U.S.-Tunisia Joint Economic Commission

Remarks
Catherine A. Novelli
Under Secretary for Economic Growth, Energy, and the Environment 
Washington, DC
May 6, 2016


(As Prepared)

Thanks, John. Good morning. It is great to see so many friends and colleagues here today. I’d like to recognize my co-chair, Minister of Employment Ladhari, along with the rest of the Tunisian delegation. I’d also like to welcome our private sector representatives, and thank everyone who has worked so hard over the past few months to organize this event.

It is an honor to co-chair the first full meeting of this Joint Economic Commission. When President Obama and President Caid Essebsi agreed last year to establish the JEC, it was a testament to the strong partnership between the United States and Tunisia. They envisioned a mechanism to support Tunisia’s economic reform priorities and encourage private sector ties between our countries, in a manner that would promote economic development in both our countries.

Tunisia has a strong partner in the United States. We have provided Tunisia with more than $750 million in foreign assistance since 2011 and underwritten nearly $1 billion in loan guarantees.

It is worth taking a step back and recognizing what Tunisia has been able to accomplish since 2011. In the face of immense challenges and overwhelming odds, Tunisia has managed to build an accountable, representative, and inclusive democracy.

On the economic front, we commend the Tunisian government for completing a number of significant reforms, such as the bankruptcy law, the competition and prices law, the public-private partnership law, and public bank recapitalization. We recognize that other reforms are in the works: an investment code, a banking sector reform law, a tax code, and customs modernization. We applaud these efforts.

This morning, you may have noticed a large screen at the front of this conference room. It was playing a video of interviews with Tunisian business owners and entrepreneurs.

There’s Khaled Doulami, a young entrepreneur who has founded two radio stations and two IT companies. And there’s Ramzi Ben Hedi, who runs Chili’s and Papa John’s franchises. There’s also Badreddine Ouali, who operates a Tunis-based financial software supplier. And Abdelaziz Makhloufi, representing C.H.O. Group, one of Tunisia’s major olive exporters. Each one has created jobs and opportunities within Tunisia. I encourage everyone to take a look at the video and hear these amazing stories.

We know that they and similar entrepreneurs operate in the face of many challenges. They describe a lack of access to credit, uncertainty about registering a business, complicated customs processes, and licensing delays. Business owners and entrepreneurs have told us about the regulatory, legal, and other barriers that stifle innovation and economic growth.

Finding practical ways to address these challenges is what the JEC is all about. The JEC is our only bilateral dialogue with Tunisia that includes private sector participation. This is what makes it unique and so important.

The JEC is also about building Tunisian partnerships with U.S. firms and finding tangible ways to unlock the potential that already exists in the Tunisian economy. This includes creating the right business environment to attract foreign investment, including from U.S. companies. Concrete steps to improve the business environment, which make it easier for Tunisian and U.S. firms to operate, will help create jobs for Tunisians. Boosting trade and business links between our two countries will also benefit the U.S. economy and help to strengthen U.S.-Tunisian relations.

Improving Tunisia’s business climate will also help to move more workers from the informal to the formal sector. In an economy where approximately 40 percent of non-agricultural workers are employed in the informal sector, this is a critical objective. This is will also boost economic opportunities for women, as women are hit particularly hard by being excluded from the formal economy.

Today’s agenda reflects the input of private sector representatives – groups like AmCham, Partnership for a New Beginning, and Tunisian American Young Professionals. Over the past few months, we’ve talked to hundreds of people – including many of you in this room – and we’ve received suggestions on where and how to focus our efforts.

In our break-out sessions today, we’re going to focus on three areas: 1) new opportunities in the agriculture and food sector, 2) strengthening small and medium-sized enterprises, and 3) growing the ICT sector. Let me say a few words on the outcomes we hope to achieve in each of these areas.

Agro/Food Sector

We know that Tunisian firms would like to trade and partner more with U.S. companies. Agriculture comprises almost ten percent of Tunisia’s GDP and provides jobs for roughly 15 percent of the labor force, and this is a sector ready for increased cooperation.

Today, we will focus on steps to increase opportunities for Tunisian farmers and agricultural exporters to find U.S. partners. We will assist the Tunisian government, in coordination with our private sector colleagues, in the creation of a road map to boost bilateral trade.

SMEs (Small and Medium-sized Enterprises)

We will also focus on Small and Medium-sized Enterprises – SMEs – which are the lifeblood of economic growth in most countries. In Tunisia, new job growth comes predominantly from businesses in their start-up phase, which is to say businesses that are less than four years old. SMEs comprise more than 80 percent of Tunisia’s economy.

Yet Tunisian entrepreneurs face a complex process for registering a business, involving multiple ministries. By some estimates, it takes up to 40 days and costs an average of $500 to register a business. This prevents many entrepreneurs from registering companies in the first place, which is why so many businesses remain in the informal sector. This is not just an isolated phenomenon. It is a systemic barrier to economic growth and job creation.

The World Bank estimates that the financing gap for Tunisian SMEs exceeds $2 billion. And nearly 50 percent of Tunisian SMEs are unserved or underserved in terms of access to credit.

So today, we will look at ways to improve the environment for SMEs within Tunisia. We will focus on concrete steps to simplify the process for starting a business, including through the creation of a one-stop shop for online business registration. We will work together on ways to enable small business owners to use assets – such as equipment or accounts receivable – as collateral to access financing, thus bringing down borrowing costs significantly.

We will share best practices on developing legal and regulatory frameworks that expand access to finance for SMEs. We will also look for opportunities for Tunisian SMEs to partner with U.S. firms.

ICT (Information and Communications Technology)

What’s so encouraging is that all of these changes – increasing transparency, moving more Tunisians from the informal to the formal sector, and making it easier for SMEs to partner with U.S. firms – are within reach as a result of Tunisia’s commitment to building out its ICT capacity.

Last May, Tunisia launched “Digital Tunisia 2018,” which includes nearly 1 billion Tunisian dinars for its “Smart Tunisia” initiative. And Minister of Telecommunications and Digital Economy Fehri just announced plans to connect every Tunisian school to the Internet by 2017, and all Tunisians by 2020.

The Tunisian government is already moving forward on updating its Telecom/Digital Communications Code and establishing a comprehensive National Broadband Plan. These are important steps that will help attract increased private sector investment in Tunisia’s ICT infrastructure.

These are ambitious efforts. And today we will identify ways to mobilize public and private sector support for these efforts.

One specific way to advance Tunisia’s ICT strategy is through our Global Connect Initiative. The State Department launched this initiative last fall to bring an additional 1.5 billion people around the world online by 2020. Our strategy is to mainstream the view that Internet connectivity is as fundamental to economic development as roads, ports, electricity, and other traditional infrastructure.

As you may know, we are coming off our very successful Global Connect High Level Event several weeks ago. Secretary Kerry and World Bank President Kim hosted more than 100 participants, including representatives from over 25 countries, including Tunisia, as well as representatives of civil society, the ICT industry, international organizations and multilateral development banks.

Participants announced more than 65 new and ongoing initiatives valued at more than $20 billion to expand global connectivity infrastructure. The public-private partnerships that underpin these initiatives are entirely consistent with Tunisia’s connectivity strategy. In fact, Finance Minister Chaker, who attended the event, proposed that Tunisia serve as a model country for the initiative.

Moving forward, the United States will work through the Global Connect Initiative to support Tunisia’s ambitious connectivity goals.

Conclusion

Although I’ve spoken about each JEC theme separately, all three of the breakout sessions are closely linked together. Simplifying the process for registering businesses and making it easier for SMEs to access finance will also help agricultural firms hoping to export to new markets.

Bridging the digital divide and connecting more Tunisians to the Internet will make it easier for innovators and entrepreneurs to create new businesses, hire new workers, and bring new efficiencies to the market. It will also make it easier for U.S. firms to invest and find new opportunities in Tunisia.

Achieving these inter-connected goals will require a multi-stakeholder approach – which is what makes the JEC so important. Governments have an important role to play, but it is the private sector that will drive our economic relationship and create greater prosperity in both Tunisia and the United States.

We have a tremendous opportunity today to expand our economic relationship and bring our countries closer together, creating jobs in Tunisia and the United States. I look forward to working with each of you to do so today and into the future.

Thank you.

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