{"id":115203,"date":"2026-05-18T00:00:00","date_gmt":"2026-05-18T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/menaplus\/?p=115203"},"modified":"2026-05-18T06:01:10","modified_gmt":"2026-05-18T06:01:10","slug":"tunisias-strongest-fdi-year-in-a-decade-wont-be-enough-to-fix-its-structural-problems","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/menaplus\/2026\/05\/18\/tunisias-strongest-fdi-year-in-a-decade-wont-be-enough-to-fix-its-structural-problems\/","title":{"rendered":"Tunisia\u2019s strongest FDI year in a decade won\u2019t be enough to fix its structural problems"},"content":{"rendered":"<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"> <strong>On paper, Tunisia is having its strongest year for foreign investment in a decade, but the <\/strong><strong>war in the Gulf is exposing the limits of that play.<\/strong> FDI is up <a target=\"_blank\" href=\"https:\/\/www.tap.info.tn\/en\/Portal-Top-News-EN\/19985964-tunisia-over-tnd\" style=\"\">30%<\/a>, the country has cemented itself as a European <a target=\"_blank\" href=\"https:\/\/afrocaribbeantv.com\/heres-a-detailed-overview-of-foreign-investors-in-tunisia-and-the-sectors-theyre-most-active-in\/\" style=\"\">near-shoring hub<\/a> for automotive components and IT, and its startup ecosystem ranks <a target=\"_blank\" href=\"https:\/\/flat6labs.com\/Location\/tunisia\/\" style=\"\">19th out of 190 countries<\/a> in the World Bank\u2019s Starting a Business Index. On the flipside, oil import costs are running at nearly double the government\u2019s working assumption, GCC remittances are softening, growth forecasts have been cut by a full percentage point, and the deficit is on track to hit 6% of GDP \u2014 and there\u2019s very little political room to negotiate an IMF backstop.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The country sidestepped a balance-of-payments crisis the last time it walked this <\/strong><strong>tightrope in 2023<\/strong>, after President Kais Saied rejected a USD 1.9 bn IMF bailout. That escape ran on luck \u2014 remittances rose; tourism bounced back; a drought ended, sending agricultural output up; and energy prices fell. None of those conditions hold today, with the Strait of Hormuz effectively shut and Brent trading near double the budget\u2019s USD 63 \/ barrel assumption.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>For investors already inside the country<\/strong> \u2014 Germany\u2019s Leoni, France\u2019s Faurecia, the cluster of <a target=\"_blank\" href=\"https:\/\/trovit.tn\/news\/enquete-ahk-les-entreprises-allemandes-en-tunisie-prevoient-daugmenter-leurs-investissements-en-2024\" style=\"\">German<\/a> biopharma, pharma and IT names \u2014 <strong>the near-shoring case still holds.<\/strong> But the inflows are concentrated, capital-intensive, and largely a story of incumbents scaling existing plants rather than new entrants taking the plunge. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>\u201cThese companies are scaling up their own factories. They already have the <\/strong><strong>infrastructure and know how to deal with the market,\u201d<\/strong> Birgit Lamm, country director for Tunisia and Libya at the Friedrich Naumann Foundation for Freedom, told EnterpriseAM. The structural drag \u2014 a non-convertible TND, an overpowering bureaucracy, oligarchic monopolies, and laws that bar foreign retail and wholesale \u2014 means the headline FDI figure masks how narrow the gains really are.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;text-align:left\">\n<p class=\"tag-border-left\">Looming fiscal and inflationary pressures<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>\u201cOne of Tunisia\u2019s biggest macroeconomic challenges is that its growth rate is extremely <\/strong><strong>low,\u201d<\/strong> Deputy Director of the <a target=\"_blank\" href=\"https:\/\/timep.org\/author\/kaldas\/\" style=\"\">Tahrir Institute for Middle East Policy<\/a> Timothy Kaldas tells us \u2014 and the war is making it worse. The <a target=\"_blank\" href=\"https:\/\/ent.news\/2026\/4\/854.pdf\" style=\"\">IMF<\/a> cut its 2026 and 2027 growth forecasts by a full percentage point, to 2.1% and 1.6%, citing the spillover from the Iran conflict. <a target=\"_blank\" href=\"https:\/\/www.spglobal.com\/ratings\/en\/regulatory\/article\/tunisian-banking-outlook-2026-slow-economic-growth-constrains-earnings-s101666317\" style=\"\">S&P Global<\/a> was more pessimistic still at 1.7% for 2026, \u201cexcluding any major external or internal shocks,\u201d and warned that stalled structural reform would crimp public and private investment and constrain bank earnings. The government\u2019s own 3.3% target looks increasingly aspirational.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The fiscal picture is tightening fast:<\/strong> Higher commodity import costs, rising sovereign borrowing costs, and softening GCC remittances are converging on a small, oil-importing economy with little room to absorb shocks. The budget deficit hit <a target=\"_blank\" href=\"https:\/\/asharqbusiness.com\/economics\/130692\/%D8%AA%D9%88%D9%86%D8%B3-%D9%81%D9%8A-%D8%A7%D8%AE%D8%AA%D8%A8%D8%A7%D8%B1-%D8%A7%D9%84%D8%B9%D8%AC%D8%B2-%D9%88%D8%A7%D9%84%D8%AA%D8%B6%D8%AE%D9%85-%D9%88%D8%B3%D8%B7-%D8%AA%D8%AF%D8%A7%D8%B9%D9%8A%D8%A7%D8%AA-%D8%AD%D8%B1%D8%A8-%D8%A5%D9%8A%D8%B1%D8%A7%D9%86\/\" style=\"\">TND 5.2 bn<\/a> (USD 1.8 bn) in 1Q 2026 alone \u2014 more than half of last year\u2019s full-year deficit of TND 9.6 bn (5.5% of GDP). It is now projected to widen to TND 11 bn (USD 3.8 bn), or 6% of GDP, driven largely by the spike in oil prices thanks to the war in the Gulf.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Policymakers don\u2019t have much wiggle room: \u201cMore than two-thirds of the budget is <\/strong><strong>blocked for things that don\u2019t give you room for maneuver<\/strong> in stimulating the economy,\u201d Lamm says, noting that only about 10% is allocated to investment and management \u2014 insufficient, in her view, to move the dial. Roughly 40% \u2014 about TND 25 bn (USD 8.3 bn) \u2014 goes to public sector wages and salaries, and another 32% \u2014 about TND 20 bn (USD 6.8 bn) \u2014 to subsidies and other social-affairs line items. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The areas drawing the most FDI \u2014 automotive and textiles \u2014 are not labor-intensive<\/strong>, and the value generated often leaves the country, says Jalel Ben Romdhane (<a target=\"_blank\" href=\"https:\/\/www.linkedin.com\/in\/jalel-ben-romdhane\/\" style=\"\">LinkedIn<\/a>), an independent Tunisian expert in alternative finance and financial markets. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The official breakdown \u2014 63% in manufacturing, 16.3% in energy, 18.8% in services \u2014 <\/strong><strong>looks healthy in aggregate<\/strong>, but Ben Romdhane points to a more rigid labor code and a shrinking domestic market as reasons Tunisia\u2019s competitive edge is eroding. In automotive, while the majors run plants in Tunisia, Morocco, and Egypt, \u201cthe real value does not stay in the country,\u201d he says.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>There\u2019s a looming tipping point.<\/strong> \u201cIf [the fallout from the war in the Gulf] doesn\u2019t stop quickly, there will be a moment when [policymakers] can\u2019t do anything else but raise fuel prices,\u201d Lamm said. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Tunisia isn\u2019t alone: <\/strong><a target=\"_blank\" href=\"https:\/\/www.fitchsolutions.com\/bmi\/country-risk\/us-iran-conflict-egypt-most-exposed-in-north-africa-under-base-case-non-uniform-exposure-should-war-escalate-09-03-2026?mkt_tok=NzMyLUNLSC03NjcAAAGhkTSAlQlNWR-zKSonVH3mNhmRPmo16qh6LVZthzoR9z-pHsfGSFkysU94ULYWaAnOOvo_KjhY4-OLlkLx5SZ1AgtWDVqJ8Rfavr5XhnLvTg24X-4X_A\" style=\"\">Fitch\u2019s analysis<\/a> ranks Egypt as the most exposed in the region, followed by Morocco and Tunisia, given thin external buffers, limited fiscal space, and constrained monetary policy flexibility across all three.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;text-align:left\">\n<p class=\"tag-border-left\">Structural roadblocks<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>\u201cTunisia\u2019s administrative setup is considered internationally as being rather rigid and <\/strong><strong>bureaucratic,\u201d<\/strong> Lamm tells us. Beyond the public-sector wage bill, an \u201coverpowering bureaucracy\u201d slows everyday business. Authorizing a signature on an employment contract, for example, requires a half-day trip to the municipality just to get the stamp that makes it legally binding.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>A financial system that doesn\u2019t easily allow for expatriation of funds creates another <\/strong><strong>layer of problems.<\/strong> \u201cYou cannot freely convert TND into other currencies. If you want to invest in Tunisia, you cannot take money out without permission from the Central Bank. You can bring all the money you like in, but the money stays here,\u201d Lamm told us. Tunisia\u2019s tightly-managed exchange rate has come under more pressure amid fallout from the war in the Gulf, while Egypt\u2019s fully flexible rate has allowed the currency to serve as a shock absorber. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Then there\u2019s the monopoly problem.<\/strong> \u201cThe oligarchic families that have monopolies in Tunisia fundamentally make it almost impossible to attract new investment outside of partnerships with them,\u201d Kaldas notes, citing the distribution of goods and the banking sector as the most affected. Last month, a Tunisian court <a target=\"_blank\" href=\"https:\/\/www.reuters.com\/world\/africa\/tunisia-jails-tycoon-mabrouk-ex-pm-chahed-corruption-charges-2026-03-03\/\" style=\"\">sentenced<\/a> businessman Marouan Mabrouk \u2014 a relative of ousted president Zine El Abidine Ben Ali \u2014 along with the former prime minister and several other ex-cabinet members on corruption charges. The Mabrouk family, with interests spanning trade, banking, communications, and car dealerships, has long been criticized for receiving protection from successive post-2011 governments.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The legal architecture reinforces the closure.<\/strong> Foreign companies are banned under <a target=\"_blank\" href=\"https:\/\/www.trade.gov\/country-commercial-guides\/tunisia-distribution-sales-channels\" style=\"\">Tunisian<\/a><a target=\"_blank\" href=\"https:\/\/www.trade.gov\/country-commercial-guides\/tunisia-distribution-sales-channels\" style=\"\">law<\/a> from operating in the wholesale or retail sectors. Domestic distribution is restricted to nationals, and majority-foreign joint ventures are rare across the economy.. A 2022 <a target=\"_blank\" href=\"https:\/\/www.carthage.tn\/sites\/default\/files\/public\/%D9%85%D8%B1%D8%B3%D9%88%D9%85%20%D8%B9%D8%AF%D8%AF%2014%20%D9%84%D8%B3%D9%86%D8%A9%202022.pdf\" style=\"\">law<\/a> criminalized \u201cillegal speculation\u201d \u2014 covering offenses including hoarding and price manipulation \u2014 but stopped short of addressing the distribution monopolies created by the agency laws themselves.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">!_Subhed_! Silver linings<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The picture isn\u2019t uniformly grim.<\/strong> \u201cTunisia\u2019s economic problems are manageable compared to Egypt or Lebanon, but a balance of payment crisis can still arise,\u201d Kaldas says, noting that the government is currently leaning on exceptional measures \u2014 zero-interest borrowing from the central bank, pulling liquidity out of the banking sector. \u201cAt some point, those domestic options will be exhausted.\u201d<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Reform is possible, analysts say, if politically uncomfortable.<\/strong> \u201cA progressive reform is possible. In Tunisia, it is easier than in most of North Africa to tax wealth. They have a high capacity for taxation \u2014 their tax-to-GDP ratio is double Egypt\u2019s,\u201d Kaldas says. \u201cBut that has to be coupled with removing the privileges of the monopolists and creating space for businesses to scale and compete.\u201d<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The hub thesis still has legs \u2014 provided the plumbing gets fixed.<\/strong> \u201cIntegrating the Tunisian currency into the international monetary system would cause some initial shocks for the local market, but if you want to develop Tunisia as an economic hub, you need to cut down on red tape and make the government more transparent and agile,\u201d Lamm says.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Planet Startup is the bright spot \u2014 for now.<\/strong> The IT sector represents 7.5% of GDP and creates over 7.5k jobs a year. But Ben Romdhane warns the broader macro damage isn\u2019t visible to citizens yet because the budget is absorbing it. \u201cStartups and technology companies are booming, but until now, the shock is absorbed by the budget. What will happen is the budget deficit will grow and, in one way or another, it will become inflation. It\u2019s not very visible to the citizen yet,\u201d he tells us.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>But even among startups, there\u2019s a ceiling to be reckoned with:<\/strong> \u201cFor a startup to grow, it must go international very quickly. Then you enter the complicated structure of international money transfers and banking. You would need easier structures and more facilities from the government to help these startups grow. The people are there, but unfortunately, when they reach a certain level, they often think of moving out of Tunisia,\u201d Lamm explains.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>And remember: A good chunk of that \u201cIT sector\u201d is offshoring <\/strong>\u2014 a sector where we think <a target=\"_blank\" href=\"https:\/\/enterpriseam.com\/menaplus\/2026\/05\/11\/the-decoupling-of-revenue-and-headcount-what-indias-export-oriented-it-headcount-slump-means-for-mena\/\" style=\"\">the numbers out of India indicate AI is already taking jobs from humans<\/a>. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;text-align:left\">\n<p class=\"tag-border-left\">IMF to the rescue?<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>No bailout deal is in sight, and the country\u2019s failed 2023 talks with the Fund still cast a <\/strong><strong>long shadow.<\/strong> Saied explicitly rejected a USD 1.9 bn bailout, citing national sovereignty and what he termed \u201c <a target=\"_blank\" href=\"https:\/\/www.reuters.com\/world\/africa\/tunisian-president-rejects-imf-dictats-says-public-peace-not-game-2023-04-06\/\" style=\"\">foreign diktats<\/a>.\u201d In response to EnterpriseAM\u2019s questions, an IMF spokesperson said that \u201cThe 2023 Article IV consultation was postponed at the request of the authorities.\u201d <strong>The Fund tells us that it has not received a request for financial assistance from Tunisia<\/strong>, but \u201cremains committed to supporting the authorities in their reform efforts to reduce macroeconomic imbalances, enhance social equity, and support growth and job creation.\u201d<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The 2023 package had real flaws of its own, Kaldas notes. <\/strong>\u201cThe staff-level agreement that ultimately was rejected by Kais Saied had flaws in terms of austerity and its reliance on value-added tax as opposed to more progressive sources of revenue.\u201d Two sticking points dominated: the IMF\u2019s view that energy subsidies were unsustainable, and Saied\u2019s political objection to borrowing from the Fund at all. The division split the government \u2014 Saied <a target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2024-01-25\/tunisia-default-averted-despite-saied-s-rejection-of-imf-bailout\" style=\"\">fired<\/a> the economy and planning minister after publicly rejecting the deal.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>A return to the table looks hard to engineer.<\/strong> \u201cIn the end, the government will probably need to talk to the IMF again. But after the earlier clash, where the president was very clear about national sovereignty and not being patronized, it makes it hard for him to explain a change of mind to the public. You would need a different narrative or instrument to justify it,\u201d Lamm tells us.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>For now, Tunisia is leaning on its European partners for funding<\/strong>, on Algeria for energy imports, and on a long-standing development cooperation with the World Bank.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>What\u2019s next is unclear \u2014 but the conditions that bailed Tunisia out last time aren\u2019t on <\/strong><strong>offer.<\/strong> In 2023, the economy was spared the brunt of a BoP crisis because remittances went up, tourism recovered, drought ended, agricultural production rose, and energy prices dropped. <strong>\u201cSaied got lucky,\u201d as Kaldas puts it<\/strong>. The current geopolitical landscape and macroeconomic conditions don\u2019t lend themselves to a repeat.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Without the buffer of tourism and cheap energy that saved it last time, Tunisia will have to face its deep structural issues<\/p>\n","protected":false},"author":1,"featured_media":115204,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2608],"tags":[2466,2695,2538,2690,2607,2760],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-115203","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-lede","tag-debt","tag-economy","tag-enterpriseam","tag-macroeconomics","tag-the-lede","tag-tunisia","wpautop","entry"],"acf":{"mongo_id":"b8e51a19-138b-4a72-bc1c-3857ef8c1ee5","order":"3","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2026\/5\/1040.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Tightrope","related_issue":[115200],"teaser":"Without the buffer of tourism and cheap energy that saved it last time, Tunisia will have to face its deep structural issues"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.1.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Tunisia\u2019s strongest FDI year in a decade won\u2019t be enough to fix its structural problems - MENA+ Edition<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterpriseam.com\/menaplus\/2026\/05\/18\/tunisias-strongest-fdi-year-in-a-decade-wont-be-enough-to-fix-its-structural-problems\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tunisia\u2019s strongest FDI year in a decade won\u2019t be enough to fix its structural problems\" \/>\n<meta property=\"og:description\" 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