Posted by: Agence Tunis Afrique Presse

The World Bank announced on Thursday a new US$500 million operation to support key reforms in Tunisia aimed at promoting private investment and creating opportunities for small businesses, while protecting vulnerable households and increasing energy security.

The new operation will support concrete actions to simplify import and export procedures, open many sectors to investment, make it easier for small businesses to access credit and bid for government contracts, ensure social safety nets reach the poorest and help build human capital, and create a more sustainable and greener energy sector.

The Investment, Competitiveness and Inclusion Development Policy Framework was designed to help implement major goals outlined in the government’s Five-Year Development Plan 2016-20. The operation is based on three components, with the first aimed at implementation of the new investment laws.

This will include eliminating 27 of the 127 procedures needed to clear customs. The remaining procedures will be digitised, to make the process more predictable and efficient. As mandated by law, government procurement will also be digitized to make it easier to bid for public contracts. This will set the stage for achieving the goal of 20% of government contracts awarded to small businesses.

The second component will focus on improving the targeting and impact of social safety nets and expanding access to microcredit. Better targeting will not only ensure that social programmes are reaching those that need them most, but will also make implementation of the law increasing the size of payments to beneficiaries more feasible. The new operation will also support the linking of social programs to better health and education outcomes.

The ceiling for microcredit loans will be doubled from 20,000 to 40,000 Tunisian Dinars, to increase the range of potential beneficiaries; from income generating activities for the most marginalised to start-ups launched by unemployed young people or recent university graduates. The goal will also be to increase the volume of microcredit loans from the current 731 million to 1,175 million Tunisian Dinars, with 600 million earmarked for women.

“Well designed social safety nets will play an important role in the government’s commitment to leaving no one behind,” said Marie Francoise Marie-Nelly, World Bank Country Director for the Maghreb and Malta. “Along with protecting the most vulnerable from temporary shocks that can accompany reforms, they also provide a ladder out of intergenerational poverty by encouraging families to keep their children in school and promoting good health and nutrition. Microcredits are especially important for people in less developed regions, who have fewer options for accessing credit.”

The third component will support reform of the energy sector to make it financially viable and sustainable by creating the conditions for achieving the goal of generating 30% of all electricity generation from renewable sources by 2030. A critical step will be the lifting of energy subsidies, which place huge pressures on the national budget and benefit the rich, who consume more energy, than the poor.

Lifting subsidies will allow for precious public resources to be re-directed toward social safety nets. Equally important,adjusting prices along with reforms to increase the economic efficiency of the sector, will mean the electric utility recovers the full cost of generating electricity. This will be critical for attracting investment in the sector, and addressing the financing needed for the shift to green energy.