Tunisia’s challenge after Ben Ali: tackling inequality

The Arab Spring was born in Tunisia’s impoverished hinterland, where protests over state corruption and unemployment spiraled into a mass movement that stormed the country and soon after the whole Middle East. The election of the recent Constituent Assembly charged with drafting a new constitution for Tunisia was marked by a widespread victory for Islamic political parties.  As a result, the country has been plunged into a heated debate about the relationship between Islam and national identity, with secular parties refusing any form of hardline political Islam.

Critics today – keeping in mind the Islamic revolution in Iran many years ago – fear that calls for increasing freedom and democracy may be hijacked by Islamic political parties that aim to establish theocratic regimes. Mainstream Islamists, represented by the Nahda party, denounce such claims and constantly voice their intention to maintain the liberal values of the Arab Spring although their social agenda in this area does contain significant conflicts.

A surprising recent poll conducted in coordination with the National Democratic Institute reveals that the majority of Tunisians are not concerned with such political jousting, but want to see more done in terms of economic reform. In fact, a total of 40% of the people polled prioritized the economy compared to just 18% who chose national identity and 11% drafting the new constitution. This proves that the people still care most about dismantling the longstanding economic legacy of the former Ben Ali regime and all the suffering that it continues to cause.

Source:  I-Watch Tunisia January 2012

The former regime’s economic paradigm created shocking levels of inequality between regions. Around 58% of total value-added in the Tunisian economy comes from the northeastern region, including the capital Tunis. Essentially, all economic development in Tunisia took place in the capital Tunis and its surrounding suburbs. This region accounts for only 30% of the country’s population and around 10% of its land mass, yet in terms of investment, 65% of total private investment in the country takes place there.

The western and southern parts of Tunisia account for around 57% of its population, but only contribute to a total of 18% of value-added in the economy. Their share of private investment is only 14% and they contribute to only 6% of the country’s exports. The very high degree of economic centralization near the capital is having abominable effects on the living standards of the country at large. Moving towards more regionally-inclusive growth is by all means the largest economic challenge facing Tunisia in this period of transition.

Source: Rim Chatti and Faysal Zidi 2010

Further compounding this problem is the 80,000 or so new job seekers entering the Tunisian labor market each year. Much of the country’s youth is forced to move to the capital in order to make a better living, and this places a great strain on the social fabric of Tunisia and further exacerbates regional inequality. The new jobs created are accompanied by new investments that are limited to the rich areas of the country, and a vicious cycle is created as job creation mirrors the bias in development between regions. To overcome the legacy of the old development paradigm, the Tunisian government must realize that the issue of youth unemployment is structurally related to that of regional inequality: this problem must be addressed by means of balanced regional development.

What is the interim government doing in this respect?   A recent World Bank meeting with government officials and local stakeholders came to the conclusion that the primary economic priority is to create jobs, especially “in those regions of the country where less support was directed in the past.” There are many national agencies and programs in place to promote youth employment; however, they have remained highly focused on urban areas and not equally distributed at the regional level. Consequently, youth unemployment rates have seen no real improvement.

The most serious attempt at regional development was passed by the interim government before the October 2011 elections, as part of the Jasmine Economic and Social Plan. One of the major results of this plan was a draft decree-law that establishes the “Ajyal Fund”, a national fund for regional development. The aim is to invest around 4 billion dollars (9% of GDP) in regional development activities like infrastructure, technology, tourism and real estate over a five year period. According to the previous interim government, this plan should contribute to the creation of more than one million jobs in Tunisia within five years.  However, it is not clear whether the current government – elected by the new constituent assembly – will follow such a commitment.

Inasmuch as Tunisia succeeded as a regional pioneer in political transition, its success on the economic front is a crucial indicator for what awaits the region at large.