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    ‘Sinking Little by Little:’ Tunisia’s Small Businesses Struggle in Poor Economy

    By Hager Almi | Feb 18 2014 Share on Linkedin Share on Facebook Share on Twitter Share on Google Share on pinterest Print

    Sadok Yahaoui's vetegable stand. Image credit: Hager Almi, Tunisia Live

    Sadok Yahaoui’s vetegable stand. Image credit: Hager Almi, Tunisia Live

    When I talked to him, Sadok Yahaoui had not sold anything in four days. He said his wilted produce was destined for the trash.

    The fruit and vegetable vendor said competition from informal sellers and customers with less spending money were driving businesses out.

    “We can no longer survive. Every month a business closes because there are no customers,” Yahaoui said. His shop is in the municipal market in working-class Taieb Mhiri neighborhood in l’Aouina, near the Tunis airport.

    While recent improvements in the political and security situation have raised hopes for some, the economy continues to struggle post revolution. The effect on businesses, however, varies depending on their location and the goods they sell.

    Some business owners see the growth in the informal economy as one factor hampering their profits, with many more street vendors now hawking their wares than before the revolution.

    Merchants interviewed told Tunisia Live this unfair competition damages their businesses, as the unlicensed vendors do not pay taxes and do not have shops to maintain. Reduced costs allow the informal sellers to charge lower prices and secure a larger profit margin.

    According to Yahaoui, seven stores have closed in the market in less than a year, and now only three vegetable vendors remain.

    “Since the revolution, we have only been sinking little by little, and all the promises made by these governments are never kept,” Yahaoui told Tunisia Live.

    The vendors of this market are asking the local authorities to relocate the illegal merchants far from the market so they do not “steal” their clients, Yahaoui said.

    A recent study by the World Bank estimates that smuggling and informal trade has cost Tunisia 1.2 billion dinars in public revenue.

    Neither the new constitution nor new government provides Yahaoui consolation.

    “I have no hope, only my faith in God gives me strength to fight everyday, to resist,” he said.

    Slim Saadallah, vice president of the Tunisian Consumer Defense Organization, told radio station Shems FM that a surprise inspection of the wholesale market in Bir el Kassaa, where Tunis vendors will go to buy their produce, found that about 60 percent of the agricultural products there are sold to informal markets.

    In a nearby butcher’s shop, the owner told Tunisia Live the purchasing power of his customers has taken a serious blow in recent years.

    “We feel that the year after the revolution, people had a little left in reserve, the money put aside for hard times. In 2013, the resources are gone and the middle class can no longer spend money as before. For my part, the amount of meat sold was cut in half,” said the owner, who refused to be named.

    While the upper class is still able to afford the same standard of living, the middle class has felt the burden of the post-revolution economic slowdown.

    “The first continues to buy the same quantity of meat, the second, instead of consuming a pound, only takes half and only just after pay day,” the butcher said.

    With the political and security environment improving in recent months, economic indicators have improved in 2014. The unemployment rate has declined to 15.7 percent, down from 18.9 percent last year, while per capita GDP in 2013 improved from a significant drop in 2012.

    “The country’s problem is caused by multiple strikes and social movements that have hindered the fragile economic operations,” said Saida, a spice seller in Taieb Mhiri who didn’t want her last name mentioned.

    “Today, everything will be fine with this new government. There are no more strikes and protests. We will surely overcome the crisis.”

    The Tunisian Central Bank foresees a healthier economy this year, estimating a growth rate of 3.8 percent, far above the 2013 rate of 2.7 percent. This optimism comes from the increased confidence that recent political progress provides for investors and financial institutions.

    Still, vendors worry about higher prices.

    “It’s clear that times are getting harder, all prices are getting higher,” said Hedi, a vendor at a small local shop in La Marsa, a chic suburb north of Tunis.

    Hedi's shop in La Marsa. Image credit: Hager Almi, Tunisia Live

    Hedi’s shop in La Marsa. Image credit: Hager Almi, Tunisia Live

    Despite competition from big international supermarkets, his business is doing well.

    “Likely, some people prefer to go small shops where they can have a friendly discussion with neighbors,” said Hedi, who did not want his last name mentioned. “One advantage of the corner shop that attracts clients is the possibility of buying on credit.”

    Buying on credit at small shops is a common practice in Tunisia. One can get all one needs over one or two months without immediate payment, settling the debt eventually.

    “More and more clients buy on credit. It’s becoming hard to do grocery shopping in one shot and pay in cash,” Hedi said.

    “The only thing that can make things go better for me and for the consumer is to reduce prices and stop new taxes.”

  • By Hager Almi  / 
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      Thamry721 /

      Informal business is one of the thorniest current issues the country has to deal with at the moment. We have to recall that Mohamed Bouazizi was also an illegal street vendor and here comes the problem with this country. Bureaucracy is a driving force behind any illegal start-up and, moreover, amplified by a higher post revolution corruption level. As long as corruption becomes more perceived by everyone, so do these informal businesses the same way.

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