A giant step forward.

The way in which President Ben Ali and his team have managed Tunisian society and economy over the last 12 years is being cited as a model for other developing countries to try and emulate. Tunisia today is politically stable, socially coherent, modern in outlook, confident in its identity and economically prosperous.

"But this," says Mohammed Ghannouchi, Minister for International Cooperation and Foreign Investment, "as President Ben Ali constantly reminds us, is only the base. This is the foundation on which we have to build in order to take our historically rightful place among the developed nations of the world."

The next 12 years therefore will be as critical for Tunisia as the last 12 have been - although the challenges will be different.

The over-riding priority will be to integrate Tunisia gradually but surely into first the European, and later the world, economic arenas. This involves not only raising the standard of producing and marketing goods and services, but more importantly, an entire change of culture. This, as history shows, is the most difficult part. Countries in transition that succeed in changing cultures go on to higher things; countries that fail to do so often regress.

"Genuine change," says Ben Ali, "comes from within. It cannot be forced from without."

One of the most important goals that will face the new administration after the elections will be to complete the national healing process that was started by the President in 1987. The on-going process of achieving pluralism will go a long way in promoting consensus through discussion. The National Solidarity Fund and other measures will continue to integrate previously marginalised groups into the mainstream; and the spread of quality universal education will help open up more opportunities for all and enhance the competitiveness of the economy.

The net result of Ben Ali's strategy of 'joining in instead of looking on' is likely to be a heightened sense of patriotism and the feeling - which is indispensable for national success - that every individual is part of a greater whole. It was in an effort to achieve this effect that Britain's Prime Minister Tony Blair coined the phrase 'the stakeholder society'. Already the poor in Tunisia's largely middle-class society constitute only 6% of the population.

The second important cultural change involves the transformation of Tunisian society into an open, modern and creative one. This process is already far advanced but real acceleration is expected during the next development plan, 2002-2007. Women already figure strongly in business, education and certain areas of administration. Over the next five years, as the new generation comes on stream, women's economic contribution is expected to at least double - making for an all-round increase in per capita incomes.

Pace stepped up

The pace of higher and vocational training has already been stepped up. By the end of 2001, the total capacity of high schools and universities will be 200,000 per annum as against 100,000 in 1997. All these students will be computer literate with an inevitably modern outlook.

In order to provide meaningful work for new entrants to the job market, eat into the current 15% unemployment rate and maintain the 3.5% annual growth rate in per capita incomes, the economy will have to maintain growth at around 5%, rising to 6-7% by 2007. The per capita GNP, already at $2,400, will near the $5,000 mark by 2007.

This is a stiff task for a country with no natural resources. "Ideally, we should achieve growth of 10% by 2010," says Abdelhamid Triki, Director General of Planning, "but this is not realistic. I believe we can reach 6-7% - historically Tunisia has achieved an 8% growth - so it can be done."

But the doing will not be easy. A very fine balance will have to be struck between increasing productivity and competitiveness and sustaining social cohesion.

"Fortunately, as result of Ben Ali's foresight and a vigorous implementation of policy, both the social and economic elements are nicely poised for sustained economic growth," adds Triki.

Twin pillars of growth

The rate of inflation is around 3%; national saving has increased to 24.5% of GNP; external debt servicing has come down to 17% of exports; the budget deficit, which was 5% in 1996, has dwindled to 3.2% (excluding privatisation income) and is expected to reach 2.8% this year and 2% in 2001. Tunisia has never rescheduled its external debts with the result that it has earned an impressive BBB investment rating from Moodys.

Tunisia's growth strategy is based on two pillars: improving productive efficiency to European level by 2008 and attracting more foreign direct investment. Both aims are being served by the current economic policy. "By setting the EU parity goal, Ben Ali also shifted into gear a general economic upgrading momentum," says Triki.

A number of measures are in place to help the private sector cut production costs, improve quality, delivery and marketing and generally become much more competitive. So far 1,000 companies are involved in the programme and the number is expected to reach 2,000 in 2001. Results, officials say, have been positive - turnover improvement is around 10% this year and exports have increased.

A series of reforms, particularly in the financial sector to encourage greater openness and efficiency has already led to a quickening of the economic tempo. The pace is expected to pick up yet again when the privatisation programme - in which all competitive state-owned enterprises will be sold off - is completed. Legal frameworks, such as company laws, are to be adapted in the near future to conform to international standards. $10bn has been allocated for investment in infrastructure improvements. This will affect highways, railways, telecoms, ports, air ports and the industrial zone. Twenty-four new industrial zones are being constructed and are open to private investment.

The aim is both to make the Tunisian entrepreneur as efficient as possible and to create as welcoming a climate as possible for the foreign investor. FDI is crucial to Tunisia's economic plans. Average FDI inflow over the past five years has been around the $400m mark, although in 1998 alone, $800m was invested. Currently there are 1,700 foreign companies providing 150,000 jobs in Tunisia. These include major multinationals such as British Gas, Benetton, Siemens, Phillips and General Motors.

The aim now is to diversify the source of FDI and attract non-traditional investors such as Americans and Asians. At an investment forum in Carthage in June, more than 120 Asian and American investors attended and expressed a keen interest in the mechanical, electrical, electronic and construction industries. The state is also actively encouraging Tunisian entrepreneurs to open up their capital to foreign investors and reap the benefits not only in terms of technology transfer but as a means of integration into the global market.

Tunisia's proximity to Europe, its qualified workforce, its regulated wage structure and its advanced infrastructure making it possible for more and more companies to produce 'just in time', puts it at the top of the pile as an investment destination. Everything else being equal, there is no reason why Tunisia should not become the Singapore of