Interview: Bilel Sahnoun
What banking reforms would be most beneficial to the development of Tunisia’s capital markets?
BILEL SAHNOUN: In Tunisia there is a near-complete dominance of commercial banking over investment banking. Revenues from market-related services are negligible compared to loan-related services. Banks remain absent from the equity capital market even though most of them hold stakes in brokerage firms. Currently, only brokerage firms can operate in the capital markets. Reforms are required to enable financial institutions like banks and insurers to realise their full potential and boost the capital markets. They would help the building of new services and products that do not yet exist here.
The Tunisian financial market does not offer market making or clearing services at present. Nor does it offer exchange-traded funds – the kinds of services and products that only institutional investors with a sufficient level of expertise and capital can actually promote. Much of the future of Tunisia’s financial system depends on empowering institutional investors to play a greater role in developing the capital markets.
How can the BVMT encourage small and medium-sized enterprises (SMEs) to go public?
SAHNOUN: In 2015 the BVMT launched a plan to create a steering committee made up of representatives of major stakeholders in the entrepreneurial ecosystem that is dedicated to helping SMEs more easily access financing through capital markets. It defined a comprehensive programme that will help SMEs raise both public and private equity and debt more easily.
The programme will provide SMEs with adequate assistance and easy-to-read documentation that will explain the process of launching an initial public offering (IPO). In addition, it will pair SMEs with the professionals needed to support the IPO process, such as lawyers, accountants, brokers and so forth. The BVMT is also searching for donors to assist in the creation of a fund that will help with a number of the costs associated with raising funds through market mechanisms, such as launching an IPO.
What is the BVMT doing to better inform companies about the benefits of IPOs?
SAHNOUN: The BVMT has undertaken targeted awareness campaigns to further clarify the advantages of going public. The last one gathered about 60 family-owned holdings and focused on the challenges associated with business succession. Many of Tunisia’s largest companies were founded in the 1970s and remain family owned. Their founders have now reached an age when they must contemplate succession. The departure of a company’s founder compromises the viability of that company, since keeping succession among kin does not necessarily ensure that the company will remain under the control of professional management.
However, going public helps to separate ownership from management, introduce better corporate governance practices and ensure the continuation of professional management. Through these education campaigns, the BVMT has raised awareness of the ways in which going public contributes to the sustainable growth of family-founded companies.
How would you assess the main concerns of family-owned firms with regard to going public?
SAHNOUN: Family-owned firms often think twice about going public because they cannot see how the advantages outweigh the disadvantages. They fear losing control and divulging information that could help competitors. There is also an emotional component. Founders often balk at the prospect of being accountable to outsiders who did not participate in the founding of their companies. They find it hard to accept questions from shareholders about their compensation, expenses and other details. The government should also offer more tax cuts to companies that go public for the first five years after they launch an IPO.
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