Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Selling to the Government
The GOT conducts most of its international purchases through public international tenders. These tenders are published widely in the local media. Government decree #34 of May 2018 imposed on all ministries, non-administrative public institutions, and state-owned companies the use of the Tunisian e-procurement system (http://www.marchespublics.gov.tn/onmp/content/index.php?lang=fr).
Prospects for U.S. businesses are highlighted on the Department of State’s Business Information Database System and available on the U.S. Embassy business webpage.
Tunisian legislation permits the granting of certain contracts without recourse to public tender, and some companies have had success approaching the public sector with public-private partnership proposals.
Tunisia’s Association Agreement with the EU bars non-EU companies from certain major tenders receiving EU financing. Tunisian government agencies tend to adhere to tender regulations and specifications.
U.S. bidders on Tunisian tenders should not assume that potential customers are looking to the bidders to design solutions to a given problem. Tunisian government agencies typically arrive at desired solutions through pre-tender studies and then solicit specific equipment or services. Favorable financing terms often trump other factors normally considered for tenders, such as history with the bidder or type and proven reliability of a certain technology.
Submitted bids that do not meet tender specifications, even if technically superior to the solicited proposal, usually will be disqualified. Bids that are not delivered by the tender deadline may be disqualified without further consideration. U.S. bidders interested in submitting proposals that deviate from the original required specifications should do so only as a clearly identified alternative and ensure that it does not disqualify them from the main offer.
The GOT has a reputation for lengthy negotiations, and U.S. firms are advised to take this into consideration upon submitting their initial bids. Bid bonds between 1% and 10% of the bid value are common on government contracts. The government will generally adhere as strictly to the specifications of the contract as it does to the tender specifications. It will expect similar adherence from the contractor. Since 2011, government ministries have a certain degree of autonomy in selecting top bids, although the Commission Supérieure des Marchés, a quasi-independent contracting oversight office at the Prime Ministry, will ultimately confirm who wins a tender after performing its own due diligence. Some major contracts may require approval by Parliament.
U.S. firms should be aware of the factors that influence the government’s evaluation of bids, including:
- Job creation
- Contribution to the local economy via investment in or partnership with a Tunisian entity
- Transfer of skills or technology
- Long-term financial impact (cost, financing packages, impact on the trade balance)
- Geographical location – investments serving underprivileged areas of Tunisia will likely be favored
While U.S. bids have typically been competitive on price and technology, European firms historically have benefited from stronger financing packages and links to the local economy. Both U.S. and European companies may face challenges when competing with companies backed by governments, such as that of the People’s Republic of China (PRC), that may offer generous financing programs because they are not bound by Organization for Economic Cooperation and Development (OECD) regulations.
Recent cases have demonstrated a lack of transparency and delays in the decision-making process in various types of tenders, particularly in the power and infrastructure sectors. However, there is no evidence that indicates American companies have specifically been targeted or intentionally placed at a disadvantage in Tunisia.
Tunisia is neither a party to the WTO Agreement on Government Procurement nor a party to a free-trade agreement (FTA) with the United States.
U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.
Financing of Projects
Project financing is generally available for established borrowers. However, Tunisian banks are often reluctant to deal with newer firms. Bankers describe the Tunisian market as one in which the supply of short-term commercial credit exceeds demand, although a significant lending gap is evident for start-ups and small and medium-sized businesses that do not have land or other types of traditional secured collateral. Private equity and microfinance are underdeveloped in Tunisia. This limits financing options for entrepreneurs and businesses.
For U.S. exporters to Tunisia, financing facilities are available through the Export-Import Bank of the United States (EXIM). While EXIM lending has focused largely on transactions with state enterprises, EXIM is seeking greater private sector involvement in Tunisia. U.S. companies competing for government tenders are advised to work closely with the U.S. Embassy in Tunis and EXIM once evidence of a foreign competitor’s ability to obtain concessionary financing becomes clear.
Excellent financing terms offered by European and Asian suppliers present an obstacle for U.S. companies. However, EXIM will strive to match concessionary financing from foreign competitors’ governments.
The U.S. International Development Finance Corporation (DFC) is operational in Tunisia and provides financing for private development projects. The DFC consolidates and modernizes the Overseas Private Investment Corporation (OPIC) and Development Credit Authority (DCA) of the United States Agency for International Development (USAID).
From the prior OPIC portfolio in Tunisia, the DFC currently has an active $50 million credit-guarantee facility through the Middle East Investment Initiative (MEII) with three local commercial banks (Arab Tunisian Bank (ATB), Amen Bank, Attijari Bank) to increase access to finance for small and medium-sized enterprises (SME). In 2022, the DFC also signed a seven-year $35 million loan portfolio guaranty with ATB to increase lending to SMEs, with a focus on those in the country’s interior and remote areas. The credit facility is set to expire in September 2023.
The U.S. Millennium Challenge Corporation (MCC) Board of Directors unanimously approved, but MCC and the GOT have not yet signed, a nearly $500 million compact grant agreement to finance critical projects in the transportation, trade, and water sectors.
The Transport and Trade Project will make trade with Tunisia easier and less expensive by expanding Tunisia’s principal port, the Port of Rades, creating a dedicated container terminal, and investing in improved port management. The Demand Management and Productivity Project will help Tunisia better manage its groundwater by building the capacity for water conservation and management, improve irrigation systems, and help farmers incorporate water efficient technologies and approaches. The project will target the poorer interior regions of Tunisia. Finally, the American Catalyst Facility for Development (ACFD) will catalyze private sector investments supported by DFC that complement the Transport and Water Projects. ACFD will attract additional investment to Tunisia and further expand the impact of the compact.
Initial compact funding will become available following signature of the compact while most compact funds will be made accessible following Parliamentary ratification of the compact.
The U.S. Trade and Development Agency (USTDA) assists U.S. firms seeking contracts in the Tunisian market. USTDA’s services include funding for conducting feasibility studies, conditional training grants, and trade development missions. U.S. companies may also take advantage of procurement opportunities in Tunisia funded by multilateral development banks.
Multilateral Development Banks and Financing Government Sales. Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from the Multilateral Development Banks (MDB). A helpful guide for working with the MDBs is the Trade Finance Guide. The U.S. Department of Commerce’s (USDOC) International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.
Learn more by contacting the:
- Commercial Liaison Office to the African Development Bank
- Commercial Liaison Office to the Asian Development Bank
- Commercial Liaison Office to the European Bank for Reconstruction and Development
- Commercial Liaison Office to the World Bank.