Tunisia suffers as investors turn wary after revolution

Political uncertainty and the euro zone debt crisis combined to drag down foreign investment flows to Tunisia last year.

Foreign direct investment in Tunisia fell by nearly 30 per cent last year as the country's revolution and the debt crisis engulfing nearby Europe kept investors away.

During the year, foreign direct investment reached US$1.1 billion (Dh4.04bn), 29.7 per cent down from the year before, said the country's Foreign Investment Promotion Agency yesterday.

"The political transition in Tunisia is creating a lack of certainty that's holding back investors. There's a wait-and-see attitude on the part of domestic and foreign investors," said Mohamed Lahouel, a Tunisian national and the chief economist at the Dubai Department of Economic Development.

Tunisia's economy has been struggling to return to growth after a revolution forced Zine El Abidine Ben Ali from the presidency in January last year and triggered a political vacuum.

Despite the election of a new government in October, Tunisia remains beset by unemployment, poverty and strikes.

The country has also been hurt by the debt crisis in the euro zone, the biggest market for its exports and a significant source of tourists and other forms of investment.

A total of 148 foreign companies set up in Tunisia last year, creating 6,191 jobs. But 182 foreign firms pulled out, leading to the loss of 10,930 jobs. Of the firms leaving, 64 were Italian and 61 French.

Tourism was the sector hardest hit by the slowdown, with investment in the sector declining by 83 per cent compared with the previous year. Industry was down 42 per cent, and the energy sector 30 per cent.

Tourism is Tunisia's biggest source of foreign currency, but the number of overseas tourists dropped by more than half to 2 million last year, Reuters reported recently, citing a Tunisian official at the tourism ministry.

But officials are hoping a period of political stability and a better business climate will help to tempt investors back.

The promotion agency has set a target of attracting $1.5bn of investment this year.

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