Microfinance in Tunisia

The history of microfinance in Tunisia goes back to the early sixties.

In 1960:

• The creation of the "Local credit mutual funds"
• Development programs funded by international organizations: "International Fund for Agricultural Development" (IFAD) and "World Food Program" (WFP).

In 1973, the State intervened again with the establishment of the "Regional Program of Development" (PRD) to help the creation of employment opportunities and the improvement of the living conditions.

In 1979, some development NGOs (APPEL, FTDC, SAVE THE CHILDREN, ASAD, ATLAS, KEF FOUNDATION, UTSS) began to include a microcredit component in their development projects and to make use of this designation.

At the beginning of the 80's, the interest for the economic insertion of the urban population appeared with:

• The establishment of the "Integrated Urban Development Program" (IUDP)
• The creation of the "Fund for the Promotion of Crafts and Small Trades"

In 1997, in order to optimize its policy of socio-economic integration of the poor population, the Tunisian Solidarity Bank (BTS) was established after the meeting of its general assembly on December 22, 1997 following the presidential decision of May 21, 1997. The Tunisian Solidarity Bank (BTS) started its activities in March 1998 to finance microenterprises (for the skilled and graduate youth). The BTS’s distinguished contribution consists in a financing that reaches 90% of the investment.

In order to ensure better coverage, the bank has developed partnership frameworks with public technical administrations:

• Regional Commissions for Agricultural Development,
• The National Agency for Employment and Independent Work,
• The Tunisian Agency of Vocational Training.

This policy allows a complementarity between the technical role of the regional network of technical administrations and the BTS branches.

In 1999, the promulgation of the organic law n ° 99-67 on the microcredits granted by the associations, which defines the microcredit as "any credit, granted by the associations of microcredit (ACM), which aims at supporting the economic and social integration by financing the acquisition of small production equipment or working capital. It can also be granted for the improvement of living conditions.”

The maximum amount of this credit is 5,000 DT, with an interest rate of 5%, for a maximum repayment term of three years. People eligible for microcredits are natural persons who are members of needy families and vulnerable social categories and who have the capacity to carry out a continuous activity; or those who are qualified to carry out an activity and who do not have a dependent employment.

In October 2011, the document that had been under preparation for several months before 2011, related to the "Concerted Vision for the Microfinance Sector in Tunisia" was approved.

The Concerted Vision is structured around four strategic axes:

• The Establishment of a regulatory and supervision framework encouraging the sector’s development,
• The Contribution to the development of priority regions and segments: to supervise a detailed market study to better identify the needs of the target clientele; to set up an incentive framework for the development of microfinance,
• Structuring the sector in order to record its long-term impact: Restructuring the ACM and redefine the role of the BTS (Tunisian Bank of Solidarity) and the NGF (National Guarantee Fund); better understand the role of the Post office; gradually prioritize the involvement of the private financial sector for the refinancing of microfinance,
• Promote and support responsible growth of the sector: establishing an institutional infrastructure that can promote sustainable development of the sector.

The first initiative representing the concerted vision is the new Decree-Law No. 2011-117 organizing the activity of the microfinance institutions. The main contribution of this text is that it allows limited companies for the first time to grant microcredits. These companies must have a minimum capital of 3 million dinars. Article 58 of the Decree-Law No. 2011-117 organizing the activity of the microfinance institutions amended by Law No. 2014-46 of July 24, 2014 allows micro finance institutions in the form of associations (MCA) to continue to operate provided that they comply with the provisions of this decree-law including a minimum endowment of 50 thousand dinars.

The new decree-law gives the possibility for a MFI to diversify its products by offering microinsurance. Also, the creation of a supervisory authority whose main mission is the supervision of MFIs. The operating methods of this structure are set by Decree No. 2012-2128 of September 28, 2012.

The new regulation has brought changes to the level of the microcredit ceiling and the conditions of its granting. The ceiling is raised to 10.000 TND for associations, and 40.000 TND for the MFIs having the status of public limited company. For loans granted for the improvement of living conditions, the ceiling is 2.000 TND for associations and 3.000 TND for public limited companies. On the other hand, for the microcredits granted from budgetary resources mobilized in the framework of agreements concluded with the BTS, the maximum annual interest rate applied is fixed at 5% plus a flat file study commission set at 2.5% of the microcredit amount levied on the beneficiary. For microcredits granted to other resources, other than budgetary ones, the interest rate takes into account the actual expenditure necessary to grant these credits including the cost of resources, management and training operations, as well as operating costs.