Noureddine Ferchiou of Ferchiou & Associés in Tunis looks at the latest market developments in Tunisia

On December 17 2010, a Tunisian street vendor staged a desperate protest against local corruption and 25 years of dictatorship. The act triggered a revolution in Tunisia and a wave of uprisings now known as the ‘Arab Spring’. While the consequences of the Arab Spring are still unfolding, the desire for economic freedom that spurred the political upheavals persists.

Since the ousting of the country’s president in January 2011, Tunisia has undergone a historic transition from dictatorship to democracy; the leaders ratified a progressive constitution, the people voted in a free and fair election, the first democratically elected president was inaugurated, and the parliament formed a new coalition government. However, in order to sustain this political progress and fulfill the economic ambitions of the Tunisian people, the new government must focus on achieving economic reforms to attract foreign investment and deliver prosperity.

Tunisia’s next chapter: Economic reform

The decades long policy of « state capture » ended with the democratically elected government. Now, Tunisia must initiate economic reforms to create an attractive environment for domestic and foreign companies and stimulate investment to signal that Tunisia is open for business.

Economic reforms have been prioritized for four main sectors:

1) Tunisia’s 1994 Investment Code is being revised to streamline, simplify, and clarify the Code to facilitate more private sector growth and competition.

2) Tunisia’s banking system requires comprehensive reforms to recapitalise publicly owned banks, support the creation of new businesses, and include a bankruptcy law to protect risk takers and lay the foundation for an entrepreneurial society.

3) The tax and customs structure must be modernised to be more transparent and reliable.

4) Public-private partnership (PPP) laws are being drafted to attract private capital for infrastructure projects and increase transparency and predictability for domestic and foreign companies who want to invest in the country’s progress.

New legislation in progress

The 1994 Investment Incentive Code is the transparent legal framework governing national and foreign investment. The Code offers investment incentives to all investment projects, except those relating to mining, energy, and finance, and provides incentives including tax exemptions, investment bonuses, no cost infrastructure, and custom duties exemptions for capital goods with no locally made counterparts. Recent reforms were introduced in June 2015 in order to simplify administrative procedures and facilitate market access. The new investment code will reduce activities subject to government authorisation by at least two thirds.

New legislation related to the renewable energy sector was also introduced in March 2015. The Act is intended to define the legal framework for power generation from renewable energy sources for either local use or export. It also defines the legal guidelines for institutions, equipment, and facilities that are required for the production of energy from renewable energy sources.

Finally, revisions to the 2008 Concession Act are underway in order to further define the legal framework for PPPs, develop a formal PPP policy, and establish a centre of PPP expertise. The Concession Act requires provisions concerning the use of securities and government guarantees for the proper implementation of PPP, along with new laws for additional financing instruments and defined remedies for breach in order to help minimize risk to investors. If lawmakers are able to assure the coordinated and effective implementation of PPP programs, this model would certainly be used in Tunisia on a larger scale in order to develop the large infrastructure projects that are needed on the non coastal areas of the country. The government is also promoting privatisation programs and public service projects are open to foreign investors through special concession programs.

International partnerships for Tunisia’s prosperity

In March 2015, Tunis hosted the Tunisian Investment and Entrepreneurship Conference organised by the American Chamber of Commerce (AmCham) Tunisia. It was attended by an impressive group of CEOs and entrepreneurs, local and international government officials. The US Secretary of Commerce announced the RISE (Regional Investments to Support Entrepreneurship) initiative to focus on the cooperation between the public and private sectors to promote more trade and market access, increase training, mentoring, and access to finance for entrepreneurs, support the development of business incubators and encourage economic reforms that will improve commercial diplomacy.

Tunisia is already signatory to several preferential treaties granting its businesses access to foreign markets. The Free Trade Associative Agreement provides access to the EU member market and allows Tunisian businesses to export its industrial goods duty/tax and quota free. In 2012, Tunisia was granted Advanced Partner Status; offering additional trade advantages, and priority to Tunisian exports in the European market.

Regional experts are urging the US to deepen its support for Tunisia’s democratic transition by invigorating trade policies through a FTA with Tunisia and adopting regulatory reforms to incentivise private investment. The signing of an FTA with Tunisia would help spur additional economic reforms, encourage a more business friendly regulatory environment, and strengthen regional and European allies to deepen their own trade and investment relationships with Tunisia.

According to the IMF, Tunisia has a diverse, market oriented economy with a 2.4% GDP growth rate in 2014. Investors are optimistic that the newly elected technocratic government will promote macroeconomic stability and an increase in foreign direct investments.

The Government’s investment promotion authority provides a generous package of incentives to companies planning to invest in offshore or export oriented operations in Tunisia along with incentives for onshore investments in Tunisia’s interior and underserved regions.

A newmarket - The foreign franchise

The franchise is a foreign investment model of growing visibility in Tunisia. The Overseas Private Investment Corp. announced the creation of a $37.5 million lending facility for SMEs and ear-marked a majority of the investment for franchising.

Although the current legal framework for the franchise has been criticised for being “too general”, it is undeniable that the security of the franchise contract is a solution for economic development and the foreign franchise model provides an important transfer of knowhow and sustainability for both the franchiser and the host country.

Trade in Tunisia complies with international standards

Although trade is strictly regulated and must be authorised by the Central Bank and the Trade Minister when performed by foreigners, business practices in Tunisia comply with international standards and provide guarantees generally recognised in international transactions. The Tunisian Dinar is fully convertible and its financial institutions are able to respond to its client’s demands by furnishing letters of credit or by financing projects.

Transactions involving foreign currency are highly regulated and may be subject to the approval of the Central Bank. Under normal operations, the transfer of foreign currency is free and foreign investors have the legal guarantee that he can repatriate his investment without the requirement of approval.


With the new technocratic government firmly in place, now is the time to prospect future business opportunities in a country where both the government and its people have demonstrated their commitment to democracy, transparency, and economic prosperity.

Noureddine Ferchiou

Managing partner

Ferchiou & Associés


About the author

Providing exceptional legal skills for more than 30 years, Nourredine Ferchiou, has guided Tunisia’s most successful businesses in industry leading transactions and has built a reputation for finding innovative and successful solutions for his client’s business challenges. Noureddine Ferchiou laid the foundation of integrity and skill that the firm is recognised for today. His involvement in Tunisia’s highest profile matters in almost all industry sectors has developed a deep global network of relationship law firms and financial institutions making Ferchiou &Associés the most connected law firm in the country. Having a broad global reach, Noureddine Ferchiou’s understanding of Tunisia’s political, cultural, and business nuances gives his firm its local depth as it is regularly requested by the government and its public entities to provide guidance on the countries legal framework and revisions to industry code.