Foreign Direct Investment
In the context of social and political turmoil, FDI flows to Tunisia remain below their potential. According to UNCTAD's World Investment Report 2023, FDI inflows to Tunisia increased 8% y-o-y in 2022, totalling USD 713 million. The stock of FDI reached USD 39.4 billion, around 84.7% of the country’s GDP. According to the latest data by the Tunisian Investment Office, at the end of the first nine months of 2023, international investments in Tunisia reached the amount of TND 1,862.1 million. Compared to the past three years, these investments have recorded variations of 13.1% compared to 2022, 34.6% compared to 2021, and 36.0% compared to 2020. During the same period, FDI was distributed as follows: 20.3% for energy, 58.9% for manufacturing industries, 20.4% for services, and 0.4% for agriculture. The breakdown by country places France in the lead with TND 444.8 million, representing over 32% of the total FDI excluding energy. Following are Qatar with TND 282.2 million, Italy with TND 184.9 million, Germany (120.4), and Switzerland with (40.6). The regional distribution confirms a great disparity among regions: more than 51.3% of FDI is concentrated in the Greater Tunis regions (mainly the governorate of Tunis) and in the Northeast region (25.6%).
The key assets of Tunisia are its proximity to Europe, sub-Saharan Africa and the Middle East, free trade agreements with the EU and much of Africa and an educated workforce. In recent years, the Tunisian government has carried out necessary structural reforms to improve Tunisia's business climate, including an improved bankruptcy law, an investment code and an initial 'negative list' and a law allowing for public-private partnerships. The government adopted laws allowing to start a business more easily (more services are available via the one-stop shop, and fees decreased); registering property is now faster and more transparent and paying taxes is easier (implementation of a risk-based tax audit system). Nevertheless, there are still huge bureaucratic barriers to investment. State-owned enterprises are a major player in the Tunisian economy and several sectors remain closed to foreign investment. The informal sector, estimated at between 40% and 60% of the overall economy, is still a concern since legal businesses are forced to compete with smuggled goods. Moreover, the country is facing high political and social instability, unemployment, inflation, and rising levels of public debt. Tunisia ranks 79th among the 132 economies on the Global Innovation Index 2023 and 150th out of 184 countries on the 2023 Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
FDI Inward Flow (million USD) | 652 | 660 | 713 |
FDI Stock (million USD) | 37,955 | 38,933 | 39,467 |
Number of Greenfield Investments* | 10 | 8 | 14 |
Value of Greenfield Investments (million USD) | 479 | 276 | 409 |
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Tunisia | Middle East & North Africa | United States | Germany |
Index of Transaction Transparency* | 6.0 | 6.4 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 7.0 | 4.8 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 5.0 | 4.7 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.