In 2012, Tunisia announced the establishment of a free trade and logistics zone (FTZ) in Ben Guerdane, near the Libyan border. The aim is to develop marginalized southeastern border regions and formalize informal economic actors. However, the plan has stalled due to institutional resistance, political divisions, and an incapacity to exploit international geopolitical rivalries. If this persists, the project may become irrelevant because of emerging FTZs in Libya, denying Tunisia revenues its ailing economy needs.
- The Tunisian-Libyan border region has long relied on informal cross-border trade. This was tolerated as it reinforced social stability in a poor region.
- The Tunisian and Libyan uprisings in 2010–2011 disrupted the border economy. A fragmented security landscape in Libya, the erosion of supply chains, and heavy-handed Tunisian border security measures exacerbated the distress of the border population, pushing the authorities to propose Ben Guerdane’s FTZ as a solution.
- The FTZ is aimed at upgrading trade and investment infrastructure, generating regional economic development, and encouraging entrepreneurs of the informal economy to formalize their activities.
- The project has suffered multiple delays caused by its conceptual shortcomings, negotiations over property rights, institutional resistance related to tax incentives and currency regulations in the FTZ, rivalries between economic elites, and ambiguity around Tunisia’s participation in international competition over Mediterranean trade routes.
FINDINGS AND RECOMMENDATIONS
- The Tunisian authorities must revive the FTZ project as soon as possible to capitalize on Tunisia’s economic potential and give hope to the population of the border area.
- Tunisia urgently needs to formulate an attractive regulatory and incentive framework for the Ben Guerdane FTZ to appeal to Tunisian and foreign investors. Its success will also depend on a credible strategy to formalize the informal economy, as the main goods being traded informally—gasoline and cigarettes—will not be covered by the FTZ.
- Failure to position Tunisia in a competitive regional and global environment—a positioning the FTZ will advance—will exacerbate Tunisian economic hardships. Until now, however, Tunisia has been buffeted by rivalries between China and Western states.
- One element of this regional and global positioning is to move forward on identifying a strategic private-sector international operator to invest in the FTZ. This process has been deferred since 2015.
- Time is of the essence, as western Libyan cities are also engaged in similar projects, with Misrata having already established a dynamic FTZ and Zuwara planning to do so. Continued progress in Libya could soon make the Ben Guerdane project irrelevant.