An investment-grade country with the second-highest per capita income in the Middle East and North Africa, Tunisia might seem to be easy ground for privately financed infrastructure projects. Yet as recently as February 2008, one of its highest priorities in infrastructure— a circa. $900 million airport project—was still in finance.
Based on a 40-year concession, the project could not be financed solely by commercial banks. Its sponsors turned to IFC, and the deal was completed in less than three months.
A short hop from Europe, Tunisia has built a strong tourism industry around its Mediterranean beaches, ancient historical sites, among other attractions. Tourism is a major job-creator, helping this otherwise resource-poor nation become one of the highest-ranked emerging markets in the World Economic Forum’s Global Competitiveness Report. But its main tourism gateway, Monastir International Airport, dating back to the 1960s, had reached saturation, limiting the industry’s growth potential.
Needing a new approach, in 2007 the government awarded a Turkish firm, TAV Airports, a concession to upgrade Monastir Airport, build another at nearby Enfidha, and manage both. But commercial banks could not provide loans with tenors long enough for a major project with high upfront costs and extended payback periods in Tunisia. When IFC stepped in, lending at substantially longer maturities than commercial banks could, and working with government counterparts to make the concession agreement more bankable, the project’s financing moved swiftly and closed two and a half months later. ABN Amro, Société Générale, and Standard Bank worked alongside IFC as lead arrangers and syndication partners.
With financing secured, one of the largest private investments in Tunisia’s history is now in place. It will brings benefits to all, providing improved service for tourists, a profitable business opportunity for TAV, and an estimated $5 billion in taxes and concession fees that the government can reinvest in health, education, and other priority sectors over the next 40 years.
