to the medina’s entrance is mostly pedestrianised, giving it the air of a café-lined Parisian boulevard.

Desert adventures are also slated to become more popular as visitor numbers increase. The Sahara, the largest desert in the world, plays a significant part in Tunisia, and tours offering a glimpse into desert lifestyles and landscapes are springing up

Foreign visitor exports (LHS) Foreign tourist arrivals (RHS)

golfers in Europe. This is very important for the U.K. market as we know British people are extremely keen on golf,” Ammar says.

The Tourism Board chief ’s primary objective for 2013 is to see the sector return to 2010 levels.

“Just before the Revolution, therefore by the end of 2010, the income from the tourism sector was around 1.8 billion euros. The number of tourists was around 7 million and there were around 38 million nights spent in hotels. After the revolution, in 2011, we recorded -32% in terms of income, -32 % in terms of number of tourists and -42% in terms of nights spent in hotels.

“But in 2012 things went much better. We increased our income by 33% in comparison with 2011. We have reached 4.8 million tourists. Figures are much better and the sector is recovering.”

Although the National Tourism Board’s priority is to promote Tunisia as a destination—it has 17 offices that work with it to this end—it is also responsible for training and has nine training centres throughout the country.

“Four hundred thousand direct jobs are created by the tourism sector, and as one of our leading industries, that has a direct impact on other sectors and creates even more jobs. As well as improving the tourism product, we are taking advantage of the ICT sector and encouraging tourism professionals to use the tools available and invest more in it. Our proximity to European capitals is key. We are close to London and Paris, and less than one hour away from Rome.”

“We have to succeed in diversifying our products. This is the most important goal.

Investors are used to investing in sun and beaches but we strongly encourage them to invest in different products.

12 TUNISIA “Secondly, I would like to see the tourism sector becoming more independent from tour operators and gain greater capacity to promote itself. We are also aiming to have a reinforced transport structure to gain more flexibility and improve connections around the country.

“The government is working on that, and of course, the introduction of the open skies policy that is being discussed right now.”

The ONTT is also working on improving tourism administration. “We want the sector to be divided into three agencies, in order to share and spread responsibility,” Ammar says.

“One agency for promotion, another one for training and the third one dedicated to regulation. We have invited a lot of people to Tunisia, journalists and operators, so that they see the reality and distinguish between what the media says and what the reality is.

“Tourists are our guests. I want to invite British people to come and visit Tunisia.

I strongly encourage they come and discover a new country where people are now free and enjoying peace and democracy.”

Final word Tunisia has made many reforms in its economy that will allow it to embrace transparency, free trade and openness, but in order to increase its international relevance, it needs a thriving business environment and further investment.

The U.K., as one of the world’s most innovative and important business centres, is a key partner to develop these new business opportunities with a win-win relationship that will benefit both countries.

London is the major financial centre for international business and commerce.

Around 75% of Fortune 500 companies have a presence there. Despite the crisis, London has continued to increase its gross domestic product and develop new businesses and investments. This is one of the key moments of Tunisia’s development, a historic moment of change and improvement.

The U.K. made a commitment to be Tunisia’s partner on innovation and the development of new opportunities, and it is for this reason Business Focus decided to showcase this rapidly changing country.

Tunisia’s Tourism Strategy 2016 Source: OECD I :Product Innovation and Diversification · Develop a quality charter (charter jasmine) for all professionals · Encourage the promotion of innovation (innovative projects by supporting and rebuilding the tourist areas) · Diversify the types of tourist accommodation (encouraging new forms of accommodation) · Strengthen the supply chains of diversification (business tourism, cultural, ecological, golf ...)

II- Tourism Promotion · Adopt a marketing approach by country (the study of marketing strategy and communication plan) Sign partnerships air (creating a fund of support services to new countries...) · Construct the new events policy (creation of two international events and an annual calendar of events) · Diversify funding sources (taxes ...) to increase the budget · Creating brand “Tunisian tourism” and a “regional identity” III- Institutional Framework · Re-structure ONTT by means of creating a tourist promotion and marketing structure and another one specialised in tourist vocational training, while effectively associating the profession to these two structures.

IV-Financial sector restructuring · Perform an inventory of the financial health of hotels · Restore the financial health of hotels in financial difficulty: V - Upgrading of ICT in tourism “tourism web compatible” · Site overhaul ONTT (intranet administration, extranet for business and community platform for the general public) · Implement e-governance through an overhaul of the administration · Strengthen training e-tourism (hotel schools ..) · Create a Tunisian tourism portal to be updated and followed up by the National Board of Tunisian Tourism (ONTT). · create a websites introducing Tunisia’s cultural, historical and civilisational specificities. · Increase the resources allocated to the web (allow 20 to 30% of the web promotion, creation of an ICT observatory, an internet code and a charter ICT)

There’s more to celebrate

www.cometotunisia.co.uk