THE SHADOW ECONOMY OUTSIDE TUNIS
How Informal Markets and Businesses Operate Beyond the Official Statistics
By Barhoumi Mohamed Chaeib
Journalist & Researcher – Tunisia
ATEP MED – Arabic Digital Center for Media and Development
Introduction: The Economy That Exists Outside the Numbers
Walk through a weekly market in an interior Tunisian town and an economic reality quickly becomes visible.
There are traders selling clothing, food, agricultural products and household goods.
There are small transport operators, repair workers, seasonal labourers, street vendors, home-based producers and countless people earning an income without necessarily appearing in the same statistical and administrative categories as formally registered businesses.
This economy is not necessarily hidden in the physical sense.
It is visible everywhere.
What is less visible is its full economic weight.
How much money circulates through it?
How many people depend on it?
How many activities are registered?
How many workers have social protection?
How much tax revenue is potentially outside the formal system?
And why do so many people continue operating outside the formal economy?
These questions are particularly important outside Tunis, where formal employment opportunities and private-sector activity can be more limited and where informal activities can become an essential source of household income.
A Large Economy That Is Difficult to Measure
A major study published in March 2026 estimated the average size of Tunisia's shadow economy at 39.08% of GDP between 1988 and 2023. The researchers used a Multiple Indicators Multiple Causes model and identified factors including tax pressure, unemployment, trade openness and corruption as among the causes associated with the shadow economy.
The study estimated higher levels during major economic shocks, including 41.70% during the 2011 Revolution period and 46.62% in 2020 during the COVID-19 crisis.
These figures should not be confused with an official measurement of the entire informal economy.
They are an academic estimate based on a specific methodology.
But they raise an important question for journalists:
If a significant part of economic activity is difficult to observe directly, what does the official economic picture leave out?
Beyond the Capital
The informal economy is not a single phenomenon.
It can take different forms depending on the region.
In agricultural areas, it can include seasonal agricultural labour, small-scale production and direct sales.
In towns, it can include market traders, small workshops, repair services, transport and street commerce.
In border regions, informal cross-border trade can become particularly important.
In poorer communities, informal work may simply be a survival strategy for people who cannot find formal employment.
This means that an investigation into informality cannot rely exclusively on statistics produced in Tunis.
It needs to go to the places where the economy operates.
The Market as an Economic Observatory
A weekly market can tell a journalist a great deal about the local economy.
Who sells?
Who buys?
Where do products come from?
How are they transported?
How many sellers have formal business registration?
How many issue invoices?
How many workers are employed?
How much does a trader typically sell in a normal day?
What are the main costs?
How much income remains?
Do sellers pay taxes or social contributions?
These questions should not be used to criminalize ordinary traders.
The purpose is to understand the economic system in which they operate.
A person selling agricultural products without a formal company structure may not see himself as part of a "shadow economy."
He may simply be trying to earn a living.
That distinction matters.
Informality and Employment
The informal economy is also an employment issue.
The International Labour Organization has emphasized that informal employment is widespread globally and is strongly associated with employment vulnerability and deficits in decent work.
For Tunisia, the ILO's labour statistics provide data on informal employment by sex, age and urban/rural status, among other dimensions.
A recent ILO supervisory document citing ILOSTAT data reported an informal employment rate of 58.7% in Tunisia in 2024, with a higher rate among young people.
The number is striking, but it also needs to be understood correctly.
Informal employment is not identical to the shadow economy as a percentage of GDP.
They are different statistical concepts.
One concerns employment and the nature of jobs; the other concerns economic activity that is not fully captured by formal measurement.
A serious investigation must keep these definitions separate.
The Young Worker Outside the Formal System
For many young people, the choice may not be between a formal job and an informal job.
It may be between informal work and no income at all.
A young person may work as a mechanic's assistant, sell goods in a market, provide transport services, work seasonally in agriculture or operate a small activity from home.
The work may generate income, but it may not provide the protections associated with formal employment.
There may be no pension contributions.
There may be no unemployment insurance.
There may be limited access to credit.
There may be no formal employment contract.
This creates a paradox.
The informal economy can provide employment where the formal economy does not provide enough jobs, while simultaneously leaving workers more vulnerable.
Small Businesses Facing a Difficult Choice
Informality is not only about workers.
It also concerns businesses.
A small entrepreneur may face registration procedures, taxes, accounting costs, social contributions and regulatory requirements.
For an established company, these costs may be manageable.
For a very small activity generating limited revenue, they can become a major barrier.
The result can be a cycle:
The activity remains small because it is informal.
Because it remains informal, access to finance can be limited.
Because access to finance is limited, the business cannot expand.
Because the business cannot expand, formalization may appear too expensive or risky.
The ILO has identified enterprise formalization as an important policy challenge and notes that informal enterprises are often characterized by low productivity and deficits in decent work, while also recommending measures that make registration cheaper, easier and more attractive.
The Border Economy
In some regions, informal economic activity has another dimension: cross-border trade.
Tunisia's border areas have long experienced informal trade influenced by price differences, taxes, subsidies and market conditions in neighbouring countries.
A World Bank analysis of Tunisia's informal cross-border trade found that differences in subsidy and tax regimes could create strong incentives for informal trade. It also noted that informal trade can generate employment for wholesalers, transporters and service providers.
The lesson is important.
Informal trade is not simply a question of individuals breaking rules.
It can also reflect economic incentives created by differences between markets.
If the price of the same product is dramatically different on two sides of a border, economic activity will tend to move toward that difference.
The journalist's task is to understand the mechanism.
Where Does the Money Go?
One of the central questions for our investigation should be the movement of money.
Suppose a trader purchases goods for 1,000 dinars and sells them for 1,300.
Where did the goods come from?
Who transported them?
Who stored them?
Who sold them to the trader?
How many people earned income during the process?
How much of the transaction was formally recorded?
How much entered the banking system?
How much was paid in taxes or social contributions?
And how much remained outside formal accounting?
This approach transforms the investigation from a general discussion about "informality" into an examination of an economic chain.
The Cost to the State
The informal economy can have consequences for public finances.
Businesses and workers operating outside the formal system may not contribute to taxation or social protection systems in the same way as formal enterprises and employees.
The International Labour Organization notes that informal enterprises generally do not generate public revenues in the same way as formal enterprises and can create unfair competitive pressures for formal businesses.
But the fiscal question should not be examined alone.
If informal activity disappeared tomorrow without creating alternative formal employment, thousands of households could lose income.
Therefore, the real policy challenge is not simply:
How can informal activity be eliminated?
It is:
How can viable economic activity move gradually into the formal economy without destroying the livelihoods that currently depend on it?
What Official Statistics Can and Cannot Tell Us
Official statistics remain essential.
The National Institute of Statistics publishes regular economic and social indicators and labour-market information.
But measuring informality is inherently difficult.
The ILO and OECD have noted that measuring informality in the MENA region is complicated by limited data collection and restricted access to microdata. Tunisia has made progress in measuring informal employment through its labour-force survey, but important limitations remain.
This creates an important opportunity for investigative journalism.
Journalists can complement official statistics with field evidence.
A market survey.
Interviews with traders.
Interviews with workers.
Business registration records.
Local tax information where accessible.
Transport observations.
Agricultural production data.
Household income stories.
Banking and payment trends where reliable aggregate information is available.
The goal is not to replace official statistics.
It is to help explain what the statistics cannot fully show.
The Women Who Work Without a Shop
Another part of the informal economy can remain almost invisible because it takes place inside homes.
Women may produce food products, clothing, handicrafts, agricultural goods or other products and sell them directly or through intermediaries.
The activity may generate income without becoming a registered enterprise.
This is particularly important in rural communities.
A woman may contribute substantially to household income while remaining statistically difficult to identify as an entrepreneur.
The investigation should therefore ask:
How many women participate in these activities?
What products do they make?
Who buys them?
How much do intermediaries earn?
What prevents formalization?
Could digital commerce provide a pathway into the formal economy?
Could cooperatives or social and solidarity economy structures provide alternatives?
These questions connect the informal economy with women's economic participation and regional development.
Digital Payments and the Informal Economy
The digital transformation of Tunisia's economy also creates a new question.
Can digital payments make informal economic activity more visible?
Can online commerce allow small producers to reach customers beyond their local markets?
Can electronic invoicing and digital administrative services reduce the cost of formalization?
The ILO has examined the relationship between technology, e-government and informality and found that digitalization can influence informality in different directions. Its research suggests that e-government can reduce informality in many cases, although technology can also create new forms of own-account work and informality.
This could become one of the most interesting dimensions of the investigation.
The informal economy may not simply be disappearing.
It may be changing.
The Field Investigation
To understand this economy, ATEP MED's investigation should eventually focus on several interior regions representing different economic realities.
For each location, the research team could document:
Type of informal activity
Number and profile of workers
Estimated daily or weekly turnover where participants voluntarily provide information
Supply sources
Customer profile
Employment conditions
Access to social protection
Relationship with formal businesses
Barriers to registration
Use of cash and digital payments
Relationship with local authorities
Economic importance to households
The investigation should combine interviews with available statistical and documentary evidence.
The People Behind the Statistics
Behind every percentage is a person.
The street vendor.
The seasonal agricultural worker.
The young mechanic.
The woman producing food at home.
The small transporter.
The market trader.
The repair worker.
The family running a small workshop.
They are not simply "the informal sector."
They are people navigating an economic system in which formal opportunities may not always be accessible.
Understanding their choices is essential to understanding Tunisia's economy.
Conclusion: An Economy That Cannot Simply Be Ignored
Tunisia's informal economy is neither a marginal phenomenon nor a simple story of illegal activity.
It is a complex economic reality involving workers, families, traders, small businesses, farmers, consumers and entire local markets.
Recent research suggests that the shadow economy represents a substantial share of Tunisia's economic activity, while labour statistics indicate a high level of informal employment.
Yet the most important part of the story cannot be found in a single percentage.
It is found in the markets and streets of Tunisia's interior regions.
It is found in the workshops, farms, homes, transport routes and small businesses where people create income every day.
The challenge for policymakers is to understand why people remain informal and how formalization can become economically attractive.
The challenge for journalists is different.
It is to make this invisible economy visible without stigmatizing the people who depend on it.
The question is therefore not simply:
How large is Tunisia's shadow economy?
The deeper question is:
What would happen to Tunisia's interior regions if this economy suddenly disappeared — and what would be required to bring its workers and businesses into a stronger, more secure and more productive formal economy?
That is the investigation that remains to be done.
By Barhoumi Mohamed Chaeib
Journalist & Researcher – Tunisia
ATEP MED – Arabic Digital Center for Media and Development
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