Background and general framework of the project
The Tunisian economy has been resilient in the last few years. The standard of living of Tunisians has improved and the poverty rate has declined over the past decades. However, the COVID-19 pandemic and consequent economic crisis has deeply affected tourism, industrial activity and exports and is set to leave a serious mark on the economic and social fabric. Tunisia’s GDP in 2020 is expected to fall by almost 9%, followed by only a partial recovery as growth is estimated to be below 6% in 2021.
In the context of the European Union’s “Programme d'Appui à la Gouvernance Economique” the Government of Tunisia wishes to improve the national business climate and revive business investment as part of a post-COVID recovery plan. The OECD has been asked to contribute to this effort and share its extensive experience in pro-competitive reforms to identify restrictions and provide recommendations that aim at increasing consumer’s welfare and economic growth.
In co-operation with Tunisia, the OECD will conduct a peer review of competition law and policy as well as a review of laws and regulations in the tourism and the banking sectors. The project started in February 2021 and builds on the success of the first OECD Competition Assessment ever conducted in the country in 2019 and which covered two important sectors of the economy: wholesale and retail trade as well as road and maritime freight transport.
OECD country reviews of national competition laws and policies assess how each country deals with competition and regulatory issues, from the soundness of its competition law to the structure and effectiveness of its competition institutions.
OECD competition assessments are based on the Competition Assessment Toolkit, which is designed to identify shortcomings in the regulatory and policy environment. The Toolkit is organised around a list of questions that screen whether regulations can potentially restrict competition, for instance by creating barriers to entry or by discriminating between suppliers.
The OECD will hold extensive consultations with the Tunisian administration and other stakeholders to tailor the analysis and the recommendations of both reviews to the Tunisian reality. The work will be complemented by workshops to build the capacity of Tunisian officials to conduct competition assessments, in line with international best practices.
The essential role of competition
Increased competition can improve a country’s economic performance, open business opportunities and reduce the cost of goods and services to the benefit of consumers.
Although laws and regulations are necessary for the well functioning of our societies and economies, in some cases they can restrict competition, preventing the said benefits from taking place.
Competition assessment is the process of identifying restrictive regulations and developing alternative, less restrictive measures that still achieve government policy objectives. This exercise could significantly reduce unnecessary restrictions and contribute to continued and sustained growth.
Why the transport sector
The Government of Tunisia, the European Union and the OECD have decided to conduct a competition assessment of the tourism sector given its importance for the economy, especially in a post-COVID perspective.
Tourism has historically played a central role in the Tunisian economy. As one of the largest contributing sectors to GDP and employment, tourism is a major contributor to foreign currency reserves. The consequences of the COVID-19 pandemic on the sector are being considered as severe with about 60% drop in earnings in 2020. Preparing the sector for a potential recovery and enabling it to reach its full potential, including by removing barriers that may hinder the competitive and efficient functioning of the industry is the main objective of the Tunisian authorities.
Why the banking sector
It was also decided to conduct a competition assessment of the banking sector. Banks are the cornerstone of the Tunisian financial system where they account for more than 90% of intermediated financing. On the other hand, the share of bank credit in GDP is still low by regional and international standards and access to finance was one of the main obstacles identified by Tunisian businesses across several recent surveys (WEF, 2017/ WB 2014).
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