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Tunisia Facing Increasing Poverty and Regional Inequalities

The worsening of disparities proves that reforms initiated by governments since 2011 and the strategies implemented by the development plan have failed to ensure social justice and create regional cohesion.

by Manel Dridi
Published on October 26, 2021

In Tunisia, the challenges of local human and business development – along with fixing the economic disparity between the country’s different regions – has long been a major concern of state authorities. Indeed, the set of strategies and reforms initiated by the 2016-2020 National Development Plan were designed to improve the socioeconomic conditions of the country and consolidate the connections between its different regions in order to reduce poverty and growing regional inequalities. Among its objectives, the plan foresaw an annual GDP growth of 4 percent, a 30 percent improvement in the share of high-growth activities, a 30 percent gap reduction in regional development indicators, and the creation of 400,000 jobs by the end of 2020 intended to reduce the unemployment rate from 15 percent to 12 percent and lessen the poverty rate by 2 percent. Yet, these objectives were ultimately unrealistic. 

Today, Tunisia is afflicted by increasing economic disparities that favor its coastal regions, which account for more than 80 percent of urban areas and 90 percent of overall employment. Indeed, the Covid-19 pandemic and its resulting health crisis only further deteriorated the Tunisian economy, which was already fragile and facing many structural obstacles exacerbated by the political instability that followed the 2011 revolution. The GDP collapsed 8.6 percent in 2020 compared to 2019, the budget deficit widened to 10.2 percent of the GDP, and the country’s public debt reached 87.6 percent of the GDP at the end of 2020. Tunisia is also strangled by the weight of its external debt, equal to 30 billion dollars. 

In addition to the economic crisis, social indicators signal a deterioration in the social situation. The percentage of poverty increased from 14 to 21 percent in one year, and the unemployment rate increased from 15 percent in Q1 2020 to 17.8 percent in Q1 2021. This crisis has given rise to multiple demonstrations and protests against poverty, unemployment, and regional inequalities in several areas of the country. These protests, moreover, resulted in a slowdown of economic activity and the closure of hydrocarbon and phosphate production sites in the south of Tunisia. Faced with this alarming situation, the population lost confidence in the government and its ability to improve the country's economic situation and ensure social justice and fair development within the country. This desperation led to protests in all regions against the state’s poor governance on Independence Day on July 25, 2021.

In response to this institutional crisis that has multiplied demonstrations, on the evening of July 25, Tunisian President Kaïs Saïed announced the freezing of parliament's activities, as well as the lifting of parliamentary immunity and the dismissal of the leader of government Hichem Mechichi.

Regional fallout from the pandemic and longstanding local development problems, however, point to the need for a more focused strategies and reforms to strengthen territorial cohesion across different regions of Tunisia. These reforms and policies must take into account the socioeconomic characteristics and different potentialities of the regions, especially in more marginalized areas. They also must be complemented by compensatory measures in order to counterbalance the negative effects of previous regional policies, such as a more balanced allocation of public funds which would create job opportunities and make public services more accessible to the poor. 

An analysis of the economic geography of Tunisia reveals a phenomenon of urbanization, largely resulting from the concentration of activities and living conditions in the most dynamic coastal regions – especially those of greater Tunis – while interior regions remain entirely rural and heavily dominated by farming and agricultural activities. This, in turn, led to the rural exodus (Graph 1) – today, the coastal regions account for 85 percent of businesses operating in all sectors, and 90 percent of the overall employment.

These regional gaps show that there has been no positive external effect on rural regions, which further isolates them from the presence of urban interactions and all forms of cooperation or local initiatives that make it possible to promote regional growth and correct this structural imbalance. Moreover, the vulnerability of these regions allows for the concentration of poverty observed in its multidimensional aspects, shown through needy families, rudimentary housing as well as the phenomenon of social exclusion.

Likewise, poverty analysis confirms the growing disparities resulting from various development policies which favor coastal areas and large cities. The highest poverty rates are concentrated in rural areas, especially those in the northwest and southwest of the country (often exceeding 33 percent). Contrarily, the greater Tunis area shows the lowest values, with Tunis being 4.6 percent, Ben Arous 5.6 percent, and Ariana 7 percent. 

In addition, unemployment studies show that regions with high poverty rates also have the highest unemployment rates in the country, which can reach 26 percent in the northwest regions and 21 percent in southern regions – a large gap compared to the national average of 15.2 percent. These figures accompany an increase in unemployment among young people aged 18 to 29 – including 56 percent of university graduates – who in 2016 represented more than 70 percent of total unemployment. Consequently, this worsening of disparities proves that reforms initiated by governments since 2011 and the strategies implemented by the development plan have failed to ensure social justice and create regional cohesion. 

An evaluation of the 2016-2020 five-year plan ultimately shows that its achievements fall short of its stated objectives. Specifically, the rate of project completion is low, which implies the presence of multiple constraints and obstacles for local development. In fact, mapping of public investments shows that the coastal governorates, particularly Tunis and Sfax, benefit from the largest public fund allocations exceeding 2,000 million dinars respectively, while the southwestern governorates received very low budget allocations of around 512.281 million dinars in Tozeur and 545.462 million dinars in Kébili.

Likewise, our evaluation of the five-year plan revealed that the completion rates of public investment projects are deeply lagging behind intended timelines and durations for the projects, in contrast to Tunis and Sfax which have the highest completion rates (65.8 percent at Tunis and 41.3 percent in Sfax). Investments made in the southwest and northwest are the lowest, revealing a long delay in the realization of public projects. Tozeur and Kébili have seen the lowest amounts in investments, which are 258,401 million dinars and 273,527 million dinars respectively.

The below maps on poverty and public investment projects that were completed show that the poorest regions of the country have continuously received the lowest investment, which inhibits the possibility of growth and achieving regional equality. A good development strategy must be able to trigger sustainable regional growth in order to create balanced, long-term development for the whole country. To do this, the authorities must ensure the completion of public investments, which among many other things, would make public services accessible to the poor. Even more than this, regional public investments must be substantial enough to create an attractive base for businesses and bolster local economic processes so that they could create more jobs for young graduates in these areas.

These expected regional development strategies must guide the movement of urbanization in order to gradually create new urban structures in the interior of the country, including the establishment of high value-added industrialization, which allows rapid growth and also creates a complex structure of production, innovation, and trade. It also entails an optimal use of resources and the development potential of each region, as well as extensive reform of state structures and institutions – the most important being rapid and sustainable decentralization. 

Thus, authorities must, on the one hand, support the rural population and its inhabitants by creating employment opportunities through subsidies and the establishment of projects, and on the other hand, improve their skills and human capital by instituting training in new techniques and tools used by farmers to enable them to increase the yield of cultivated areas.

Therefore, the Tunisian government must coordinate development actions between different ministries and regional authorities in order to realize concrete and effective public investments that meet sustainable development goals and reduce regional inequalities and relative poverty, which will ultimately improve opportunities for all groups, especially disadvantaged communities.

Dr. Manel Dridi is an assistant professor at Tunis Heigh Business School (ESCT). She is a member of the Research Laboratory on Prospective, Strategies and Sustainable Development (PS2D) at the University of Tunis ElManar. Her work focuses on economic analysis and regional development studies.