Finding an alternative: Opportunities to boost small and medium-sized enterprise financing on the alternative market

In December 2007 the Tunis Stock Exchange (Bourse des Valeurs Mobilières de Tunis, BVMT) launched an alternative market with considerably softer entry requirements than those on the principal market. The project was set up to provide small and medium-sized enterprises (SMEs) with a means to raise the funds necessary for their development. After a decade of existence the market has made certain advances, but overall growth has been slow, with work remaining to be done to boost trading activity and listings, and ensure the continued development of the exchange.

Different Rules 

In order to encourage SMEs to seek financing on the exchange, special conditions have been adopted. While two years of profitability are required to list on the BVMT’s main exchange, no such obligation is in place for the alternative exchange. Likewise, it is possible for companies that are still in the process of being established to join the alternative exchange, whereas firms must be in existence for a minimum of three years prior to listing on the main exchange. Furthermore, there is no minimum capitalisation level on the alternative exchange, whereas a minimum capitalisation level of TD3m ($1m) is required to enter the principal market. However, inspired by the eurozone alternative fund Euronext Growth, the Tunisian alternative market requires a sponsor – certified by the capital markets authority – to help the company meet its regulatory duties while listing.


As of 2019, 15 companies had listed on the exchange: 13 remain listed, following the transfer of one firm to the main market and the removal of another firm. The market has mobilised over TD285m ($99m) from the public, including TD260m ($90.3m) in the form of a capital increase for listed companies, reflecting the priority given to issuers to finance their growth. Firms listing on the exchange have included textile firms, technology start-ups, cement companies and agri-businesses. All of these were medium-sized companies, with an average market capitalisation of around TD50m ($17.4m). However, while listed companies who have highlighted their large growth potential, the majority have yet to achieve their expected targets.

As a result, the trust between investors and entrepreneurs has eroded, and the exchange has become associated with a high degree of risk. At the same time, the companies listed on the exchange have underperformed; of the 15 listed firms, 11 saw their share price drop since joining the alternative market. This situation has been exacerbated by the predominance of small-scale, risk-averse investors on the exchange, with institutional investors showing little interest in the alternative market. Indeed, this continuing lack of appetite among institutional investors has contributed somewhat to the ongoing instability.

Results & Opportunities 

While the alternative exchange has provided SMEs with the opportunity to finance their development, the performance of the listed companies has been disappointing. The amount of capital raised on the exchange is low compared to the amount invested by the venture capital (VC) industry. According to the Tunisian Association of Capital Investors, VC investment went to 1350 companies and exceeded TD2bn ($695m) between 2011 and 2018.

Given the economic significance of improving access to finance for SMEs, a number of strategies can be pursued to boost activity on the exchange. Efforts should be undertaken to increase both the supply and demand sides of activity on the alternative exchange. Increasing demand requires a review of the eligibility of those investing in the market, to reserve it exclusively for institutional investors and provide incentives for them to hold securities beyond a period of two years. On the supply side, the BVMT, with the financial support of the African Development Bank, established the Investia PME project to help companies benefit from financing on the alternative market. A total of 120 firms are set to take advantage of the scheme, the first phase of which was expected to be rolled out in 2019.