Protesters and investors rejoice as Tunisia ousts government

As protesters call time on the government’s handling of the fragile political transition and the pandemic, Tunisia's new government could unlock the political stalemate and pave the way to recovery and investment, economists say.



Tunisia’s president fired his long-time rival, Prime Minister Hichem Mechichi on Sunday, and suspended the government as public frustration with the country’s worsening economy and handling of the pandemic boiled over.

The streets of Tunis erupted in celebrations as the president Kais Saied announced that he would take power, and appoint a new prime minister. Under Tunisia’s constitution power is shared by the president, prime minister and parliament.

The move was slammed by opponents as a coup and constitutional breach as military vehicles encircled the parliament building, and blocked the speaker of parliament and leader of Ennahda party, Rached Ghannouchi, from entering.

Thousands took to the streets on Saturday after the health ministry reported that Covid deaths hit a record high, with hospitals full, short of oxygen and unable to cope.

A slow-moving vaccine rollout has galvanised frustration with the government’s failure to deliver real change, says James Swanston, a North Africa economist at Capital Economics.

“Tunisia has been in a state of political paralysis since October 2019 with several prime minister-elects failing to form a government. As a result, there has been little in the way of policymaking that has come at the same time as one of the worst economic contractions in Tunisia’s history.”

GDP shrank by 8.6% in 2020 while the political deadlock has prevented the formation of a government and held back reforms to support the economy, deal with the effects of the crisis, and restore macro stability, Swanston adds.

On Sunday, protesters stormed the Ennahda party’s local headquarters in the city of Touzeur and smashed computers. The moderate Islamist party has dominated Tunisia’s political scene since a 2011 revolution ousted autocratic leader Zine El-Abidine Ben Ali and triggered the Arab Spring.

“Right now people are associating this failure with this party.  We needed change and something to unlock the situation,” said a Tunisian investment banker based in London, who wished to remain anonymous.

“I don’t think Ennahda have been helping people have a better life. People have been patient for ten years and had a lot of good will, and this good will has probably run out.”

Investors take stock

The latest political shake-up also holds the promise of enacting the reforms needed to confront the country’s fiscal challenges.

“You can look at the latest move as an initiative to trigger change and bring a more efficient government, and a leader more involved in the running of government. It could bring stability and clarity starting with pandemic recovery,” said the Tunisian banker working for a large global bank.

If the situation escalates into a full-blown political crisis, the turmoil risks delivering a big hit to the economy. “But right now nothing indicates that,” he added.

Tunisia’s services, tourism and manufacturing economy hinges on stability, efficient governance and productive populations, says the banker.

“These sectors require not only political stability to attract foreign direct investment, but it requires the same stability to allow local economic operators to invest and start new projects.”

“That’s the problem with Tunisia, it’s not poor or underdeveloped enough to throw money at, but on the other hand its always struggling to get to the next level.”

Beacon of hope

Until now Tunisia was upheld as a beacon of democracy in a region where revolutions from Egypt to Syria, Sudan and Yemen, have been painful, bringing bloodshed, economic malaise and in some cases war.

As Tunisia continues its transition from an authoritarian to a parliamentary regime, the upheaval is a natural part of the state-building process, the banker says.

“In the history of nations ten years is not a long time, to bring openness and democracy, and to have that trial and error. You can’t make up a successful and a prosperous democracy in ten years.”

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