Stories from the Unfinished Revolution: Regulations Leave Bitter Taste for Tunisian Candy Makers

Our new series, Stories from the Unfinished Revolution is based on interviews conducted for the World Bank’s new report: The Unfinished Revolution: Bringing Opportunity, Good Jobs and Greater Wealth to All Tunisians.
 

Tunisian sugar beet and Sudanese sesame seeds are the main ingredients of the halwa made by Tunisia’s Grand Fabrique de Confiserie Orientale (GFCO) company . Great globs of sesame seeds, mixed with nougat, are put in cans bearing pictures of a gazelle. 

The Ottoman Turks left behind a taste for this sweet not just in Tunisia but in Libya and Algeria too, and this brand of halwa has long made its own way onto their markets, according to the company's director, Moncef Ayoub.

Although the official formalities associated with quality control have put the company off exporting directly to these two countries itself, since 2011, indirect exports of halwa have boomed, as cross-border traders—in other words, smugglers—make the most of laxer border controls.

The company estimates that Algeria and Libya consume around 25 per cent of its halwa, up by almost a third from 2010, about 70 percent of it passing through the hands of "unofficial" cross-border traders.

Just securing the documents to export a Tunisian-made product can take two weeks, a considerable drain on a company’s time. A trade ministry official has to come first. The official takes samples which are sent to a central laboratory for analysis. For some tests, there is a wait of a week or more for the results. The company then has to go back to the trade ministry to apply for an export certificate.

This quality control requirement was made part of a Tunisian–Libyan trade accord signed in the closing years of the Qaddafi regime. If the halwa were exported to Europe, testing would be done mainly by the authorities of those countries, Ayoub said, when the product was already on the market.

Ayoub’s criticisms are directed at the bureaucratic mentality he says is still found in Tunisia.  “This mentality,” he adds, "thinks [its] role is to impose penalties, make demands, ask for papers, tell you to come back tomorrow."

Onerous procedures are a common complaint from Tunisian companies. A World Bank ‘Doing Business’ survey found a Tunisian business needed to complete 19 different procedures for a construction permit, for example—a process that would take an average of 94 days. Four procedures and 65 days were needed to get hooked-up to the electricity grid.

A forthcoming report from the World Bank, The Unfinished Revolution: Bringing Opportunity, Good Jobs and Greater Wealth to All Tunisians identifies the bureaucratic burden as both a drain on firm’s resources and an impediment to growth. It estimates that dealing with the array of bureaucratic procedures takes up 25 percent of a manager’s time and costs firms 13 percent of their turnover. Excessive regulations have spawned corruption, along with strategies to circumvent the bureaucracy that result in the evasion of taxes and customs duties. It is estimated that corruption costs Tunisia two percent of its Gross Domestic Product per year.  

The GFCO company (part of the Tunisian, family-owned Amen Group), sells its halwa to wholesalers in the south and west of Tunisia. Security permitting, the wholesaler then trades it across the border into Libya. While not officially paying duty, something is paid, or as Ayoub puts it, "we know it's not free.”