SHORT-TERM CONSULTANT REPORT: JOBS, OPPORTUNITIES, & BUSINESS SUCCESS PROJECT (JOBS)

CONTRACT NUMBER: AID-664-C-17-00001

MARCH 8 - 17, 2019

Ibrahim Osta

Implemented by:

Chemonics International Inc. 1717 H Street NW Washington, DC 20006 Telephone: (202) 955-3300

This report is made possible with the support of the American People through the United States Agency for International Development (USAID). The contents of this report are the sole responsibility of Chemonics International Inc. and do not necessarily reflect the view of USAID or the United States Government.

ACRONYMS COP Chief of Party CDCS Country Development Cooperation Strategy DO Development Objective GOT Government of Tunisia JOBS Jobs, Opportunities, and Business Success SOW Scope of Work STTA Short-term Technical Assistance USAID United States Agency for International Development USG United States Government

A. PURPOSE OF CONSULTANCY The purpose of this assignment is to conduct a rapid assessment of levers that can catalyze sustainable and responsible tourism development with a focus on increased income to Tunisia and expanding job opportunities and employment for its residents. Consultations were held with stakeholders from the hospitality, inbound tour operator, food and beverage and associated industry sectors. The objective is to identify trends, factors for success and areas needing support that will and highlight major SME development, employment and job creation needs and opportunities at Tunisian establishments.

B. PROGRESS MADE AGAINST OBJECTIVES OF CONSULTANCY

The JOBS team organized a rich program of activities designed to provide an overview of Tunisia’s tourism potential and key challenges that impede growth, development and job creation. This included meetings with public sector representatives, industry associations, including three focus groups, and meetings with tourism investors, professionals and entrepreneurs from diverse subsectors of the industry. The diversity of views heard was enriched by the geographic diversity of the program, having visited , Hammamate, , Kairawan, and , Mehdiya, and several other locales. Informants interviewed were eager to share their views and concerns, and expressed true interest in and hunger for assistance. Their frankness allowed for clearer understanding of the key issues challenging Tunisia’s tourism sector and identified bright spots that may unlock growth with targeted assistance.

C. KEY OBSERVATIONS Tunisia’ tourism industry is one of its most promising sectors that can rapidly propel economic growth in the country. It is one of the largest earners of foreign exchange, source of employment, and small and medium enterprise (SME) development. The year 2010 was a landmark year for Tunisia tourism, and since then the industry has experienced severe decline in arrivals and revenue primarily due to internal political and security influences. During this period, Tunisia tourism suffered double-dip crises, one resulting from the 2011 revolution and the second, more impactful incident, was the 2015 terrorist attacks in Tunis and Sousse that essentially brought the industry to a halt. Since 2016, inbound tourism into Tunisia has been on the rebound and in 2018 arrivals stood at a 8.3 million visitors, an all- time high. Yet tourism revenue remains low, with 2017 earnings (most recent available data) are under 2010 figures.

Tunisia Visitor Arrivals & Tourism Receipts Generated Year 2005 2010 2015 2016 2017 2018 Arrivals (Million) 6.4 7.8 5.4 5.7 7.1 8.3 Arrivals % Increase/Decrease 22% -31% 6% 25% Receipts (Billion) 2.143 2.645 1.381 1.236 1.304 Receipts % Increase/Decrease 23.4% -47.8% -10.5% 5.5% $ $ $ $ $ Average spend per person per trip 335 339 256 217 184

The recovery is credited to selling the destination and floor prices. This is predominantly due to the country’s overreliance on beach all-inclusive tourism, the lowest-yielding segment

1 | TOURISM ASSESSMENT TRIP REPORT (IBRAHIM OSTA): TUNISIA JOBS in world tourism markets. Sustainability of the recovery is also risky due to shaky industry resilience, weak international destination communication capability and poor overall industry competitiveness.

Public and private sector institutions are weak and there is lack of coordination among its actors. Its public and private sector institutions project great enthusiasm and drive but exhibit a chronic lack of capacity. Tunisia suffers from an absence of an agreed national strategy for tourism development or a sharp international destination promotion positioning and approach. Workforce development is needed across the board from entry-level to professional, supervisory and managerial. Governance of the sector requires modernization, including laws, regulations and institutional arrangements among national tourism actors. Despite these weaknesses, tourism entrepreneurs are innovative and, while tourism income has dropped, many have shown resilience over the past eight years to stay afloat, relying on domestic tourism and opportunistic international arrivals for survival. With a clear strategy, Tunisia has a wealth of cultural, natural and geographic attributes that can enable it to dramatically expand its share of more lucrative international tourism and fuel broad-based economic growth and job creation.

Tourism is currently on the rebound and will continue to grow, requiring skilled workforce, an opportunity for job creation and preparation of prospective workers for new employment opportunities. The global market in the cultural, adventure and MICE segments is rising, presenting a direct fit with Tunisia’s under-promoted assets. Pursuing these markets with vision and skill will allow Tunisia to move up market and attract higher- spending visitors, leading to wider geographic and socioeconomic spread of benefits.

D. ISSUES AND/OR PROBLEMS ENCOUNTERED

There were no problems detected that might have hindered the assignment.

E. EXPECTED FOLLOW-ON ACTIVITIES AND/OR NEXT STEPS

Tunisia JOBS has an opportunity to make a transformational contribution to Tunisia’s tourism industry by capitalizing on interest from the government and partnership with the private sector. The results can be large scale job creation, employment and attraction of foreign exchange. Toward this goal, a detailed report will be developed outlining key findings and recommendations section for USAID consideration to be undertaken under the JOBS project, including:

• Identifying high-level growth opportunities and impediments to growth in the tourism/hospitality sector that may inform policy reform advocacy agenda • Proposing for USAID consideration potential technical assistance areas JOBS may be able to support tourism sector enterprises with that would contribute to JOBS results, mindful of the following themes: • High-level recommendations for assisting Tunisia transition from a predominantly mass beach tourism market to higher-yielding visitor profiles from the culture, adventure and business segments • Workforce development initiatives, including skilling, upskilling and job matching • Enhanced visitor experience development through improved products and services to be provided by entrepreneurs and SMEs

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