TUNIS (Reuters) – Tunisia needs more bank mergers to strengthen its financial sector and become a bigger foreign investment target, Arab Gulf investors said at a conference in the north African country.
Business leaders from Dubai, Kuwait, Saudi Arabia and Qatar said at the two-day conference ending on Saturday that they were looking with growing interest at the country of 10 million.
They said steady economic growth, political stability and business-friendly reforms were likely to boost inward investment in coming years but progress was still held back by under-developed financial markets and weak banks.
“The financial market does not mirror the real growth of Tunisia’s economy,” said Mustafa Farid Geninah, chief executive of Dubai Capital.
“The government should encourage mergers in the banking sector and oblige banks to invest their part of profits in the bourse,” he said, citing Banque de Tunisie (BT.TN: Quote, Profile, Research) and Banque Nationale Agricole as possible tie-up candidates.
Dubai Capital, a unit of Dubai Group, has committed $16 billion to Tunisia since arriving in 2004, said Geninah.
“We came to seek out business opportunities and we found an encouraging atmosphere,” he said.
Tunisia has the most competitive economy in the Middle East and Africa but is still held back by limited foreign access to private property and public debt, according to the World Economic Forum’s Global Competitiveness Report 2006-07.
The country has struggled to attract enough inward investment to create the economic growth needed to absorb 88,000 job seekers entering the employment market each year. Officials say the unemployment rate stands at 14.3 percent.
Infrastructure improvements and a modernization of Tunisia’s legal framework are still needed to keep the momentum of inward investment, said Sama Dubai Chairman Farhan Faraidooni.
“These measures consist in opening all the sectors to foreign investors and endorsing flexible laws that would encourage investors to come,” he said.
European Union countries remain the biggest investors in Tunisia with a strong presence in textiles, call centers and tourism but Arab Gulf ruling families with billions of petro-dollars to invest are carving out a growing presence.
Sama Dubai, the property unit of Dubai Holding, plans to spend $14 billion on a luxury real estate development north of Tunis including apartments, theatres, cinemas, offices and hotels covering 837 hectares (2,092 acres).
United Arab Emirates’s Aldar Properties and Sorouh Real Estate recently unveiled a plan to invest $5.5 billion to redevelop another suburb of Tunis through a tourism and housing project led by their Al Maabar subsidiary.
A Tunisian official said on Friday that the project’s final value could rise to $11 billion.
Egyptian, UAE and Kuwaiti firms are active in Tunisia’s telecoms sector and Emirates Telecommunications Corp (Etisalat) said this week it might join the fray by bidding for a third Tunisian high-speed mobile network license.
“We think the investment opportunities here are very promising,” said Ahmad Julfar, Etisalat Chief Operations Officer. “We aim to invest here and if we find investment opportunities that respond to our offer, we’ll do it.”