Libyan border closure weighs on Tunisian informal trade

Tunisia and Libya are heavily dependent on informal cross-border trade, but recent restrictions on the Libyan side have triggered weeks of instability and chaos. TRT World visits the border town.

The “Souk Maghrebi” market offers a colorful range of products for locals and visitors. (Alessandra Bajec / TRTWorld)

BEN GUERDANE, Tunisia – The main street of Ben Guerdane, a border town in south-eastern Tunisia about 30 kilometers from the Libyan border, is lined with goods stored outside shops as trucks, vans and cars carry everyday items from Libya.

On July 10, Tripoli closed the border with Tunisia, but the passage of all goods except fuel was prohibited on the Libyan side for about a year, according to businessmen on the Tunisian side. The official border closure, however, lasted more than six weeks, triggering demonstrations by traders in Ben Guerdane.

The closure came after 200 Tunisian protesters blocked the main road to Ben Guerdane in June, citing mistreatment by Libyan border authorities at Ras Jedir, Tunisia’s main border post with Libya, and trade policies ” unjust ”Libyan women.

As Ras Jedir reopens on September 1, relative calm reigns. The reopening came several hours after the only active airport in Tripoli was closed due to fighting in the Libyan capital.

If the business starts again limping, the traders of Ben Guerdane deplore heavy losses because of the prolonged stop of the smuggling of goods via the border.

Sitting in a cafe, Salah Lacheheb, 40, a small shopkeeper specializing in tapestry, explains how hard his business has been.

“When Ras Jedir is open, I earn between 1000 and 1800 DT (350-650 $) per month, because it always varies. When it’s closed, nothing.

The trader went on to say that the border has been subject to intermittent closures in recent years.

“My bank account has been in the red for a long time now. “

Husband and father of four young children, Lacheheb is the sole breadwinner in his family. After an average gain of 10% for each item sold and taking into account professional expenses, he doesn’t have enough profit to make ends meet.

The economic misery suffered by the inhabitants of the border town of Ben Guerdane is not new. It reflects an old policy of neglect by the Tunisian state in a part of the country that is experiencing little or no development as investments continue to be concentrated in the capital and coastal areas.

Married with three children, Fathy Maayen has 20 years of experience as a trader.

Married with three children, Fathy Maayen has 20 years of experience as a trader. (Alessandra Bajec / TRTWorld)

The absence of a state

Ben Guerdane lives essentially on an economy of smuggling oil and consumer goods. Gasoline is sold at informal bus stations across the south. Transporters transport consumer goods across the border, wholesalers distribute them to traders, who sell them in stores across the country.

“In the absence of the state, with a very weak economy in this region, informal trade is an essential source of life,” said Mohamed Kouni, assistant professor of economics at the Higher Institute of Business Administration. from the University of Gafsa.

Tunisia’s informal sector represents around 60 percent of the national economy, Kouni said.

The main types of goods passing through the Ras Jedir border post include fuel, tobacco, electronics, household appliances, clothing, bananas and apples. Goods such as fuel are either heavily subsidized in Libya or more heavily taxed in Tunisia, making their sale in the Tunisian market more profitable.

A World Bank Report 2017 estimated informal fuel imports from Libya to Tunisia at 495 million liters in 2015 (accounting for 17 percent of Tunisia’s consumption in 2014), with a market value of at least $ 107 million (297 million of TD), five times the 2013 estimate of $ 24 million (TD 67 million).

The value of informal merchandise imports from Libya is estimated at $ 214 million in 2015, while the number is set at $ 89 million for imports from Tunisia to Libya.

Draw figures of a World Bank Study 2013, Kouni observed that, on the other hand, there is a considerable loss of state revenue linked to informal trade which amounts to around 432 million dollars (1.2 billion TD). The government cannot generate significant tax revenue on the goods since most of the supplies are bought illegally from the other side.

However, a flat tax of $ 18 (50 DT) is levied on each commercial vehicle crossing the Libyan border.

Yet informal cross-border trade is the lifeblood of the population of Ben Guerdane. Although illegal, trade across the Libyan border is highly normalized as most of the activity there takes place in public and is fully visible.

Efforts to control trade flows have periodically angered Tunisian residents of the border town, leading to protests. The Ras Jedir terminal has been closed several times in recent years, causing repeated tensions on the Tunisian side. Security forces used tear gas to disperse the crowd.

Tunisian authorities have spoken of difficulties negotiating with their Libyan counterparts on customs arrangements amid the chaos that has ravaged Libya since the collapse of the country’s former leader Muammar Gaddafi in 2011.

Married with three children, Fathy Maayen has 20 years of experience as a trader. He works with his father and siblings in the informal and formal trade sectors.

Whenever Ras Jedir is closed, the 38-year-old trader has to resort to formal trade on the mainland, which is less profitable than informal trade through Libya where goods are sold at cheap rates. In his experience, tariffs on imported items set by Tunisia are very high, in some cases up to 90 percent of the real value of the product.

“There is no economic stability in this kind of business,” Maayen said. “I have to find backup solutions all the time because it is my source of income.”

Informal versus formal economy

Kouni estimated unemployment in Ben Guerdane at nearly 20% and made a similar estimate for the entire Medenine region, highlighting the disastrous effects of the Ras Jedir closure on local development.

Kouni warned against measures such as hardening the border and combating smuggling as long as smuggling and informal trade are the main sources of employment for border communities and alternative businesses in the formal sector remain. rare.

For Kouni, the ideal scenario is for Tunisia to integrate informal trade into its formal economy and reduce tariffs on imports, which he says would help “promote competitiveness” and “stimulate growth” in the economy. Tunisian-Libyan border region.

And for Lacheheb, if the State is able to propose a development plan for border towns and create employment opportunities, that will make the difference.

“Ras Jedir cannot be the only economic source to rely on”, he argued, “we need investments in other sources of income without rejecting Ras Jedir’s business assets”.

The two-month shutdown was also felt on the Libyan side.

Libya unilaterally closed its border following protests against anti-smuggling measures, harassment and reported attacks against Libyans transiting through Ben Guerdane after Tunisian smugglers disrupted border traffic. While Ras Jedir was closed, many Libyans en route to Tunisia reoriented themselves to the Dhiba border post to avoid being stuck in the border region.

Maghrebian souk market seen from afar, Tunisia.

Maghrebian souk market seen from afar, Tunisia. (Alessandra Bajec / TRTWorld)

A few days after the reopening of Ras Jedir, most Libyan travelers stopped in the streets of Ben Guerdane to buy Tunisian dinars at Sarrafas or informal stockbrokers and hurried to continue their journey.

A few who walked down a street nicknamed “Wall Street”, where most Sarrafas function, spared some of their thoughts on how the situation in Ras Jedir affected them.

“I am visiting Tunisia for medical reasons. After more than a month and a half of being closed, I don’t feel well but I am now here, thank goodness, ”Mohammed said.

“We come from a very difficult life with the ongoing fighting in Libya, Tunisia is our hope. The border must remain open, ”Fatima said.

“I have been affected by this border closure since I have less work, of course,” nodded Salah, a taxi driver who regularly takes Libyan passengers to Tunisia via Ras Jedir. “We want to keep friendly relations with the Tunisians. I hope that these problems between Libya and Tunisia can be resolved, ”he said.

Source: TRT World

About Wesley V. Finley

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