Tunisia

The eight sectoral scenarios as well as their relationship to the Current Path and the Combined scenario, are explained in the Technical. Chart 10 summarises the approach.

Chart 11 presents the mortality distribution in the Current Path for 2023 and 2043.

The Demographics and Health scenario envisions ambitious improvements in child and maternal mortality rates, enhanced access to modern contraception, and decreased mortality from communicable diseases (e.g., AIDS, diarrhoea, malaria, respiratory infections) and non-communicable diseases (e.g., diabetes), alongside advancements in safe water access and sanitation. This scenario assumes a swift demographic transition supported by heightened investments in health and water, sanitation and hygiene (WaSH) infrastructure.

Visit the themes on Demographics and Health/WaSH for more details on the scenario structure and interventions.

Tunisia introduced free healthcare on independence and has since made significant investments in the sector. Since then, the country's mortality profile has increasingly shifted toward non-communicable diseases (NCDs) since the late 60s, reflecting broader demographic and epidemiological transitions.

Currently, the country’s disease burden is dominated by NCDs such as cardiovascular conditions, malignant neoplasms (cancers), chronic respiratory diseases and mental health disorders. This trend aligns with changes in population structure, urbanisation and lifestyle factors, including dietary habits, physical inactivity, tobacco use and environmental pollution.

The Current Path indicates that mortality from key NCDs will rise significantly over the next two decades. Cardiovascular-related deaths will increase from 37 080 in 2023 to 62 200 by 2043, while deaths from malignant neoplasms will increase from 10 780 to 16 480 over the same period. This sharp increase is largely driven by population ageing, rising prevalence of risk factors, and gaps in the prevention and early detection of chronic diseases.

In addition to cardiovascular disease and cancer, other NCDs, including mental health conditions, respiratory diseases and metabolic disorders, are becoming more pronounced. Deaths attributed to mental health-related conditions will rise from 3 740 in 2023 to 9 580 by 2043 under the Current Path. Similarly, fatalities from respiratory diseases will increase from 2 860 to 5 910, and other NCD-related deaths from 4 070 to 6 130 over the same period. These trends underline a growing and diversified NCD burden that poses significant challenges for Tunisia's health system.

Though relatively advanced by regional standards, Tunisia's health system faces critical challenges in responding to this evolving disease burden. These include underinvestment in preventive healthcare, uneven quality of services between urban and rural areas, limited integration of NCD management into primary care, and a shortage of specialised personnel and diagnostic infrastructure. The COVID-19 pandemic also exposed underlying vulnerabilities in the public health system, particularly concerning emergency preparedness, supply chain resilience and digital health infrastructure.

To effectively address the rising burden of NCDs, Tunisia will need to prioritise comprehensive health sector reforms. Key priorities include expanding access to early diagnosis and screening programs, integrating NCD care into primary healthcare delivery, and increasing investments in mental health services. Strengthening the country’s epidemiological surveillance and health information systems will also be essential for timely intervention and resource allocation. Moreover, public health campaigns focused on behavioural change, targeting tobacco use, physical inactivity and unhealthy diets, are critical to reducing the incidence of NCDs over the long term.

As the country prepares for an ageing population and rising healthcare demands, greater strategic planning, investment and intersectoral coordination will be required to build a resilient, equitable and sustainable health system.

Overall, Tunisia demonstrates strong performance across key health indicators. Life expectancy in the country is relatively high, reaching approximately 78.1 years in 2023. The Current Path suggests further improvement, with average life expectancy increasing to 80.6 years by 2043, nearly four years above the global average forecast.

Consistent with global trends, female life expectancy in Tunisia will remain higher than that of males. Between 2023 and 2043, female life expectancy will increase from 80.4 to 82.9 years, while male life expectancy will rise from 75.8 to 78.1 years under the Current Path. These trends reflect continued gains in healthcare access, disease prevention and general living standards, although gender disparities in health outcomes will persist.

Chart 12 presents the infant mortality rate in the Current Path and in the Demographics and Health scenario, from 2020 to 2043.

The infant mortality rate is the probability of a child born in a specific year dying before reaching the age of one. It measures the child-born survival rate and reflects the social, economic and environmental conditions in which children live, including their health care. It is measured as the number of infant deaths per 1 000 live births and is an important marker of the overall quality of the health system in a country.

Tunisia has already achieved the 2030 Sustainable Development Goal (SDG) target of reducing infant mortality to below 25 deaths per 1 000 live births, well ahead of schedule. It currently holds the lowest infant mortality rate among African lower-middle-income countries, a reflection of the country’s relatively strong healthcare infrastructure, effective immunisation programs and improvements in maternal and child health services.

Under the Demographics and Health scenario, Tunisia will make further gains in reducing infant mortality. The rate will decline from 9 deaths per 1 000 live births in 2023 to approximately 5.3 deaths by 2043. This compares favourably with the Current Path of 6.3 deaths per 1 000 live births over the same period. These improvements reflect the potential impact of continued maternal and child health investments, expanded access to quality prenatal and neonatal care and improved socio-economic conditions.

Moreover, the Demographics and Health scenario will be essential in improving life expectancy in Tunisia. Under this scenario, life expectancy will rise even further, reaching 1.67 years above the Current Path estimate of 80.56 years by 2043. This enhanced outcome benefits both women and men. Female life expectancy will exceed the Current Path of 82.94 years by an additional 1.46 years, while male life expectancy will rise 1.89 years above the Current Path estimate of 78.12 years. These gains reflect the positive impact of improved health services, better disease prevention and enhanced living conditions across the population.

Chart 13 presents the demographic dividend in the Current Path and in the Demographics and Health scenario, from 2020 to 2043.

The dividend is the window of economic growth opportunity that opens when the ratio of working-age persons to dependents increases to 1.7 to 1 and higher.

Demographers commonly distinguish between the first, second and even third demographic dividends. This analysis focuses on the first demographic dividend, which refers to the economic growth potential resulting from changes in the population’s age structure, specifically, an increase in the proportion of the working-age population (aged 15–64) relative to dependants (children under 15 and adults over 64). A demographic window of opportunity typically opens when this working-age to dependant ratio exceeds 1.7 to one, allowing for greater productivity, higher savings and increased per capita income.

Tunisia experienced a peak demographic window in 2010–2011, when the ratio of working-age individuals to dependants reached 2.3 to one. The country will undergo a second historical peak in the ratio around 2034–2036, reaching approximately 2.1 working-age persons per dependant under both the Current Path and the Demographics and Health scenario. Notably, the Demographics and Health scenario begins to exert a more positive impact from 2030 onward, as improvements in health and fertility outcomes contribute to a more favourable age structure. However, after this peak, the demographic dividend begins to decline. By 2043, the working-age to dependant ratio will decrease to 1.89 under the Demographics and Health scenario, slightly below the Current Path of 1.92.

This modest decline reflects several interrelated factors. First, population ageing becomes more pronounced in the years following the demographic peak, increasing the proportion of elderly dependants. Second, fertility rates, while reduced in earlier decades, may stabilise at lower levels (1.7 births per woman under both the Current Path and the Demographics and Health scenario), thereby slowing the growth of the working-age population. Third, labour force participation rates, particularly among women and youth, remain suboptimal, limiting the economic benefits that could otherwise be derived from the existing age structure. Finally, structural challenges in Tunisia’s economy, such as high unemployment, informality and underutilisation of skilled labour, also inhibit the full realisation of the demographic dividend.

These dynamics suggest that Tunisia's window of opportunity for maximising the first demographic dividend is finite and will begin to close in the late 2030s. To sustain and extend the benefits of this period, the country must accelerate investments in education, health and labour market reforms, particularly those that boost job creation, particularly for women, expand formal employment and improve productivity across sectors. Doing so will be essential for capturing the current dividend and laying the groundwork for a potential second demographic dividend driven by increased savings and capital accumulation in an ageing society.

Chart 14 presents crop production and demand in the Current Path from 1990 to 2043.

The Agriculture scenario envisions an agricultural revolution that ensures food security through ambitious yet feasible increases in yields per hectare, thanks to improved management, seed, fertiliser technology and expanded irrigation. Efforts to reduce food loss and waste are emphasised, with increased calorie consumption as an indicator of self-sufficiency and prioritising it over food exports. Additionally, enhanced forest protection signifies a commitment to sustainable land use practices.

Visit the theme on Agriculture for our conceptualisation and details on the scenario structure and interventions.

Agriculture remains a vital component of Tunisia’s economy and social fabric. The sector contributes approximately 11% to national GDP and employs around 16% of the labour force, which is particularly important in supporting rural livelihoods and ensuring food security. Tunisia is among the world’s leading producers and exporters of olive oil. It is one of the few African countries that has achieved self-sufficiency in dairy products, fruits and vegetables. However, the country remains heavily dependent on wheat imports, rendering its food system vulnerable to external price shocks and supply disruptions.

Between 1990 and 2023, both agricultural production and domestic demand have seen notable growth. Total agricultural output rose from 6.4 million metric tons in 1990 to 14.4 million metric tons in 2023, while demand increased from 8.2 to 19.8 million metric tons over the same period. This growing imbalance (demand is slowly outpacing production) has led to a widening food deficit, which stood at 4.8 million metric tons in 2023. Nevertheless, the Current Path indicates an improvement by 2043, with the food deficit narrowing to 2.5 million metric tons, as production and demand rise to 19.4 and 21.8 million metric tons, respectively.

As in many African economies, Tunisia's agriculture is predominantly crop-based. It plays a crucial role not only in economic output but also in providing food security and employment, especially in rural areas. Recent developments in the sector include increased investment in agro-export value chains, particularly olives, dates and citrus, as well as renewed policy focus on agricultural resilience and climate-smart farming practices.

Crop yields have improved moderately over the past three decades, increasing from 1.3 metric tons per hectare in 1990 to 2.6 metric tons in 2023. Variable climatic conditions, limited water availability and slow uptake of modern agricultural technologies have shaped this growth. While export-oriented crops such as olives and dates have performed relatively well, staple crops like wheat and barley are constrained by recurrent droughts, soil degradation and limited irrigation infrastructure.

Looking ahead, further improvements in agricultural productivity will depend on adopting sustainable water management practices, greater investment in agricultural research and innovation, and the broader application of modern farming techniques, including precision agriculture and climate-resilient seeds. Under the Current Path, crop yields will increase to 3.4 metric tons per hectare by 2043.

Within this period, total crop production will rise from 12.1 million metric tons in 2023 to 16.3 million metric tons by 2043, while demand will increase from 16.5 to 18.5 million metric tons. As a result, the crop deficit will decline significantly, from 4.4 million metric tons in 2023 to 1.9 million metric tons in 2043. This narrowing of the crop production and demand gap indicates that, with appropriate policy interventions and sustained investment, Tunisia has the potential to strengthen its food security and enhance the resilience of its agricultural sector.

Tunisia has made significant progress in expanding and modernising its irrigation infrastructure. The total land area equipped for irrigation increased from approximately 340 870 hectares in 1990 to 406 550 hectares in 2023, with a peak of 494 720 hectares in 2017. Despite this progress, water scarcity remains a critical constraint to agricultural productivity and sustainability. On the Current Path, the irrigated area will reach 442 100 hectares by 2043, an improvement from current levels, yet still below both the 2017 peak and the estimated national irrigation potential of 560 000 hectares. The Agriculture scenario increases total irrigated land to 483 000 hectares, an 18% improvement on the Current Path.

Among lower-middle-income countries in Africa, Tunisia currently ranks third after Egypt and Morocco in total irrigated land. However, further expansion and efficiency improvements in irrigation will require a strategic focus on sustainable water resource management. This includes greater investment in desalination technologies, rehabilitation of existing irrigation networks and the wider adoption of climate-smart practices such as drip and deficit irrigation. Ensuring sustainable water use will be essential to safeguarding Tunisia’s agricultural sector and securing long-term food and water security in the face of growing environmental and climate pressures.

Chart 15 presents the import dependence in the Current Path and the Agriculture scenario, from 2020 to 2043.

Improved agricultural yields directly affect food security and Tunisia’s dependence on food imports. Under the Agriculture scenario, crop production will rise significantly from 12.1 million metric tons in 2023 to 19.9 million metric tons by 2043. This represents a notable improvement over the Current Path, which forecasts production reaching only 16.3 million metric tons by the same year.

The successful implementation of the interventions outlined in the Agriculture scenario, which include enhanced input use, improved irrigation efficiency, adoption of climate-resilient practices and expansion of agricultural extension services, will be essential in closing the crop production gap.

These measures will eliminate the country’s crop deficit by the 2037/2038 season. By 2043, Tunisia could transition from a deficit of 4.4 million metric tons in 2023 to a surplus of 1.81 million metric tons. In contrast, remaining on the Current Path would still leave the country with a shortfall of approximately 1.9 million metric tons in 2043. This divergence highlights the transformative potential of targeted agricultural investments in achieving food security.

As of 2023, Tunisia imported approximately 26.7% of its total crop demand, making it vulnerable to global market volatility and external supply shocks. Critically, the Agriculture scenario enables Tunisia to eliminate its dependence on crop imports by 2040, achieving full self-sufficiency and surpassing domestic demand by approximately 6% by 2043, a milestone last achieved during the 1963–64 season. In comparison, the Current Path suggests a decrease in net agricultural import dependency to 13.6% by 2043.

From a food security perspective, this outcome would be significantly more favourable. Achieving self-sufficiency would shield the country from external price fluctuations, ensure greater resilience to supply chain disruptions, and enable Tunisia to more reliably meet the dietary and nutritional needs of its growing population. In the context of rising global food insecurity and supply chain vulnerabilities, exacerbated by climate change, geopolitical tensions and commodity price volatility, enhancing domestic agricultural capacity remains a strategic imperative for Tunisia’s long-term stability and development.

Chart 16 depicts the progress through the educational system in the Current Path, for 2023 and 2043.

The Education scenario represents reasonable but ambitious improvements in intake, transition, and graduation rates from primary to tertiary levels and better quality of education at primary and secondary levels. It also models substantive progress towards gender parity at all levels, additional vocational training at the secondary school level, and increases in the share of science and engineering graduates.

Visit the theme on Education for our conceptualisation and details on the scenario structure and interventions.

In 2024, Tunisia’s education system ranked 71st globally, a reflection of the country's sustained commitment to education as a national priority. Tunisia continues to allocate approximately 20% of its national budget to the education sector, highlighting one of the highest levels of public investment in education across Africa. The country ranks 49th globally for schooling expectancy and 51st for the student-to-teacher ratio at the primary level, underscoring its relatively strong emphasis on foundational education.

Since gaining independence in 1956, Tunisia has made remarkable strides in expanding educational access and improving outcomes. Landmark reforms have included significant investment in early childhood education and the introduction of free and compulsory education for children between the ages of six and sixteen. These reforms have resulted in Tunisia having one of the most educated populations in North Africa, ranking second after Libya within the region and ninth on the African continent overall, measured by the average number of years of schooling attained by adults aged 15 and older.

Despite these successes, challenges remain, particularly concerning the quality and inclusivity of education. The Current Path shows that the average number of years of schooling attained by youth aged 14 to 24 years, a key measure of future human capital, will remain stagnant at 11.6 years between 2023 and 2043. This stagnation is accompanied by a persistent and slightly widening gender gap favouring females. In 2023, the mean years of education for males trailed behind females by 0.38 years, and this gap will widen slightly to 0.41 years by 2043.

Regarding quality, Tunisia’s education system continues to improve, albeit gradually. The Current Path shows that the primary education quality score will rise from 36.7 in 2023 to 41.5 by 2043, while secondary education quality will increase modestly from 47 to approximately 50 over the same period. This positive trend places Tunisia above the average for lower-middle-income countries in Africa, demonstrating the impact of its sustained public investment in education. Nevertheless, the slow pace of improvement signals the need for renewed policy focus, especially to align educational quality with the demands of a modern economy.

A pressing concern is the widening gender gap in educational outcomes, increasingly favouring females. Between 2023 and 2043, the gender gap in primary education quality will increase from 1.5 points to 1.6 points, while the gap in secondary education quality will widen from 0.8 points to 1.01 points under the Current Path. While both boys and girls are benefiting from overall improvements, girls are progressing at a faster rate. These trends are corroborated by external assessments, including the World Economic Forum’s Global Gender Gap Report 2023, which ranked Tunisia 128th globally, a decline of eight places from the previous year. Although Tunisia has achieved near gender parity, or even a female advantage, in secondary and tertiary education enrolment, underlying disparities persist, particularly affecting male literacy and academic performance.

Recent evidence shows that female students outperform male students in critical subjects such as reading literacy, mathematics and science. However, this educational success among females has yet to translate into proportional labour market gains. Despite their higher educational attainment, Tunisian women face significant barriers to economic participation. Female labour force participation remains 43.6 percentage points lower than that of males under the Current Path, highlighting a major disconnect between educational advancement and employment outcomes. This mismatch limits the contribution of women’s educational achievements to overall economic growth and points to broader societal and structural constraints.

Moreover, the steady decline in boys' academic performance, combined with their disengagement from education, has broader implications for Tunisia’s workforce competitiveness and social cohesion. If unaddressed, these trends risk entrenching gender imbalances not only in education but also across the labour market and wider society. Therefore, there is an urgent need for targeted interventions to support male educational achievement while continuing to promote female economic empowerment.

At the same time, Tunisia faces significant structural challenges at the upper-secondary and tertiary levels. High dropout rates, curriculum-job market mismatches and limited capacity in technical and vocational education persist, undermining the ability of the education system to meet evolving labour market demands. Many of Tunisia’s educated youth, particularly university graduates, struggle to access meaningful economic opportunities, leading to heightened frustration and social unrest. This disconnect between educational attainment and economic integration was a critical driver behind the 2011 Freedom and Dignity Revolution and remains a potent source of socio-political tension today.

Addressing these interconnected challenges requires a holistic approach that focuses on improving educational quality, narrowing gender disparities, enhancing the relevance of education to labour market needs, and dismantling barriers to female labour force participation. Only through such comprehensive reforms can Tunisia fully realise the transformative potential of its substantial investments in education.

Chart 17 presents the mean years of education in the Current Path and in the Education scenario, from 2020 to 2043, for the 15 to 24-year age group.

The average years of education in the adult population aged 15 to 24 are a good first indicator of changes in society's stock of knowledge.

Under the Education scenario, Tunisia will achieve notable improvements in both the quantity and quality of education. By 2043, the average years of educational attainment for individuals aged 14 to 24 will increase to 11.9 years, 0.3 years higher than the Current Path of 11.6 years. This would reverse the stagnation observed in recent years and surpass Tunisia’s previous peak of 11.7 years, recorded in 2020.

Importantly, the scenario also narrows the gender gap in educational attainment for this age group, reducing the difference between females and males from 0.38 years in 2023 to 0.23 years by 2043. In contrast, the gap will widen slightly to 0.41 years on the Current Path, highlighting the scenario's potential to promote greater gender equity in education.

Significant gains are also apparent in educational quality. Tunisia’s primary education quality score will rise to approximately 47.5 by 2043, representing an improvement of around 6 points above the Current Path. This outcome would surpass the country's previous peak score of 43.9, achieved in 1995, and mark a meaningful reversal of the long-term decline in primary education performance. Furthermore, the Education scenario contributes to narrowing gender disparities: the gender gap in primary education quality will shrink dramatically from 1.5 points in 2023 to just 0.3 points by 2043, compared to a widening gap of 1.6 points under the Current Path.

At the secondary level, quality scores also improve substantially. The Education scenario raises Tunisia’s secondary education quality score to 55.5 by 2043, again approximately 6 points higher than the Current Path. Importantly, gender equity advances alongside quality improvements. The gender gap in secondary education quality will decline significantly, from 0.8 points in 2023 to 0.2 points by 2043, compared to a widening gap of 1.04 points under the Current Path.

These outcomes suggest that targeted educational reforms not only elevate overall performance but also meaningfully contribute to reducing gender disparities across primary and secondary education levels. The improvements reflect the scenario's emphasis on targeted interventions, including teacher training, curriculum reform, expanded access to digital learning tools and enhanced learning environments, particularly in underserved and rural areas.

Recent developments in Tunisia’s education sector further reinforce the relevance of this scenario. Ongoing reforms have focused on modernising curricula, reducing dropout rates and aligning educational outcomes with labour market demands. There is a growing national dialogue around bridging the skills gap and expanding access to technical and vocational education, which is essential to enhancing employability and driving inclusive economic growth. If effectively implemented, the Education scenario offers a pathway to revitalising Tunisia’s education system and unlocking its human capital potential.

Chart 18 presents the value-add by sector as a share of GDP in the Current Path, for 2023 and 2043.

In the Manufacturing scenario, reasonable but ambitious growth in manufacturing is envisaged through increased investment in the sector, research and development (R&D) and improved government regulation of businesses.

Visit the theme on Manufacturing for our conceptualisation and details on the scenario structure and interventions.

Similar to the situation in most African countries, Tunisia’s economy is dominated by the service sector, which contributes significantly more to GDP than other sectors. In 2023, the service sector accounted for approximately 62.4% of GDP, followed by manufacturing, agriculture, ICT, materials and energy. However, under the Current Path, the contribution of services will decline slightly, reaching 60.6% by 2043, suggesting a modest rebalancing in the economy's sectoral composition.

According to the classical theory of structural economic transformation, also known as the three-sector hypothesis, countries tend to shift from an agriculture-based economy toward industrialisation, and eventually toward a service-dominated economy as they ascend the income ladder. For a lower-middle-income country like Tunisia, this would typically imply a robust expansion of the manufacturing sector, driven by declining agricultural employment and productivity growth in industry. However, Tunisia’s Current Path reflects a pattern of distorted structural transformation, where the growth of the service sector has not been accompanied by sustained industrial dynamism.

The Current Path illustrates a modest increase in the share of manufacturing value added to GDP, from 14.3% in 2023 to 16.9% by 2043. This limited growth suggests that the industrial base remains underdeveloped and that the country has yet to harness the full potential of manufacturing-led development. At the same time, the share of agriculture in GDP will decline slightly, from 10.9% in 2023 to 9.9% by 2043, consistent with broader patterns of agricultural decline during economic transformation.

Given the country’s urgent need to generate employment, especially for youth and educated graduates, Tunisia's limited industrial performance is particularly concerning. Industrialisation is critical not only for creating direct employment in manufacturing but also for generating indirect jobs and productivity gains in related sectors such as logistics, ICT, services and construction. Current government initiatives, including the National Industrial Strategy 2035, seek to revitalise key manufacturing sectors such as pharmaceuticals, automotive components, agri-processing and electronics. These efforts are supported by investment promotion reforms and international cooperation agreements to integrate Tunisia into regional and global value chains.

Despite recent policy shifts aimed at revitalising the industrial sector, Tunisia continues to face various structural challenges that constrain its manufacturing potential. Weak infrastructure, particularly in interior regions, limited innovation capacity, bureaucratic inefficiencies and restricted access to finance for small and medium-sized enterprises (SMEs) remain persistent obstacles. Compounding these issues is that, although Tunisia’s education system has expanded significantly, it remains largely oriented toward general academic training rather than equipping students with the technical and vocational skills needed to support higher value-added manufacturing. Efforts to strengthen vocational education have been limited, resulting in a persistent mismatch between workforce capabilities and industry demands. Moreover, the chronic lack of regional trade integration across North Africa severely restricts Tunisia’s ability to climb the manufacturing value-added ladder. Fragmented markets and weak cross-border industrial linkages undermine opportunities for economies of scale, innovation and supply chain development, leaving Tunisia heavily reliant on the European Union (EU) as its primary trading partner. Addressing these interconnected constraints will be critical for unlocking higher levels of inclusive growth and achieving a more balanced and sustainable structural transformation.

Chart 19 presents the contribution of the manufacturing sector to GDP in the Current Path and in the Manufacturing scenario, from 2020 to 2043. The data is in US$ and % of GDP.

Under the Manufacturing scenario, Tunisia will experience a significant expansion in its industrial base, with the manufacturing value-added share of GDP rising from 14.3% in 2023 to 19.2% by 2043. This would surpass the country’s historical peak of almost 19%, recorded in 1995, and notably outperform the Current Path of 16.9% for the same year. This upward trajectory reflects the scenario’s emphasis on industrial revitalisation through targeted investments, improved infrastructure, value chain integration and enhanced competitiveness in strategic sectors such as agro-processing, automotive components, textiles and electronics.

While the relative contribution of other sectors to GDP, particularly services and agriculture, will decline slightly, their absolute growth continues, indicating positive spillover effects from the manufacturing sector. These intersectoral linkages, particularly through increased demand for logistics, ICT, business services and agricultural inputs, are critical for sustaining a broader economic transformation. As a result, government revenue also benefits, with increased tax collection from a more dynamic and diversified economic base.

In this scenario, Tunisia’s government revenue as a share of GDP will rise from 25.9% (US$11.16 billion) in 2023 to 30.2% (US$23.73 billion) by 2043. This represents a modest improvement over the Current Path, which forecasts government revenue at 29.8% (US$22.41 billion) by the same year. However, despite these gains, the 2043 revenue share remains below the country's previous peak of 35.6%, recorded in 2017. This suggests that while industrial growth contributes to fiscal recovery, further tax policy and revenue administration reforms may be necessary to fully restore Tunisia’s fiscal capacity.

The Manufacturing scenario also drives broader economic growth. By 2043, Tunisia’s GDP will reach US$78.54 billion—US$3.43 billion higher than the Current Path. This translates into an increase in GDP per capita to US$13 270, approximately US$400 above the Current Path. These improvements underscore the potential of manufacturing-led growth to generate higher incomes and enhance economic resilience.

Crucially, the scenario also contributes to poverty reduction. The share of the population living in extreme poverty, defined as living on less than US$3.65 per day, will fall from 3.4% in 2023 to 1.5% by 2043. This is a more substantial decline than under the Current Path, which estimates extreme poverty at 1.7% by 2043. The reduction is attributed to stronger economic growth, greater job creation in the manufacturing and allied sectors, and the inclusion of targeted social transfers for unskilled workers.

Overall, the Manufacturing scenario illustrates a more robust and inclusive development pathway for Tunisia, marked by deeper structural transformation, improved fiscal space and enhanced social outcomes. Policy coherence, investment in industrial infrastructure, support for SMEs and greater integration into regional and global value chains will be essential to realise this potential.

Chart 20 depicts exports and imports as a percentage of GDP, from 2000 to 2043, in the Current Path and in the AfCFTA scenario.

The AfCFTA scenario represents the impact of fully implementing the African Continental Free Trade Agreement by 2034. The scenario increases exports in manufacturing, agriculture, services, ICT, materials and energy exports. It also includes improved multifactor productivity growth from trade and reduced tariffs for all sectors.

Visit the theme on AfCFTA for our conceptualisation and details on the scenario structure and interventions.

Given the historically low levels of intra-regional trade in North Africa, it is unsurprising that, in 2023, nearly 72% of Tunisia’s exports were destined for the EU, while 44% of its imports originated from the EU, rather than from neighbouring countries. This heavy reliance on the EU market underscores the chronic lack of regional economic integration within North Africa, a region often described as one of the most politically and economically fragmented on the continent. Persistent divisions among North African states, exacerbated by long-standing political tensions (such as the closed borders between Algeria and Morocco) and limited institutional cooperation, have constrained the potential for trade-led growth, cross-border investment and broader economic collaboration across the region. Despite numerous initiatives, such as the Arab Maghreb Union, intra-regional trade in North Africa remains stagnant at less than 5% of total trade, far below levels seen in other African regions like East or West Africa.

Given these regional constraints, Tunisia has strategically pursued closer ties with the EU to drive its economic development. Efforts to deepen Tunisia’s integration with the EU formally began with the launch of negotiations for a Deep and Comprehensive Free Trade Area (DCFTA) on 13 October 2015. The DCFTA aims to expand Tunisia’s preferential access to the EU single market by including sensitive sectors such as agriculture, services and investment, areas that were excluded from the earlier 1995 EU-Tunisia Association Agreement. By doing so, the DCFTA seeks to foster new trade and investment opportunities, enhance Tunisia’s competitiveness and further integrate Tunisian firms into European value chains, particularly in sectors such as manufacturing, agribusiness and information technology.

While the DCFTA offers significant opportunities, including the potential for technology transfer, improved standards and increased foreign direct investment, it also presents substantial challenges. Domestically, the agreement remains controversial. Critics argue that the DCFTA could disproportionately benefit large export-oriented firms while marginalising smallholder farmers, local producers, and small and medium-sized enterprises (SMEs), ill-prepared to compete with European firms. There are also concerns that liberalising sensitive sectors such as agriculture could expose Tunisia’s agricultural sector to unfair competition, threatening rural livelihoods. Furthermore, opponents warn that aligning regulatory frameworks too closely with EU standards could erode Tunisia’s regulatory sovereignty, limiting the country’s ability to pursue independent development policies tailored to national priorities.

Current developments indicate that negotiations have stalled intermittently due to these domestic concerns and broader political uncertainty. Rising socio-economic frustrations, high unemployment and fears over economic dependence on Europe have made the DCFTA a politically sensitive topic in Tunisia. Moreover, the European Union’s own evolving trade and sustainability policies, such as the Green Deal and Carbon Border Adjustment Mechanism, add further layers of complexity to Tunisia’s future integration into the European economic space.

Nevertheless, if negotiated carefully, with adequate safeguards for vulnerable sectors and comprehensive support for economic modernisation and diversification, Tunisia’s deeper integration with the EU could offer a powerful engine for growth and structural transformation. Achieving this, however, will require balancing the benefits of greater access to European markets with the need to protect national interests, foster inclusive development and strengthen resilience against external shocks.

At the same time, Tunisia faces significant internal trade challenges. It is estimated that nearly one-third of goods sold in the domestic market are imported illegally, a trend driven by high import tariffs, outdated trade regulations and corrupt customs practices. These barriers deter formal trade activity and undermine state revenue collection. A comprehensive overhaul of trade regulations, customs enforcement and currency exchange rules is urgently needed to reduce informality and restore confidence in the formal economic system.

In this context, the AfCFTA scenario presents a more optimistic trajectory. It envisions a Tunisia that is more deeply integrated into regional markets. The AfCFTA offers Tunisia a strategic opportunity to diversify its export markets, reduce its dependence on Europe and position itself as a gateway to African markets. With its geographic proximity, well-educated labour force, industrial base and investment potential, especially in pharmaceuticals, textiles and automotive components, Tunisia is well-placed to serve as a regional manufacturing and logistics hub.

Tunisia’s global trade openness, measured as the sum of exports and imports as a percentage of GDP, will grow from 96.2% in 2023 to 130.6% by 2043 under the AfCFTA scenario, compared to 123.3% under the Current Path. This signals a marked improvement in Tunisia’s integration into global and regional value chains.

Moreover, the AfCFTA scenario anticipates a structural transformation of the economy, shifting from a reliance on agriculture, raw materials and low-productivity services to a stronger focus on manufacturing and ICT. By 2043, the manufacturing sector’s contribution to GDP will rise from 14.3% in 2023 to 18.3%, compared to 16.9% on the Current Path. ICT will also expand, driven by digital infrastructure investments, policy reforms and greater regional demand.

Importantly, these changes will translate into tangible gains in living standards. Tunisia’s GDP per capita (PPP) will rise from US$9 900 in 2023 to US$13 500 by 2043 under the AfCFTA scenario, which is approximately US$630 higher than the Current Path of US$12 870. These gains are contingent on ensuring that the benefits of trade openness are equitably distributed across geographic and social groups, especially in rural areas where trade participation remains limited.

Overall, the AfCFTA and broader trade liberalisation efforts offer Tunisia a pathway to more inclusive and sustainable economic growth. However, realising this potential will require a proactive strategy that combines trade facilitation, infrastructure development, regulatory reform and targeted support for SMEs and domestic producers.

Chart 21 presents the trade balance in the Current Path and in the AfCFTA scenario, from 2020 to 2043 as a percentage of GDP.

Under the AfCFTA scenario, Tunisia will experience significant growth in both exports and imports, reflecting deeper integration into regional and global markets. Exports will increase from US$18.33 billion in 2023 to US$51.88 billion by 2043, while imports will rise from US$23.1 billion to US$53.41 billion over the same period. This represents a substantial expansion of Tunisia’s trade volume, with exports growing more rapidly than imports. In comparison, the Current Path figures are more modest, with exports reaching US$44.93 billion and imports US$47.68 billion by 2043.

As a result, the AfCFTA scenario indicates a narrowing of Tunisia’s trade deficit, from US$4.77 billion in 2023 to just US$1.53 billion by 2043. This contrasts with a larger deficit of US$3.51 billion under the Current Path. The improvement is driven by stronger export performance, increased access to diversified markets across Africa, and Tunisia’s potential to become a regional export hub under the AfCFTA.

Sectorally, the AfCFTA scenario has the most transformative effect on manufacturing, where the trade balance contribution to GDP increases more significantly than in other sectors. This reflects the scenario’s emphasis on scaling up industrial production and promoting value-added exports, particularly in pharmaceuticals, textiles and automotive components. ICT follows closely, supported by digital economy initiatives, increased demand for high-end services and the digitalisation of cross-border trade. Agriculture and energy also register gains, although to a lesser extent.

Conversely, the scenario forecasts a decline in the trade balance contribution of raw materials and low-end services to GDP. This structural shift suggests that Tunisia will move away from exporting unprocessed goods and low-productivity services toward higher-value exports. The boost in manufactured commodities and high-end service exports signals a positive trend in economic sophistication and competitiveness.

Recent policy developments support this trajectory. Tunisia has strengthened its trade facilitation infrastructure, digital customs platforms and export support mechanisms. The government's push for industrial renewal and digital transformation, aligned with AfCFTA protocols on goods, services and investment, offers an enabling environment for structural change in trade composition.

Ultimately, the AfCFTA scenario improves Tunisia’s trade balance and supports the broader goals of economic diversification, value chain integration and resilience to external shocks. For these benefits to be fully realised, Tunisia will need to continue investing in trade-related infrastructure, upgrading industrial capabilities and ensuring that SMEs and rural producers can participate meaningfully in expanded trade opportunities.

Chart 22 presents the Current Path of access to electricity for urban, rural and the total population from 2000 to 2043.

The Large Infrastructure and Leapfrogging scenario involves ambitious investments in road and renewable energy infrastructure, improved electricity access and accelerated broadband connectivity. It emphasises adopting modern technologies to enhance government efficiency. It incorporates significant investments in major infrastructure projects like rail, ports and airports (other infra) while highlighting the positive impacts of renewables and ICT.

Visit the themes on Large Infrastructure and Leapfrogging for our conceptualisation and details on the scenario structure and interventions.

In 2024, Tunisia ranked 6th out of 54 African countries on the composite African Infrastructure Development Index (AIDI), reflecting its relatively advanced infrastructure base across key sectors. The country demonstrated particularly strong performance in water and sanitation, ranking 4th, followed by 5th in ICT, 7th in energy and 18th in transport. These rankings highlight Tunisia’s sustained investment in essential infrastructure, especially in digital connectivity and public utilities, while indicating areas, such as transport, where further improvements are needed to enhance economic integration and regional competitiveness.

Tunisia has made remarkable progress in expanding access to electricity, achieving universal electrification in both urban and rural areas, a milestone that places it among the leading African countries in energy access. Urban areas reached universal electricity access as early as 2012, building on an already high coverage rate of 99.9% in 1994. In rural areas, where electrification rates stood at just 66.3% in 1994, the country successfully closed the access gap by 2021, thanks to sustained public investment and targeted rural electrification programs.

These achievements have been underpinned by the efforts of the Société Tunisienne de l'Électricité et du Gaz (STEG), which has played a central role in expanding grid infrastructure and promoting equitable access to energy services across the country. Tunisia’s success reflects a broader national commitment to inclusive development and infrastructure modernisation, supported by concessional financing, public-private partnerships and regional development programs.

In line with its National Energy Transition Strategy, Tunisia is now focusing on ensuring the sustainability, reliability and affordability of electricity supply. With rising energy demand and increasing pressure to decarbonise the energy mix, the country is accelerating the integration of renewable energy sources, particularly solar and wind, into the national grid. The goal is to raise the share of renewables to 35% of total electricity production by 2030, reducing dependence on fossil fuel imports and enhancing energy security.

These developments not only consolidate Tunisia's energy access gains but also support broader objectives related to climate resilience, green industrialisation and inclusive economic growth, especially in underserved regions.

Chart 23 presents the number of people using cookstoves in the Current Path and in the Large Infrastructure and Leapfrogging scenario, from 2020 to 2043.

Tunisia has already adopted modern fuel cookstoves universally, positioning itself as one of the few African countries to have successfully transitioned away from traditional biomass-based cooking methods. This transition results from decades of sustained investment in energy infrastructure, urbanisation and social development policies that have improved household access to clean and efficient energy sources, particularly in rural and peri-urban areas.

Historically, traditional solid fuels, such as firewood and charcoal, were more prevalent in rural Tunisia, particularly in the early 1990s. However, through targeted rural electrification programs, subsidies for liquefied petroleum gas (LPG) and public awareness campaigns on the health and environmental impacts of traditional cooking methods, Tunisia gradually reduced its reliance on polluting fuels. By the early 2010s, most households had adopted modern fuel sources such as LPG and electricity for cooking, contributing to improved indoor air quality, reduced respiratory health issues and environmental preservation.

Today, the country continues to build on this achievement through broader energy and environmental strategies. As part of Tunisia’s National Energy Transition Strategy, there is growing emphasis on energy efficiency in households, including promoting efficient cooking appliances and integrating clean energy solutions in public institutions such as schools and health centres. Additionally, Tunisia is aligning with international commitments to reduce greenhouse gas emissions by promoting sustainable energy practices across all sectors.

The universal adoption of modern cookstoves not only improves public health outcomes but also reflects Tunisia's broader commitment to sustainable development, gender equality and climate resilience by reducing the domestic burden on women. Continued investments in clean energy technologies and inclusive energy access will be essential to maintaining this progress, particularly as energy demand rises due to demographic and economic change.

Chart 24 presents the percentage of the population and number of people with access to mobile and fixed broadband in the Current Path and in the Large Infrastructure and Leapfrogging scenario, from 2020 to 2043. The user can toggle between mobile and fixed broadband.

Fixed broadband in Tunisia encompasses a variety of technologies, including cable modem connections, Digital Subscriber Line (DSL) services with speeds of at least 256 KB/s, fibre-optic infrastructure and other fixed broadband technologies such as satellite Internet, Ethernet LANs, fixed wireless access, wireless local area networks and WiMAX. As of 2023, Tunisia recorded approximately 1.82 million fixed broadband subscribers, representing nearly 15 subscriptions per 100 people, a relatively strong performance compared to other lower-middle-income African countries.

Tunisia holds significant potential to develop its ICT sector further. Leveraging digital technology and innovation can accelerate economic transformation, improve public service delivery and allow Tunisia to leapfrog traditional development pathways by bypassing legacy infrastructure constraints. The country's relatively strong foundation in ICT positions it well to become a regional digital hub.

Tunisia already boasts one of the most advanced telecommunications infrastructures in North Africa. The sector benefited from early liberalisation, with mobile competition introduced in 2002, sparking rapid growth. By 2023, Tunisia had reached 11.84 million mobile broadband subscribers, equivalent to over 96 subscriptions per 100 people. A nationwide fibre-optic backbone and international connectivity through submarine cables have further supported the growth of Internet usage and digital services.

However, despite these advancements, the ICT sector remains constrained by several structural challenges. Chief among them are limited market competition and high entry barriers, which have led to elevated service prices. These pricing constraints affect household access to high-quality digital services and undermine Tunisian firms' competitiveness and productivity. Moreover, restrictions on inter-operator services and limited regulatory reform have hindered the full integration of ICT into the broader economy. As a result, Tunisia has not yet fully capitalised on the transformative potential of ICT, even though the sector’s value-added contribution to GDP is on par with that of some upper-middle-income countries.

The Large Infrastructure and Leapfrogging scenario offers a more ambitious pathway for ICT development. Under this scenario, fixed broadband subscriptions will increase significantly, reaching 42.74 per 100 people by 2043, compared to 38.8 on the Current Path. By the same year, this would place Tunisia well above the average Current Path of 27.26 subscriptions per 100 people for lower-middle-income countries. Mobile broadband subscriptions also increase sharply under this scenario, reaching 144.81 subscriptions per 100 people by 2031, compared to 142.1 on the Current Path. Beyond 2032, the growth trajectories of both scenarios converge, with subscriptions reaching 154 per 100 people by 2043, slightly above the average forecast of 152.25 for comparable income-level countries in Africa.

Tunisia must address regulatory bottlenecks, reduce market concentration and promote digital inclusion to fully realise this potential. Strategic investments in broadband infrastructure, especially in underserved regions, and greater support for local digital startups and tech-driven entrepreneurship will be essential. Additionally, aligning national digital policies with regional frameworks, such as the African Union’s Digital Transformation Strategy, can position Tunisia to lead in Africa’s digital future.

Chart 25 presents the trends in FDI, aid and remittances in the Current Path and in the Financial Flows scenario as a percentage of GDP, from 1990 to 2043.

The Financial Flows scenario represents a reasonable but ambitious increase in inward flows of worker remittances, aid and an increase in foreign direct investment (FDI) stock and additional portfolio investment inflows. We reduce outward financial flows to emulate a reduction in illicit financial outflows.

Visit the theme on Financial Flows for our conceptualisation and details on the scenario structure and interventions.

Tunisia has long faced challenges related to financial governance and the efficient mobilisation of external and domestic resources. During the presidency of Zine El Abidine Ben Ali (1987–2011), large-scale corruption and rent-seeking practices were widespread. It is estimated that Ben Ali and his inner circle siphoned off vast sums of public wealth through illicit channels. However, despite the 2011 revolution and the fall of the Ben Ali regime, such practices have not been fully eradicated. Illicit financial flows (IFFs) remain a significant drain on Tunisia's economy, with losses estimated at around 3% of GDP annually, much of it driven by smuggling along the borders with Libya and Algeria. These cross-border informal networks undermine state revenues and distort formal economic activity.

In contrast to many sub-Saharan African countries, foreign aid plays a relatively modest role in Tunisia’s fiscal landscape. Yet, it remains an important resource for addressing structural constraints in public service delivery, rebuilding institutions and supporting economic recovery. Tunisia’s post-2011 political transition created an urgent need for sustained donor engagement. However, overall aid volumes remain below levels required to meet key development goals. Estimates suggest a minimum increase of 6% of GDP in annual foreign aid would be necessary to adequately finance Tunisia’s reform and development agenda.

Foreign direct investment (FDI) has historically been a more prominent source of external finance. However, FDI inflows into Tunisia have declined steadily since 2006, when they peaked at 9.4% of GDP. The decline was triggered by the 2008 global financial crisis and domestic political and economic instability following the 2011 revolution. Although there was a modest recovery in FDI inflows during the 2020/2021 financial period, recent global uncertainty and internal governance challenges have constrained sustained improvement.

The Financial Flows scenario envisions a more favourable external financing trajectory. Under this scenario, FDI as a share of GDP increases from 3.8% in 2023 to 5.9% by 2043, significantly outperforming the Current Path of 4.3%. While this represents notable progress, it remains below Tunisia’s historical potential. Nevertheless, Tunisia will maintain an FDI-to-GDP ratio above the average for lower-middle-income African countries throughout the Financial Flows scenario, reaffirming its relative attractiveness as a regional investment destination, particularly in sectors such as pharmaceuticals, renewable energy, ICT and automotive components.

Remittances remain a vital financial lifeline for many Tunisian households, especially among poorer and rural communities. In 2023, remittances accounted for 4.5% of GDP, but this share will decline. Under the Current Path, it falls to 3.2% by 2043. The Financial Flows scenario slows this decline, resulting in a more moderate reduction to 3.4%, reflecting efforts to maintain diaspora engagement and strengthen formal remittance channels.

Regarding official development assistance (ODA), Tunisia's aid dependency will decrease over time. Under the Current Path, foreign aid as a percentage of GDP will fall from 2.4% in 2023 to 0.9% by 2043. The Financial Flows scenario further reduces this figure to 0.7%, highlighting a transition toward greater financial self-reliance and reduced dependence on external concessional support.

These financial improvements contribute to stronger economic performance overall. By 2043, Tunisia’s GDP per capita (PPP) will reach US$13 440 under the Financial Flows scenario, compared to US$12 870 on the Current Path. However, the scenario also reflects transitional vulnerabilities. Between 2029 and 2039, poverty temporarily increases due to the reduced role of foreign aid before the economy stabilises and adapts to a more self-sufficient growth model.

Ultimately, the scenario delivers positive long-term outcomes for poverty reduction. By 2043, the proportion of Tunisians living in poverty (less than US$3.65 per day) will decline to 1.5% of the population, compared to 1.7% on the Current Path. This reflects the benefits of sustained growth, improved governance and the more productive use of external financial inflows.

To fully harness the potential of financial flows, Tunisia will need to strengthen anti-corruption mechanisms, modernise its financial regulatory framework and deepen economic reforms that improve the business environment, reduce informality and attract more diversified external capital sources.

Chart 26 presents government revenue in the Current Path and in the Financial Flows scenario, from 2020 to 2043. The data is in US$ 2017 and % of GDP. 

According to Wagner’s Law, the economic principle known as the law of increasing state activity, public expenditure tends to rise as national income grows. This phenomenon is driven by the expanding role of government in providing public goods, infrastructure, social services, and administrative functions in response to increasing societal demands and economic complexity. In this context, it is reasonable to expect that government revenues will also grow in tandem with economic development, particularly when supported by improved financial flows and institutional reforms.

Historically, Tunisia has maintained relatively high levels of government revenue as a share of GDP compared to many other lower-middle-income African countries. However, fiscal performance has been uneven over the past decade, largely due to political instability, subdued economic growth and inefficiencies in revenue collection. In 2011, Tunisia’s government revenue share in the country’s GDP peaked at 35.6% of GDP (equivalent to US$13.07 billion), but has declined due to a combination of tax avoidance, the expansion of the informal economy and weaknesses in the tax administration system.

In 2023, total government revenue stood at US$11.16 billion, equivalent to approximately 25.9% of GDP. Under the Current Path, revenue will rise to US$22.41 billion by 2043, reflecting gradual economic growth and moderate improvements in fiscal capacity. However, the Financial Flows scenario offers a more optimistic outlook, raising total government revenue to US$23.75 billion by 2043, an increase of US$1.35 billion above the Current Path. Stronger inflows of FDI underpin this improvement, more efficient mobilisation of remittances and declining aid dependency, all of which contribute to a more dynamic and formalised economy.

Recent policy efforts have also sought to strengthen Tunisia’s revenue base. These include ongoing tax reform initiatives to broaden the tax base, improve compliance and reduce exemptions that disproportionately benefit high-income groups. The government has also been working to digitise tax and customs systems, combat illicit trade and formalise segments of the economy that currently operate outside the tax net, particularly in border regions where smuggling remains pervasive.

Despite these gains, Tunisia’s public finances remain under pressure from persistent fiscal deficits and a high public wage bill, which continues to absorb a large share of budgetary resources. Therefore, while the Financial Flows scenario improves revenue generation, additional structural reforms will be necessary to ensure long-term fiscal sustainability. These should include the rationalisation of public spending, increased efficiency in service delivery and policies that encourage private sector-led growth to expand the overall tax base.

The Financial Flows scenario aligns with Wagner’s Law by illustrating how enhanced external and domestic financial flows can support higher government revenues in line with rising national income. By 2043, this trajectory would place Tunisia in a stronger fiscal position to finance its development priorities, particularly in infrastructure, education, health and social protection, without deepening reliance on debt or aid.

Chart 27 presents the Current Path of government effectiveness comparing the country to the average for the African income group, from 2002 to 2043.

The World Bank’s index on government effectiveness captures perceptions of the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation and the credibility of the government's commitment to such policies.

In 2023, Tunisia ranked 9th out of 54 African countries on the Ibrahim Index of African Governance, with an overall score of 61.2 out of 10, well above the continental average and second among lower-middle-income African countries, behind only Cape Verde. This reflects relative strength in areas such as civil society engagement, human rights and public administration capacity. The country performed strongly across all four core governance categories, reflecting a relatively robust institutional and policy framework. These results underscore Tunisia’s comparative strengths in education, health, infrastructure and civil liberties, despite ongoing challenges related to political stability, public sector reform and regional inequality.

Governance is a fundamental pillar of sustainable development. It underpins institutional effectiveness, social cohesion and the efficient allocation of public resources. In Tunisia’s context, strengthening governance capacity is essential for enhancing government effectiveness, which includes the state’s ability to raise revenue, deliver essential services, uphold the rule of law and implement long-term development strategies. Despite Tunisia’s relatively high levels of human development and institutional maturity compared to many of its regional peers, its transformative potential has long been hampered by deep-rooted structural and governance challenges.

Tunisia has made notable progress in democratic consolidation and civil liberties in the years following the 2011 revolution. The country is often cited as the only enduring democratic transition from the Arab Spring. However, institutional reform or inclusive economic transformation has not matched this political progress. Tunisia continues to operate under a highly opaque political system marred by entrenched clientelism, regulatory fragmentation and an insider-outsider economic structure. These dynamics limit market access, suppress competition and divert resources away from productive sectors. As a result, many Tunisians, especially the youth and informal workers, are marginalised from formal economic participation, leading to widespread informality and persistent regional disparities.

Moreover, Tunisia lacks a coherent, long-term development vision and a well-articulated strategy for public investment. Governance remains reactive rather than strategic, with political transitions and elite contestation often delaying or diluting reform agendas. At the same time, Tunisia faces several pressing socio-economic challenges: high youth and graduate unemployment, regional inequality and rising public discontent. The state’s fiscal space is increasingly constrained by large and untargeted subsidies on fuel, food, energy and public transportation, alongside a bloated public wage bill, one of the highest in the region relative to GDP. These expenditures crowd out investments in infrastructure, health and education, reinforcing inequality and undermining long-term growth prospects.

Despite these constraints, Tunisia performs relatively well on governance metrics compared to other countries in its income group. On the Current Path, Tunisia’s governance index score will improve from 0.56 in 2023 to 0.63 by 2043, suggesting gradual gains in institutional performance and policy implementation.

Recent governance developments, however, raise concerns about the trajectory of democratic accountability. Since 2021, President Kais Saied has consolidated executive power through constitutional reforms, dissolved parliament and curtailed judicial independence. These actions have drawn domestic and international criticism and may undermine institutional checks and balances, transparency and citizen participation if not corrected. The erosion of democratic norms could affect investor confidence, foreign aid flows and broader governance outcomes.

For Tunisia to fully realise its development potential, governance reform must be elevated as a strategic national priority. This includes depoliticising public administration, enhancing fiscal transparency, tackling corruption, ensuring judicial independence and creating a clear, inclusive, and forward-looking development vision. Empowering local governments through decentralisation and increasing citizen engagement in policy processes will also be vital to making governance more accountable and responsive.

Ultimately, improving governance is not only about institutional efficiency but also about restoring public trust, fostering social cohesion and laying the foundation for inclusive, sustainable economic development.

Chart 28 presents the security, capacity and inclusion index for the Current Path versus the Governance scenario, for 2023 and 2043.

This scenario assumes better governance: stability, capacity and inclusion. It measures a state’s progress using the average of these three indices. To this end, it includes an index (0 to 1) for each dimension, with higher scores indicating improved outcomes.

Note that the scenario includes increased welfare transfers to unskilled workers, which are paid for by taxes on skilled workers. Social transfers have proven the most effective short/medium-term measures of alleviating poverty and reducing inequality in the context of high poverty levels and inequality.

Visit the theme on Governance for a full conceptualisation and details on the scenario structure and interventions.

On the Current Path, Tunisia ranks fourth in governance effectiveness among lower-middle-income African countries, closely competing with Morocco and trailing Cape Verde, Senegal and Ghana. While Tunisia has demonstrated relatively strong institutional capacity compared to its regional peers, particularly in areas such as public administration and civil society engagement, progress on governance reform remains uneven and challenged by recent political developments.

Under the Governance scenario, Tunisia’s governance effectiveness index, which measures the quality of public services, policy formulation and implementation, rises from 2.35 in 2023 to 2.82 by 2043, surpassing the Current Path of 2.68. This would allow Tunisia to match Senegal’s performance by 2043, reflecting significant improvements in administrative efficiency, transparency and responsiveness of state institutions. These gains are critical for restoring public trust, enhancing policy implementation and creating a more predictable environment for investment and inclusive development.

In parallel, Tunisia’s score on the Ibrahim Index of African Governance, a broader measure encompassing security, rule of law, participation and human development, will increase marginally under this scenario, indicating steady, if incremental, institutional strengthening.

One of the key fiscal implications of improved governance is a more efficient allocation of government resources. On the Current Path, the share of government-to-household welfare transfers, including fuel, food and transport subsidies, will decline from 8.8% of GDP in 2023 to 6.9% by 2043. Under the Governance scenario, this decline is slightly mitigated, with welfare transfers reaching 7.2% by 2043. This suggests a better-targeted, more equitable social protection system that balances fiscal sustainability with citizen welfare.

Furthermore, improved governance contributes to stronger economic performance. Tunisia’s GDP (MER) will reach US$77.33 billion by 2043 under this scenario—US$2.23 billion higher than in the Current Path. These economic gains are driven by increased investor confidence, reduced corruption, more effective public spending and a more inclusive and enabling business environment.

Recent governance developments, however, underscore the urgency of reform. Since 2021, concerns over democratic backsliding, including the concentration of power in the executive, the weakening of judicial independence and restrictions on political pluralism, have raised alarms among domestic actors and international partners. Without a clear commitment to transparency, the rule of law and institutional checks and balances, the long-term prospects for governance effectiveness may be undermined.

To achieve the outcomes of this scenario, Tunisia will need to recommit to good governance principles, strengthen accountability mechanisms, enhance public financial management, and ensure meaningful civic participation in policymaking. In doing so, governance can serve not only as a foundation for economic resilience but also as a catalyst for social stability and inclusive national development.