Tunisia Risks Losing its Standing as a Democratic Exemplar

January 14, 2020

*Click here to read the full article at the Financial Times, published January 14, 2020.

By Safwan Masri

It has been three months since free and fair presidential and legislative elections were held in Tunisia, the Arab world’s only democratic, secular state, and still no new government has been installed.

Last Friday, lawmakers rejected the proposed cabinet of the designated prime minister Habib Jemli. President Kais Saied has now to ask another political figure to form a coalition government. If a proposed cabinet fails a second time to receive a fractured parliament’s vote of confidence, fresh elections must be called. The longer the deadlock drags on, the greater the risk to Tunisia’s fragile democratic experiment.

The country’s citizens have endured grinding economic hardship in the aftermath of the Arab Spring. Since 2011, the currency has lost nearly half its value. Total public debt is expected to rise to nearly 79 per cent of gross domestic product this year. Unemployment has soared to 25 per cent in some regions. Eight in 10 Tunisians say endemic governmental corruption persists.

The new leadership cannot afford — literally or figuratively — to wait. Four areas require immediate attention.

First, Tunisia needs a legitimate, taxable and sustainable economy. Currently, about 50 per cent of economic activity is characterised as “informal”. Goods smuggling across the porous borders with neighbouring Algeria and Libya is rampant. None of this economic activity is taxed, resulting in an estimated $8.3bn in tax evasion since 2011.

In principle, sealing the borders would temper smuggling and stem the inflow of weapons and terrorists. In practice, though, it will place further strain on Tunisians currently forced to work in the informal economy. To their credit, policymakers, business executives and influential non-governmental organisation leaders understand that if the administration intends to eliminate off-the-books jobs, it has an obligation to replace them with honest ones.

Developing skills training and employment programmes designed to absorb smugglers into the legitimate economy — and on to the tax rolls — in exchange for amnesty is critical. Efforts are also under way to crack down on the corrupt public officials who enable the informal economy. Over the past few months, there have been several high-profile arrests and ministerial audits. Increasingly, digitisation will be deployed to shepherd projects through the government-approval process — a computer cannot be bribed.

Second, the government is leaving billions in taxes uncollected, maintaining a bloated, inefficient public sector. Wages paid to state employees account for two-thirds of collected tax revenues and half of government spending. Does the Arab world’s only secular democracy really need 19,000 employees in its Ministry of Religious Affairs?

Predictably, the overstaffed bureaucracy entangles the business community in red tape, stifling economic development. For companies that cannot or will not pay bribes, compliance costs an estimated 13 per cent of revenues.

Third, Tunisia, a gateway into the African market, must attract the right kind of foreign investment. Legacy foreign investment has flowed toward the energy and phosphates sectors. Those industries, controlled either by the state or crony capitalists, have historically been either mismanaged by the state or raided by the privileged few. The government should reduce its ownership stakes, and transfer the consistently money-losing state-owned companies to legitimate operators with transparent corporate governance structures.

The country’s new leaders must also attract investments that provide technological value to emerging sectors such as business services, software, information technology, renewable energy and telecommunications.

Finally, if Tunisian youth are not better trained for success in a revitalised economy, the other reforms will be for naught. Accordingly, the broken education system, which is misaligned with the demands of the labour marketplace, must be repaired.

This is a nation whose future economic growth will depend heavily on skilled labour, but its lauded vocational education system has been gutted, simultaneously denying prospective employers a capable technical workforce and non-college-bound youth an opportunity to participate in the formal economy.

In higher education, what was for decades considered the premier university system in the Arab world was eroded under the late deposed dictator Zein al-Abidine Ben Ali, who transformed the universities into “factories of unemployment”. By inflating graduates’ credentials while lowering academic standards, Ben Ali’s misguided reforms flooded the employment market with candidates for jobs that didn’t — and still don’t — exist. The result: Tunisian graduates have a harder time finding a job than those without a degree. Currently, only one in four college degree holders can secure work.

In a region defined by political turmoil, it is worth remembering that the street protests that have become rampant — most recently in Iraq, Lebanon and Algeria — were inspired more by economics than ideology, just as they were in Tunisia in the lead-up to its revolution almost a decade ago, and since. The country urgently needs a new, competent government. And once its new leaders are installed, they had better act fast.

Professor Safwan M. Masri is the Executive Vice President for Global Centers and Global Development at Columbia University, and is author of ‘Tunisia: An Arab Anomaly’.