Bahrain’s GFH to start $3bn Tunisia project

Bahrain’s Gulf Finance House (GFH) will start building a $3 billion financial park and real estate development north of Tunisia’s capital, a project that had been suspended for five years, the Islamic investment bank said on Monday.

The project will be one of the largest private foreign investments in the North African state, which has struggled to revive its economy since the revolution that toppled former President Zine al-Abidine Ben Ali three years ago.

A caretaker government has taken over to run Tunisia until elections later this year, ending months of crisis. But despite political progress, high living costs and a lack of economic opportunities remain the major concerns for many Tunisians.

GFH’s project was scheduled to begin in 2009, but financial difficulties at the Islamic bank and Tunisia’s 2011 uprising froze several large-scale projects.

“The $3 billion project will start on March 15, today we will sign an agreement with the Tunisian contracting companies to start practical implementation of the project in a few days,” Lotfi Zar, the executive director of the project, told Reuters.

The site will contain a corporate center, an investment banking and advisory center and an insurance area. It will also include homes, offices, a golf course, a business school and trade centers.

It is expected to create 17,000 jobs, according to Bahraini officials.

GFH, created in 1999, has invested billions of dollars in infrastructure development projects in the Middle East and North Africa.

The project, known as Tunis Financial Harbour and billed as the first financial park in North Africa, would cover 450 hectares in the Raoued suburb of Tunis.

Tunisia has promoted its lower labour costs to entice manufacturing and services businesses from nearby Europe, but economists say it needs to improve an outdated banking sector to make the most of new investment.

A political transition following the revolution is almost complete, Tunisia hopes to attract more foreign investment to drive economic growth and create jobs in a country where the unemployment is at 15.1 percent.

Lacking any major natural energy resources like neighboring Algeria and Libya, Tunisia’s economy is heavily reliant on agriculture, tourism and foreign remittances.

Prime Minister Mehdi Jomaa said this month he would seek more financing help and attract investors from Gulf countries, Europe and the United States to help offset larger borrowing needs because of the country’s budget deficit.

He said Tunisia’s external borrowing needs this year would be nearly double previous budget estimates at around $8 billion, mainly because of rising public sector pay.