WB Grants Tunisia USD 100 Million to Support Micro, Small and Medium Enterprises

Feb 2015
Tunisia, February, 11 2015 - The World Bank is making an additional loan of USD 100 million (nearly 193.2 million Tunisian dinars), available to Tunisia from Wednesday, in support to a government project for micro, small and medium enterprises (MSME).

The Central Bank of Tunisia (BCT) is responsible for overseeing the project.

Mr. Laurent Gonnet, World Bank senior financial sector specialist for the MENA region said in an interview with TAP that the aim of this project is to « improve Tunisian MSMEs' access to funding and allow those which earlier proved to be creditworthy to keep this access, while ensuring that viable MSMEs that were hit by the Revolution be able to recover their capacity to continue their repayment in a sustainable way. »

« This line of credit with an interest rate of 1% for the Tunisian state with a maturity of 15 years earmarks USD 25 million (more than 48.3 MTD) to funding micro-entrepreneurs. This amount shall benefit 45 thousand projects for a maturity of fiver years. »

The essential of the loan (USD 75 million) is dedicated to financing MSMEs, USD 15 million (nearly 28.9 MTD) of which will go to SMEs under patient financing (12 years of financing with a period of grace of 3 years), to be distributed by the Consignment and Deposit Fund (French: CDC) that will allocate these funds through long term convertible bonds.

Development of MSMEs will have positive impact on employment

Tunisia has nearly 624 micro, small and medium enterprises (99.7% of the country's overall companies), employing nearly 1.2 million people, i.e. 44% of the formal jobs in the private sector in Tunisia.

For this country which has 620 thousand unemployed people, « any measure aimed to support the development of these MSMEs (creation, extension, restructuring) would necessarily have a positive impact on job creation, » according to the World Bank.

Both the World Bank and the International Monetary Fund (IMF) consider in their projections that economic growth will essentially be achieved by the private sector. However, out of 1.2 million potential micro-finance customers, only 50% of the micro-credit needs are covered.

Though the additional financing line covers only a small part of the MSMEs' funding needs (nearly 2%), this line « comes at the right time to contribute to keep the flow of credit for the latter, » said the World Bank.

Mr. Gonnet said the selection of banks eligible for the credit line is made on the basis of the non-performing loans ratio, own funds and provisions in the event of loss.

This additional loan approved by the World Bank on April 17, 2014 seeks to meet the needs of micro-enterprises that had not been served in the first project carried out in 2012.

That project was a line of credit of USD 50 million (69 MTD) granted by the IBRD to Tunisia and that was disbursed in 12 months.

The World Bank specialist said the « swift disbursement shows a problem of liquidity of Tunisian banks. »

Five banks (AMEN BANK, ATB, BFPME, BIAT, BTE) and four leasing companies (ATL, CIL, TL, UBCI) have used this line of credit that helped finance 172 SMEs (an average SME employs 42 people). 12% of the bank loans benefitted women entrepreneurs and 20% were provided to projects in disadvantaged regions.

The line of credit with a maturity of 17 years has generated 1,538 new jobs which is a significant impact according to the WB specialist who stressed that the doubling of the 100-million-dollar loan should allow to increase job creation twofold (45 thousand micro-projects, representing as many jobs).

This first line had also mobilised fresh investments of 105.5 million dinars and helped achieve 221 MTD of additional turnover (38% for export).

Most of the projects (124) are expansions and 29 involve creations in manufacturing industries, trade, transport and telecommunications which reflects the structure of the nation's GDP.

Goal: developing micro-finance

Speaking of the amount allocated to micro-finance (USD 25 million), Mr. Gonnet considered that « the development of micro-finance is now possible in Tunisia with the establishment of a well designed legal framework and an independent micro-finance control authority (French: ACM). »

The BCT and ACM have agreed to have a unique credit bureau to ensure a healthy development of industry and micro-finance.

While, in the past, micro-credit institution « Enda » was the sole interlocutor in terms of micro-finance, the country now has nearly five licensed micro-finance institutions, besides 280 micro-credit associations the funding of which by the Tunisian Solidarity Bank (French: BTS) was cut.

The expert noted that only 80% of the loans granted by these associations are recovered against 98% required by the international standard.

He suggested speeding up the restructuring of these 280 associations so that at least a large micro-finance association per governorate (24) will emerge.

Source : Zawya

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