In any developing country, you’ll hear politicians and government officials talk about foreign investment as a solution, a priority and a need. In other words, it is essential for economic growth and more jobs. Tunisia is no exception. Ever since the 2011 revolution there has been a lot of talk about tackling unemployment by encouraging foreign investments.
Over the years, Tunisia and a number of developing countries have seen foreign investment pour into their economies. Has it led to change? Did it have a positive impact? As some politicians, among other advocates, claim loudly that foreign investment is a driving force for reducing the jobless rates and improving economic conditions, the question becomes: why has the situation on the ground in these respective countries remained unchanged and in some cases worse?
As an expert in megaprojects and international mediation, I was privileged enough to examine closely some of those investments. But what really made me reconsider the term “investment” and more specifically foreign investment, was the experience of my younger brother.
He is a young Tunisian, specializing in aeronautics, and like thousands of his peers faced the challenge of finding a decent job after graduation. Three years after the Tunisian revolution, he was lucky enough to land a position as a “machine operator” in a French tool manufacturing company in the suburbs of Tunis. He is averaging 12 hours a day, and earning less than a dollar per hour. Such a wage does not allow him to sustain an independent life in Tunis. My advice to him was to start somewhere, and to take advantage of the experience he is gaining, as I did myself in France and in the United States when I was studying, even though what he earns is not enough to make ends meet, even for a single man.
His response to my advice was that the wages were only a small fraction of the problem. “Within this factory,” he said, “There are almost no opportunities to learn and grow. Machines that require programming, which would take more configuration skills than simple assembling, are reserved for the French expat technicians.”
Today, the practices inside many foreign companies in Tunisia remain the same. There is no transfer of knowledge and working conditions do not meet any national or international labor standards. In the absence of any other alternative, young men and women with potential get lost in the low wage battle and declining working standards.
What is this type of foreign investment and how has it impacted people like my brother?
This is indeed the type of foreign investment that the Tunisian government has been trying to attract: a non-value adding type of investment that does not meet the aspirations of a young, educated generation waiting for a professional environment to help them jump-start a career, where they can grow both technically and professionally.
There are many reasons for the fact that Tunisia’s investment landscape has dramatically shifted to this type of non-value adding investment. These include: lack of transparency, a government policy philosophy encouraging such types of practices, a lack of infrastructure for service oriented types of investment, employment regulations putting a lot of burden on private investors, corruption, and economic and political dependence on certain countries due to historic ties.
It would take much more than this blog to tackle each of these reasons but one critical starting point would be to increase the transparency around government negotiations with potential investors. If they were open to public scrutiny, it would at least provide an opportunity for assessing whether the needs of Tunisians were put first. Unless developing countries reform their institutions and the way they do business, they will keep getting the same results. Only with well-trained people, better regulations and a transparent environment will we see the kind of foreign investment that has a positive impact. My brother and many more like him are waiting for that day.
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