Tensions between rival armed factions in Libya have flared up again in recent days, particularly near the Tunisian border at Ras Jedir.
This upsurge in violence is having a detrimental effect on the local population, many of whom depend on cross-border trade in the region for their livelihoods.
As a result of these tensions, Ras Jedir, the main crossing point between the two countries, has been temporarily closed for security reasons. This decision will undoubtedly have a negative impact on the Tunisian economy.
A loss of revenue of 180 million dinars!
According to a study entitled ‘The repercussions of the closure of Ras Jedir on the national economy’, published by the Arab Institute of Business Managers (IACE), the closure of the Ras Jedir border crossing between March and July 2024 will cost the Tunisian economy 180 million dinars in lost export earnings.
This shortfall could rise to around 300 million dinars by the end of the year if traffic through the crossing does not return to normal and queues remain too long.
In addition to this loss of revenue, the study points to a significant impact on companies that export their goods through the Ras Jedir border crossing, citing the construction and public works sector, cement, agricultural products and other products such as shampoo and nappies.
In this context, the IACE called for greater coordination with the Libyan side in order to find the right solutions to facilitate the movement of goods and people without risk.
The IACE has also stated that the closure of the Ras Jedir border crossing has penalized the movement of goods, whether legal or illegal, and this has certainly had a cost for consumers of this type of product, creating a shortage. When demand exceeds supply, prices rise.
Need to strengthen Tunisian-Libyan cooperation
To minimize the risk, the IACE has called for closer cooperation between the two countries to ensure efficient management and improve traffic flow and security, by modernizing the infrastructure at the Ras Jedir border crossing and creating electronic platforms to speed up the process, but also to simplify customs procedures and reduce bureaucracy.
According to IACE, it is also necessary to offer benefits to SMEs operating in the south of the country in order to reduce the weight of the parallel market and its detrimental effects on the country’s economy.
The IACE study also found that while the closure has helped to minimize the weight of the parallel market and smuggling in the south and west of Libya, it has opened up another border crossing with Algeria, resulting in a loss of revenue of almost 1,200 million dinars, according to the World Bank.
In its recent study ‘Cronyism, economic performance and inequality of opportunity’, the World Bank had already estimated that the scale of informal trade flows through the Ras Jedir border crossing was significant, with some 600 million dinars worth of products entering Tunisia informally from Libya via Ras Jedir each year.
This represents a profit of around 120 million dinars for the traders involved in this cross-border trade, although the level of profit varies considerably depending on the type of goods transported.
Fuel trafficking is the dominant activity, accounting for 10% of the value of illegal sales and 30% of the profits.
According to the same source, between 200 and 300 of these commercial vehicles cross the border every day.
To these must be added the 500 to 600 (or more) cars carrying fuel and small goods (mostly small electronic devices and clothing).
Finally, some 150 to 200 Libyan 38-tonne trucks also cross the border into Tunisia.
