Coronavirus Exacerbates Poverty Crisis in Tunisia

Fatima Badri
Tunisian Journalist
Published on 10.04.2020
Reading time: 8 minutes

Numerous financial difficulties face thousands of Tunisian workers who were forced into unemployment by the quarantine order.

A young Tunisian day labourer (with a salary that does not exceed 351 Tunisian dinars, equivalent to 125 USD, without legal cover) set himself on fire for not receiving social assistance payments he was desperately in need of, and which the state allocated for poor Tunisians, in order to help them through the coronavirus pandemic. The tragic event reveals the dire financial situation of thousands of Tunisian workers who were forced into unemployment due to the general quarantine imposed on the country. This situation is worsening to a point where they may become unable to feed their families.

Tunisian authorities adopted measures to mitigate the effects of coronavirus on the lives of workers and financial institutions, allocating 300 million dinars to assist the unemployed, and crediting businesses with 500 million dinars to enable them to acquire new loans in order to keep on working. Despite their importance, such moves stop short of the required level, for several reasons. First, the funds allocated to struggling families are insufficient. Secondly, the support excludes many categories of poor families who have lost their sources of income due to the quarantine.

Abdul-Aziz Ojaily, (Sidi Bouzeid, mid-west) is a construction worker and a father of four children living in such a difficult situation that he can’t feed his children after losing his job and having no source of income to cover his expenses.

Abdul-Aziz said, “I had to stay home after the government imposed quarantine so I lost my only source of income by which I provide for my family. I’m like many others in internal areas who work for small-scale contractors without legal status. Sometimes we get paid daily, sometimes weekly, other times monthly. As long as we’re working, we can eat and provide for our children, but if we stop working for any reason, we have no source of income.”

“I spent my few savings, and I can no longer buy food for my kids, were it not for the help of my neighbours and family. I couldn’t pay 5 dinars (1.8 USD) to go to the post office to receive the 200 dinars that the state allocated to help the poor. I don’t know what will happen to my family if the coronavirus crisis persists for a longer time”.

The problem Abdul-Aziz is facing was made even worse by the severe shortage of food supplies in his region, therefore, even those who offer them food aid may not be able to continue under the pressure of this severe shortage, and the government’s inability to take a firm stance to combat monopolizers, or to handle this problem seriously, especially in rural areas.

There is a great number of day labourers in Tunisia, who receive their wages on a daily or weekly basis, and are facing the same problem. Quarantine means that they would not have any source of income, and would not be able to get their basic supplies.

The situation is the same with Rawda, a divorced lady who is the breadwinner for her two children. She works at a public bath in the city of Kairouan. She found herself exerting a lot of effort and facing the danger of getting infected in order to provide for her children, after the bath closed its doors due to the current situation.

300 million dinars have been allocated to assist the unemployed, as well as crediting businesses with 500 million dinars to enable them to acquire new loans in order to keep on working.

“After my divorce,” said Rawda, “my husband refused to pay the children’s expenses, so I started working at the public bath. Despite the low wage, it paid the bills, especially school tuition. As soon as the general quarantine was announced, I realized I would face a huge problem, which led me to think of other solutions. I had no other source of income, I only had my daily wage, and we’ll be running out of food soon”.

Rawda called some of her clients at the bath, and offered to clean their homes during quarantine in order to gain some money to feed her children. But due to the coronavirus fears, she did not find many clients.

Part of the exceptional measures, the government had announced that loan installments could be delayed six months for low-income employees who earn no more than 340 USD per month, in addition to offering financial support for poor families.

The coronavirus crisis is expected to exacerbate the suffering of the poor in Tunisia amid international reports predicting an increase in poverty rates. A World Bank report saw a new middle class group, exhausted by the economic confusion and political instability in the country, join the poorer classes. The ‘newly-impoverished class’ expected to appear are those who were severely harmed and lost their savings during the past few years. They include junior employees in both public and private sectors, small business owners, factory workers and freelancers.

Families whose monthly income does not exceed 800 dinars (about 280 USD, double the minimum wage) are the most likely to fall below the poverty line.

Official statements of the Ministry of Social Affairs estimate the poverty rate in Tunisia at 15.2 %. According to the National Statistics Institute, the number of Tunisians below the poverty threshold has reached 1.7 millions, from a population of 11 millions.

“I spent my few savings, and I can no longer buy food for my kids, were it not for the help of my neighbours and family.”

Tunisian economic expert, Moez al-Joudi, said, “We’re talking about 623000 low-income Tunisian families who will be receiving financial support, while the actual number is much higher, especially if we add to them the day labourers who have lost their sources of income during this period. Those are not counted among the poor, but due to the current crisis, they became so.” He added that “poverty rates will increase after the quarantine due to the expected decline of investment around the world, and the deterioration of many sectors which constitute income sources for many people.”

Although al-Joudi praised social initiatives to assist the poorer classes, estimated by 200 dinars per family, he believes it is only a temporary solution, and if the quarantine continues for much longer, its effectiveness will be on the wane, and the losses enormous. Tunisia may even witness social congestion among the categories who will lose their source of income.

There are fears in Tunisia that the situation will worsen and turn into chaos if the quarantine period is prolonged. The regions of Tadamon and Moneihala, in the Ariana province (northeast, near the capital) had witnessed a state of congestion among the locals, as a result of the delay of disbursing social assistance payments which the government had allocated for low-income families to help them face the consequences of the pandemic. During the protests, a number of citizens blocked main roads and burned car tires, denouncing payment delays, while others tried to break into an official building, but security intervened to stop them.

It is worth noting that Tunisians have suffered price surges during the past few years, which led to the decline of their purchasing power by more than 40%.

Quarantine means that they would not have any source of income, and would not be able to get their basic supplies.

Among the expected consequences of the quarantine, according to al-Joudi, is an 8% inflation due to the disequilibrium of demand and supply.

Al-Joudi also expects that economic growth in Tunisia in 2020 will be negative, in the range of -2%, a rate that the country had not reached since 2011. This may lead to the inability of the state to fulfill its financial obligations, and may resort to loans, although this step will lead to increasing debt, which has already reached extreme levels (75%). Moreover, this may create a deficit in the state’s budget that may exceed 5%, according al-Joudi.

The World Bank had issued a statement declaring that the sixth and seventh installments of the loan given to Tunisia, estimated by 2.8 billion dollars and extending over a period of 5 years, from 2016 to 2020, will be suspended, awaiting progress in implementing economic and structural reforms, some of which Tunisia has failed to achieve.

The economic expert adds that the small and medium enterprises – the base of the Tunisian economy – will be the most affected, as a result of not having large savings, and because their income is directly related to work and investment. Therefore, in case this situation persists, some of them may be forced into bankruptcy, despite the importance of the measures taken by the government to delay tax payments and fees, and flexibility in dealing with bank loan installments for institutions.

It is worth noting that the government announced measures to help institutions cope with the effects of the Corona crisis, including setting a 500 million dinars line of credit to enable institutions to get more loans to work with, creating investment funds of 700 million dinars to restructure the harmed institutions, and allowing export companies to raise the rate of local marketing from 30 to 50%.

The decline in exports and tourism is one of the biggest challenges that threatens the Tunisian economy after the closure of seaports, land and airports to help stem the spread of covid-19.

Observers say that the losses of the Tunisian economy due to coronavirus would probably be between 2 and 6.6 billion dinars (0.66 to 2.2 billion USD).

Fatima Badri
Tunisian Journalist
Published on 10.04.2020
Reading time: 8 minutes

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