Tunisia Closer to Business Rebound Amid Political Transition, ECP Says

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Tunisia’s political transition since its 2011 revolution has been taxing for local companies, many of which have had to cope with unrest and higher wage demands, but the climate for investment and business growth appears to be getting better – at least in some sectors.

The Tunisian elections authority recently proposed presidential and parliamentary elections late this year after successive caretaker governments failed to produce a lasting political order. The hope is that the latest polls will cement the North African country’s transition to democracy and give a boost to investor confidence and the economy.

Everyone was affected by the revolution and its aftereffects, said Nayel-Georges Vidal, a Tunis-based director at pan-African private equity firm Emerging Capital Partners. But the tumult hasn’t been as damaging for well-run companies that supply essential services, he said. The revolution has also released a flood of entrepreneurship that had been held back under the previous regime, led by president Zine El Abidine Ben Ali.

“Entrepreneurs were beyond open to doing more business and to find investors to grow their businesses [after the revolution],” Mr. Vidal said. “Previously they were a bit afraid of appropriation of their assets [by the former regime].”

ECP had invested in one Tunisian business before the revolution: Société d’Articles Hygiéniques, a feminine and baby care products company. Another portfolio company, the Nigeria-based Continental Reinsurance, has operations in Tunisia.

For SAH, it was largely business as usual after the revolution because it supplied essential products and because ECP had modernized the company’s operations, Mr. Vidal said. ECP exited SAH a few months back through a listing on the Tunis Stock Exchange. It was the largest IPO in Tunisia since the revolution, and attracted strong interest from foreign investors.

During the later Ben Ali years, Tunisia had made strides in attracting foreign investment and growing the economy, although as in other North African countries, the growth largely didn’t raise standards of living for the average citizen.

While the International Monetary Fund projects GDP growth to hover around 3% this year – less than levels typical before the revolution – one major gain of the upheaval has been increased clarity about risks in the economy. And that could bode well for a new generation of post-revolution investors.

“Now the risks are out in the open and are easier to analyze and understand and take into account,” said Andrew Brown, ECP’s chief investment officer. “Tunisia was very successful in pretending that the risks didn’t exist and convincing everyone that the system could stay in place indefinitely. That wasn’t the case. It was just a matter of time.”


Source : http://blogs.wsj.com/



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