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All in the family: The Ben Alis and Tunisia

Many Tunisians wonder why it has taken the world so long to figure out the family profited by bending business rules.
Last modified: 27 Mar 2014 19:55

Sipping an espresso in the World Bank's minimalist Tunis canteen, Sicilian born Antonio Nucifora tells me how he and his colleagues poured over years of tax records from 220 confiscated Ben Ali firms.

Their paper reveals that this small circle of people pocketed around a fifth of Tunisia's private-sector profits.

If one number-crunches, that works out to around $233m, approximately 0.5 percent of the Gross Domestic Profit (GDP). While that does not sound that dramatic, the business environment they created caused a ripple-effect across the country's economy, as there were many other firms benefitting or suffering from this system.

Most Tunisians seem to know that the former President Zine El Abadine Ben Ali, along with his family, profited unfairly by bending business rules to benefit their companies.

So many Tunisians are wondering why it has taken the international community so long to figure it out. During his rule the World Bank was one of the institutions that praised Ben Ali for maintaining economic stability and growth.

The figures were relatively impressive, with GDP at four, or sometimes five, percent. So what was wrong with Ben Ali's system, if the country was on a steady economic track?

Nucifora says: "The international community had bought into what was a good image campaign."

On the surface, Ben Ali made a show of the country being open to business, modern and fair.

"Access to data and information was strictly controlled," he says. "However, the ruling elite were hiding the fact that a large section of the economy was closed to competition."

During his 23 years in power, Ben Ali protected entry to the economy by issuing more than 20 presidential decrees, and changing the business code dozens of times.

Crony capitalism

Economists call it crony capitalism, when political connections make a few people very rich.

Cement was one of the industries exploited by the previous president.

Companies that produced it needed prior government authorisation, that gave Carthage Cement, a company owned by Ben Ali's brother-in-law, dominance over the market.

The report found that Ben Ali firms outperformed their competitors in employment, output, and market-share. The market-share of a typical Ben Ali firm was 6.3 percent more.

The World Bank Report also reveals that three years after the revolution, rent-seeking, when people obtain benefits for themselves through political influence, still exists today.

Nucifora says those "barriers and need for authorisation should be removed, and simplified".

In so doing, certain firms are prevented from being granted privileges over others, and a "more level playing field" is created, he says.

Economic change?

Hakim Ben Hammouda, the Minister of Finance, has just returned from a trip to the Gulf which he told me "was positive".

Tunisia is in deep financial trouble, growth is low, it has a huge public-sector deficit, and it needs outside help.

His role is not an easy one, he is the fourth finance minister to take the position in three years.

Ben Hammouda does not think that cronyism, or rent-seeking, is a big issue in Tunisia.

"We are doing some studies which show the situation has improved. It is not a problem of corruption, but a problem of delays. People are taking time to make sure every step is followed and every rule is followed," he says.

Many Tunisian entrepreneurs I have spoken to would disagree, they say they are facing red tape, and over regulation, and many sectors like banking and telecoms are still protected and not open.

Tunisia has made political progress, with a new constitution, and a sense of consensus among politicians.

However, there is still a general sense of inequality, as well as a feeling that there is still a "them" and "us" in society.

Many Tunisians feel that they are still waiting for economic justice.