Public investment is visibly reduced to its bare minimum in Tunisia and more generally in Maghreb countries. Yet, for Keynes, it was public investment that would restart the machine, because when the state spends, it is companies that cash in.
In this architecture, the state drains resources from taxpayers, including savings, income, its transmission and its accumulation. In addition, the investment choices do not obey the usual criterion of profitability, except to consider a “public profitability.” Thus, actual ‘infrastructure’ (transport, energy, research) projects benefit so many people where what is important is not the return on investment, but the expense in itself.
This is probably why public investment in the Maghreb, especially in Tunisia and Morocco, is insufficient; therefore some catching up is necessary.
The observation was made by Doctor in Economics, Hafedh Bouakez who presented, Thursday in Tunis, the results of a study carried out on “Public Investment and Growth in Countries of the Maghreb.”
In Tunisia, the share of public investment in GDP has remained at around 3% in recent years, he said.
The study, which involved Tunisia, Morocco, Algeria and Mauritania, revealed that public investment, although does not have a direct effect on growth, plays a catalytic role for private investment, which impact is significant and direct on growth, according to the results of the study.
“Hence, the challenge not to neglect public investment,” while seeking to maintain a sustainable level of public debt, recommended Bouakez.
The expert said that the low correlation between growth and public investment is explained by what he called “the time to build,” i.e. the time required for the implementation of public investment projects.
A highway takes between 9 and 19 years to be built in America, he said, by way of illustration, hence the non-immediate impact on growth.
Governments of Maghreb countries should target areas where public investment is not likely to crowd out private investment, such as transport infrastructure, energy and health, also proposed the expert.
The study also suggested encouraging private operators under the public-private partnership (PPP) through tax and non-tax incentives (simplification of administrative procedures) and to effectively maintain the infrastructure in place. 30% of the existing infrastructure in Africa needs to be renovated, he has indicated.
Better control the process of awarding contracts to private companies to prevent fraud and embezzlement and improve the profitability of public projects are also among the recommendations proposed by the study.
The expert reminded, on this occasion, of the decline in the rate of public investment compared to GDP in Maghreb countries in recent years (2010- 2013).
He said that the situation is the same for all the four countries object of the study, with a downward trend in public investment, sometimes interrupted by episodes of investment in specific projects, such as water supply and electricity projects and the first highway projects during the 1970s and 1980s for the case of Tunisia and the urbanization plan of Rabat as well as the construction of dams in the case of Morocco.
