In 2024, Tunisia has emerged as a key player in the fintech sector in the Middle East and Africa, positioning itself as a cultural and technological bridge between the Francophone, Arab and African regions.
The country, which straddles the French-speaking, Arab-North African and African cultures, has the potential to act as a bridge between these different regions of the Middle East and Africa, The FintechTimes believes.
Despite facing a number of challenges, from economic to political and security issues, the country has made strides in its technological landscape and remains relatively stable and developed compared to its peers.
The Tunisian government has taken proactive steps to foster a thriving startup ecosystem and improve digital infrastructure, recognizing entrepreneurship as a catalyst for economic growth.
Initiatives such as the Digital Tunisia 2020 strategy and the adoption of the Startup Act demonstrate Tunisia’s commitment to prioritizing digital transformation.
A heavily regulated environment
However, the regulatory environment in Tunisia appears to be heavily regulated, posing potential barriers to the future facilitation as well as growth of the broader startup community. In 2019, less than 40 per cent of Tunisians aged 15 and over had a bank account, below the Middle East and North Africa (MENA) average, indicating limited access to formal financial services. Cash also remains prevalent in the country, with only eight per cent of the population owning credit cards, lower than the regional average.
Despite these challenges, Tunisia’s postal service, La Poste, has emerged as a popular provider of fintech products, serving over six million individuals with financial accounts. The country shows promise for further digitalization, boasting a mobile connection rate exceeding 150 per cent of its population and a significant internet user base of 66.7 per cent.
Nevertheless, improvements are needed, as indicated by the dissatisfaction among Tunisian fintechs regarding the national regulatory framework. Over half of Tunisian fintechs perceive the regulatory environment as discouraging, highlighting the need for reforms to foster a more conducive ecosystem for innovation.
Among the fintechs operating in Tunisia are Bitaka (offering mobile transfer services), Kaoun (providing financial software solutions), and Paymee (offering payments processing solutions).
Regulators unaware of the challenges facing fintechs
53% of Tunisian fintechs consider the national regulatory framework to be “discouraging”, according to the first edition of the Tunisian fintech barometer published by TunisianStartups.
The two regulations that pose the greatest obstacles to these financial technology startups are the foreign exchange code and the law on payment institutions, according to the barometer, which was conducted in partnership with Matine Consulting and with the support of the German Agency for International Cooperation (GIZ) to assess the state of the fintech ecosystem in Tunisia.
According to the study, the administration and regulators appear to be ‘insufficiently’ informed about the specific challenges and needs of fintechs. In addition, “the absence of the Sandbox for two years” has “widened the gap between the regulator and the start-ups”.
The BCT describes the sandbox as a “test environment to monitor the experimentation of innovative solutions proposed by fintechs on a small scale and with willing customers”.
Its absence deprives fintechs of a regulated environment in which to test their products and services, and simplifies authorization and compliance procedures, the Barometer explains.
In terms of access to finance, fintechs said they would be more receptive to investment funds and business angels (individuals who invest in high-potential innovative companies) who have a better understanding of their risk profile.
However, the internal rates of return required by funds are too high for fintechs.
In terms of access to markets, 74% of start-ups say that the attractiveness of their solutions to end users is improving, the Barometer shows.
And 42% believe financial institutions are becoming more cooperative, while 53% see no change.