Tunisia’s investment in information and communication technology (ICT) has begun to pay off. A flurry of recent reports has ranked the sector among the top in the region, highlighting its potential as a destination for the offshore operations of European companies. While such reports can only provide a rough comparison and rely on subjective factors, rankings from such diverse sources as the World Economic Forum, the World Bank, AT Kearney and the Commonwealth Business Council nonetheless underscore Tunisia’s advantages, including a proximity to key markets, a multilingual population, low costs and a competitive ICT and business environment. As European companies look to reduce expenses, the North African country could become a popular site for new developments.
Tunisia has benefitted from European corporations’ increasing tendency to locate ICT operations offshore. While Southeast Asia has emerged as a popular offshore destination, European firms have looked closer to home, relocating operations to Eastern Europe, the Middle East and North Africa. With English less of a priority, Tunisia’s location, which offers travel times of less than two hours to many European capitals and sits in the same time zone, has attracted many firms. Although North American firms still account for nearly 70 percent of offshore spending, according to a recent report by US-based consulting firm AT Kearney, European companies are catching up quickly. As European demand increases, so too will the flow of business to North Africa.
The entire region will likely benefit from this shift, but Tunisia stands out among its neighbors. For the third year in a row, the World Economic Forum’s report on ICT ranked Tunisia first in North Africa. Rated 38th of the 134 countries ranked in the report, Tunisia came in well ahead of its closest competitors (Jordan, 44 and Egypt, 76), and scored well on individual criteria, including political and economic environment and degree of ICT utilization.
Tunis hardwires ICT
This acknowledgement can largely be attributed to the government’s strong support of the ICT sector. In a bid to improve Tunisia’s knowledge economy, the government has funnelled money to training and education programs, as well as into ICT infrastructure, while new legislative incentives have also been unveiled to encourage offshoring. Tunisia’s 11th development plan (2007-11) calls for an investment of $1.91 billion into the local ICT sector, with a major focus on training and increasing employment. Although Tunisia’s population is relatively small, it is well-educated and multilingual — something the government hopes to take advantage of in the coming years, with a target of an additional 10,000 ICT jobs per year. Currently, 10 percent of university students are pursuing ICT studies, which bodes well for the future of the industry.
Given the pressures of the global economic downturn, Tunisia’s competitive labor costs and developed infrastructure are also attractive. These market advantages are bolstered by an encouraging legislative framework which has, amongst other things, paved the way for a series of IT industry zones. El Gazala, the nation’s flagship technology and communications center located just outside Tunis, is an example of the policy’s success. Open since 1999 and home to about 80 companies, including Ericsson, Alcatel-Lucent and Microsoft, demand at El Gazala has been so high that it is adding 36 hectares to its existing 65 hectares. Two other parks, at Sousse and Sfax, are also expanding, adding a total of 100,000 square meters.
The government has also worked to streamline bureaucracy in the ICT sector’s regulatory agencies in an effort to attract new companies. A one-stop shop to simplify administrative and legal procedures and to facilitate import and customs procedures for ICT was established in 2008. The process consolidates the activities of a number of oversight bodies and allows companies to complete most procedures online.
“Previously, customs procedures could take a week or longer. This speeds up the process,” said Jawher Ferjaoui, the general director of the digital economy section at the Ministry of Communications and Technology.
Tunisia’s “government readiness” rank, according to the World Economic Forum, is even higher than its overall rank (27th compared to 38th), and it ranks 8th for government prioritization of ICT. The state aims to increase ICT’s contribution to the economy to 13.5 percent by 2012, up 3.5 percent from the current level, which will bolster the sector’s position in the increasingly competitive market for offshore ICT services.
