Tunisia: Boost to microfinance
Having seen industrial foreign direct investment (FDI) in 2012 return to 2010 levels, Tunisia is looking to establish large-scale industrial and service projects that could bode well for economic recovery and export revenues – both of which are crucial given that national unemployment hovered around 18% in the waning months of 2012. A number of efforts to stimulate job creation from the bottom up, including new initiatives to support small and medium-sized enterprises (SMEs), are underway.
One such project aims to develop microfinance offerings, which are well established but limited in scope. Two main actors, Enda Inter-Arabe and Banque Tunisienne de Solidarité (BTS), lead the sector, and there are also a number of small-scale operators. Enda, a microfinance-specific institution, ended 2012 with 211,728 active clients with outstanding loans and a global loan portfolio of TD135.4m (€65.3m). Consensus is growing that microfinance stands to play a greater role in supporting SMEs and independent producers.
In mid-January the EU’s Tunisian delegation signed a €1.8m financing agreement with France-based MicroCred Group to establish a Tunisian subsidiary, MicroCred Tunisie. In addition to small-scale loans geared towards individuals and businesses that have been excluded from the formal banking system, MicroCred Tunisie is also expected to provide coaching for entrepreneurs to conceptualise and launch their own businesses.
Total project costs are expected to reach €3.6m and will be co-financed by the EU, international financial institutions and local partners, including Tunisian banks and private industrial groups. Project partners aim to reach 250,000 microcredit beneficiaries in the first five years, of which 150,000 are slated to be in under-developed regions in the interior.
Tunisian actors are also taking steps to boost conventional banking services available to SMEs. On January 2, the Tunisian Financial Bank for SMEs (Banque de Financement des Petites et Moyennes Entreprises, BFPME) signed three conventions with the Islamic Corporation for Private Sector Development (Société Islamique pour le Développement du Secteur Privé, SIDSP), the private sector arm of the Islamic Development Bank, which aims to improve funding sources for small businesses.
Under the first convention – a renewable agreement valid for five years – the SIDSP will provide a technical cooperation fund of TD350,000 (€168,630) to help the BFPME develop its service offerings. The SIDSP will provide advisory and technical assistance in the introduction of new Islamic banking products and services aimed at Tunisian SMEs.
Under a second convention, the Tunisian government and the SIDSP will create a joint fund, “Theemar,” which will be managed by United Gulf Financial Services North Africa, a subsidiary of United Gulf Bank based in Tunisia. The three parties will jointly disburse Theemar funding for SME projects. The joint management is meant to foster the exchange of expertise on risk evaluation and support for the development of SMEs.
In addition to strengthening SME output and activity in the hopes of encouraging job creation, the government is also working to channel public spending in the interior, where a lack of economic opportunities, high levels of unemployment and weaker infrastructure contribute to social discontent. New investments announced in developing interior regions dropped by 4.3% in 2012 to TD1.61bn (€775.8m). To boost this, the state is offering investment premiums for industrial projects launched in key development areas in addition to 10-year tax breaks, special workforce exemptions and capital transfer incentives in industrial zones.
In 2012 the state budgeted TD176m (€85m) for a total of 286 development projects in Kasserine, a province in the centre-west along the Algerian border. Infrastructure building, including bridge construction and the renovation of the railway running between Tunis and the city of Kasserine, is slated to receive TD44m (€21.2m). Several of these projects, totalling nearly TD19m (€9.2m), are focused on improving educational offerings in the region, including the introduction of professional training programmes to help residents match their skills with existing opportunities in the labour market. Another project sets aside TD139,000 (€67,000) for the redevelopment of industrial zones in the area.
The economic development of the interior is a long-term goal but the effort to concentrate resources and boost investment in the area should help to make progress. One of the key challenges is to stimulate job creation; by focusing on high-priority areas and increasing the funding available to small-scale and local businesses, Tunisia is taking steps to create a solid base for economic growth in coming years.