The privatization of public enterprises has served as a platform for developing the private sector in Tunisia since the 1980s. Privatization has also been a useful instrument in reinforcing the economy’s efficiency and consolidating its opening onto exterior markets. First launched in 1987, the privatization program has since consistently offered noteworthy opportunities for attracting the interest of foreign investors, including many operations for the sale of assets or stock in the capital of semi-public enterprises, as well as concessions to build highways, produce electricity, desalinate water, treat wastewater and solid waste, etc.
The program’s results have encouraged local authorities, who find themselves with a wider margin for navigating the economic difficulties related to speculation and global market mutations. To the present day, 209 public and semi-public companies have been ceded, bringing the imposing sum of $4.6 billion into the public coffers, according to an official balance sheet, which specified that foreign investment accounted for $4 billion of this amount, or 86.9%. This balance sheet highlighted that 104 public enterprises have been completely privatized and 32 partially ceded, with 11 other companies opening their capital for public investment. The privatization program has principally affected the sectors of tourism, services, commercial, and building materials.
Over the course of 2007 alone, four enterprises were sold and three others were ceded, one of which, the Tunisian Electro-Mechanical Construction Company (SACEM), still being in the course of being finalized.
For 2008, the privatization program comprises seven industrial companies: the National Oil Distribution Company (SNDP), the Tunisian Automobile Industry Company (STIA), the Tunisian Tire Industry Company (STIP), the Tunisian Drilling Company (CTF), the Cement Company of Bizerte (SCB), the Company for Producing and Commercializing Fertilizer (Granuphos) and the Tunisian Chemical Fertilizer Company (STEC). The state also ceded 16% of the capital of Tunisie Telecom to the Emirati Group TCom in 2008.
The liberalizing path
As far as macroeconomic policy is concerned, the Tunisian state appears to have resolved to disengage itself from a near totality of economic activities. Such an initiative forms part of a development strategy to build better economic structures and to redeploy the productive apparatus in such a way that will enhance its competitiveness by international standards. The state still retains final control over the privatization program, on account of the sensitive nature of the sectors in which privatizing companies operate.
The industrial sector has provided the lion’s share of privatizable entities. The Tunisian Automobile Industry Company (STIA), for instance, recently ceded its public holdings which make up 99.99% of its capital. Industry experts feel that privatization is in the best interest of the industrial sector, and predict a remarkable improvement in the performance of this branch of activity.
Another case is that of the National Oil Distribution Company for (SNDP), which opened up 35% of its capital to a strategic investor in the sector. In the services sector, the Bank of Tunisia and the Emirates (BTE) ceded public holdings equal to 38.90% of capital. The agricultural and services sectors are also in the process of partially ceding public shares. The Tunisian-Kuwaiti Bank (BTK) ceded a block of shares worth 60% of capital, of which 30% is in public holdings. The Lakhmes Agricultural Development Company (SODAL) also ceded assets and rents on state-owned land.
Privatization operations are resulting in a higher performance of economic indicators. Sahel Mechanical Workshops (AMS) has enjoyed a remarkable post-privatization success, since Groupe Loukil acquired 79% of public holdings in the company’s capital for the sum of $2.5 million. Furthermore, the first privatization in the air transportation sector shed new light on the growth being generated by this liberalizing economy. The international Turkish operator TAV obtained a concession to run the Monastir airport and to build the airport of Enfidha, with provisions to manage these for forty years. The national treasury is swelling with the initial offering of more than $530 million from the Turkish bid for these airports.
Several recent studies show that the pursuit of privatization has resulted in performance improvement in the quasi-totality of privatized companies, as much on the level of turnover and returns on investment as on the level of jobs creation and employment. The World Bank and International Monetary Fund are recommending that Tunisian authorities accelerate the pace of privatizing operations, which are beginning to reach into strategic and highly competitive activities like transportation, finance and telecommunications.
Continuing the success
The overall success of this privatization strategy, which is notably contributing to the evolution of the financial market, relies on a globally optimistic vision towards Tunisian development. This optimism has managed so far to dispatch significant foreign capital towards Tunisia. As concession opportunities multiply and the stock market grows ever more dynamic, we should expect a sizable volume of capital and foreign investment to enter into the next round of privatizations. The experience Tunisia has gained in privatization since the 1980s should shed light on new ways to achieve its objectives of reinforcing the efficiency of the domestic economy, anchoring itself in the global economy, and meeting its goals for growth, investment and employment.
