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IMF says in advanced talks with Tunisia over $2.8 bil credit

3 March 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

TUNIS (Reuters) – The International Monetary Fund and Tunisia are in the advanced stages of talks over a $2.8 billion credit over four years to help support the country’s economic reform programme, an IMF delegation said on Thursday.

A visiting IMF delegation said at the end of its mission that it would now focus on fine-tuning reform priorities and financing needs for this year.International lenders have been demanding Tunisia cut public spending, reduce deficits and introduce reforms that help create sustainable jobs and growth.

“Moving ahead with economic reform is crucial as the Tunisian economy confronts several significant challenges. Economic growth is held back by investors’ wait-and-see attitude and regional uncertainties,” the IMF said in a statement.

Five years after overthrowing autocrat Zine El Abidine Ben Ali and sweeping in democratic change, Tunisians are still struggling with an economy unable to deliver the jobs and reforms their revolution promised.

Three major militant attacks last year, including two on foreign visitors, have battered the tourism industry, while a week of rioting earlier this year has worried Western partners looking to help the North African state.

 

(Reporting by Tarek Amara; writing by Patrick Markey; Editing by Toby Chopra)

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South Africa’s MTN says may list in Nigeria once fine resolved

3 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s MTN Group may list its Nigerian unit on the stock exchange in Lagos once it has resolved a disputed $3.9 billion fine with authorities in the Western African nation, its executive chairman said on Thursday.

MTN also said it has set aside 9.3 billion rand ($600 million) to cover a potential settlement of a fine imposed by Nigerian authorities last year for failing to cut of unregistered SIM card users.

Shares in the mobile company rose more than 9 percent to 149 rand by 0845 GMT.

($1 = 15.645 rand)

 

(Reporting by Tiisetso Motsoeneng; Writing by Joe Brock; Editing by James Macharia)

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South Africa’s Clover says will no longer invest in Nigeria

2 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Clover Industries will no longer invest in Nigeria due to a financial crisis there, the dairy products company said on Wednesday.

“The current financial crisis experienced in Nigeria which is fuelled by the low oil price is a further cause of concern, thus the group has decided to withdraw from future investments in Nigeria,” Clover said in a statement.

Companies have laid off thousands, cut production and even closed operations as they struggle to get enough dollars to pay for imported spare parts and raw materials. The Nigerian naira had devalued following a slump in oil revenues, the country’s lifeblood.

“It’s a sad decision but until the currency crisis is resolved we wont be able to invest in there any further,” Chief Executive Johann Vorster told Reuters.

Clover had planned to invest no less that 100 million rand ($6.43 million) in developing its products in Nigeria, he said.

The company said it would continue to expand in Botswana, Namibia, Lesotho and Swaziland.

He added that the company would like to keep the Clover brand alive through its Tropika juices.

South African fashion retailer Truworths said this month it pulled out if its Nigerian business saying it was unable to import clothes and was struggling to pay rent and access foreign exchange.

Clover on Wednesday posted a 7 percent rise in first-half profits due to a higher demand for its milk products and as a heatwave in southern Africa caused consumers to reach for its juices and bottled water.

Headline earnings per share, a main gauge of profit in South Afica that strips out certain one-off items, for the six months to December totalled 117 cents from 109.2 cents in the previous year.

Vorster said Clover was on the prowl for acquisitions which it would fund through its balance sheet, adding that the firm could go to investors for cash “if needs be”.

($1 = 15.5603 rand)

 

(Reporting by Zandi Shabalala; Editing by Kim Coghill)

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South Africa’s economy slows further, ratings eyed

1 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

PRETORIA (Reuters) – Disappointing economic growth in South Africa at the end of 2015 is likely to heighten fears its credit rating will be cut to “junk” and further unnerve investors concerned about President Jacob Zuma’s handling of the economy.

Data from Statistics South Africa on Tuesday showed the continent’s most industrialised economy expanded 0.6 percent in the final quarter, slowing slightly from the previous three months as the agricultural and manufacturing sectors shrank. Economists polled by Reuters had expected a rise of 0.8 percent.

“With all expectations that 2016 will be weaker still, this signals decelerating growth momentum in South Africa for three consecutive years, highlighting some of the long-standing concerns of the ratings agencies,” said Standard Chartered’s head of Africa research, Razia Khan.

The rand nevertheless rose 1 percent against the dollar, tracking other emerging market currencies higher as uncertainty over the pace of further U.S. interest rate hikes tempers the dollar’s momentum.

Credit rating agencies have said South Africa is at risk of a downgrade that could take it below investment grade.

The Treasury has warned such a move could trigger a sharp reversal of foreign capital flows on which South Africa relies to finance its huge current account deficit and precipitate a recession.

Fitch and Standard & Poor’s currently rate South Africa BBB-, one notch above “junk”, while Moody’s assigns a slightly higher Baa2 grade.

On a year-on-year basis, the economy grew 0.6 percent from 1 percent in October to December compared with a Reuters poll forecast of 0.4 percent.

More sluggishness is expected in 2016 as a severe drought persists and global demand for South African exports including gold and other metals remains depressed.

The government forecasts growth of 0.9 percent this year compared with an estimated 1.3 percent in 2015, which would be the lowest rate of expansion since South Africa emerged from a recession in 2009.

 

NERVOUS

Investors are also nervous about economic policymaking after Zuma’s sudden firing in December of finance minister Nhlanhla Nene in favour of a relatively unknown lawmaker precipitated a plunge in the rand and other South African assets.

To halt the sell-off, Zuma brought back Pravin Gordhan as his third finance minister in a week, but recent media reports have suggested a rift between the president and Gordhan, who won investors’ respect during a previous stint in the job.

Gordhan outlined an austere budget last week that was aimed at avoiding credit rating downgrades but which failed to reassure investors.

Zuma, who faces his second no-confidence vote in a year on Tuesday over what the opposition Democratic Alliance called his reckless handling of the economy, has denied he and Gordhan are at war.

Highlighting the economy’s weakness, separate data on Tuesday showed new vehicle sales fell by 8.1 percent year-on-year in February, their third consecutive monthly contraction.

Electricity prices could also drag on growth after the energy regulator allowed state-owned power firm Eskom to raise tariffs by 9.4 percent in the 2016/17.

“These data make it less likely that the Reserve Bank will follow up January’s 50 basis points interest rate hike with another rate rise this month, despite the deteriorating inflation outlook,” Capital Economics analysts said in a note.

The South African Reserve Bank has been hiking interest rates to tame rising inflation, despite weak growth.

The bank will announce its second interest rate decision of 2016 on March 17.

 

(By Olivia Kumwenda-Mtambo. Editing by James Macharia and Catherine Evans)

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South Africa’s Vodacom drops Neotel deal on regulatory hurdles

1 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa mobile operator Vodacom on Monday dropped a planned acquisition of local fixed line operator Neotel, citing regulatory complexities.

“It is disappointing that we have reached this conclusion despite all our efforts to find a way to deal with the complexities of the restructured transaction,” said Vodacom Chief Executive Shameel Joosub.

Vodacom, a unit of Britain’s Vodafone, had offered $500 million to Neotel owner, India’s Tata Communications, in 2014 but was forced to rework it after regulators raised anti-trust issues.

Under the modified deal, announced in December, Vodacom would have bought assets related to Neotel’s fixed-line business but not its frequency spectrum – which the Competition Commission’s said would have given Vodacom an unfair advantage in rolling out a high-speed 4G network.

South Africa is in the midst of switching its television signal to digital from analogue, a move that would free up much-needed airwaves as consumers increasingly use smartphones to browse the internet and download applications.

 

(Reporting by TJ Strydom; Editing by Tiisetso Motsoeneng and Joe Brock)

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South African rand recovers as Zuma says not at war with finmin

29 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand firmed against the dollar on Monday after President Jacob Zuma said he was not at war with Finance Minister Pravin Gordhan, following media reports of a fallout.

The currency fell nearly 4 percent on Friday, its biggest daily loss since 2011, after Gordhan said there were attempts to discredit him and the integrity of the Treasury.

Gordhan’s statement followed a newspaper report which quoted sources as saying he had threatened to resign after receiving a letter from the elite Hawks police unit questioning his knowledge of a suspected rogue unit at the revenue service.

This followed media reports of a clash between Gordhan and the head of the South African Revenue Service (SARS).

The Hawks also said they were not investigating Gordhan, and there was no case against the minister.

“The media has incorrectly reported, among other things, that there is a war at SARS and that the President and the Minister of Finance are somehow at war. This is a total fabrication and mischievous sensationalism,” the presidency said in a statement.

“The President wishes to emphasise that Minister Gordhan remains the Minister of Finance and any positing that the position of the Minister is under any threat is dismissed with the contempt it deserves.”

As of 1344 GMT, the rand had firmed 1.45 percent to 15.9260 versus the dollar from Friday’s close of 16.1600.

Government bonds also recovered. The yield on the benchmark instrument due in 2026, which soared as much as 28 basis points in early trade, was up 4.5 basis points to 9.41 percent as of 1434 GMT.

“It is a case of correction following knee jerk selling on Friday. The markets will continue to keep a close eye on narrative and look for further confirmation Gordhan will be allowed to do his job,” NKC African Economics economist Bart Stemmet said.

On the stock market, both the Top-40 index and the broader All-share were largely unchanged.

Barclays Africa Group Ltd fell as much 6 percent when the market opened, and traded 5 percent lower after Barclays Plc said on Sunday its board was evaluating strategic options in relation to its shareholding in its African business.

($1 = 16.0379 rand)

 

(By Olivia Kumwenda-Mtambo. Additional reporting by Stella Mapenzauswa and Nqobile Dludla; Writing by James Macharia, editing by Ed Osmond)

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Kenya’s inflation falls, may pave way for easing of rates

29 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s year-on-year inflation rate slowed to 6.84 percent in February, the statistics office said on Monday, prompting at least one analyst to say the central bank could start easing rates gradually.

February’s rate is the lowest since October last year, when it stood at 6.72 percent, the statistics office said.

Razia Khan, head of research for Africa at Standard Chartered in London, said this supported the case for policymakers to start lowering costs of credit later this year.

“While lower global oil prices have clearly helped, we nonetheless expect the CBK (Central Bank of Kenya) to enact a moderate pace of easing, paying careful attention to continued foreign exchange stability in the process,” she said.

The statistics office added the fall was driven by a -0.43 percent monthly drop in the price of food, which has the biggest weighting in the basket of goods used to measure inflation.

“This resulted from notable decreases in prices of key food items which slightly outweighed the increases,” the Kenya National Bureau of Statistics said in a statement.

Prices of housing and transport also came down on a monthly basis, the bureau said.

The governor of the central bank Patrick Njoroge told Reuters in December he expected inflation to be contained within the government’s preferred band of 2.5-7.5 percent.

 

(Reporting by Duncan Miriri; Editing by Janet Lawrence)

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Gulf Economies Can Survive Plummeting Oil Prices, says IMF

28 February 2016 Comments (0) Business, Featured, Middle East

Lagarde-Christine

The IMF is confident that GCC economies can survive continued low oil prices by reducing state spending and increasing government revenues.

The International Monetary Fund (IMF) is confident that GCC economies can make the adjustments needed to cope with continuing low oil prices, but only by reducing state spending and increasing government revenues, said IMF Managing Director Christine Lagarde last week.

Speaking to a conference of Arab economic officials, Lagarde, recently given a new five-year term as IMF chief, said: “Oil prices have fallen by two-thirds from their most recent peak but supply and demand-side factors suggest they are likely to stay low for an extended period. The size and likely persistence of this external shock means that all oil exporters will have to adjust by reducing spending and increasing revenue.” However, she was cautiously optimistic, arguing that most of the GCC countries have the scope to pace their adjustment over several years and limit the impact on growth.

Oil prices have plummeted from their summer 2014 highs of $115 a barrel to the low $30s. Lagarde argues that the oil-reliant Gulf States’ ability to survive the drop will rely on greater taxation and fiscal reforms. She called for the introduction of value-added tax, “ideally a harmonized regional VAT”, commenting that “even at a low single-digit rate, such a tax could raise up to 2% of GDP”. She also called for a greater weight on corporate and personal income and property and excise taxes to increase revenues, as well as bringing energy subsidies to an end. She also called for the diversification of the economy away from oil, for example by adding incentives for entrepreneurship and boosting private sector employment.

IMF cuts economic growth forecasts

Lagarde’s comments follow the IMF’s Regional Economic Outlook report of the MENA economies, which was a brutal assessment of the slowing growth and effect of low oil prices on the region. The IMF has also cut economic growth forecasts for the oil-exporting Gulf States to 3.4% this year, as it reports that last year MENA oil exporters as a whole lost more than $340 billion of revenues (equivalent to 20% of their combined gross domestic product).

While Kuwait, Qatar, and the United Arab Emirates have strong enough fiscal buffers to last for twenty years, Oman, Algeria, Saudi Arabia, Bahrain, Libya, and Yemen are in a worrying situation, with only five years of fiscal buffers left. Masood Ahmed, the IMF’s regional director, comments: “GCC countries have sizeable buffers — most of them can finance substantial deficits for four to five years. But will they want to use buffers … to continue running large deficits?”

But it is not all bad news. The share of GDP of the non-oil sector is rising, up by 12% to 70% between 2000 and 2013 in the GCC countries as the UAE, Kuwait, Qatar, Bahrain, Saudi Arabia, and Oman all put in place strategies to promote non-oil trade, attract more foreign direct investment, and begin to lift subsidies.

Diversified economy in the UAE

Dubai

Dubai

The UAE has one of the most diversified economies in the region. Non-hydrocarbon revenues account for 75% of GDP and 80% of total export revenues. Retail and real estate sectors are showing strong growth driven by wealthy ex-pat domestic demand. And tourism, encouraged by the country’s position as a safe haven, is expected to grow further with Dubai Expo 2020.

The food and beverage sector is also looking strong. The UAE has invested $1.4 billion in the food processing industry since 1994, and it continues to expand the halal food segment which is projected to grow to $1.6 trillion by 2018.

Bahrain and Kuwait implement painful reforms under the cover of the IMF

IMF recommendations are also making it easier for some governments to implement painful reforms and cuts which could lower their citizens’ living standards. Bahrain has planned a series of austerity cuts under the cover of IMF recommendations, introducing VAT, cutting spending on social transfers, removing domestic subsidies for meat and cutting them for gasoline, and freezing public-sector wages. The country is also trying to boost revenues from tourism, light manufacturing, and services industries.

Finance Minister Sheikh Ahmed bin Mohammed al-Khalifa said: “Bahrain’s Government Action Plan, currently underway, includes wide-ranging measures that will ensure the sustainability of Bahrain’s financial resources and development, benefiting the entire country”.

The IMF is also playing an increasingly important role in Kuwait, where it has helped the government design a broad-based tax system, and introduce VAT and a business profit tax.

Oman aims to be a logistics hub for the region

Oman is traditionally dependent on oil to fund its national budget, currently accounting for 77%. But in 2015, sales fell 35%. And while Oman’s leaders have been discussing the diversification of the economy since the 1990s, it has always been put off for a later date, and today the country has almost no manufacturing or agricultural production.

However, the country does now have plans to develop manufacturing, transportation, and tourism sectors. And the government is building a huge port at Duqm, on Oman’s central coast, in an attempt to become a logistics hub for the region. This would provide an alternative shipping route for oil exports from Iran or Iraq as well as for manufactured goods. Good plans, but now we need to see some action.

Saudi Arabia searching for diversification

Saudi Arabia is similarly reliant on the oil sector, currently accounting for 85% of its budget revenues. And although finances are buffered by huge reserves of foreign currency, they can only last so long if the government continues to sell them at speed to finance spending and its fight with US oil producers. Benefitting from a surplus of 6.5% of GDP in 2013, by 2014 that figure was a deficit of 2.3%. And the struggle looks set to grow in importance over the coming years as the number of working-age Saudis is predicted to hit 4.5 million by 2030.

As part of its diversification program, the government plans to invest in transport infrastructure, energy, utilities, and housing. The Kingdom’s Unified Investment Plan also seeks to boost investment and further investment in education to improve the Kingdom’s competitiveness. A McKinsey study has also highlighted eight sectors with potential — mining and metals, petrochemicals, manufacturing, retail and wholesale trade, tourism and hospitality, health care, finance, and construction. It believes that investment in these areas will enable Saudi Arabia to double its GDP and create as many as six million new jobs by 2030.

Qatar sees impressive economic expansion

In Qatar, economic diversification of the non-hydrocarbon sector, particularly focused on manufacturing, chemicals, and services, is estimated to have grown 11.3% in 2014. As Lagarde commented last November: “A non-oil GDP growth of more than 10% is impressive.” Qatar has also announced plans to scale up petrochemical production, and private sector credit growth is being driven by growing construction and real estate.

Driven by higher investment spending — $182 billion was earmarked for new project implementation over five years from 2014 — and population growth, the Qatar National Bank expects the country’s economic growth to reach a significant 7.8% in 2016, up from 6.8% in 2015. Non-hydrocarbons contributed 62% of the country’s GDP in 2014. And Qatar’s policy to diversify its oil economy received praise from the IMF, with Lagarde commenting: “as far as Qatar, there have been solid and strong policy measures to diversify the economy.”

Let’s hope that the other GCC countries can successfully emulate Qatar’s economic success.

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Kenya, Senegal join effort to fight tax evasion

28 February 2016 Comments (0) Africa, Business, Featured

Kenya signs the Convention on Mutual Administrative Assistance in Tax Matters

Twelve African countries sign multilateral agreement to counter tax abuse, which costs the continent an estimated $50 billion annually.

Kenya and Senegal have joined 10 other African countries in signing an international agreement designed to reduce tax evasion.

The multilateral convention enables cooperation among nations, including exchange of information about tax evaders and assistance in collecting taxes from them.

African nations lose an estimated $50 billion per year to illegal financial transfers, including tax avoidance, according to a 2015 report by the African Union and UN Economic Commission for Africa. In comparison, Africa received about $29 billion in foreign aid in 2013.

The tax evasion problem is particularly acute for poorer countries that do not have tools to fight sophisticated schemes by large multinational companies. The report and aid groups have noted that these billions of dollars might otherwise be used to develop services and infrastructure on the continent.

Multinational companies blamed

“Africa is hemorrhaging billions of dollars because multinational companies are cheating African governments out of vital revenues by not paying their fair share in taxes. If this tax revenue were invested in education and health care, societies and economies would further flourish,” said Winnie Byanyima, executive director of Oxfam International.

The Multilateral Convention on Mutual Administrative Assistance in Tax Matters is one tool to fight large-scale tax evasions. It was developed by the Council of Europe and the Organization for Economic Cooperation and Development in 1988 and updated in 2010.

Parties to the agreement cooperate by providing financial information to other party countries on request, performing tax examinations and assisting with recovery of tax dollars.

Twelve African nations sign agreement

Kenya and Senegal signed the agreement in February. Other African parties to the convention are Morocco, Gabon, Cameroon, Mauritius, Uganda, Ghana, Nigeria, South Africa, Tunisia and Seychelles. Globally, a total of 94 countries have signed the convention.

Kenya also recently passed a law that prevents companies from using a common tax-avoidance practice called “transfer pricing” or “trade mispricing.”

Using this practice, companies allocate their costs to subsidiaries in high-tax jurisdictions in order to pay most of their taxes at the lower rate while moving their profits to jurisdictions where they pay little or no tax.

For example, the African Union study described a South African case in which a multinational corporation claimed that a large part of its business was located in the United Kingdom and Switzerland, with relatively low tax rates.

On investigation, South African officials found the European branches had only a few staff while the company conducted most of its business in South Africa. The scheme had enabled the company to avoid $2 billion in taxes, which the South African government reclaimed.

Invoices misstate value

Other practices are “under-invoicing” or declaring a low value on exports to minimize profits on paper and “over-invoicing” by declaring a high cost on imports.

For example, Mozambique records showed an export of 260,385 cubic meters of timber was exported to China in 2012 while records in China show 450,000 cubic meters were imported from Mozambique that year, according to the report.

Another study, by Global Financial Integrity (GFI), found high rates of over and under-invoicing in Kenya, Ghana, Mozambique, Tanzania and Uganda in the decade leading up to 2011.

Kenya, Tanzania see high losses

GFI said Kenya had an estimated $10 billion and Uganda $813 million in under-invoicing. At the same time, Tanzania had $10 billion to over-invoicing. Ghana had more than $14 million for the decade in misstated invoices and Mozambique more than $5 million.

The African Union report said illicit financial outflows from Africa have more than doubled since 2001, from $20 billion to the current $50 billion. The report said African nations lost about $850 billion to illegal transfers between 1970 and 2008, including $218 billion from Nigeria, $105 billion from Egypt and $82 billion from South Africa.

The report said mispricing occurs in a number of sectors, including mineral production in the Democratic Republic of the Congo and South Africa, crude oil exports from Nigeria, and timber sales from Mozambique and Liberia.

Corporations, organized crime cited

Thabo Mbeki, the former president of South Africa who chaired that panel that produced the report said large corporations were the main tax abusers aided by corrupt officials and weak governance.

“The information available to us has convinced our panel that large commercial corporations are the biggest culprits of illicit outflows, followed by organized crime,” Mbeki said.

African and non-African governments as well as oil, mining, banking, legal and accounting firms were involved in tax avoidance schemes, according to the study.

It found that 38 percent of the outflows from the continent originated in West African and 28 percent in North Africa. Southern, Central and East Africa each accounted for about 10 percent.

While significant to the continent, Africa’s losses are a small share of the illicit outflows globally, about six percent of an estimated $1 trillion between 2007 and 2009.

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Tunisia seeks to improve appeal to foreign investors

27 February 2016 Comments (0) Business, Featured, Middle East

tunis

A proposed investment code offers incentives to investment as the country aims to double investment to $2.5 billion by 2020.

Tunisian government officials hope to speed up implementation of a code that the North African nation hopes will make it more attractive to desperately needed foreign investment.

As its economy struggles in the aftermath of the 2011 revolution, Tunisia hopes to double foreign investment to $2.5 billion by 2020.

The Tunisian cabinet recommended hastening adoption of an investment code in February following protests a month earlier over high unemployment that included clashes with police in several towns and the capital of Tunis.

The protests were a grim reminder to the government that poor economic conditions, including high unemployment, prompted demonstrations that ended the 23-year presidency of Zine El Abidine Ben Ali during the 2011 revolution in Tunisia.

Incentives, smooth path for investment

The proposed investment code, which must be approved by the Tunisian parliament, is designed to clear administrative obstacles by creating an agency to smooth the way for companies to invest within the country, according to Yassine Brahim, Tunisian minister of development, investment and international cooperation.

The code will include financial incentives for investors, especially companies that intend to export from Tunisia and those that invest in poorer interior sections of the country.

It also will give international investors more flexibility to transfer funds out of the country, Brahim said.

Tax exemptions offered

Yassine Brahim

Yassine Brahim, Tunisian minister of development, investment and international cooperation.

Tunisia already offers significant incentives to potential investors, including a 10-year tax exemption, and, in some locations, state subsidies. The government also created industrial zones and promised significant investments in improving roads and other infrastructure.

The investment is sorely needed as the country struggles with an overall unemployment rate of 15 percent and a rate of 32 percent among college graduates. The country’s economy in 2015 grew by less than 0.3 percent.

Tunisia is generally seen as the one success story from Arab Spring, which also saw violent revolts in nearby Egypt and Libya.

However, Tunisia has struggled to form a government and improve its economy.

Civil unrest returns amid high unemployment

In January, economic conditions and regional inequalities prompted the worst civil unrest in the country since the 2011 revolution.

Protest that began in Kasserine in the central part of the country spread to several other towns and to Tunis, where shops were looted and burned. Frustrations ran highest in marginalized rural areas and in poor urban districts of the capital.

Tunisia also lost about a third of its tourism revenues in 2015 after two Islamic State attacks killed 59 foreign tourists.

Government proposes bond issue

In February, the government announced that it was preparing a bond issue of up to one billion euros to cover a budget deficit stemming from losses from January’s unrest.

Violence and unrest has kept investors away. An estimated 300 investors have left the country since 2011.

For example, one Bahraini official recently told Tunisian President Béji Caied Essebsi that Bahraini business leaders are interested in investing in the country and a delegation would visit from Bahrain.

However, Khaled Abderrahmen Al Moyed, president of the Bahraini Chamber of Industry and Commerce, also said the business leaders would require “sufficient guarantees” of success to launch projects in Tunisia.

Location, workforce are positives

The primary investment sectors in Tunisia are textiles, energy, computer science, corporate services and energy. The largest sources of investment are France, Austria, Canada and the United Kingdom.

An analysis by Santander Bank cited positives about investing in Tunisia, including its strategic location on the Mediterranean, proximity to major European capitals, a well developed social system, qualified workforce, competitive salary levels, and the increasing diversification of it economy. The main negative, Santander said, is a cumbersome Tunisian bureaucracy.

Brahim, the investment minister said Tunisia hopes to attract $1.4 billion in investment this year, an increase of 12 percent from $1.25 billion invested in 2015, with a goal of $2.5 billion by 2020.

That compares with investment of $2.2 billion in 2010, the year before the revolution.

Joblessness sparks unrest, support for IS

Despite Tunisia’s difficulties, foreign investment has been increasing in recent years.

In 2015, investment increased by 21 percent compared to 2014, which saw a 19 percent increase over 2014.

That growth hasn’t translated into enough jobs.

The economic conditions are believed to be driving many Tunisians into the ranks of Islamic State and other militant groups. An estimated 3,000 Tunisians are fighting in militant Islamic groups in Iraq, Syria and Libya.

Aymen Abderrahman, 28, a Tunis-based activist, said that “frustration and total despair” drove the January protests.

The unemployed who are living in the same conditions as before 2011 “are seeing a spark to bring back to life the revolutionary past,” he said.

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