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Tunisia:’’ solving problem of corporate finance hinges on thorough reform of governance system,’’ says BCT Governor

The mortality rate of firms in Tunisia remains the highest in the world facing a real lack of new creations compared to other neighboring countries like Morocco. This is the observation made by various speakers at a meeting organized by the Tunisian Citizen Enterprises Confederation (CONECT) under the theme: “Corporate Finance Facing Requirements of Good Governance.”

Despite the existence of a nearly comprehensive system intervening in the life cycle of businesses and the complementary funding mechanisms available, the Tunisian economic fabric suffers from a limited level of business creation.

Several reasons are behind this, including the weakness of good governance at all levels, which hindered the promotion of private investment and resulted in an economy unable to meet social needs in matters of employment. This deserves to be refined especially in this delicate situation faced by Tunisia.

This situation is marked mainly by economic recession which continues to be tense, according to Mustapha Kamel Nabli, Governor of the Central Bank, mainly in terms of liquidity and corporate finance.

“In 2012, funding has become more difficult because the central bank cannot continue to increase the volume of refinancing as it did last year, to meet the need, due to a difference between the evolution of resources and what should be the evolution of credit, “he said.

Add to this the concerns of banks which are seeing their provisions and their availability to provide additional loans somewhat hampered by the heavy burden of bad loans, considered significant in their portfolios. It should be noted that bad debts amounted to 13.3% in 2011, “a rate that reflects poor governance not only among bankers but also among companies that are expected to provide reliable information to banks, to help them in decision-making, “argued Nabli.

According to him, solving the problem of financing businesses and the economy, in general, requires a deep reform of the governance system. Indeed, the BCT will enforce from July, the circular on strengthening the rules of good governance in banks.

The Government of Jebali, according to Ridha Saidi, Minister for Economic Affairs, is committed to the establishment of a body, composed of economic actors and tasked with improving the quality of good governance within various institutions.

It is a major challenge, according to economists, who believe the government has to meet the challenge of transparency urgently, by applying the laws and regulations, that is to say, breaking the bad practices of the deposed regime, in order to ensure rapid economic recovery and resumption of normal rhythm of business.

“It is the role of the government to apply governance,” said Moez Joudi, President of the Tunisian Association of governance, indicating that new relationships based on win-win partnership should be established between funding bodies and companies seeking funding on terms comparable to those of their competitors. Moez Joudi also explains that banks had better improve their transparency and good governance. This would improve their risk management and ensure a better distribution of powers that will optimize the process of creating businesses and value and ensuring a distribution of the value created which will be more judicious

For its part, Taher Lassouad, CEO of the Upgrading Office, suggested financial restructuring especially since 72% of businesses applying for the upgrading program are facing difficulties.

Of the 4,000 diagnoses approved to date, there are 2,900 companies which are seeing the approval of their upgrading plans subject to financial restructuring, either in terms of equity or working capital.

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