Summary:

On 23 January 2024, Minister of Finance Sihem Nemsia announced in a meeting of the Parliament that the Ministry of Economy and Planning was seeking a $70 million loan to support the revitalization of the Al Fouledh Company, Tunisia’s state-owned iron and steel producer. 

Nemsia noted that the Ministry of Economy and Planning had approached the European Bank for Reconstruction and Development (EBRD) about financing Al Fouledh. 

The announcement comes following a surprise visit to Al Fouledh’s production facility in Bizerte during which the President called for revitalization of the firm. Shortly after his visit, a Bizerte court announced the opening of an investigation into allegations of financial and administrative corruption at the Al Fouledh company. 

The company has a history of operating at a loss, burdened by lagging production and accumulating debt. In 2021-2022, the company reported itself as being unable to cover its financial obligations for contributing to employee social security

Outlook: 

The challenges at Al Fouledh are indicative of issues experienced across Tunisia’s state-managed enterprises where inefficiency, corruption, and labor disputes create significant barriers to profitability. 

While a loan could extend a lifeline to Al Fouledh, significant structural changes at the company would be needed for expectations regarding profitability to change. 

Personal pressure on the issue from President Saied may be able to create momentum in the short-term, however, the underlying systemic issues that need to be addressed will likely spark backlash from the country’s labor unions if substantive reform were undertaken. 

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