Tunisia Trade and Foreign Investment

By | July 24, 2022


  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Tunisia’s exports to the European Union in 2021 represented 70.2% of total exports, and compared to 2020 they increased by 13.9%. This growth can be explained by the increase in exports to France (+10.7%), Italy (+31.4%) and Germany (+24.9%), and on the other hand by the decrease in sales to other countries, especially Spain (-16.4%) and Greece (-5.6%). Imports of goods from the EU accounted for 47.7% of total imports in 2021, and recorded a higher growth of 16.9%. Imports increased by 9% with France, with Italy by 15.8% and with Germany by 15.4%.

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 10,989.40 11,448.90 10,938.80 8,788.90 10,838.00
Imports into the EU (million EUR) 9,259.40 9,968.90 10,019.30 8,637.90 10,263.20
Balance with the EU (million EUR) -1,730.0 -1,480.0 -919.5 -151 -574.8

Source: European Commission

Trade relations with the Czech Republic

The Czech Republic has a long-term negative trade balance with Tunisia. Imports from Tunisia mainly include electrotechnical components, textiles and food, i.e. sectors dominated in Tunisia by the export-oriented off-shore sector. Exports from the Czech Republic are concentrated on input raw materials for the electrotechnical industry, cars or chemicals. The defense industry also steadily belongs here.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 4.2 3.6 3.9 3.6 ON
Imports to the Czech Republic (billion CZK) 3.5 5 5.1 4.6 ON
Balance with the Czech Republic (billion CZK) -0.8 1.4 1.1 1.1 ON

Source: businesscarriers.com

Trade relations with countries outside the EU

In the first trimester of 2022, the Tunisian trade balance showed a deficit of -billion EUR mainly due to the deficit recorded with China (-623 million EUR), Turkey (-420 million EUR), Algeria (-270 million EUR) and Russia ( -174 million EUR). On the contrary, Tunisia has a positive trade balance with Libya (EUR 152 million), where 43.5% more Tunisian goods went in 2021 than in 2020. The values ​​reflect the long-term trend in Tunisia’s trade relations with these countries.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 1 106.6 1,713.6 1,764.7 2,909.9 3,353.6
Imports to countries outside the EU (million EUR) 8,315.8 9,302.5 8,313.9 6,916.8 8,860.3
Balance with non-EU countries (million EUR) -7,209.2 -7,588.9 -6,549.2 -4,006.9 -5,506.7

Source: EIU, Eurostat

Foreign direct investment

The rate of foreign direct investment (FDI) has been around 2% of GDP since 2016, compared to 9.4% of GDP in 2006, this is a major drop. At the end of the first quarter of 2022, FDI in Tunisia reached EUR 184 million, an increase of 73.0% compared to the same period in 2021. The sectoral distribution of FDI shows an increase in the value of investments in the services sector (84 million EUR at the end of March 2022 compared to EUR 1million in 2021, an increase of 610%). The share going to the manufacturing industry in this period reached EUR 5million (an increase of 14.4%), but investments in energy fell by 4%, to EUR 92,700 at the end of the first quarter of 2022. European investments play a role in Tunisia has a leading role and covers 85% of foreign direct investment in Tunisia, despite the fact that there is no bilateral investment agreement with the EU.

According to the Investment Act of 2017, foreign investors have a number of advantages, e.g. the right to acquire, lease or operate real estate, the possibility of hiring managers of foreign nationality up to 30% of the total number of managers, free transfer of profits, dividends and capital abroad in foreign less.

The main investment incentives are at the level of so-called off-shore companies. These enjoy exemption from customs duties and simplification of customs clearance procedures, and exemption from VAT for import operations and local purchase of goods and services necessary for their operation. Profits from direct investments in regional development zones are fully deductible from taxable income for a period of five years (group 1 zones) or ten years (group 2 zones). With the budget law of 2022, it is possible for these companies to claim up to 50% of the value of the goods in the local market.

FTAs and treaties

Treaties with the EU

The EU and Tunisia date back to 1969, when a Trade Agreement was concluded, followed by an Association Agreement in 1995 (valid since 1998). In 2008, the contracting parties negotiated a Free Trade Zone for industrial products, which had a decisive influence on the industrialization of the country. The next stage of deepening cooperation was supposed to be the negotiation of the Deep and Comprehensive Agreement on a Free Trade Area (ALECA), which began to be discussed in October 2015, but the negotiations did not make any progress, and therefore were interrupted in the pre-election period of 2019 and have not yet been renewed.

Contracts with the Czech Republic

The first bilateral agreements between the Czech Republic (then Czechoslovakia) on scientific, technical and cultural cooperation were signed as early as 1963, followed by agreements on economic cooperation and cooperation in the field of e.g. tourism. The Czech Republic has an agreement with Tunisia on the prevention of double taxation and the prevention of tax evasion in the field of income and property taxes from 1990, and an agreement on the support and mutual protection of investments, while the content of the accompanying protocol is still being negotiated. In 2017, a contract was signed with Tunisia on social security.

The agreement on economic cooperation between the government of the Czech Republic and the government of the Republic of Tunisia (April 16, 2009) gave a new framework to Czech-Tunisian relations by creating the Joint Commission for Czech-Tunisian Cooperation in the Economic Area, under the responsibility of the Ministry of Industry and Trade. The next, 5th meeting of the joint commission is expected to take place in 2023 in Prague with a greater focus on specific sectors. In October 2016, the Czech-Tunisian Business Council was established. Business opportunities are created more on an operational basis, mainly in connection with business missions or the involvement of Czech companies in development projects. In addition to the CONECT association, the embassy also has ties with the UTICA association and the Tunis CCIT, Sfax CCIS and Bizerte CCINE chambers of industry.

Developmental cooperation

The European Union and EU member states are the main development cooperation partners in Tunisia. European Neighborhood Instrument support for the period 2014-2020 reached €1 billion, focused on strengthening good governance and the rule of law, stimulating a sustainable economy and employment, and strengthening social cohesion between regions. The new Neighbourhood, Development and International Cooperation Instrument 2021-2027 (NDICI) will focus, among other things, on post-COVID-19 economic recovery. The EU’s goal is also to strengthen the impact of CS EU initiatives through the Team Europe Initiatives (TEI) tool for selected sectors. The EU also provided macroeconomic support to Tunisia in connection with the effects of the COVID-19 pandemic in 2021-2022, totaling EUR 600 billion.

From the point of view of foreign development cooperation of the Czech Republic, Tunisia is a non-priority country, yet the Czech Republic has recently financed development and transformation projects, as well as activities to support private sector partnerships. During the years 2019 to 2022, four development projects in the amount of CZK 1.68 million were supported, one of which is now in the implementation phase. The projects aim at the sustainable development of marginalized regions and employment support for local women, as well as technological innovations in agriculture. From the 2020 project, a device was procured for the treatment of waste water to be used for irrigation. As part of the response to the COVID-19 pandemic, financed by the assistance program for Africa, two tied cash donations with a total value of CZK 18.3 million were identified in Tunisia. The projects ensured the equipment of the ICU and infectious disease unit of Ras Jebel Hospital (Bizerte Governorate) and the purchase and installation of technology for the treatment of industrial waste water from slaughterhouses in the municipality of Raoued/Tunis. In 2019, the Czech Republic also provided support for B2B projects for the development of Smart Cities in North Africa or a plan to introduce environmental technologies to the Tunisian market.

Prospective fields of study (MOP)

Energy industry

The use of renewable energy sources in Tunisia is gradually increasing, the government has an ambitious goal of reaching a share of up to 30% compared to fossil fuels by 2030. The sector is attracting interesting investments from foreign donors and investors, and with them also local demand for affordable technologies. Concentrated solar power (CSP) and concentrated photovoltaic (CPV) technologies are in particular demand. However, the percentage of electricity produced on the basis of natural gas still accounts for 96% of all production. The need to change and modernize the technological background for gas processing thus remains relevant.

Defense industry

Despite the difficult economic situation in Tunisia, the security sector enjoys prioritization across the political spectrum, and state investment is thus stable. The reason is the ongoing fight against terrorism on Tunisian territory, the unstable situation in the region, but also the involvement of the Tunisian army in foreign stabilization missions.

Engineering industry

The main drivers of the Tunisian economy are the textile, electrotechnical, agricultural and food industries, construction and phosphate processing also play an important role. At the same time, increasingly higher demands are placed on production capacities due to growing demand, e.g. for the Libyan market, and the introduction of standards for exporting products abroad. The technological upgrade of production lines for various industrial uses thus represents potential.

Water management and waste industry

Opportunities for Czech companies are in the areas of technologies for industrial wastewater treatment, water purification for its reuse in agriculture, but also in the field of municipal waste management. The capacities of the Tunisian waste industry are far from covering local needs, which is especially evident during floods caused by seasonal rains. On the other hand, awareness of the lack of water resources in the country is gradually increasing.

Healthcare and pharmaceutical industry

Tunisia is a popular destination for medical tourism. Tunisian private clinics and hospitals attract over half a million patients to Tunisia every year from almost all countries of the African continent, but also from Europe. The change of equipment and the expansion of the offered care represent an opportunity for the entire range of Czech products and technologies. The Tunisian pharmaceutical industry is also a promising sector for the export of laboratory equipment and medicinal substances for the production of generic drugs, both domestic consumption and export of which are on the rise.

Tunisia Trade