The North Africa Journal – May 31, 2018: Economic Brief: A parliamentary report released this week in Tunisia caught our attention because it addressed, in an honest way, the major issues facing the restive southeastern Tunisia, and by extension many other regions. On May 24, 2018, the report, which focused on Tataouine, Gabes and Médenine, highlighted the high poverty rate that plagues the region and allows unrest to take place. The authors concluded that the government must urgently change its development strategy for the region, because the current one is not working. The authors lament that the infrastructure in the region has been deeply degraded, in particular in Tataouine and Gabes. This degradation is one of the reasons why investors do not go there anymore, a region increasingly isolated by its crumbling infrastructure.
Bureaucracy remains at the top of the list of problems plaguing the region. Projects and business creation are blocked by red tape and conflicts on land and real estate issues. Out-of-control and outdated administrative procedures, dating back to the colonial era, are preventing any improvement to take place.
One of the authors, even went as far as attacking the government-controlled National Statistics Institute (Institut National des Statistiques -INS) for releasing unreliable data on the region, that “are misleading us and provide a false profile of socio-economic conditions.” They even question the government’s announced 2.5% GDP growth recorded in 1Q18. The authors also warn the government not to impose a new tax on real estate developers under the current social and economic conditions, tax that could further cripple the construction sector, and fuel more unrest as unemployment worsens.
Side note: Price of water in Tunisia likely to increase
To make things worse, the cost of living in Tunisia continues to worsen for large swaths of the population. The latest from Tunisia suggests that water company, (Société nationale d’exploitation et de distribution des eaux – SONEDE) has been lobbying hard to force authorities to allow it to increase prices. The company’s executives have been insisting that without an adjustment in tariffs, the company could face a severe financial imbalance. They report that an increasing number of customers have not been paying their bills, with unpaid invoices reaching TND 340 million, equivalent to US$ 130 million. Sonede’s debt to state-owned companies amounts to TND 80 million.
Sonede’s Chief Executive repeated the company’s claim that a price hike is necessary to avoid more losses. But the decision is one that comes from the government, which will likely resist considering the explosive social environment in many parts of the country. This is despite Sonede’s officials arguing that the deficit between production cost and prices has increased dramatically, a situation that tends to be even more magnified in the south of the country.
