Présentation dans le cadre d'un webinaire organisé par FSEG Sousse.

1. UNLOCKING TUNISIA’S
ECONOMIC POTENTIAL
MAHMOUD-SAMI NABI
LEGI-EPT & FSEGN
University of Carthage
24 /02 / 2022

2. 2
OUTLINE
1. A CONSTRAINED ECONOMIC SYSTEM
2. THE FAILURE TO CONDUCT THE ECONOMIC TRANSFORMATION
3. THE NEED FOR AN INTEGRATED DEVELOPMENT STRATEGY
4. DIGITAL TRANSFORMATION : THE LEAPFROGGING OPPORTUNITY

3. 3
What are the common international characteristics of high and sustained growth ?
Leadership
and
governance
Future
orientation
Efficient
functioning of
the markets
Macro-
economic
stability
Openess to
the global
economy
Sources : Commission on Growth and Development (2008)
Credible commitment to
growth; Inclusion with
capable administration.
Resources allocation
based on prices and
incentives.
Higher saving and
investments (physical and
human capital)
Knowledge transfer and
tapping into the global
marked demand
Low inflation. sustainable
public finances..
1. A CONSTRAINED ECONOMY

4. 4
0
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14000
15000
16000
17000
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19000
20000
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23000
24000
25000
26000
27000
28000
1963
1964
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1967
1968
1969
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1971
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1975
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1991
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1995
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1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Tunisia
Korea, Rep.
GDP per capita
(constant 2010 US$)
Source: World Development Indicators
x 3,9
x 22.4
Difference in output
due to Total Factor
Productivity (TFP)
growth
(~ 2.5% per year )
Difference in
output due to
the
accumulation of
labor and capital
What explains the long-term divergence of the per capita income of Tunisia and South Korea ?

5. 5
▫ Creation of wealth: complex process requiring the conjunction of a multitude of factors:
Human
capital
Knowledge
R&D
Labor
Physical
capital
TALENT is a central ingredient in the production of
knowledge : …individuals who demonstrate
exceptional talent in their teenage years have an
irreplaceable ability to create new ideas over their
lifetime.
Talented individuals born in low- or middle-income
countries are systematically less likely to become
knowledge producers. (Ruchir Agarwal and Patrick
Gaule (2018), Invisible Geniuses: Could the Knowledge
Frontier Advance Faster? IMF WP/18/268)

6. 6
>> DISPERSED R&D WITH INSUFFICIENT IMPACT ON THE ECONOMY
▫ Tunisia’s rank in the Global Innovation Index deteriorated to 77th in 2016 (versus
59th position in 2012).
▫ Tunisia is relatively well positioned (45th) regarding "Human capital and research“.
▫ The country is bad ranked in terms of "university/industry research collaboration"
(107th), "knowledge absorption (103rd) "Market sophistication (123)" and "Business
sophistication " (107).
>> lack of an adequate and modern national ecosystem to favor innovation and
university/industry collaboration.

7. 7
‒ Failure to reallocate the production resources to high-return activities and escape the
low-productivity trap
‒ More than 50% of Tunisia's highly educated workers are employed in the public sector,
mainly in health and education. Around 16 % of employees of the private sector had a
high level of education.
‒ FDIs are concentrated in labor-intensive and low-value added activities (textile, tourism,
call centers) which do not require high skills (despite the presence of many foreign firms in
electronics, aerospace activities)
>>> A Tunisian economy trapped in the low-productivity level

8. 8
Sources: Economic Freedom Index 2021; Global Innovation Index 2021;
World Bank Logistic Performance Indicators 2018
57 54
50
45 42
30 33
28
23
14
73
22
87
40
29
21
27
0
10
20
30
40
50
60
70
80
90
100
Economic
freedom
Property
Rights
Labor
Freedom
Investment
Freedom
Judicical
effectiveness
Financial
freedom
Customs
International
shipments
Logistic
competence
Business
sophistication
Human
capital
and
research
University/industry
research
collaboration
Domestic
credit
to
private
sector
(%GDP)
Financing
of
SMEs
Venture
capital
availability
Market
capitalization
(%GDP)
Insurance
premium
(/GDP)
Higher transactions costs and unfavourable ecosystem to favour an efficient/innovative driven growth…
Including insufficient development of the institutional environment and of the financial system
Restrcited foreign exchange transactions
Unfair fiscal regime

9. 9
Sources: Economic Freedom Index 2021; Global Competitiveness Report 2019
20
30
40
50
60
70
80
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Financial
freedom
score
Tunisia Morocco Jordan
Egypt Kenya
A stationary unfree/underdeveloped financial system
i. Government regulation of financial services,
ii. State intervention in banks and other
financial firms through direct and indirect
ownership
iii. Government influence on the allocation of
credit
iv. Financial and capital market development
v. Openness to foreign competition.
Financial development comprises “factors, policies, and institutions that lead to effective financial intermediation
and markets, as well as deep and broad access to capital and financial services.” (WEF, Financial Development
Report,2012).

10. 10
2. THE FAILURE TO CONDUCT THE ECONOMIC TRANSFORMATION
3,5
5,2
6,7
4,2
3,0 3,5
-1,9
4,0
3,0 2,9
1,1 1,0
1,9
2,6
0,9
-8,8
-10
-8
-6
-4
-2
0
2
4
6
8
10
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Real GDP Growth
Tunisia Lower Middle Income
21,1%
9,4%
4,6%
24,6%
17,5%
13,0%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
26%
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Saving (% GDP) Investment (% GDP)
Investment & Saving
‒ Decrease of the growth potential : 5% in 2000 > 3.2 % in 2019 (OCDE, 2018).
‒ Firms investing in innovative products and services: 28% in 2013 > 14% in 2019.
‒ Productivity of the Tunisian firms : -4.5% in 2013 & -5.1% 2019 (World Bank, 2020).

11. 11
10
15
20
25
30
35
40
45
50
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Total University graduates
University graduates (Female) University graduates (Male)
Unemployment
16,0% 18,5% 18,9% 18,4% 20,1% 19,0% 21,6% 21,9% 20,0% 21,0% 21,4% 20,7%
24,7%
25,9% 28,0% 26,2%
30,7% 35,0%
40,3%
48,4% 57,0% 54,0%
67,1% 66,0%
40,7%44,6% 46,9%46,6%
50,8%
55,4%
61,9%
70,3%
77,0%
75,1%
88,5%
86,7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017 2018 LFC
2019
2020
(FMI)
2021
(FMI)
Dette publique extérieure (% PIB)
Dette publique domestique (% PIB)
Public debt
Brain Drain - A World Overview – Source : OECD

12. 12
1,7%
5,2%
16,0%
36,6%
20,0%
-5,3%
5,1% 5,7%
9,0%
18,0%
16,4%
-1,0%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
GDP growth (%) Inflation (%) Unemployment rate (%) External debt (%GDP) Domestic debt (%GDP) Overall Fiscal Balance
(%GDP)
Real average TFP : -1%
Simulated avearage
TFP 1.7% (2001-2010)
Source: Nabi (2021) "Tunisia after the 2011’s revolution: Economic deterioration
should. and could have been avoided." Journal of Policy Modeling
What if TFP evolved during 2011-2018 with the same average growth rate as in 2001-2010 ?

13. 13
The Tunisian Governance Indicators (2010-2018)
(ranges from 0 (lowest) to 100 (highest) rank)
Source: Data from the worldwide Governance Indicators,
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Regulatory Quality Government Effectiveness
Political Stability and Absence of Violence/Terrorism Voice and Accountability

14. 14
‒ Difficulties/inability in reaching a national consensus on the implementation of the necessary
economic reforms.
‒ Difficult coordination and dialogue between the multiple actors of the Tunisian economy
even within the executive.
‒ Lack of institutional capacity to conceive the details of the reforms (The Council of Economic
Analysis of the Presidency of the Government).
‒ Insufficient ability of the State to ensure that the planned objectives are met. The execution of
many planned public investment expenditures was not realized due to the limited
implementation capacity of the government.
Among the causes of the government’s weak effectiveness

15. 15
Acceptance
for the change
Ability to achieve
the change
Accountability
of the change
CHANGE SPACE
SOURCE: ANDREWS ET AL (2010)
‒ Conducting the reforms requires a change management approach where FAIRNESS and
TRUST in the State’s institutions are crucial.
Reforming the economy is a multidmensional process

16. 16
EXTRACTIVE
ECONOMIC
INSTITUTIONS
EXTRACTIVE
POLITICAL
INSTITUTIONS
▫ Without fairness and trust in the State’s
institutions, it would be difficult for Tunisia to
peacefully undertake the set of necessary
economic reforms.
DISTORTED
ECONOMIC
POLICIES
LACK
OF SOCIAL
COHESION

17. 17
Institutions Politics
Economique Individuals
▫ Necessary to engage all Tunisians in a common national project
>> Social cohesion : a social cohesive country is not only
less vulnerable to conflicts and divisions but also takes
advantage from its diversity and builds its common identity.
>> “….bring people together around a common set of goals,
norms, rules and larger vision that, over time,
will encourage people to work together more constructively and peacefully”
(Kaplan and Freeman 2015, 27).
3. THE NEED FOR AN INTEGRATED DEVELOPMENT STRATEGY

18. 18
Build a new social contract ensuring social progress and inclusiveness
Social contract: dynamic agreement between the state and the society on their mutual roles and
responsibilities (OECD/DAC ,2008).
State
Society
Elite will to channel the state’s resources
+
Capacity to fulfill social expectations
Expectations about the state’s role Capacity to provide public services and
secure revenue
>> The social contract shall includes social progress as an integral part of an inclusive development strategy .
>> Monitor the social progress through social performance indicators (SPIs)

19. 19
Current socio-economic
situation
Knowledge-based
and inclusive country
1. The revolution and the
post-revolution political
arena
2. Diagnosing the Tunisian
Economy
3. The economic reform’s
agenda and bottlenecks
8. Moving toward a knowledge-
based economy
4. Towards and integrated
development strategy
5. Unlocking Tunisia’s
economic potential
6. Daring new financial
channels for development
and social inclusion
7. Tunisia’s integration in the
global economy

20. 20
Enabling Innovative mechanisms
Leadership
&
Inclusive
institutions
Human
capital, R&D
& Innovation
Economic
management /
Financial
resources
Reengineering
the role of State
With a new social contract
Culture and religion
in favor of
development
Unlocking the
economic potential
Smart integration
in the global
economy
Modern
& efficient
State
Efficient
& innovative
market economy
Social
cohesion
Fair and modern
social contract
Social &
solidarity
economy
The pillars and engines/resources
of the suggested
development strategy

21. 21
Modern
& efficient
State
▫ Reengineering the government programs and setting of priorities.
▫ Systematic evaluation of the efficiency of public money.
▫ E-government to improve the quality of the public services.
▫ Ecosystem (open data and e-participation) for the (empowered)
citizens (individuals/civil society) to participate in the emergence of an
inclusive change process.
▫ Facilitate the emergence of new institutions which not only stimulate
dialogue and contribute to more social cohesion and (political and
economic) inclusiveness, but also those which develop creativity and
entrepreneurship.
INSTITUTIONAL LEADERSHIP
A Tunisian Development Institute
NATIONAL SOLIDARITY
INSTITUTION
Coordination & raising funds
INDEPENDENT PUBLIC ASSETS
MANAGEMENT COMPANY Special
investment vehicle

22. INCLUSION
EFFICIENCY
INNOVATION
22
Digital capital : source of ~1/3
of global GDP growth :
Intangible digital assets (2/3)
Tangible digital capital (1/3)
Digital economy contribution
to World GDP :
> 15.5% (2016)
> 25% (2026)
4. DIGITAL TRANSFORMATION : THE LEAPFROGGING OPPORTUNITY
Human
capital
Knowledge &
R&D
Labor
Physical
capital
Sources: “The Digital Dividends”). Rossotto et al. (2018).; McKinsey (2013); World Development Report (2016)
Exports of ICT services in total exports
increased from 6.1% in 2010 to 9.2% in 2017.
Tunisia’s top ICT occupations (Online Labour
Index):
> Software development and technology
> Creative and multimedia
> Sales and marketing support

23. ‒ Improved financial development and better access to loans are highliy correlated woth the availability of the
recent digital technolgies in MENA.
J
ordan
M
orocco
O
man
S
audi
Arabia
T
urkey
A
lgeria
B
ahrain
Egypt
K
uwait
I
ran
L
ebanon
Q
atar
Tunisia
U
nited
Arab
Emirates
Y
emen
y = 0,98x + 5,12
R² = 0,73
0
20
40
60
80
100
120
140
160
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140
Financial
Market
Development
&
Ease
of
access
to
loans
(Rank
over
155)
Availability of last technologies
23
Source : Nabi (2018)

24. 24
Source : BIS (2021)
Source : Nabi (2018)
Jordanie
Maroc
Oman
Arabie
Saoudite
Turquie
Algerie
Bahrein
Iran
Kuwait
Liban
Qatar
Tunise
EAU
Egypte
R² = 0,6271
0
20
40
60
80
100
120
140
160
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140
Efficiency
in
using
public
funds
and
level
of
irrigular
payments
and
bribes
(Rank
over
155
countries)
Availability of last technologies (rank)
‒Digital technologies/payments are highly correlaed with efficient use of public funds and less corruption/informality.

25. More channels/tools for social & financial inclusion
‒ Emergence of alternative vectors and modes of finance: APIs (Application Programs
Interfaces); Digital Wallets; Maturing of the mobile money infrastructure; Distributed
Ledger Technologies (blockchain) >> crowdfunding platforms, P2P loans, online
markets, cryptocurrencies and crypto assets.
Improved efficiency of the financial intermediation &the financial markets
‒ Cryptography, Biometric, smart contracts >> Automatic transactions, Security Identity
protection.
Innovative Fintech solutions
‒ Big data on individuals and firms, advances in artificial intelligence; machine learning;
predictive analytics >> innovative tools for Investment advice (robots), Credit
decisions, Fraud detection, Asset trading.
>> Acceleration of the investment in Fintech : from 9 billions USD in 2010 to 25 billions USD in
2016 and 120 billions dollars (1/3 of the world finance of venture capital) in 2018. 25
The digital disruption of the financial system

26. ‒ High penetration of the mobile phone : ~ 70 % of the 20% the most poor of the developing countries
have mobile phones (>clean water and electricity) :
• M-payment: payment services via the mobile phone/device > Sub-Saharan Africa: In 2017, 21%
of adults with an e-money/m-money account (x2 relatively to 2014) .
• Money transfers (domestic and remittances)
• M-banking: access to financial services via the mobile channel. In 2018, there was 866 million of M-
banking accounts (300 millions in 2014) operated by 272 institutions among 90 countries (GSMA,
2019).
‒ Positive and significant correlation between the adoption digital financial services
& i) Women participation in the labor market; ii) unemployment in the developing countries
(Lederman, 2019).
‒ DFS played an important role during the COVID-19 crisis:
• Rapid support of the vulnerable groups
• Extension of the social protection systems 26
The mobile financial services : efficient tool of financial inclusion of the rural population of developing
countries

27. ‒ Acceleration of the crowdfunding since the global financial crisis of 2008-2009 in reaction to
the difficulties of fund raising by the firms in seed stage .
► From 16,2 milliards USD (2014) to 34 milliards USD (2015) [ P2P Lending (25 Billion
USD) + Reward and Donation (5.5 Billion USD) + Equity (2.5 Billion USD)].
► France : from 152 millions EUR (2014) to 628.8 millions EUR (2016).
‒ Contribution of crowdfunding to the developing countries’ economies :
► Improve the access to finance to the MSMEs.
► Contribute to the emergence of new generation of innovative entrepreneurs and the
financing of R&D
► Support the access to the global markets by provide trade financing (exporters).
► Enabling financial channels for social solidarity and charity
Sources: KPMG, 2017; Nabi, 2019 ; WorldBank, 2015; http://crowdexpert.com/crowdfunding-industry-statistics
Acceleration of the crowdfunding’s contribution to better access to finance for individuals and
MSMEs especially in developing countries
22

28. Tunisia’s Strategic Plan for Digital Economy (2016-2020)
‒ Guarantee social Inclusion and reducing digital disparities
‒ Promoting the “digital” culture
‒ E-Government
‒ Job creation, entrepreneurship and Innovation
‒ Improve enterprise competitiveness
‒ Transition Tunisia’s economy to encompass all things Digital
July 2020: Vision for the “Plan National Stratégique 2025”
‒ Prosperous, democratic and inclusive Tunisia
‒ A creative economy through innovation and talents
‒ Affordable and cashless digital services
‒ Client-centred E-administration
‒ Smart and modern cities
>> START-UP ACT
23
Ambition, strategic plans and many digital transformation projects are there since many years..
‒ Système d’information « Amen »,
‒ SI Cnam -Smart Card,
‒ Registre National des Entreprises,
‒ Identification Unique du Citoyen,
Interopérabilité des SI (connected -Gov),
‒ Cloud Computing National,
‒ ERP (SI) de l'Etat,
‒ Justice connectée,
‒ Edunet 10,
‒ Gestion électronique des
correspondances, Code du numérique,
‒ Aménagement numérique du territoire,
‒ Loi cybercriminalité
Smart Capital / Caisse des Dépôts et Consignations
(CDC) ANAVA Fund of Fund (200 millions EUR) to
strengthen the role of VC in financing Startups' growth.

29. Recommended priority actions to unlock the potential of
the Tunisian digital economy
Governance
of the digital
strategy
Digital
sector
(H)
Digital
compe-
tences
Digital
financial
services
Digital
platforms
Innovative
digital
entrepreneu
rship and
R&D
Source : MTCEN & DECA (2020)
24
1. Optimize the governance of the digital strategy (Priority : High)
2. Reinforcing the competitiveness of the digital sector (Priority : High)
3. Developing and retaining the digital competences (Priority : Very high)
4. Accelerating the developing of the digital financing services (Priority
: Very high)
5. Favouring the emergence of digital platforms (Priority : High)
6. Favouring the digital entrepreneurship and R&D (Priority : Moderate)
The maturity of the Tunisian digital economy is still far (2.4) from the
international frontier (5)

30. 30
Digital Financial services (2.6) are still weakly used in tunisia
‒ Financial inclusion strategy (2018-2022) with a digital financial services axis.
‒ DFS played an important role during the COVID-19 crisis:
► Rapid support of the vulnerable groups ,
► extension of the social protection systems : emergence of the digital portfolio.
‒ Willing of the CBT to develop the digital payment and fintech ecosystem (regulatory sandbox, de-cashing,
interoperability, G2P).
‒ Main constraints :
i) Unsuffisient development of the legal framework.
ii) Limited and expensive offers.
iii) Luck of trust.
iv) Resistance to change.

31. 31
Sources : Gévaudan et Lederman (2020) & BIS (2021)
% population endowed
with banking account,
% population having
realized a digital
payment transaction
using a payment card.
% population having
realized m-payment or
prepaid card.
37%
19%
2%
0%
25%
50%
75%
100%
6 7 8 9 10 11 12
Ln (GDP) per capita, PPP (current USD)

32. 32
"Tunisia is well positioned to become a regional champion in
innovation and entrepreneurship if it recognizes the potential
of young aspiring businesswomen and businessmen.”
Thank you
msaminabi@ept.ucar.tn