Unpacking the Tunisia crisis

Images of people rioting in the streets don’t reflect well upon a country’s image abroad. This is especially the case for countries that are popular tourist destinations.

Zin Bekkali

Zin Bekkali

Less than a year ago, Thailand made global headlines when 150,000 protesters brought Bangkok to a standstill. The news was front page material for three months. Initially, Thailand paid a hefty price for this with vacant hotel rooms, 90 civilian casualties, and a deep correction in the stock market. However, Thailand ended the year in good spirits with record tourism arrivals and a recovering stock market.

This year, it would seem that it is Tunisia’s turn to make the headlines. At first sight, Thailand and Tunisia do not have a lot in common. However, if you take a closer look, there are a few surprising similarities.

First of all, both countries have an almost identical GDP per capita level of around US$9,000. Secondly, they both doubled their GPD per capita in the last 10 years and are regarded as economic success stories. Thirdly they are both open economies and score well in terms of business environment. Out of 133 countries, the World Economic Forum ranks Tunisia 32nd and Thailand 38th.

Nevertheless, something went wrong. While the catalysts were different, the underlying issues have much in common. The main similarity can be traced back to an economic development model where a minority does extremely well; the majority of the population enjoys increasing affluence while the poorest members of society are left behind.

In both countries it was precisely the group of people that feel ignored who angrily took their frustrations of being marginalised out to the streets. The main themes that embodied the protests were also somewhat alike. In the case of Thailand, it was the blocking of a previous prime minister, supported by the poor, to participate in politics. For Tunisia, it is the lack of tolerance for any political participation apart from the incumbent.

Thailand needed three months to put an end to the riots and to find stability. Today, however, the world doesn’t seem to be giving Tunisia much time to sort out the issues. The ill-fated initial reaction by the Tunisian government and the beyond ignorant killing of 50 citizens did not help to put this problem on a track of smooth handling of events.

Different analysts have argued that the Tunisian crisis will be spreading into the rest of Northern Africa. In our view, most of the insights communicated in this vein are nothing more than oversimplifications of the realities on the ground. The various North African countries may share borders, but in reality, they are as different to each other as are Chile, Argentina, Brazil or Paraguay.

The challenges faced by each North African country are real but each one of them will need to define its own path to deal with them. History has taught us that emerging countries, where the interests of the population are better aligned with pragmatic (not necessarily democratic) are also places where politicians will find ways to deal with upheavals.

Egypt, Tunisia and Morocco are all well equipped to deal with the increasing assertiveness of their populations. The main reason for optimism is the middle class and the corporate leaders in these countries. They will push politicians into the right direction.

Even though, for now, the majority of the masses and the entrepreneurs are not necessarily happy with the way things are today, but they can’t ignore that they have seen major improvements over the last ten years. Today, they already have much to lose and even if they sympathize with the cause, it is highly unlikely that they will let a small group of people push their countries into a full crisis. The good news for investors is that, in terms of population, the stakeholders of progress vastly outnumber those who have nothing to lose.

Zin Bekkali is CEO of Silk Invest, a specialist frontier market investment manager