Fighting Rent Economy and Misuse of Public Resources Requires a Comprehensive Vision and Long-Term Effort
The relationship between rent and economic growth in Tunisia is a crucial issue. Despite its potential and successive reforms, the national economy remains marked by a strong presence of rentier structures and influential monopolies, which hinder competitiveness, innovation, and the integration of companies into a market often dominated by groups benefiting from favorable regulations.
What is a Rent Economy?
A rent economy is based primarily on the exploitation of natural resources, regulatory privileges, or a dominant position in a market, rather than on the production of added value through innovation and competitiveness.
Impact of Rent Economy on Tunisia's Development
For several decades, the dominance of the rent economy has heavily weighed on the country's development. "This dominance is reflected in the capture of wealth by groups benefiting from privileges related to monopolies, import licenses, targeted subsidies, preferential interest rates, or complex administrative barriers," according to the Tunisian Institute of Strategic Studies (Ites) in a recent study on combating the rent economy.
These mechanisms block competition, limit productive investment, hinder innovation, create market distortions, and fuel social inequalities.
Reduced Entrepreneurial Dynamics
According to indicators cited by Ites, more than 50% of the economy operates in sectors where strong restrictions limit competitive entry: monopolies, heavy and complex regulatory frameworks, and multiple prior authorizations. "This interlocking of public interventions has led to a locked-in economic model, with low competitiveness, where the state maintains a strong grip through public enterprises and direct interventions," notes Ites.
Limitations on Innovation and Investment
The functioning of the Tunisian economy, dominated by rents, limits the incentive for innovation and productive investment. "Companies protected by monopolies or anti-competitive practices prioritize rent over improving products, processes, or services," reveals Ites.
It also adds that "the maintenance of rents greatly reduces entrepreneurial dynamics, hindering the creation of new and competitive businesses." Access to financing is discriminatory, with companies linked to networks being privileged to benefit from advantageous interest rates, while SMEs face major obstacles.
Investments and Productivity
Investments are mobilized in unproductive activities or "intensive use of unskilled labor, which limits long-term productivity gains." The study also focused on the complex regulatory framework, with long and uncertain procedures, which disempowers economic actors and hinders initiative-taking.
Accompanying Inclusive Investment
The study proposes key actions to simplify and unify the regulatory framework for investments, reducing administrative barriers, particularly in innovative regions and sectors. It also suggests refocusing aid and subsidies on sectors with high technological and innovative potential, as well as on local SMEs, encouraging the mobilization of territorial actors (local authorities, chambers of commerce) to support inclusive investment, and setting up a single window for all procedures, accelerating business creation and license issuance.
Recommendations
Ites recommends a series of actions to strengthen competition, improve economic governance, protect the middle class, stimulate innovation, and promote sustainable and inclusive growth. These measures include promoting real and healthy competition through the strengthening of the independence of the Competition Council, revising sectoral regulations to eliminate excessive protection of interest groups, and formally prohibiting any legal exemptions from anti-cartel laws.
Reforming the Tax System
The Institute also calls for simplifying concession, license, and other attribution procedures, combating informal barriers through independent audit mechanisms, facilitating access to financing for SMEs and start-ups, and establishing transparent criteria for eligibility for public tenders.
For the tax aspect, "it calls for a reform of the tax system to restore equity, by gradually eliminating unjustified tax niches, digitizing and centralizing tax data to reduce evasion, and setting up transparent control devices."
Improving Economic Governance and Transparency
To improve economic governance and transparency, the Institute proposes setting up an open data portal grouping all public information, regularly publishing the beneficiaries of concessions, public markets, and creating multi-party instances to monitor reforms.
Efforts Towards Reform
Efforts should also be directed towards reforming the banking system (strengthening transparency on credit granting criteria, establishing specific financing access devices for innovative SMEs), administrative and land reform, and other areas.
Ites recalls that fighting the rent economy "is a major and complex task, requiring coordination between the different components of the state, the private sector, civil society, and international partners."
