February 08, 2011
Tunisia, the profile of faux econ liberalism
Now, the arty below I strongly suggest taking Gulfies complains about bureaucracy with a large grain of salt. Maghreb bureaucracies do follow the finest French traditions of inflexibility, but on the flip side my experience with Gulfies is that they expect all rules etc to be open to personal negotiation (e.g. adding on floors at a whim on approved building plans, etc.). There is a happy medium that neither side has achieved. In many respects I prefer the Maghreb side as at least there are genuine institutions, rather than generalised personal fiat.
FT.com / Middle East & North Africa - Tunisia left with an investment mirage
Tunisia was always heralded, by itself and others, as a magnet for Gulf investment. But just as the political unrest of the past month has given the lie to its political stability, another mirage is the country’s image as a prime investment destination, Gulf investors say.
They complain of a combination of grinding bureaucracy, corrupt demands and interference from the family of the former president Zein al-Abidine Ben Ali. The impact of the global financial crisis added a further burden to many landmark foreign investments.
“Gulf businessmen found out that corruption in Tunisia wasn’t the corruption they were used to,” says one Tunisian banker. “You pay to get in, but you don’t get a service in return.”
Statistics suggest that the UAE is the largest investor in Tunisia, with more than $30bn of foreign direct investment.
Yet Gulf businesses may have promised grandiose plans but in reality have only mobilised a much smaller amount of capital. While Tunis Sports City is the most advanced UAE project in the country, Bukhatir is still only believed to have invested a tiny fraction of the $5bn cost.
“Bukhatir has been deeply committed to the development and remains focused towards Tunisia’s long-term growth prospects,” the company said in a statement.
Gulf investors say most deals, even those that went through government agencies and ministries, eventually ended up with some sort of financial demands from the broader family of Ben Ali, from bribes to finalise the transfer of land to fully fledged joint ventures.
The item re The Family is important. By all accounts I have from professional partners in Tunisia, the Trabelsis (mostly but not only) got quite rapacious in the past decade and it only escalated in the past 5 years as a sense of impunity grew. Raises questions I may add, parenthetically, about Transparency Int'l indices.
The other item here is the Vapour Ware effect of Gulfie investments, particularly Dubai / UAE investors who have not given up on their 'minimal direct capital, maximum effort to flip on speculation' - the speculation and flipping strategy being why they're so keen on the big announcements effect. A leveraged strategy they're still trying even now. That's in contrast with the Kuwaitis who tend to eschew that, and actually put in the hard capital and get something done before crowing about it.
Posted by The Lounsbury at February 8, 2011 04:54 AM
Filed Under: Business, Private , Economic Development , Economic Policy , MENA Region General , Maghreb , North Africa , The MENA '48 , Tunisia Revolution
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"Raises questions I may add, parenthetically, about Transparency Int'l indices."
Shared a similar thought with a Tunisian We Know as I kept wondering about the obvious discrepancy between reports of steady growth and people lounging unemployed in cafes and small vendors setting themselves on fire.
His view, confirming one of my own suspicions from a distance -- bogus numbers and failures of international/financial bodies to catch them, for whatever reason.
Posted by: matthew h at February 8, 2011 09:25 AM
Well, a nuance. I don't believe the hard GDP numbers, etc are bogus (an index like Transparency that is subjective, self-reported is very open to active gaming, however, and Ben Ali was very concerned about such things, so....).
Rather I see the major problem as EQUALITY of opportunity. In Tunisia you had very much a Family Takes All game emerging with weak trickle down (not non existent, however), combined with a population that was increasingly educated and middle class in orientation. That led to some serious frustrations and dislocations.
I don''t know that Int''l dev bodies have failed to catch them - what people in those bodies say in private was increasingly critical over the past 5 yrs - but that those bodies are locked into working via "official channels" and thus had to play ball (or thought they had to).
Posted by: The Lounsbury at February 8, 2011 10:13 AM
L., to use the GDP number example, ways were found to artificially inflated. E.g. the sale of those cementries (forgot the name), a major non-productive, asset sale which was included. Also, inflation numbers for example, no banker I know would take them seriously, etc.
How does this compare with Morocco do you think?
Posted by: Xoussef at February 9, 2011 01:46 PM
Re GDP: I highly doubt figures are as bad as suggested re massaging. I hear these kind of accuasionts all the time in emerging markets - but it is hard to sustainably massage, it usually shows up in suspicious patterns (e.g. China). I'll continue to hold to my position that Tunisian growth was real until some hard evidence is presented otherwise. (Inflation figures are always hard and the critique re Tunisia is that the index left out key segments.... this is always true, no index is perfect, and one really needs different inflation indices for different purposes. TunGov was probably remaining silent though on certain items deliberately).
Re Morocco: there are analagous issues re corruption, but nothing Trabelsi like. More on that later
Posted by: The Lounsbury at February 9, 2011 03:36 PM
For us less statistically tutored -- If economic growth or spending or activity occurs primarily in, say, the "crony sector", would it not show up as a macro + economically, but translate into little real output in the ordinary economy. Example (absurd but to illustrate), if Trabelsi Monopoly or Else Hairdressers Inc. earns billions from $10,000 haircuts, it is really not an all around positive though it may show as GDP enhancing economic activity?
On the issue of outright bogusdom, if any, were reported unemployment figures in the last BenAli years accurately reflective of deterioriating conditions?
Posted by: matthew h at February 9, 2011 05:35 PM
"would it not show up as a macro + economically"
by which I mean as a macroeconomic positive number
Posted by: matthew h at February 9, 2011 07:17 PM
GDP is not concerned with Crony or not. It's simply accounting final value of goods and services. Nothing to do with WHO produced (well other than the national territory).
Figures like GINI are supposed to capture distribution, which is more an issue impacted by cronyism.
Posted by: The Lounsbury at February 10, 2011 04:39 AM