Construction has long been a mainstay of the Tunisian economy, and this year new projects will help stimulate an economy that is likely to see a contraction resulting from the global financial crisis. Since Gulf investors stepped up their interest in 2006, the construction sector has been dominated by high-end, mixed-use developments, but this year domestic spending on infrastructure and housing is a top priority.
Tunisia’s fourth largest industry in 2008 was construction. According to Chokri Driss, the director of the National Federation of Buildings and Public Works Entrepreneurs, it accounted for approximately 7 percent of the economy and employed 33 percent of the working population. But its strength is a relatively recent development.
Although the government has long encouraged private investment, the sector suffered from a lack of financing until 2006 and was characterized by small-scale local investments. Since then, the promise of Gulf investments totaling nearly $50 billion has led to new competencies and a revitalized sector.
Foreign direct investment will likely now be harder to secure, particularly for luxury proposals. For even though big residential, office, retail, tourism and leisure complexes are still in the works, the downturn has led to slower progress.
Despite these factors, foreign direct investment remains a central component of the government’s plan to upgrade infrastructure and spur on construction, with expansion set to continue. A $550 million project for the Enfidha Airport, 80 kilometers south of Tunis, was awarded to the Turkish firm Tepe-Akfen-Vie Airports Holding, under a build-operate-transfer contract, and is slated for completion by October. The Japanese International Cooperation Agency’s joint roadway project with the Tunisian government to build the $106 million Radès-La Goulette highway in Tunis is also in its final stages.
In January, Slaheddine Malouce, the minister of equipment, housing and physical planning, announced that $318 million would be allocated to development. Projects under the new spending plan include extending existing highways, such as the Tunis-Hammamet-Sud and the Sfax-Gabe connections, the upgrade and consolidation of roads and the construction of new bridges.
In addition to transport infrastructure, foreign investors are also providing financing for energy facilities, such as France-based Alstrom’s construction of a 400 megawatt power plant that is expected to be operational by the end of 2009, the joint Tunisian-Italian El Haouaria 1,200 megawatt gas plant, and the joint Spanish-Tunisian Bizerte project to build wind turbines that will generate 120 megawatts.
Malouce also unveiled the government’s plan to build new low and middle-range housing units. There has long been a shortage of affordable housing in Tunisia, and with the population growing at an annual rate of 1.2 percent, the lack of supply is becoming increasingly pressing. The centerpiece of the strategy is the eleventh development plan, which calls for the construction of 300,000 homes.
In 2009, the Société Nationale Immobilière de Tunisie plans to build nearly 3,000 homes throughout the country, 58 percent of which will be low-range units and 36 percent mid-range. The government is also working to develop a village for social housing in the governorate of Ariana, which will include 1,700 homes.
Making the old new again
There are also plans to revitalize older communities. An urban renewal program will target 200,000 inhabitants in 56 districts from 2009 to 2012, primarily by addressing the lack of basic infrastructure. The program, which covers sanitation and utilities, also finances s economic activities such as the construction of roads and the extension of waste-water treatment canals and storm-water drainage.
While the majority of these investments will go toward upgrading infrastructure, 30 percent is reserved for microcredit, trades and training, which will enable small business owners to access funding, as well as prepare unskilled workers for the job market.
The government hopes that holistic community development programs will help ease the difficulties of the slowdown in growth, giving residents the necessary skill sets to find work. By channeling these plans through construction projects, the government is both filling a necessary housing gap and using public funds to stimulate the economy during a difficult period.
