Terrorism and Tunisian economic challenges

By African Bulletin on August 17, 2016

Typically in the high season, Tunisia’s beaches are packed with visitors from France, Britain, Germany and the Netherlands.

But this year Russians and Algerians are more likely to be filling the sunloungers as two Isis terror attacks targeting holidaymakers in 2015 — including the deaths of 38 people on a beach in the popular resort of Sousse — have seen many European visitors shun the country. Their absence has dealt a severe blow to an industry that is a critical source of foreign exchange and employment in the north African state.

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Tunisia has been feted as the only successful democratic transition after its 2011 revolution sparked the Arab Spring. However, those upheavals left the country suffering from sluggish economic growth.

In a nation struggling to lure investment and create jobs for its disaffected youth — many of whom are attracted to and swayed by the propaganda produced by Isis — the decline in tourism presents a serious challenge.

In 2010, Tunisia boasted 7m tourist arrivals and revenues reached $3.5bn. But arrivals fell to 5.5m last year and tourism receipts plummeted to $1.5bn.

Those declines helped stifle economic growth pushing it to less than 1 per cent and added to pressures on the Tunisian dinar, which hit record lows against the US dollar in July.

“The tourism sector and travel agencies have been in crisis since the 2011 revolution,” said Hedi Hamdi, spokesman for the Tunisian Federation of Travel Agencies.

Most hotels have reopened after the 2015 attacks, which also included an assault on a museum in the capital, Tunis, and authorities have strengthened security measures at tourist zones, with hundreds of extra police and patrols. But the cruise ships that stopped visiting the country after the attack on the capital have yet to return.

Tunisia’s industry has reacted by seeking to benefit from the troubles of regional competitors: slashing prices and targeting new markets, particularly Russia and Algeria.

Both Egypt and Turkey have historically been popular with Russian tourists, but a diplomatic row with Moscow has hurt the Turkish industry. Moscow imposed sanctions on Turkey — including a ban on Russian tour packages — after it shot down a Russian fighter jet over the Syrian border in November. Russia also banned flights to Egypt after an Isis bomb destroyed a Metrojet airliner carrying Russian tourists in October shortly after take-off from an Egyptian airport, killing all 224 passengers and crew.

These incidents have helped Tunisia to lure 350,000 Russian tourists to its resorts so far this year — a record number, Mr Hamdi said. The expectation is that Russian visitors could reach 700,000 in 2016, but Mr Hamdi and others say it will not compensate for the losses of French, British and German tourists.

“It is the only European market in which we are seeing an increase, the others are very bad,” Mr Hamdi added.

In 2014, France provided about 1.4m tourists, but this year just 213,000 French have chosen to visit the north African country.

Mohamed Daoud, whose company, One Hotels and Resorts, runs two hotels with a total of 1,500 rooms in the resort of Monastir, said it has been a battle for hotels to stay open.

“Unfortunately we have had to reduce prices, as we have just the Russian market now,” he said. “We were obliged to offer special rates to attract them. The average rate is now 30 per cent less than it used to be in 2014.”

Riadh Ben Jelili, an economist and a founder of Joussour for Public Policy, a Tunisian think-tank, said the average daily spend per tourist has also slumped. In 2014, it was between €50 to €60 a day, but he estimates it has dropped around €30.

He said this was because operators are having to offer all-inclusive packages, even at more upmarket hotels, making it “impossible” for the sector to become profitable.

The ripples are likely to be felt in the fragile banking sector, he said, which is burdened with hefty non-performing loans related to tourism.

“The vulnerability of the banking sector is highly linked to the proportion of NPLs in tourism,” Mr Jelili said. “Almost a fifth of the new NPL’s over the past two years are from the sector.”

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