Behind the new investment code: who it courts, and who it leaves out

Tunisia has learned to speak the language of investment fluently. Every few years, the same vocabulary returns with minor adjustments: attractiveness, simplification, digitalization, incentives, competitiveness, regional development, public private partnership, value chains, innovation. The new investment code, or the reform now being prepared around it, belongs to this familiar grammar. It promises to make Tunisia easier to enter, easier to finance, easier to navigate, and easier to sell to international investors who have long viewed the country as both promising and frustrating.

But the more serious question is not whether Tunisia needs a new investment framework. It does. The deeper question is who this framework is designed to reassure, and who remains outside its imagination.

An investment code is never just a legal text. It is a political document disguised as a technical one. It tells investors what the state wants from them. It tells citizens what kind of economy their government is trying to build. It tells domestic entrepreneurs whether they are being treated as partners in national development or as obstacles to be disciplined. It also reveals what the state is afraid of: capital flight, unemployment, regional anger, foreign dependence, fiscal collapse, or the loss of control over strategic sectors.

Tunisia’s investment problem is not simply that investors do not know the rules. It is that they often do not trust the system that applies them. A new code can simplify procedures, reduce authorizations, create fiscal advantages and strengthen investor services. But it cannot, on its own, compensate for a deeper crisis of confidence in administrative discretion, policy unpredictability, slow justice, currency restrictions, weak public services, and a banking sector that is often more comfortable financing the state than financing productive risk.

This is where the new investment code must be judged. Not by the elegance of its language, but by the political economy it creates.

The first constituency it courts is obvious: foreign capital. Tunisia wants to be seen again as a serious investment destination, especially for European nearshoring, automotive components, aeronautics, pharmaceuticals, digital services, renewable energy, food processing and export oriented manufacturing. The pitch is not irrational. Tunisia has proximity to Europe, a skilled workforce, a long industrial tradition, a coastline connected to Mediterranean trade routes, and a level of social sophistication that remains one of its greatest assets. In a world where European companies are trying to shorten supply chains and reduce dependence on Asia, Tunisia should have a natural advantage.

The problem is that Tunisia often mistakes geography for strategy. Being close to Europe is not enough. Morocco is close to Europe. Turkey is close to Europe. Eastern Europe is close to Europe. Egypt offers scale. The Gulf offers capital. Sub Saharan Africa offers growth. Tunisia’s comparative advantage cannot simply be that it is nearby and relatively affordable. It has to offer reliability, speed, predictability and institutional seriousness.

This is where the code must do more than advertise incentives. Foreign investors do not only ask how much tax they will pay. They ask whether they can obtain land, import equipment, hire qualified staff, repatriate profits, resolve disputes, receive permits, access foreign currency, and operate without being trapped in a maze of competing administrations. They ask whether a signature means something. They ask whether a promise survives a ministerial reshuffle. They ask whether decisions are made by law, by instruction, or by personal access.

If the new code answers only the first layer of these questions, it will attract delegations, consultants, conferences and memoranda of understanding. It may not attract long term capital.

The second constituency it courts is the export oriented economy. Tunisia’s offshore model has been one of the country’s most successful and most limiting economic arrangements. It created jobs, integrated Tunisia into European value chains, and brought foreign exchange into the country. But it also produced a divided economy. On one side, relatively productive export firms connected to international markets. On the other, a domestic economy constrained by regulation, low productivity, weak competition, poor access to finance and administrative burdens.

A serious investment code must not simply reinforce this divide. If Tunisia continues to privilege the offshore sector while leaving the onshore economy trapped in old habits, it will deepen the very structure that has held back national growth. It will create islands of efficiency surrounded by a sea of frustration. The result will be familiar: foreign owned or export linked firms receive attention, facilitation and incentives, while local entrepreneurs serving the domestic market face queues, inspections, slow authorizations, uncertain interpretation of rules, and banks that require collateral rather than evaluate business potential.

This is not a minor issue. Tunisia’s future cannot be built only around attracting foreign companies to produce for others. It must also enable Tunisian firms to grow, compete, export, innovate and become regional players. The question is not foreign investment versus national investment. The question is whether foreign investment becomes a ladder for domestic capability, or merely a fenced corridor through which value passes without transforming the wider economy.

The third constituency the code appears to court is the state itself. This may sound paradoxical, but it is central. Tunisia wants investment, but it also wants control. It wants capital, but fears dependence. It wants growth, but is cautious about liberalization. It wants jobs, but worries about social instability. It wants foreign exchange, but maintains a restrictive financial architecture. It wants private initiative, but often distrusts private actors. This contradiction has shaped Tunisian economic policy for decades.

The new code will therefore be judged by whether it reduces state discretion or merely reorganizes it. A law that says investment is free, while leaving large categories subject to authorization, opaque interpretation or sectoral exceptions, does not fully liberate investment. A one stop shop that receives applications but cannot compel other administrations to act is not a one stop shop. A digital platform that reproduces the same approvals online is not reform. It is bureaucracy with a password.

Real reform would mean that silence from the administration after a fixed deadline becomes approval. It would mean that all authorizations are published, justified, limited and challengeable. It would mean that sectoral restrictions are exceptional, not routine. It would mean that investors can know, before they spend money, which institution decides, on what basis, within what timeframe, and with what appeal mechanism. It would mean that local officials cannot block a project through inertia and central officials cannot unblock it through privilege.

The people left out are equally important.

The first are small and medium sized Tunisian businesses. In political speeches, they are celebrated as the backbone of the economy. In practice, they are often treated as administratively suspicious, fiscally exposed and financially underserved. Many do not need grand incentives. They need clarity, payment discipline, access to credit, fewer arbitrary controls, faster customs, simpler tax rules, and public administrations that do not turn every procedure into a test of endurance.

For a small Tunisian manufacturer, a young service provider, a family agribusiness, or a regional contractor, the problem is not whether Tunisia has a beautiful investment code. The problem is whether they can register easily, hire legally, import equipment without losing months, get paid by public clients, access working capital, and survive tax pressure while competing against informal operators who face fewer obligations.

If the new code is written mainly for large projects, international investors and headline announcements, it will miss the part of the economy where most Tunisians actually live.

The second group left out is the interior. Every Tunisian investment law promises regional development. Every government repeats the language of reducing disparities. Yet the economic map of the country remains brutally uneven. The coast accumulates infrastructure, ports, logistics, universities, hospitals, services, networks and administrative attention. The interior receives promises, delegations and sometimes industrial zones without the ecosystem required to make them work.

An investment code cannot correct regional inequality through tax incentives alone. A company will not move to Kasserine, Gafsa, Jendouba or Tataouine simply because the fiscal treatment is attractive. It will ask about roads, energy, water, skilled workers, suppliers, schools, hospitals, security, transport costs and the ability to resolve problems locally. If these conditions are absent, incentives become compensation for structural disadvantage rather than a real development tool.

The interior does not need symbolic inclusion. It needs territorial investment packages that connect fiscal incentives to infrastructure, vocational training, land availability, logistics, local governance and guaranteed administrative service standards. Otherwise, the code will once again promise equality while financing concentration.

The third group left out is the informal economy. Tunisia cannot build a serious investment climate while a large part of economic life remains outside formal rules. But formalization cannot be achieved through punishment alone. Many informal operators remain outside the system because entering it is expensive, confusing or risky. They fear taxes, inspections, paperwork, social security costs and unpredictable enforcement. For them, the state is not a service provider. It is a threat.

A serious investment framework would treat formalization as an investment policy issue, not only a tax issue. It would create pathways for micro enterprises to enter gradually, access simplified accounting, receive social protection, qualify for small loans, and move from survival activity to productive activity. Otherwise, the investment code will speak to investors with lawyers, accountants and consultants, while ignoring the thousands of Tunisians who run businesses from garages, workshops, markets, kitchens, taxis, farms and small shops.

The fourth group left out is young talent. Tunisia produces engineers, doctors, developers, technicians and graduates whose skills often mature into frustration. The country then watches them leave, and describes their departure as a national tragedy. But brain drain is not only a moral question. It is also an investment climate indicator. Talent leaves when the economy cannot absorb ambition.

A new investment code should therefore be evaluated by whether it creates high quality jobs, not only jobs. Tunisia does not need investment that traps graduates in low wage execution tasks while strategic decisions, research, design and intellectual property remain elsewhere. It needs investment that transfers technology, upgrades skills, builds management capacity, supports research and development, and allows Tunisian professionals to move up value chains.

Foreign investment that employs Tunisians is useful. Foreign investment that develops Tunisian capability is strategic.

The fifth group left out is the citizen as consumer. Investment policy is often discussed as if the investor were the only economic actor who matters. But the purpose of investment is not only to increase the number of projects. It is to improve the quality, availability and affordability of goods and services. A country can attract investment and still leave citizens facing poor service, weak competition, high prices and limited choice.

This is especially important in Tunisia, where public frustration is often rooted in daily economic humiliation: bad service, slow delivery, opaque pricing, unreliable utilities, poor maintenance, weak accountability, and a feeling that citizens have no effective recourse. If investment reform does not strengthen competition, consumer protection and service quality, it will remain distant from ordinary life.

The new code must therefore be linked to a wider reform agenda: competition policy, consumer protection, public service delivery, financial inclusion, digital administration, customs reform, commercial justice and local governance. Investment is not an isolated file. It is the visible part of a much larger state capacity problem.

There is also a fiscal dilemma that cannot be ignored. Tunisia wants to attract investment, but the state is financially constrained. It cannot afford an uncontrolled race to the bottom through exemptions, holidays and special privileges that erode the tax base without producing measurable benefits. Incentives are politically attractive because they allow governments to announce support without immediately spending money. But foregone revenue is still a public cost.

The question should not be whether investors receive incentives. The question should be what Tunisia receives in return. Incentives should be conditional, transparent and measurable. They should be linked to job creation, regional location, export performance, training, technology transfer, local sourcing, decarbonization, research partnerships, and compliance with labor and environmental standards. They should expire when conditions are not met. They should be published so citizens can see who benefits and why.

Without that discipline, investment incentives become a quiet transfer of public value to private actors with limited accountability.

The new investment code therefore faces a choice. It can be a marketing instrument aimed at reassuring foreign investors and producing a new round of optimistic announcements. Or it can become a genuine economic settlement between the state, investors, entrepreneurs, workers, regions and citizens.

For that to happen, Tunisia must be clear about the kind of investment it wants.

It should court investors who create productive capacity, not merely exploit temporary advantages. It should court companies that train Tunisians, not only employ them cheaply. It should court capital that links coastal strength to interior development. It should court manufacturers, digital firms, renewable energy operators, agribusinesses and service providers that can integrate Tunisia into future industries rather than lock it into low margin subcontracting. It should court diaspora investors who bring networks, credibility and sector knowledge. It should court domestic entrepreneurs with the same seriousness it offers foreign delegations.

But Tunisia must also be honest about what investors need in return: legal predictability, administrative speed, currency clarity, fair taxation, reliable infrastructure, dispute resolution, and protection from arbitrary treatment. These are not concessions to capitalism. They are basic features of a functioning state.

The danger is that the new code becomes another reform that is technically correct and politically incomplete. Tunisia has no shortage of laws. It has a shortage of implementation, trust and institutional discipline. Investors do not only read codes. They read behavior. They watch how disputes are handled, how administrations respond, how courts function, how political messages shift, how quickly permits move, how often rules change, and how the state treats its own private sector.

Behind the new investment code lies a simple test. If it courts only large foreign investors, export enclaves and politically visible projects, it may improve the country’s image without changing its economic structure. If it also serves Tunisian SMEs, interior regions, young talent, informal operators ready to formalize, and citizens demanding better services, then it can become something more important than an investment law.

It can become part of a new national bargain.

Tunisia does not need an investment code that merely invites capital in. It needs one that decides what capital is for.