Think small: More banks are looking to improve funding for small and medium-sized businesses


As in many countries, and emerging markets in particular, Tunisian small and medium-sized enterprises (SMEs) can struggle to access bank financing. According to International Financial Corporation figures, close to 30% of Tunisian micro-enterprises and SMEs lack any form of access to credit. However, the government is working to improve such access, and a number of initiatives under way or in the pipeline should help to boost levels of financing in the coming years.

State Support

Since 2005 the segment has had a dedicated lender in the form of the Banque de Financement des Petites et Moyennes Entreprises (BFPME), which seeks to lend to industrial SMEs in particular. The bank, which receives support from a range of local and foreign partners, had assets worth TD229.8m (€98.6m) in 2015, ranking it as among the smallest banks in the country; however, its asset base is growing quickly, having expanded from TD97.2m (€41.7m) five years previously. Another state-backed institution, Société Tunisienne de Garantie, guarantees the BFPME’s loans, as well as SME lending by some other banks, obviating the requirement for borrowers to put up collateral, which is scarce in the segment.

Boosting Lending

Hamdi Ksiaa, director of assistance, identification and development at BFPME, told OBG that there had been a recent improvement in the availability of financing for SMEs from some banks in the country. “Some institutions are showing more and more interest in the sector by, for example, establishing departments specialised in SME lending,” he told OBG.

Such banks include Banque de l’Habitat, with Haykel Khadraoui, director of credit risk, evaluation and oversight at the bank, saying the bank is planning to seek more business in the segment. “We already have a significant SME business and plan to develop our SME and [very small enterprise] VSE activities further, as there is a lot of room for expansion in the segment,” he told OBG, adding that new client ratings system being developed (see overview) would facilitate this.

A range of initiatives under way should help to further boost access to credit in the segment. These include plans by the central bank to raise the level of an existing cap on interest rates, ahead of its eventual replacement with a system of caps tailored to the type of client (see overview). Khadraoui also said reforming the system could have a major impact. “There are a great deal of SMEs and VSEs that are not bankable under the current interest rate regime,” he told OBG, adding that many sought financing outside the banking system and that relaxing the rules could bring in more clients.

Government plans to develop a new state-backed regional bank, focused in particular on improving access to finance for SMEs and VSE in the interior of the country, will also help with the development of the sector. In the past few years the authorities had come close to finishing work on a draft law to establish the institution; however, the 2016 elections delayed the introduction of legislation. The launch in November 2016 of the country’s first credit bureau by Tunisian firm Mitigan should also help to boost lending to SMEs more generally by improving banks’ knowledge of their clients. The company is backed the state-owned investment fund Caisse des Dépôts et Consignations.

Alternative Avenues

As banks work to step up their activities in the segment, companies struggling to access bank credit in the meantime have several alternatives available to them. Many SMEs turn to leasing companies, which tend not to ask for guarantees, as the equipment they are financing effectively acts as collateral, and which observers say are the major source of SME credit in the country. Hassen Zargouni, chairman of the board at microcredit institution Microcred, said microcredit providers were ready to finance the wider SME segment should the lending cap of TD20,000 (€8580) imposed on such lenders be raised. “We would like to move beyond lending to micro-entrepreneurs to financing VSEs and SMEs,” he told OBG, adding that the firm was planning to launch new VSE products in 2017.