Sakher el-Materi bought a Tunis car dealership called Ennakl that specialised in importing foreign cars, in 2004. Soon after he took over the company, quotas set by his father-in-law, then President Zine El Abidine Ben Ali, allowed the dealership to import almost four times as many cars as before.
Five years after he bought the company for $18m, it brought in over $41m in a partial initial stock offering. El-Materi fled the country after the 2011 revolution that forced Ben Ali out, but the company continues to be the only Volkswagen and Porsche dealership in Tunisia.
This example is one of many laid out in a World Bank report published today, which analyses the extent of Ben Ali family’s hold on the Tunisian economy during his 23 years in power.
Looking at 220 companies owned by family members that were seized by Tunisian authorities after the regime fell, the World Bank determined that while the firms accounted for only three percent of economic output, they controlled 21 percent of net private sector profits.
By tailoring regulations to meet only their companies’ needs, the Ben Ali family structured Tunisia’s economy to benefit themselves and their closest allies.
One of the businesses mentioned in the report as a victim of these practices is a nonprofit private school founded by Mohamed Bouebdelli. A competitor to the International School of Carthage, founded by Ben Ali’s wife, Leila Trabelsi, Bouebdelli’s school was temporarily shut down due to failure to comply with regulations.
Bouebdelli said that the regulations were changed in ways that directly harmed his business.
“These were general laws, but we knew Ben Ali wanted to destroy our school so that Leila Trabesli’s new Carthage school would face no competition.
The school was prevented from teaching some subjects and eventually was prohibited from awarding diplomas. Taxes were raised and new regulations about classroom size were implemented.
“Ben Ali adjusted laws to serve the interests of his family and those close to him to the detriment of the rest of Tunisia,” he said.
“Ben Ali’s laws were never fair,” Bouebdelli added. “It was obvious and people were aware.”
Ramzi el-Fekih, an entrepreneur who heads Viamobile, a mobile phone and Internet banking and payment company founded in 2009, says regulations were used to prevent businesses like his from competing with established firms.
“We were stopped by the political powers at the time,” he told Al Jazeera. “Instructions were given to the Central Bank to stop the project.”
He was told the business could not move forward because the government needed to regulate the mobile financial sector. El-Fekih believes the real reason was that those with connections wanted a head start in the mobile banking industry.
He suspects that the Ben Ali family or those close to them stopped his business so they could be the first in the sector. “Most of the time they used the laws for themselves,” el-Fekih said.
While regulations meant roadblocks for many Tunisians, they represented opportunity for those connected to the regime.
“Ben Ali’s relatives ran to the sectors that were riddled with these barriers, where there was no open competition. This allowed them to be super-performing because they did not have any competitors,” Antonio Nucifora, the World Bank’s lead economist for Tunisia and one of the report’s co-authors, told Al Jazeera. “If they were entering new sectors, suddenly the president would issue a new decree introducing new barriers in that sector, stifling competition.”
In the media sector, the Ben Ali family’s financial interests intersected with restrictions on public expression. Tunis-based radio and TV stations, in addition to newspapers and magazines, were at least part-owned by a member of the family. El-Materi, the car dealership-owning son-in-law, also owned Radio Zitouna. Popular radio station Mosaique FM was also confiscated as a Ben Ali family asset.
“The laws regulating the media sector during the Ben Ali era were repressive,” said Ibrahim Slimi, a journalist with Radio
Karima, based in the central town of Sidi Bouzid where Mohamed Bouazizi’s self-immolation in December 2010 sparked the 2011 revolution. Radio Karima was started after the revolution, when the media climate eased enough for stations to open in Tunisia’s more rural interior, according to Slimi.
Slimi said the former government would use state-issued press passes and advertising revenue to restrict the media sector to friendly companies. The disadvantage continues, as the same media outlets formerly owned by the Ben Ali family are still the largest and best-known.
Ben Ali and most of his family are gone. Ben Ali fled to Saudi Arabia and el-Materi to the tropical island nation of Seychelles. The laws that rigged the system, however, remain.
“Financial regulations and monetary rules in Tunisia are the same as they have been for many years,” el-Fekih said.
Regulations for activities such as electronic payments are formulated in ways that prevent entrepreneurs from getting licenses necessary for their businesses to operate.
“Anybody can apply for licenses as long as as they follow the rules, but the rules are either so difficult nobody can follow them, or nonexistent so nobody can do it,” he said.
“The administrative red tape is extremely heavy,” el-Fekih said, explaining that items essential for one’s business might be caught up in customs for months.
But for him the written rules and regulations are only part of the story. “There has to be a mentality shift,” he said.
“The whole country has been oppressed. Whoever has power has abused his power. The people who have been abused also want to abuse, thinking ‘I have the power and I feel like exerting that power.'”
He says he was prevented from importing a car to use for his business simply because a customs agent chose to deny the transaction.
“You need to set the mentality for the clerk, for everybody,” el-Fekih said. “There has to be a mind-shift towards helping businesses develop, to make sure that we help them set things up.”
Bouebdelli agrees that problems have persisted since the fall of Ben Ali.
“Nothing has changed after the revolution, especially the administration. We still have the same laws,” he said. “Laws concerning business licenses should be reduced so as to open the door for all businesses. The administration should also improve its service quality.”
Economic regulations have not been a priority for Tunisia’s National Constituent Assembly. However, there is hope that now that the constitution is passed, work will move forward to reform business rules.
“There is a real willingness to change the existing infrastructure, but I don’t think that has translated yet to significant results,” Bob Rijkers, a coauthor of the World Bank report.
“We have to first, reduce regulations and make the economy more competitive, ensuring lower prices. Second, make sure regulations that remain in place are not circumvented,” assembly member Moncef Cheikhrouou, an economist with a PhD from the University of California, Berkeley.
“There are a lot of regulations that don’t serve the consumers with no compelling economic rationale,” Rijkers said. “Ultimately the public are the ones paying the price for the privileges created by these kinds of regulations.”
( Courtesy World Bank , Agencies & Al Jazeera………..Source…….New Africa Business News )