ON a good day Abdenaceur Hammoudi takes home 15 dinar ($10) from selling fruit in the Tunisian coastal town of Tabarka. Since the overthrow of president Zine el-Abidine Ben Ali last January, municipal inspectors no longer demand a three-dinar-a-day bribe. But prices have risen sharply and Mr Hammoudi now pays wholesalers almost double for his supplies. Customers have become scarce and loans are as hard to come by as ever. “The government needs to build factories to bring us proper jobs,” he says.

A year ago the self-immolation of a Tunisian fruit seller, Muhammad Bouazizi, inspired uprisings that toppled the leaders of Egypt, Libya and Tunisia, and caused violent chaos in Bahrain, Syria and Yemen. The protests were motivated not just by demands for greater political freedom but also by popular frustration with unemployment and economic stagnation.

Mr Bouazizi, who could not afford a trading licence, set himself on fire after officials confiscated goods of his worth about $200. Whatever its political triumphs, the revolution he sparked has caused an economic downturn. Tunisia saw its GDP growth in 2011 go from 3% to 0%, according to the IMF—the Tunisian government says the economy actually contracted by 1.8%. Egypt saw a decline from 5% to 1%. Libya's economy is thought to have contracted by more than 50% after its six-month civil war paralysed the oil industry. A former Libyan bank governor reckons the country suffered as much as $15 billion in damage during the conflict to oust Colonel Muammar Qaddafi.

Inflation is on the rise, though exact figures are hard to find. Worried Egyptians are depositing far less money in their banks, fearing a devaluation of the currency. Unemployment is also rising fast. One estimate sees an increase in the official rate from 10% to 15% in Egypt. Youth unemployment is reckoned to be at least 25%.

Tourism, on which some 15m Egyptians depend, has been harmed, too. Workers in once-busy resorts on the Nile have flocked to Cairo, the capital, hoping to pick up menial work. In Tunisia many hotels remain closed. Having bought one in a fire sale, a new owner says, “I'm buying the walls, nothing else.” He dismissed all the staff.

Foreign investment has been hit hardest of all. A Tunisian analyst reckons 120 foreign firms shut up shop, cutting 40,000 jobs. Yazaki, a Japanese cable manufacturer, pulled out of a poor rural region. Overall foreign direct investment dropped by more than a quarter (see chart). In Egypt it plunged from $6.4 billion in 2010 to $500m last year; in Libya it dropped from $3.8 billion to almost nothing. A few foreign companies have signalled an interest in coming back. Italy's Eni, an energy giant, says it will invest $600m in Tunisia this year. Thanks to its existing investment in health care, the country also has hopes of attracting medical tourists from Europe and the rest of north Africa, where facilities are abysmal. In Libya construction and oil companies are falling over themselves in a race to rebuild what will probably be a wealthy country. Cities like Misrata that were destroyed in the fighting need immediate attention. Executives speak of a “gold rush”. The United Arab Emirates, France and other countries that supported the rebels have sent official business delegations. Many entrepreneurs see unprecedented potential under new governments accountable to their people. The toppling of dictators could open up the private sector, once reserved for those with ties to the ruling circle. Tunisia has a well-educated workforce and decent infrastructure. Libya has the world's eighth-largest oil reserves; the flow is expected to reach 2010 levels later this year. Egypt has a large domestic consumer market. “There is great excitement. Not every day do you get countries which have been under an autocratic regime for 42 years suddenly opening,” says Kevin Virgil, an investment adviser who hopped on a plane to Tripoli the day Qaddafi was killed. Nonetheless few deals have been signed and most investors remain on the sidelines.

Why they faltered

There are four main reasons for the economic downturn in the post-revolution countries. The first is instability, both imagined and real, that has driven away customers and undermined business confidence. Post-revolution Libya is largely lawless. Young, unemployed men with guns roam the streets. Security firms are decamping from Baghdad to Tripoli. Tattooed former soldiers populate the breakfast rooms of reopened business hotels.

In Egypt the discredited police force has withdrawn from many districts, leaving control to local youths (at least 73 people died in a riot after a football match on February 1st). George Bahna, who runs an engineering-services company, says he abandoned a large project near the city of Suez when locals raided his warehouse and fought gun battles over control of his property. “They stole the metal doors at the entrance,” he says.

Even relatively stable Tunisia has seen continuing disturbances. In the country's north-west, roads were blocked by angry protesters in January. The government has recorded a total of 330 sit-ins and other protests in the first three weeks of this year over a lack of government services.

The second cause of the downturn is strikes. Workers feel able at last to vent their frustration after years during which they feared repression. Owners report that in many places employees demand more pay and the replacement of managers who have supposed ties to the old regime. “When a strike takes place they have no united leadership, so you're dealing with 60 people tugging at your jacket asking for this and that. And when you've made concessions and you think you've resolved it, it all begins again after a couple of months,” says one owner. Civil servants have also been making demands for higher salaries and the replacement of their bosses. Fayza Aboul Naga, Egypt's minister for planning, has said the country is in “no shape to respond to the demands”.

The poor state of the government machinery is a further reason for the downturn. In many areas the state has either ground to a halt or been overwhelmed by rapid change. Egypt has had four finance ministers in the past year. Businessmen complain of red tape becoming “even redder” as corrupt bureaucrats down tools since they no longer dare to demand bribes. In Libya, where the state barely existed under the paranoid Qaddafi, many institutions have to be built from scratch. Diplomats say 2012 is “year zero”. In all three post-revolution countries, new leaders—who for the first time face legal accountability for their actions—are reluctant to sign off on projects, afraid that they may later have to answer questions in court. This is especially common in Libya, where the National Transitional Council says it will not ink any long-term deals until an elected government is in place.

The final reason for the downturn is the chill that has descended over all businesses connected to the previous rulers, especially privatised ones. Some sales of state assets are rightly seen as acts of plunder. Even where the regimes instituted painful but necessary reforms the benefits mainly went to insiders, leading the public to associate privatisation with crony capitalism. Now that the old rulers have left, their successors are going after some of their cronies, piling on yet more uncertainty.

Libya's new rulers have said they might revise certain oil contracts. Tunisia has confiscated over 300 companies deemed to be owned or controlled by the discredited cronies, including a 51% stake in Orange Tunisie, a telecoms firm, that was owned by Marwan Mabrouk, the son-in-law of the deposed president. In Egypt wrangling continues over deals made under former President Hosni Mubarak; Damac Properties and Al-Futtaim, two property companies, have agreed to make additional payments for land they bought cheaply from the government in 2006. A senior executive at a property-development firm in Cairo says, “We had to take out ads after the revolution to tell people that we are a major employer, and we received threats from people who wanted to blackmail us.”

The new rulers

Many local businessmen hope that new governments can dispel the gloom. Alas, ministers are preoccupied. Egypt, Libya and Tunisia all face fiscal crises. Tackling them is the first order of business for new ministers. Egypt is the worst off. Its foreign-currency reserves have dwindled, from $36 billion to $10 billion in the past year, and an inflation-inducing devaluation is looming. The government is struggling to finance a budget deficit of 10% of GDP. In January the government managed to sell only a third of a planned $580m bond offering, even though it will be paying yields close to 16%.

The IMF says it stands ready with technical assistance and loans to balance the books and rebuild foreign reserves. It is negotiating a $3.2 billion loan with Egypt that would send a good signal to investors. The IMF is also offering help to Tunisia. Libya is still waiting for the unfreezing of $170 billion in Qaddafi-era deposits abroad.

Most of all the new governments want foreign investment. Abdullah Dardari, a UNESCO economics adviser and former Syrian government minister, says oil-producing Gulf states could easily and profitably invest 10% of their sovereign-wealth funds in north Africa to promote growth and regional stability. “Countries should look at regional ties,” he says.

How soon investors return partly depends on the policies of the new governments. They are mostly made up of moderate Islamists who spent decades in opposition to authoritarian rulers—which makes them suspicious to both the West and the Gulf. In public so far the new governments have emphasised their support for free markets and property rights. They say they look to economically liberal Turkey for inspiration.

Nevertheless the priority for leaders in Tunisia and Egypt is popular concerns, such as cleaning up corruption, creating jobs and investing in new roads and schools. Tunisia's government has vowed to raise growth to 8% and reduce unemployment from 19% to 8.5% by 2016. Egypt says it will restructure and boost private enterprises such as textile factories that employ some 70,000 workers.