Targeted funding programme attracting small and medium-sized enterprises to Tunisia's alternative market


Despite their significant presence in the Tunisian economy, SMEs continue to face difficulties in financing their development. Aware of these challenges, the authorities are looking to provide SMEs with alternative sources of financing outside of the banking sector, which has been limited in its ability to finance such enterprises. To this end, the Tunis Stock Exchange (Bourse des Valeurs Mobilières de Tunis, BVMT) is currently developing a new programme with international partners that aims to attract over 100 SME listings in the coming years.


According to a study from North African advisory firm Sigma Conseil, although SMEs accounted for about two-thirds of Tunisia’s economic activity in 2014, over 70% claimed to be dissatisfied with their access to financing. In the eyes of many market observers, the banking sector, which represents the single largest source of private investment financing in Tunisia, still does not adequately finance SMEs (see Banking chapter).

“This is in part because of the high collateral required by banks before lending to SMEs in order to cover risk,” Hamdi Ksiaa, director of communications at the Banque de Financement des Petites et Moyennes Entreprises (BFPME), told OBG. “Banks mostly lend to large companies, and to a certain extent to individuals, while SMEs are left with very few options in the current system,” Ksiaa added.


As in many markets, the bourse seeks to offer an alternative to bank financing. The BVMT’s alternative equity market, mainly targeted at SMEs, was launched in 2007, but since its inception it has failed to attract a significant number of companies. By the end of 2017 only 13 SMEs were listed on this market, compared to the 100 the BVMT is aiming to attract in the coming years. According to market observers, several barriers may be responsible for the lack of listings. “Retail investors who dominate the small board without properly understanding it have contributed to the poor reputation of this market, especially in the eyes of SME owners who are, by nature, cautious to open their firm’s capital. The process of an initial public offering (IPO) is highly constraining and time consuming, and many SMEs do not have the necessary resources to go through it,” Salma Zammit Hichri, head of the research and analysis department at brokerage MAC SA, told OBG.

Part of the issue also lies in the transparency requirements for listed companies, which some SMEs may be reluctant to implement. “The regulations, which stipulate an SME must go public after a certain debt limit is reached, are not respected by many SMEs,” Lotfi Khezami, head of the BVMT’s communications department, told OBG.

Partnering Up

Strategic partnerships could help SMEs as they consider and navigate their entry into the financial markets. In late 2017 the UK announced a funding programme to support access of high-potential SMEs to non-bank financing through financial markets with a contribution of £2.5m to be managed by the African Development Bank. “The programme will provide technical and financial assistance to 120 companies to help them access non-banking sources of financing, via the alternative equity market, the corporate bond market or venture capital operators,” Khezami told OBG. In the meantime, the BVMT is looking to implement additional measures to support SME listings, Khezami said, including easing market entry requirements.

“The programme is a good step towards deepening the alternative market, in that it will offer assistance to SMEs during the lengthy IPO process, and will incentivise companies to improve their governance and profitability, while encouraging institutional investors to invest in the alternative market, which in turn will bolster its reputation,” Rym Gargouri Ben Hamadou, director of the corporate finance department at Tunisie Valeurs, told OBG.

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The Report: Tunisia 2018

Capital Markets chapter from The Report: Tunisia 2018

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