The privatization process in Tunisia is starting to run out of steam, though not from lack of support for the program from the government. It has instead become a victim of its own success, as the state is beginning to run out of assets of interest to investors.
Although the program is ongoing, the pace at which it is moving is less than in the past. On Jan. 12, Direction Générale de la Privatization, Tunisia’s privatization authority, announced it was calling for tenders for a 76% stake in the state-owned retail chain Magasin Général. The winning bid for the profit-making chain of 43 outlets is set to be made public in the second quarter of 2007.
Bids have also been called for the privatization of state-owned electrical transformer and power and solar water heater producer Société Anonyme de Constructions Electromécaniques (SACEM). As with the sale of Magasin Général, Banque d’Affaires de Tunisie, which has become something of a specialist in the field of privatization, is serving as the main adviser for SACEM’s sell off.
Another enterprise that has recently been put up for sale is Nour El Ain Hotel, operated by Ain Draham Tourism Society. Located in the north of the country, close to mountain ranges and hunting preserves, the 60-room hotel has drawn strong interest from investors. The tender process for the hotel closed on March 20.
Early adopter of privatization
Tunisia was an early convert to the privatization process in the region, first launching its program in 1987, after the policy shift away from a centralized economy. The program can be divided into three distinct phases. The first ran from 1987 until 1994, when many unprofitable state enterprises were sold off, the majority being in the tourism, commerce, fishery and agro-foods sectors.
The second phase, which covered a four-year period from 1994, saw the state put in place legislative procedures to allow it to sell off more profitable assets, launch initial public offerings and block sales, laying the foundations for the expansion of the program.
Since 1998, the focus has shifted to the privatization of major state enterprises, in strategic areas such as heavy industry, communications, energy, transport and retailing.
To date, Tunisia has achieved solid success, having sold off just over 200 state enterprises, spread across three broad categories—services, industry and fisheries/agriculture—with 45 sell-offs in the tourism sector, one of the most important for the Tunisian economy. Over the past 20 years, some $4.2 billion has been raised from the sales.
During the period of Tunisia’s 10th five-year economic plan, which commenced in 2002, 47 state enterprises were partly or fully sold off. In terms of numbers, this was only exceeded by the preceding five-year term, in which 75 state assets went under the hammer. However, as far as revenues go, 2006 broke all records, with $2.37 billion being transferred into the government’s coffers.
An interesting aspect of Tunisia’s privatization program is the high level of interest it has attracted from overseas investors. Of the total $4.2 billion generated so far, $3.7 billion has come in the form of foreign direct investment (FDI).
Tunisie Télécom a moneymaker
The success of 2006 has been underpinned by the sale in July last year of a 35% stake in Tunisie Télécom to Tecom Dig, a subsidiary of Dubai Holding. The sale raised $2.25 billion, accounting for more than half of the program’s total revenue and the vast majority of FDI.
Another achievement is the ongoing viability of the vast majority of enterprises after their shift away from the public sector. According to studies conducted by the privatization authority, almost all of the businesses and assets privatized have prospered, even those loss makers that the state divested itself of early in the program.
While Tunisia’s privatization program may not have generated some of the highest levels of revenue garnered by other countries in the region, the process has been a steady and carefully moderated one, rather than a “fire sale” of assets. Moreover, according to state surveys, most enterprises have upped their profits and taken on staff following their privatization, translating into an ongoing benefit to the economy, instead of a one-off windfall. As Tunisia is discovering, boosting the private sector can prove fortuitous.
